Underused crackers and fast-tracked frackers – Ineos at Grangemouth

Greenpeace fracking image


Wales have declared a moratorium too. Yet the UK Government is attempting to fast-track fracking legislation which will allow companies access to drill beneath private property. The House of Lords has thrown out key parts of amendments relating to protecting drinking water in the UK Infrastructure Bill.

The underused 320,000 tonne/year G4 ethylene cracker plant at Grangemouth – previously used to process oil-derived naphtha, mainly from the North Sea – has been converted along with the downstream BE3 butadiene and associated benzene production units.

With a fleet of dragon ships ordered and a 15 year deal signed for fracked shale gas imported from the US, are Ratcliffe (and Cluff) bluffing about fracking, blackmailing the nation or merely a corporation covering all their bases?

Underused crackers and fast-tracked frackers – Ineos at Grangemouth

The pipeline from the Forties oilfield makes landfall at Cruden Bay beach in Aberdeenshire Cruden Bay beach - web copyfive miles north of my home in Collieston. Just up over the hill lies one of the most important worksites in Scotland, the pipeline’s pumping station near Whinnyfold. I’ve tried photographing the pumping station: suffice to say it’s unadvisable. From Whinnyfold, crude oil and gas condensate are pumped 110 miles south to the Kinneil plant at the massive Grangemouth industrial complex on the Firth of Forth..

The Grangemouth refinery and petrochemicals facility is a deeply-integrated production centre exploiting synergies between the conflated refinery and petrochemicals plants. Located 40 kilometres west of Edinburgh on a 1700-acre site, the petrochemicals facility manufactures over 2 million tonnes of chemical products a year. The refinery has an annual capacity of 10 million tonnes. Two ethylene crackers (G4 & KG) at the heart of the petrochemicals site produced the feed materials used by the other chemical plants. The two units had an ethylene production capacity of 1 million tonnes per year between them. The G4 ethylene cracker could crack both gas and light distillate feedstocks, whereas the KG (Kinneil Gas) unit is a gas cracker using mainly ethane and propane as its raw materials. Grangemouth’s ability to crack both liquid and gas feedstocks has significant commercial advantages. The refinery processes around 200,000 barrels of crude oil per day. The oil feedstock is mainly supplied by the neighbouring BP-operated Kinneil oil and gas processing plant, fed by the Forties pipeline network.

In 2013 owners Ineos threatened to shut down the Grangemouth refinery with the immediate loss of 1500 jobs. Thousands of workers and whole communities depend on the complex – in direct employment, supply chains and subsidiary activities. All of Scotland would have been affected, had Grangemouth closed. The workforce voted to strike to protect both their hard-won working conditions and the position of Steven Deans, a Unite trade union official who worked full-time at the site. Ineos exaggerated and fabricated financial concerns, claiming that the plant was losing money. The company was accused of cynical blackmail – they had in fact made a profit, but the Swiss parent company’s accounts are inaccessible and no one company runs the complex. Valued at £389 million, Grangemouth Chemicals’ assets were suddenly reduced on paper to nil during the conflict. Faced with intransigence, bluff and lies on a massive scale, a lack of solidarity from the Labour Movement and the potential closure of the refinery, Unite was forced to accept what amounted to a wide-ranging, vicious assault on their pay and working conditions, including a clause preventing any strikes for three years. Unite leader Len McCluskey described Ineos as ‘Capital exercising naked power’. Robin McAlpine suggested that if Ineos was an individual, that person would be a certified psychopath, you could say ‘crackers’. More laconic and gaffe-prone than psychopathic, UK Prime Minister David Cameron compared Unite to the Mafia.

High energy costs have been a concern for citizens and firms resident in the Grangemouth area. The costs cause fuel poverty and hinder investment, employment and the viability of businesses and operations. Falkirk Council is fired up about a long-term clean energy project which may provide a fresh, vital boost to industry and employment. In part it could take the form of a biomass power station at Grangemouth Docks. The initiative could see the council and its partners harness heat lost in Grangemouth’s industrial processes to provide local homes with cheap fuel, and to safeguard and create thousands of jobs. Meantime Unite’s Scottish secretary, Pat Rafferty, said that there has been a significant flight of workers to industry competitors from Grangemouth as a consequence of the nature and detail of the Ineos ‘survival’ plan.

Part of the new business model involves the import of liquified natural gas (LNG) from the US and refining it on site. From China, Ineos has ordered eight bulk carriers (dragon ships) to satisfy light-feed ethane transport requirements. Importing LNG means reduced production from North Sea Oil sources due to ‘dwindling supplies’. The underused 320,000 tonne/year G4 ethylene cracker plant at Grangemouth – used to process oil-derived naphtha – has been converted along with the downstream BE3 butadiene and associated benzene production units. In 2014 Ineos secured a £230m loan guarantee from the UK Government to build a shale gas storage facility on the Grangemouth site.

At least they plan to process rather than burn hydrocarbons, but a danger is Scotland becoming dependent on gas imports from the US. Ineos require around 1 billion cubic metres of methane a year for Grangemouth. US methane costs a third of the price of North Sea gas. “Scotland already produces seven times more fossil fuels than we need,” Richard Dixon, director of Friends of the Earth Scotland, reminds us.

North-East Scotland relies on oil and gas and there is little enthusiasm or opportunity for using the skills and technology for future alternative industries. So, just as you wouldn’t have joined a miners’ picket line to tell them to stop risking their lives mining dirty coal or highlight Greenpeace membership on a cv when applying for a job with an oil company, so it is difficult to prioritise the big renewable picture – rule out shale, phase out coal (close Longannet power station, for example) leave fossil fuels where they are (Canadian tar sands, the Arctic) and freeze the carbon floor price. All these measures would cut bills, tackle pollution, and improve energy security.

FrackFreeScotlandAs the company and politicians collude ‘to save the power plant’, Ineos has bolstered its stake in shale gas licences on land around the Grangemouth area. The UK Government is changing the trepass laws, paving the way for fracking by attempting to fast-track legislation allowing right-to-drill and potentially-unlimited access beneath private property in Britain. Westminster MPs have rejected a fracking moratorium. Fracking has been banned in France, Bulgaria, Ireland, the Netherlands and New York State, to name but five countries and regions.

Dart Energy and Cluff Natural Resources (CNR) are two other companies in the unconventional gas arena: their versions of Hell on Earth are coalbed methane and underground coal gasification (UCG) respectively. The latter technology sees boreholes inserted into coal seams beneath the seabed which are then ignited, with the resulting syngas piped ashore to plants.

Algy Cluff was involved in the discovery of the North Sea Buchan oilield forty years ago. ns007CNR hold a total of eight UK licences for UCG projects. Five of these licences have been issued by the Coal Authority in the Firth of Forth/Falkirk areas.

SNP Government ministers appear to have left a loophole in their legislation on fracking by excluding UCG operations, both onshore and under the seabed, though SEPA licences would be required for processing onshore. Offshore UCG would at present be regulated by the Crown Estate. Ask the Energy Minister to stop Underground Coal Gasification  The UK Government wants to override Smith Commission recommendations on the devolution of the Crown Estate so the UK can extract revenues from Scotland, in effect running two Crown Estates at the same time. Onshore gas extraction was recommended to be devolved to the Scottish Government under the Smith Agreement.

Robust challenges are halting this onslaught in Scotland. A coalition of community and environmental groups has been campaigning, lobbying the Scottish government to ban shale drilling, coalbed methane and underground coal gas exploration. This diverse coalition – comprising climate change activists, trade unionists, socialists and ‘Anti-Fracking’ groups – is demanding “a moratorium on all forms of unconventional gas development in Scotland”. The Scottish government have agreed to a delay, if not an outright ban, acting to protect communities across the country and the environment from these industries. Dart Energy’s plans for commercial coalbed methane exploration at Airth, near Falkirk, have been included in the moratorium. Canonbie, where 19 planning permissions for coalbed methane extraction exist, is also protected by the new ‘policy’. Pat Rafferty says that “hundreds of millions of pounds in public subsidies, not to mention the financial sacrifice of the workers, was given up to ensure that Grangemouth remains open.”  Ineos have never said this was dependent on developing indigenous fracking sources.

Ineos chairman, Chief Executive and tax exile Jim Ratcliffe lives on a £130 million yacht, so drilling under his pad is a tad unlikely. Besides, he can always sail away if the seams below him are set alight or, heaven forbid, a tax bill is delivered. In 2010 Ratcliffe relocated Ineos central staff operations to Switzerland for tax purposes. It has been suggested that Ratcliffe and Cluff are wasting their money, bluffing about fracking and UCG  exploration, though Ineos have high hopes for an early start to shale gas output.

On March 15th 2015 Rob Edwards in the Sunday Herald revealed that oil and chemical plants run by Ineos at Grangemouth have breached health and safety regulations 34 times in the last four years, been officially condemned as “poor” for pollution for three years in a row, and seen more than 20 staff injured since the start of 2015. These revelations have prompted criticisms from environmentalists and trade unionists, who claim that safety at Grangemouth has deteriorated. They will also increase anxieties over Ineos’ bid to win community and political support for fracking shale gas across the central belt. Widespread opposition to unco gas exploration led to the Scottish government’s declaration on January 28th. A public relations charm offensive hit flak before getting underground (sic). A company called Mediazoo invited journalists to Grangemouth on March 17th 2015 to meet senior Ineos executives over a posh sarnie or two.

‘Their major new Scottish shale gas community engagement programme’ uses US stats to promise UK communities 6% profits if their homes are in fracked areas. No gas – not enough or too much expense – after fracking will mean no profits, and therefore communities will get no money. In Scotland their wooing is likely to become a big whoa if the moratorium leads to an outright ban. Hopes for an early start? Ineos, Dart Energy and CNR may find their plans floating dead in the (contaminated) water, and their poisonous hopes will not become reality.

Meantime it was announced in March 2015 that a project for a coal-fuelled power station with carbon capture and storage technology at Grangemouth has secured £4.2 million from the Scottish and UK governments.   The money has been awarded to the Seattle-based Summit Power Group for research and feasibility studies for its proposed Caledonia Clean Energy Project.  fracking


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