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The new tank will allow it to import cargoes of LNG produced in the US
04/12/2013
Grangemouth to import US shale gas
Ineos prepares troubled site for first UK imports
Richard Jansen
GRANGEMOUTH is to become the first UK chemical plant to import cheap shale gas from the US, as owner Ineos looks to draw a line under a bitter industrial dispute.
Switzerland-based Ineos says it is investing £150m (US$245m) in a new ethane tank at the Scottish site as part of a ‘survival plan’ designed to keep the embattled facility operating. It claims that dwindling supplies of North Sea oil and high operating costs rendered the facility “totally uncompetitive,” causing it to lose around £450m over the past three years.
“This investment is absolutely critical for Grangemouth,” says Calum MacLean, chair of Ineos’ UK petrochemicals business. “Without a second advantaged feedstock supply chain the petrochemicals business is not sustainable beyond 2017.”
The new tank will allow it to import cargoes of LNG produced in the US, where an ongoing shale boom has cut gas prices to a fraction of those paid in Europe. Ineos says it is currently negotiating supply contracts with US exporters, and expects that the first cargoes of gas could arrive at Grangemouth as early as 2016.
The company says is already close to completing a tank and import terminal at its Rafnes plant in Norway, which is set to become the first place in Europe to import shale gases. A company spokesperson tells tce that its new investment “will bring US shale gas economics” to Grangemouth.
The future of the 2.36m t/y plant looked in doubt for much of October, in the wake of a bitter row between Ineos and the Unite union, which represents workers at Grangemouth. After weeks of heated negotiations and threats from both sides, however, Unite stepped down from its call for strikes and accepted several concessions, including a three-year pay freeze and move to a cheaper “modern” pension scheme. The union also accepted that it will no longer have any full time representatives at the site.
In exchange, Ineos has agreed to invest £300m to cover ongoing losses in addition to building the new gas terminal. It is also planning to overhaul its naphtha cracker and may close some of the site’s smaller chemical plants.
“After what has been a very difficult three months at Grangemouth it is very reassuring for our employees to see real progress being made on the tank and infrastructure project,” adds MacLean.
