Sector News

Ineos says Grangemouth complex has no long-term future if Scotland bans fracking

February 11, 2015
News
Ineos has warned that its massive UK manufacturing complex at Grangemouth, Scotland, has no long-term future if the Scottish government does not reverse its decision to impose a moratorium on fracking for shale gas. At a conference on Tuesday organized by The Scotsmannewspaper, Gary Haywood, Ineos’s CEO/upstream, warned that Scotland’s biggest industrial site will need a UK shale revolution to survive. He also hit out at the “scaremongering” surrounding the debate on the subject, as he addressed the conference in Edinburgh.
 
Although Grangemouth will start importing cheap shale gas from the US next year, Haywood warned that Ineos needs its own feedstock in the long term. “When you’re shipping in material, you’re always at a disadvantage. It’s a special situation with the ethane being available in the US at very low prices because of the rapid increase in production in the US and the lack of demand.” He added:  “You can’t see that going on. So it’s unlikely – unless we can develop an indigenous source – that [the Grangemouth] cracker has a long-term future.” Ineos owns the majority of shale gas exploration licences awarded in Scotland.
 
Union chiefs representing workers at Grangemouth expressed their concerns at his comments, which came only 15 months after Ineos promised that the future of the complex was secure. This followed the settlement, on Ineos’s terms, of a bitter dispute over pay, pensions and work practices at Grangemouth, which nearly led to the closure of the complex. They called on Haywood to “clarify” his comments.
 
Former World Bank adviser Gordon Hughes, a professor of energy economics at the University of Edinburgh, said Scotland was facing stark choices about its future energy supply.“I don’t mind if you decide there should be no unconventional gas production in Scotland – but please recognize what that choice is. It means you close down Grangemouth sooner or later. It’s inevitable. There’s no alternative to that.”
 
The Grangemouth complex, consisting of an oil refinery and the petrochemical plant, is Scotland’s biggest industrial site. It employs about 1,300 staff and thousands more contract workers. It has had to look elsewhere for gas supplies as North Sea gas supplies run down.
 
Although the proposal for a moratorium on fracking was defeated in the UK parliament at the end of January, the Scottish government, acting under its devolved powers, announced its own moratorium shortly afterwards. The proposed UK moratorium was rejected only because the majority of Labour Party members of parliament abstained from voting, partly at the urging of two of the UK’s biggest trade unions, Unite and the GMB, both of which are affiliated to and are major donors to the Party. The two unions generally support fracking because of its potential for job creation. 
 
By Natasha Alperowicz
 

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