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Ineos’ Portents of Doom for UK Energy Market

Highlighting the laggard status of UK shale Ineos boss Jim Ratcliffe has claimed:

“America has drilled 1.1m wells; the UK has drilled one, and that wasn’t drilled very well”.

However Ineos’ hoped for UK shale revolution focussed on the North of England and Scotland has taken a pounding from the results of a YouGov poll commissioned by the petrochemical giant.

Ineos found:

  • Higher levels of opposition to fracking in Scotland than in North West England.
  • Only 43% of Scottish respondents backed fracking, whilst
  • 50% of those surveyed in the North West backed shale

Ratcliffe believes that the continued failure to capitalise on the shale opportunity is directly impacting the success of UK businesses in the global marketplace.

Ineos is one of the UK’s largest energy users and the company reports that across its spheres of operation it pays three times as much for its gas and twice as much for its electricity as its US competitors. Perhaps more surprisingly, given the shale revolution in the US, is that Ineos claim that their German competition by enjoying generous exemptions from renewable energy levies pay half as much for electricity.

The situation is so acute according to Ratcliffe that Ineos’ plastics manufacturing plant at Runcorn, in Cheshire, which employs 1,300 workers and uses as much electricity as the entire city of Liverpool, would eventually have to close if prices do not begin to fall. Ratcliffe said:

“We are buying the most expensive electricity in Europe. Runcorn is not going to survive long term if we are paying twice what Germany and the US are paying.

“The numbers do not work. Something needs to happen reasonably quickly.

“If it does not, there will be no gas left in the UK and little manufacturing left in the UK. We want to take the lead for shale in the UK.”

Ratcliffe added:

“[The UK is not] a great place when it comes to energy.

“In the last six years in the UK we’ve seen 220 closures of chemical plants, no new builds, and [by contrast] in the US today the publicised investment in chemicals is $150bn.”

Putting commercial considerations aside, numbers like that simply don’t stack up without impacting the productivity of the UK energy market and in turn the UK economy.