Chemicals giant INEOS has confirmed that it plans to invest $1bn (£640m) in UK onshore shale gas exploration and appraisal.
Substantial further investment would follow if the company moved into development and production, INEOS explained.
If the company wins all of the Petroleum Exploration and Development licences (PEDLs) it has bid for from the Department of Energy & Climate Change (DECC), the company would become one of the biggest players in the UK’s shale gas industry.
INEOS is already the owner of two substantial shale licences in Scotland, comprising over 120,000 acres, in addition to investing a further £400m ($627m approx.) in an ambitious project to bring US shale gas to Grangemouth.
The vast majority of the INEOS bids are in Scotland and the North of England.
INEOS believes that an indigenous shale gas industry would transform UK manufacturing – and that the gas can be extracted safely and responsibly.
Jim Ratcliffe, INEOS founder and Chairman, said, “I want INEOS to be the biggest player in the UK Shale gas industry. I think shale gas could revolutionise UK manufacturing as it has done in the US. I believe INEOS has the resources to make it happen, the skills to extract the gas safely and the vision to realise that everyone must share in the rewards.”
The announcement from INEOS comes in the same year as many questions being raised about the future of the European chemicals and refining sectors.
Fears have been expressed about a combination of dynamics that leave the region in an uncompetitive position, a situation that was put into the spotlight earlier this year when Ratcliffe authored an open letter of concern to the President of the European Commission, José Manuel Barroso.
A report from research and consulting firm GlobalData explained that with new and more efficient refineries coming online in the Middle East and Asia this year, combined with lower-cost product imports from the US, European refineries are being squeezed out of their local and export markets.
The European refining sector is uncompetitive in today’s global marketplace, it continued, as a combination of lower feedstock and energy costs provide US refineries with a significant cost advantage compared to European companies.
In his letter to the European Commission, Ratcliffe observed, “I wish to express my deepest concerns about the future of the European chemical industry. Sadly, I predict that much of it will face closure within the next 10 years…”
“Chemicals depend upon competitive energy and feedstock costs. Whilst intensely technical as an industry, and one of the reasons historically that Europe has been so successful, technology alone will not save it…”
“Chemicals literally find their way into all walks of life, they are omnipresent. Chemicals are required to make metals, to make fibres, to make pottery. They are in our watches, our deodorants, our iPhones, cars, clothes and Nike shoes. Without a chemical industry, all of the above manufacturers in Europe are potentially put at a disadvantage.”
He continued, “Chemicals depend upon competitive energy and feedstock costs. Whilst intensely technical as an industry, and one of the reasons historically that Europe has been so successful, technology alone will not save it.”
“Energy, in the form of gas, in Europe is three times higher than the US today, whilst electricity is 50% higher. There are no cheap feedstocks in Europe. US and Middle East feedstocks costs are in another league.”
INEOS, one of the world’s largest chemical companies with over 50 manufacturing plants across 11 countries, this year increased efforts to import shale gas from the US to secure the future of its Grangemouth refinery site.