INEOS Europe AG, ExxonMobil Chemical Limited and Shell Chemicals Europe B.V. announced a long-term sale and purchase agreement to secure ethane from US shale gas for the Fife Ethylene Plant (FEP) at Mossmorran in Scotland, from mid 2017.

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 ExxonMobil and Shell has 50 percent capacity rights.

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.

“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.”

“Today’s agreement helps to secure additional feedstock for the Fife plant,” said Karen McKee, vice president of ExxonMobil’s global basic chemicals business.

“This agreement gives FEP access to the new infrastructure developed by INEOS 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.

About INEOS

INEOS will be the sole operator of the three licenses awarded today. Shale gas extraction has transformed communities in the USA where landowners own the mineral rights under their property. INEOS has developed an industry leading community benefits package that seeks to replicate this, giving communities a real stake in development. INEOS has promised to share 6% of revenues. Four percent of this would go to homeowners and landowners in the immediate vicinity of a well, and a further 2% to the wider community. Based on our estimates, a typical 10km by 10km development area would generate £375m for the community over its lifespan. Overall we anticipate that our future shale gas business could contribute over £2.5bn to communities under this scheme, having a material impact on regional economies and the standard of public services.

INEOS recognises that shale gas extraction is a controversial issue and communities have understandable questions about the potential risks and rewards. We will engage comprehensively and openly with communities at every stage to accurately convey the risks and rewards, so they can make an informed judgment about extraction. It is the view of mainstream scientific authorities such as the Royal Society and Royal Academy of Engineering that shale gas can be extracted safely with appropriate regulation, and there could be real benefits from doing so, including jobs, tax revenue, local investment and improved energy security. It is vital to have a thorough and evidence-based conversation to ensure this opportunity is considered properly.