Scotland

A tale of two petrochemical plants

Ineos plant in Norway
Image caption The plant run by Ineos in Norway will import shale gas from the United States

The Rathnes plant in Grenland in the south of Norway is set to be the first in Europe to import shale gas from the US as a feeder gas for the site.

The reason for this is simple. Even after shipping the US gas will cost less than half the price of the dry gas they currently buy from the North Sea.

They will continue to use this more expensive gas too, but bringing in the cheaper feedstock for them makes economic sense.

The Ineos-run plant is already - according to the company - a success story. But they say this venture can secure its future for at least the next two decades.

Site director Magner Bakke said they were importing US shale gas "to secure the future of this site and to make sure that the site has a long life".

They have already started to build the infrastructure. A tank that stands 37m tall dominates the site. It will hold 17,000 litres of liquefied gas.

This will then be processed in the site's cracker - which heats the feedstock gas up to 1,100 degrees.

Ineos plan to follow this model in Grangemouth. The plant nearly closed in October this year. However, when staff agreed to new terms and conditions, Ineos said they would implement their survival plan for the plant.

Part of this involves importing shale gas from the US. The tank at Grangemouth, though, will have twice the capacity of the one at Rathnes.

The tank there will be 40m high and 54m in diameter and will hold 33,000 tonnes of shale gas.

Shipping operation

A site has been identified at Grangemouth for the tank and a jetty will also have to be built for the ships coming in with the shale gas.

Two ships will deliver to the site on a 24-day cycle, seeing the site use use more than 2,000 tonnes of gas a day.

Ineos said this would be the way to make Grangemouth profitable. The Kinneil Gas cracker at Grangemouth is currently only operating at 50%.

Image caption Rathnes could, the company believes, be a model for Grangemouth

This is because the amount of dry gas being brought in by the Forties Pipeline has reduced.

For the company to make money it needs to be working harder the firm hopes that by putting shale gas in the mix is that it will work at 100%.

They said "if we cannot import US shale gas, then Grangemouth Petrochemicals will close in 2017 latest".

The project is subject to an investment worth over £300m from Ineos along with a loan guarantee of £125m from the UK government and a grant from the Scottish government.

The company said they have had positive indications from Westminster for the loan guarantee and the Scottish government say they qualify for the RSA grant.

In the short term, Ineos have said they will shut down three unprofitable parts of the plant.

The old naphtha cracker and butadeine and benzene assets are set to shut by the second quarter of 2015.

Redundancies

The Unite union has concerns about this and claimed it could affect 200 to 300 jobs.

Ineos have denied this and said there would be a maximum of 50 redundancies as a result and that most affected staff will be redeployed.

Workers at Grangemouth have already accepted that there will be changes to their pensions and shift allowances after a bitter dispute almost saw the petrochemical plant shut down.

Pat Rafferty, Unite Scottish secretary said: "There is a real danger that the price being exacted from the workforce by Ineos could backfire and lead to an exodus of skilled operatives attracted by better paid work elsewhere.

"There is already a shortage of skilled and experienced operatives in the industry and these aren't people who you can train overnight.

"It takes years to become fully trained and the fear is that a brain drain will turn into a skills gap with new starters deterred by poor conditions and lower pay rates than existing staff.

"The brutality and meanness of these cuts and the way they were forced on to staff has sent a message out to the rest of the industry and turned what used to be viewed as a good employer into one to be avoided at all costs."