By NIDAA BAKHSH
INEOS Group is considering investing in UK shale-gas
exploration to secure raw materials for its chemicals
operations in the country after a shortage threatened to
close a plant employing at least 800 people.
The countrys biggest petrochemical
company has charged
a team of five people to look into options including
supporting the nascent shale industry by investing in
exploration and production, according to an article in an
in-house magazine on its website.
The reason for putting together this team is to look at
what the options might be for us, said Tom Crotty, a
director of the Rolle, Switzerland-based company. We
may buy into something thats already there or
pick up acreage in the 14th onshore licensing round, he said.
Energy-intensive industries such as chemicals are having to
compete with companies that have access to lower-cost
materials in the US, where shale drilling caused gas prices
to drop to about a third of Europe
an levels. While Britain
under the Conservative-led government would like to replicate
the US fracking boom, exploration has yet to get off the
We are frustrated by the lack of progress, Crotty
said. We need companies to be getting on with it.
plant at Grangemouth
in Scotland faced closure last year as supplies of feedstock
s from the North Sea
dwindled. The combined petrochemical
operation, which employs
1,400 people, had lost about 150 million pounds ($252
million) a year in the last three years, according to the
The company announced a survival plan in October
to secure the long-term future of the site that includes
building a gas terminal to import ethane from the US. It was
forced to run one of its ethylene plants below capacity
because of insufficient feedstock
s, and the unit is
expected to operate fully from 2017 following raw material
deliveries from the US.
The British Geological Survey estimates that parts of
northern England may hold as much as 1,300 trillion cubic
feet of gas. That could meet demand for half a century at an
extraction rate of 10% similar to US fields, according to
Bloomberg calculations. A similar report is being
conducted for the Scottish belt.
Several licenses lie close to INEOSs production facilities
in Scotland and
Reach Coal Seam has PEDL 162, which covers 400 square
kilometers (150 square miles) in the Scottish central belt
that the company is seeking funding for and is in the process
of negotiating a farmout, company director Graham Dean said,
without specifying who the talks are with.
Reach needs 12.5 million pounds ($21 million) in the initial
exploration phase, Dean told a conference in London last
week. That amount rises to 50 million pounds in the next
stage of extraction, followed by half a billion pounds for
full development, he said.
Dart Energy, which IGas Energy agreed to buy last month to
become one of the largest shale explorers, has acreage in the
Forth Valley of Scotland. Aurora Energy Resources, a unit of
Aurora Petroleum, has PEDL 164, in West Lancashire and
Merseyside, northern England, according to its website.
Centrica, the largest UK energy supplier, and Total, Europe
s second-largest oil
company, bought into licenses in the UK in the past year. GDF
Suez and Iberdrolas Scottish Power have also farmed