Ineos warned over shale offer
30 Sep 2014
Ineos’ plan to offer 6% of its UK shale revenues to local communities has been accused of being potentially harmful to the wider shale gas industry.
The chemical company announced yesterday that it intended to give away up to £2.5 billion over the life of its proposed UK shale gas business.
Speaking in a video posted online to explain the company’s proposal (see above), Ineos chairman Jim Ratcliffe said it would be “a game changer for Britain”.
The more people are given money, the more people think there is a reason that they need to be compensated
IGas CEO Andrew Austin
“Giving 6% of the revenues to those living above our Shale gas operations will give them a real stake in the success of the venture and encourage the development of the whole Shale gas industry,” he said.
However, rival developer IGas’ chief executive Andrew Austin warned that such payments could prove harmful in perpetuating the suspicion that there is something “wrong” with shale gas.
“The more people are given money, the more people think there is a reason that they need to be compensated,” said Austin, speaking at the European Shale Gas and Oil Summit (ESGOS) in London yesterday.
“We already have 100% business rates retention, which equals 3% of our revenues going straight through to the councils. There are a number of ways (to support communities) and some are more eye-catching than others, but I think we need a more balanced approach.”
Ineos predicts its payments could total £375 million for a shale community comprising 200 wells spread across an area of 100km2 – far more than the government’s proposal of £20,000 per well.
The company was accused by Greenpeace of offering “bribes”, and Conservative MP Dan Byles, also speaking at ESGOS yesterday, said developers were “dammed if they do and dammed if they don’t”.
“If you don’t offer anything you get asked ‘what’s in it for us’, if you do then you get told ‘you’re giving us bribes’,” said Byles, who is the chairman of the All-Party Parliamentary Group for Unconventional Oil and Gas.
“Payments are an artificial benefit, whereas the organic and natural benefit (of shale sites) is economic development, but that takes a lot longer to occur.”
UPDATE 1st October 2014: Planners speaking yesterday at day two of ESGOS also agreed that Ineos’ offer could prove harmful to communities’ trust of the shale industry. Chorley Council head of planning Jennifer Moore said: “When I hear 6% revenue stream, most members of the communities I serve will smell a rat. They will be suspicious.”
