North Sea Succumbs to Cheap US Shale Gas

Published at 08:56AM - 27/09/16

The UK has received the first shipment of shale gas from the US, bringing the future of the North Sea oil and gas industry into question.

As well as placing dwindling North Sea supplies under the limelight, the move comes less than 24 hours after the Labour Party announced a ban on fracking.

“This is a hugely important day for Ineos and the UK. Shale gas can help stop the decline of British manufacturing,” Ineos founder and chairman, Jim Ratcliffe, said.

North Sea Succumbs to Cheap US Shale Gas

 

The Ineos Insight tanker is carrying the shipment, a total of  971,153 cubic feet of ethane coming from US shale fields.

The tanker is due to dock at Grangemouth, Scotland’s only crude refinery and petrochemical plant.

Owned by Ineos, it produces most of the fuel used in the country and hosts Europe’s biggest ethane tank, with a capacity to hold 2.1 million cubic feet of gas.

North Sea Succumbs to Cheap US Shale Gas
Ineos Grangemouth Refinery

Ineos has signed 15-year contracts with suppliers to pipe ethane from the US to export facilities on the east and Gulf coasts of America and then ship the gas across the Atlantic in a fleet of eight tankers.

So far, Norway, Portugal and Spain have already received shale gas shipments, but this is a first for the UK.

US Shale Can Save Jobs, Says Ineos

According to Ineos, shale gas shipments from the US can replace declining supplies from the North Sea and secure the future of Grangemouth’s workforce, but this is being criticised by many as it follows a moratorium on all fracking in Scotland.

Still, Ineos says these shipments are the only way the UK can possibly bring in enough gas at reasonable prices while maintaining operations at the facility, which has been running under capacity for many years.

As well as this, Ineos says the shipment is the result of a £1.6 billion investment which has resulted in eight tankers forming a “virtual pipeline” between the US, UK and Norway.

Overall, these shipments could save 1,300 jobs at Grangemouth, Ineos says.