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Ineos Secures Another U.S. Shale Gas Agreement For Ethylene Plant in Scotland

Global petrochemical giant Ineos has secured a long-term agreement with units of ExxonMobil Corp. and Royal Dutch Shell plc to source ethane from U.S. shale gas beginning in mid-2017 to supply a plant in Scotland.

Ineos Europe AG, ExxonMobil Chemical Ltd. and Shell Chemicals Europe BV said Monday the gas would be used at the Fife Ethylene Plant (FEP) at Mossmorran. FEP is owned and operated by ExxonMobil, while Shell has 50% capacity rights. The plant would receive ethane from Ineos' proposed import terminal in Grangemouth, Scotland, which would complement natural gas supplies from fields in the North Sea.

"This is a landmark agreement for everyone involved," said Ineos Olefins & Polymers UK Business Director Geir Tuft. "We know that ethane from U.S. shale gas has transformed U.S. manufacturing and we are now seeing this advantage being shared across Scotland."

Details of the contract were not disclosed. The agreement "gives FEP access to the new infrastructure developed by Ineos, and in so doing brings U.S. advantaged ethane to FEP," said Shell Chemicals' Elise Nowee, general manager of base chemicals Europe. "The agreement will help us to meet the long-term needs of our ethylene customers."

Ethane gas is needed to produce ethylene, which itself is used to manufacture a broad range of products across the UK and is exported to Europe and other world markets. Ineos three years ago became the first European company to contract for U.S. feedstock after agreeing to transport Range Resources Corp. production through Sunoco Logistics Partners LP’s Mariner East pipeline project in Pennsylvania (see Shale Daily, Sept. 28, 2012). Consol Energy Inc. last year also contracted with Ineos to send ethane produced at the Mariner East complex (see Shale DailyFeb. 14, 2014).

Ineos has committed US$679.7 million to build an import terminal at the Grangemouth facility. An existing pipeline would transport the gas to Fife. FEP, with capacity of 830,000 metric tons/year, began production in 1985. It is one of four natural gas-fed steam crackers in Europe and the first specifically designed to use natural gas liquids from the North Sea as feedstock.

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