Grangemouth boss proposes to offer 6% of gross revenues from fracked wells to landowners and the local communities May 20 2014

Extracted from Dominic O'Connell (17/5/14) and Danny Fortson (28/9/14) - The Sunday Times

Jim Ratcliffe, of Ineos, will import 1.6bn tonnes of cheap American shale gas per year for ten years from terminals on America’s Atlantic coast and the Gulf of Mexico. The gas will be sent to a facility in Norway owned by Ineos, Ratcliffe’s giant chemicals company, and to Grangemouth in Scotland.

The imported gas will be used to make ethylene, a vital chemical in the manufacture of plastic. About half the gas will come from the Marcus Hook terminal in Pennsylvania, and the rest from Houston Bay in Texas. A huge surge in gas production in America – almost all of which comes from the hydraulic fracturing (fracking) of underground shale – has pushed down prices to between one third and one half of European levels.

In North America, 55 shale gas wells are currently drilled every day.  The cheaper energy produced has given the American manufacturing and chemicals industries a boost, with thousands of jobs being created in new factories and refineries. In contrast, the pace in Britain has been sluggish: just one well has been partially drilled since the first license was granted in 2008. The government, prudently invoking the precautionary principle, issued an eighteen month fracking ban in 2011 after drilling caused tremors, apparently equivalent to those typically created by a bus or lorry passing by the front door of an urban terraced house, to be recorded near Blackpool.

Ineos has said it will now also consider pursuing shale gas exploration licenses in Britain.  In October the Government closes the bidding for hundreds of six mile (ten kilometer) by six mile exploration blocks, and the auction winners will be revealed by June - after the General Election.  Each block might comprise ten pads each with a (stacked) cluster of twenty wells which are scheduled to produce over a twenty year life.  To this end Ratcliffe has hired the team credited with starting the shale gas revolution at Texas explorer Mitchell Energy. Drilling expert Nick Steinsberger, and geologists Kent Bowker and Dan Steward, have signed up to five year contracts with Ineos.

The Coalition Government is now attempting to stimulate shale drilling by changing the laws of trespass on underground exploration and by promising windfalls for locals. The proposal seems to exempt access at more than 300m (1000ft) below a property from the law of trespass.  The Government is very positive about shale, but they need more positive feedback from people in the UK to go out and really push it.

Cardigan Sand would like to add: Some business tax on shale gas will be allocated to the Local Authority and some explorers, notably Cuadrilla, are also offering to remit 1% of revenues specifically to fund Community or Environmental projects local to the exploration sites.  We understand that the Minerals (Oil, Petrochemical and Gas in this case) are owned by the Crown Estates who remit the majority of its income to the State coffers, and there is therefore little incentive for locals to allow fracking.  Jim Ratcliffe has offered to up this to 2% from UK wells developed by his company and give an additional 4% to the landowners.  The Lancastrian hopes this "game-changer" will spark the industry into life.  By his reckoning each 100 square kilometre block will generate 20 million pounds per annum for twenty years for the community,  all paid for by the six percent allocation of revenues suggested.   Most of the Shale in the UK is in the old industrial heartland, which is still largely depressed.  Shale gas, he contends, has the potential to re-vitalise manufacturing in these areas.