MOSCOW (MRC) -- Refiner and petrochemical group INEOS Group was running equipment at its biggest plant, in Grangemouth, Scotland, at less than half capacity. That’s because its sources of raw materials - oil and gas fields in the North Sea - were depleting and the volume of fuel heading to the facility dwindling, as per Hydrocarbonprocessing.
Hoisting the roof in July onto an ethane storage tank large enough to hold 560 double-decker buses was a sign of the company’s reviving fortunes. Amid a USD1 billion overhaul - a life or death revamp for the plant - the biggest such container in Europe will store feedstock originating not from fields off Britain’s coast, but from as far away as Pennsylvania; gas produced amid the shale-fracking boom.
"We had to convince the site and the government that this is a workable plan," said John McNally, CEO of INEOS Olefins & Polymers UK. "It was the only plan, the survival plan for Grangemouth chemicals."
The story of INEOS shows how the US shale-drilling frenzy is altering the global energy landscape, and points to one possible future for Europe’s chemical and manufacturing industries. Output of crude oil and liquid fuels in the North Sea has fallen by 50% since 2005, while US exports of natural gas liquids and liquid refinery gases surged 16-fold in the period. The boom has driven the price of US ethane down 86% from a 2008 peak. It now costs about half as much as the same fuel in Western Europe.
The US-sourced fuel - exported from a Sunoco Logistics terminal in Marcus Hook, Pennsylvania - will feed plants including INEOS’s cracker, a machine that converts oil and gas into ethylene. The company is also seeking access to onshore British supplies, having acquired 12 shale gas exploration licenses. It will apply for permits, and will buy hydraulic fracking expertise if it wins permission to drill, McNally said.
INEOS isn't alone in tapping US gas. Borealis is spending USD135 million upgrading its cracking facilities in Sweden. It plans to source about two-thirds of its ethane from the North Sea, with the remainder coming from the US, said Markku Korvenranta, executive vice president for base chemicals. The Vienna-based petrochemicals company will also import US propane, he said.
As MRC wrote before, Ineos will invest around GBR 640m (USD1 billion) in shale gas exploration in the United Kingdom. The company plans to use the gas as a raw material for its chemicals plants, including Grangemouth in Stirlingshire. Grangemouth is currently running at a loss, but Ineos believes shale gas will transform the economics of the plant.
INEOS Group Limited is a privately owned multinational chemicals company consisting of 15 standalone business units, headquartered in Rolle, Switzerland and with its registered office in Lyndhurst, United Kingdom. It is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell) and the largest privately owned company in the United Kingdom.
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