INEOS buys into IGas shale acreage
The chemical industry giant, INEOS, has acquired a position in a number of IGas Energy’s natural gas exploration licences around the UK, according to an announcement made today.
INEOS operates two of the UKs largest and most important chemical manufacturing sites – Grangemouth in Scotland and Runcorn, Cheshire.
Access to locally produced natural gas will enable INEOS to compete on a more equal footing with rivals in the US and the Middle East that benefit from lower energy costs and cheaper feedstocks.
Grangemouth is already set to receive shale gas imported from the US. It uses natural gas as a feedstock to produce ethylene, the building block for chemicals that feature in many of the products we take for granted in our modern lives, including plastics and even anaesthetics.
The ability to obtain natural gas on its own doorstep, rather than rely on imported gas, will not only lower costs but will avoid the attendant shipping emissions.
It’s Runcorn plant is one of the UKs biggest users of electricity, with annual demand similar to the whole of the nearby city of Liverpool. The electricity is used as an integral part of the process of manufacturing chlorine which then goes on to be used in hundreds of products, from UPVC windows to household bleach.
The IGas Energy licences in Cheshire could be used to feed the Runcorn plant.
In the announcement, Andrew Austin, the chief executive officer at AIM-Listed IGas Energy said: “We are delighted to announce this farm out with INEOS which underpins the quality, scale and significant potential of our licences, whilst retaining material upside in these key assets.
“Alongside the commitment from our existing partners, INEOS’s commitment of upfront cash and considerable capital investment will help fund us through the next steps of our shale appraisal and production programme.
“This transaction, together with our existing partnerships with Total and GDF, reinforces the potential and materiality of our portfolio to world class counterparties and strongly positions us as we seek to work together to unlock the potential of our untapped natural gas resources in Britain.”
Gary Haywood, CEO of INEOS Upstream, said:
“This is a great opportunity to acquire some first class assets that have the potential to yield significant quantities of gas in the future. INEOS believes that an indigenous Shale gas industry will transform UK manufacturing, and that we can extract the gas safely and responsibly. We are pleased to have agreed this deal with IGas. INEOS’s scale, asset position across the UK, US shale gas expertise, and our expertise in managing oil and gas facilities will be a great match with IGas’s existing onshore asset base, and significant exploration and production capability.”
You can find the IGas Energy AIM announcement here. Please remember that the OESG is not responsible for externally hosted content.