The Americans are coming! US shale gas finds a new market in Britain

The first shipment of US shale gas arrived in Britain on Tuesday, sailing into the competing winds of US economic growth, British job creation, and environmental concerns.

The shale gas was imported by INEOS, a chemical company that processes petrochemicals for use in packaging, in construction, and as fuels. The company has now established what it describes as a “virtual pipeline” for shale gas, using eight ships to move the gas from the United States to its processing plant in Scotland.

The marine pipeline – touted by the company as a means to boost production and protect jobs – has met with concern in parts of Britain. Fracking is currently under a moratorium in Scotland as independent research projects study its environmental, economic, and health effects. Some see shale as a route to economic prosperity, but some have a moral problem with importing shale gas that the United Kingdom is not willing to produce itself.

Hydraulic fracturing, or fracking, is a gas extraction technique that injects water, sand, and chemicals into shale rocks that easily break apart the layers and release natural gas out of the rocks. Grangemouth, INEOS’ plant in Scotland, uses ethane from natural gas to create plastic pellets that can be used in manufacturing.

In the past, the plant had used ethane extracted from North Sea natural gas. The company says that over the past three or four years, however, supplies of North Sea gas have been diminishing. The plant has therefore been at half capacity, according to INEOS.

In the search for natural gas to process into plastic pellets, importing natural gas from the US has become increasingly attractive. US gas is already being exported to Portugal, Norway, Spain, and across Britain since a 40-year-old US export ban on crude oil was lifted in December 2015.

For advocates, the American experience with fracking, which transformed the country from a net energy importer to an exporter, shows that unconventional gas extraction can bring benefits for a country's economy. INEOS chairman and chief executive officer Jim Ratcliffe has said that Scotland, which spent £14.8 billion (about $19.3 billion) more than it raised in 2015-2016, would need to exploit shale resources if it wanted to be an independent state.

“I don’t see how the numbers can work at the moment without shale because the North Sea isn’t generating any revenue for Scotland and [independence] needs to have a profit and loss account which is in the black and not in the red,” he said, according to The Scotsman.

INEOS holds fracking licenses for more than 1 million acres of land across Britain. The company says that it plans to start test wells in the north of England next year. However, it cannot use the licenses until it gets planning permission from local authorities, many of whom are concerned about how the practice might effect the environment and public health, such as polluting the water table with waste and triggering earthquakes. 

For US producers, new European markets are welcome. But European importers and critics alike have expressed concern about the double standard of opposing domestic shale production yet importing gas from shale fracked in the US. 

“It is completely unacceptable to attempt to prop up INEOS’ petrochemicals plant on the back of human suffering and environmental destruction across the Atlantic,” Mary Church, head of campaigns for Friends of the Earth Scotland, said in a statement. She mentioned that the gas delivered to INEOS was supplied by Range Resources, a company that has been fined by the Pennsylvania Department of Environmental Protection for violating environmental protection regulations.

Complicating the picture are recent reports from Britain's Committee on Climate Change. A report released Tuesday says that Scotland is already feeling the effects of climate change. In July, the committee warned that Britain could not start exploiting shale on a large scale if it wanted to meet its commitment to reduce emissions at least 80 percent by 2050 – unless emissions were “strictly limited” throughout the process. 

Some have framed the debate as a question of the future of UK energy. Labour and the Scottish National Party have called for a transition to a low-carbon economy. 

“Fracking locks us into an energy infrastructure that is based on fossil fuels long after our country needs to have moved to clean energy. So today I am announcing that a future Labour government [would] ban fracking,” shadow energy minister Barry Gardiner told the annual Labour Party conference on Monday.

But ethane, the fracking product used by the Grangemouth plant, is not used for energy but for plastics production. To use less gas, the UK would therefore have to use less plastic. In France, this reduction is already underway: the country’s recent ban on plastic cups, plates and utensils will go into effect in 2020. 

What replaces plastic is less clear. Researchers are testing materials from milk to mushrooms to seaweed, looking for those that can substitute for different types of plastics.