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Issues are 'not insurmountable'

Grangemouth plant needs local shale production ‘to ensure future’

Fracking

The Grangemouth chemical plant needs access to local sources of shale gas to guarantee its future, it was claimed at a conference on fracking today.

Gary Haywood, chairman of Ineos Upstream, owner of the Grangemouth complex, said the plant cannot survive long term without cheaper raw materials.

He said shipping gas from overseas producers to the UK was not a long term solution to Britain’s energy needs.

Last November the Switzerland-based company unveiled a £1billion plan to power the Grangemouth plant with shale gas in a bid to stem losses at the plant. It is to spend £640million in Britain developing shale gas exploration and has drilling licences for two wells near the Stirlingshire plant, but still needs planning permission and local approval. It says it will give away 6% of revenues to local homeowners and landowners, although critics have called this a “bribe”.

In the meantime, the company is spending £400million shipping liquefied shale gas from the US.

Mr Haywood said that a decade ago the UK exported gas, now it imports half of it and this trend will increase rapidly. He argued that it was essential to have a mixed energy supply, but said gas would dominate that mix over the next 20 years, accounting for 40% of demand against 21% now. Shale gas reserves were still being understood but could provide between 20% and 50% of UK demand alongside renewables.

“I do not think the UK can afford to let this opportunity pass by,” he said. Public concern was understandable, he admitted. “We have to work hard to get the facts out, while taking people’s concerns seriously. There is a lot of information out there that this misleading, some of it valid, but some of it is scaremongering.”

He said a lot of third party evidence backs up the view that the public health concerns can be resolved.

Chris Masters , who chaired a government commissioned panel on the issue, told delegates meeting in Edinburgh that the industry could put the country’s chemical plants at a significant advantage against their European rivals and reduce its dependency on other sources.

Dr Masters said it was important not to draw too many comparisons with what was happening in the US where the industry is much bigger and more advanced, but mothballed rigs in the States had been brought back into production and investment was pouring into new chemical plants.

He said there could be significant reserves of unconventional oil and gas in the area between Glasgow and Edinburgh, but accepted the widespread concerns which range from waste water to the impact of fracturing the land.

“There are technical challenges to fracking but none of them are insurmountable,” he said. The regulatory framework was in place to control the industry though he acknowledged the importance of consultation with all those affected at an early stage.

“Simply focusing on the engineering  aspects of risk is unlikely to meet many people’s concerns about fracking. Genuine engagement needs to include the social, political and ethical aspects of the debate,” he said.

Gordon Hughes, of Edinburgh University, said no industry was entirely “clean or green” and warned against “posturing”, a point clearly aimed at politicians. He said: “Fracking is one of the least disruptive technologies, especially relative to traditional oil and gas production.”

He added that the Scottish government has ambitious social and welfare targets which have to be paid for. He said capital could not be taxed, while land could be. However, it had to be productive.

Ken Cronin, chief executive of the UK Onshore Oil and Gas group (UKOOG) said public concerns are not new in the energy industry but extensive efforts were made to work with regulators, communities and government officials to ensure operations were properly managed. His organisation had welcomed the Scottish government’s recent  moratorium on applications and public consultation. He said it would enable the facts to come out.

“We must make sure the debate is not polarised. We need all types of energy. We can do renewables, nuclear and oil and gas together. This is not about either/or.”

Melissa Thompson, an expert in the firm with conference sponsor Pinsent Masons, said that protests were increasing and were targeted and it was important for local authorities to plan and engage early when responding to applications from operators.

Jennifer Roberts of Strathclyde university said public perceptions were often difficult to judge but society’s acceptance of a project had to be taken into account.

Stuart Paton, an adviser on oil and gas, said the US had made huge improvements in the technology, but insisted it is not a new technology contrary to a view that it was untried and untested. He shared the view of earlier speakers that no industry is without its hazards. “Any sort of energy we produce will impact on the community,” he said.

“It is about making choices. None of he energy we want comes at zero cost.”

Rob Westaway, a geophysicist at Glasgow university with extensive knowledge of earthquakes, said few tremors would be felt. “Is shale gas safe? Yes,” he said.

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