Shale Gas Transatlantic Agreement: Can US Shale Save Old World Ethylene Plants?
Chemical operations in the UK relied heavily on natural gas from offshore field sin the North Sea - a resource that is dwindling rapidly. Now, companies in Europe are looking for other sources of supply - and set their sights on US shale gas. A first purchase agreement between European and American companies is already underway.
Ineos has signed a long-term sale and purchase agreement with Exxon Mobil Chemical and Shell Chemical to supply US ethane from shale gas via Ineos' Grangemouth sites to an Scottish ethylene plant in the Fife region. These new feedstock supply routes shall complement North Sea gas supplies, ensuring the competitiveness of the Fife Ethylene Plant (FEP) at Mossmorran.
Ethane gas is a vital raw material needed to produce ethylene, which itself is used in the manufacture of a broad range of products across the UK and is exported to Europe and other world markets. Access to ethane from shale production will provide sufficient raw material to run UK steamcrackers to make ethylene at full operating rates.
Bringing the Shale Revolution to Scotland
“This is a landmark agreement for everyone involved”, says Geir Tuft Business Director at Ineos O&P UK. “We know that ethane from US shale gas has transformed US manufacturing and we are now seeing this advantage being shared across Scotland.”
The Fife plant will receive ethane from Ineos’ new import terminal in Grangemouth, Scotland. Access to this new source of feedstock will help complement supplies from North Sea natural gas fields. The agreement will also ensure the competitiveness of a major manufacturing facility in Scotland and help secure skilled jobs in the long run. FEP is owned and operated by Exxon Mobil and Shell has 50 percent capacity rights.
Accessing the Shale Gas Infrastructure
“Today’s agreement helps to secure additional feedstock for the Fife plant,” said Karen McKee, vice president of Exxon Mobil’s global basic chemicals business. “This agreement gives FEP access to the new infrastructure and in so doing brings US advantaged ethane to FEP. The agreement will help us to meet the long-term needs of our ethylene customers” said Elise Nowee, General Manager Base Chemicals Europe, Shell Chemicals.
Ineos has committed £450 million to construct the new ethane import terminal at its Grangemouth facility. It represents the most significant investment in UK petrochemical manufacturing in recent times and is supported by both the UK and Scottish governments. An existing pipeline will transport the gas from Grangemouth to Fife.
The Fife Ethylene Plant is one of Europe's largest and most modern ethylene facilities. The plant started production in 1985, and is one of only four natural gas-fed steam crackers in Europe. It was the first plant specifically designed to use natural gas liquids from the North Sea as feedstock. Alongside Ineos Grangemouth, it supplies manufacturing in Scotland, the rest of the UK and export markets with ethylene. It has an annual capacity of 830,000 tonnes of ethylene. Shell Chemicals has 50 percent capacity rights at the Fife Ethylene Plant.