The entry of the UK’s Ineos Energy into the US shale sector through its recent deal with US firm Chesapeake Energy marks the “next big phase” of the company’s growth as it rebalances its portfolio towards oil rather than gas, chairman Brian Gilvary tells Hydrogen Economist.

The energy arm of UK-based chemical group Ineos is buying a portion of Chesapeake’s assets in the Eagle Ford shale in south Texas for $1.4bn in a deal that will give it 2,300 wells, producing 36,000bl/d oe. The deal is expected to complete in the second quarter.

“The Eagle Ford shale was perfect. It was a mostly oil portfolio, which attracted us, and it will create the next phase for us in the US,” Gilvary says. “It is the next big step for Ineos Energy into one of the most stable fiscal regimes for investment. We think we have the know how to develop those fields. It is a prolific basin and has been over a long period of time.” The US shale operation will be a standalone business, rather than forming part of Ineos’ internal supply chain, he adds.

“The Eagle Ford shale was perfect. It was a mostly oil portfolio which attracted us and it will create the next phase for us in the US” Gilvary, Ineos

Gilvary traces the move into US shale back to a strategy formed when group CEO Jim Ratcliffe brought him in to chair the newly formed Ineos Energy unit in 2020, after a 34-year career with oil major BP.

“The ambition was to see if we could move this into a real energy company that had all the facets of an energy company in the energy transition. So it needed baseload energy—oil and gas—it needed nodes into LNG trading in terms of moving things around, and hydrogen.”

That strategy has subsequently played out through a $150mn deal with US company Hess, giving Ineos control of the Danish South Arne oil and gas field, strengthening the portfolio alongside the UK gas business. The strategy also involved selling the company’s position in the “high tax regime” Norwegian sector to a subsidiary of Poland’s Pgnig for $615mn.

In LNG trading, Ineos last year signed a heads of agreement with US LNG developer Sempra Infrastructure for the potential supply of 1.4mn t from North America for 20 years.

Fourth transition

The company is also investing heavily in low-carbon hydrogen, which it sees as one of the big opportunities presented by the transition to low-carbon energy, along with CCS.

In 2021, it unveiled plans to invest more than €2bn ($2.1bn) in electrolysis projects across Europe, with the initial focus on a 100MW plant at its Cologne site in Germany. Ineos also became an anchor investor in HydrogenOne, a London fund dedicated to the clean hydrogen sector.

Gilvary says hydrogen has a key role to play in what he terms the “fourth energy transition”, following the rise of coal in the industrial revolution, oil-powered post-war modernisation in the 1950s and 1960, and gas-driven Asian growth in the 1990s and 2000s.

“Hydrogen is one of the few potential opportunities from an energy perspective that could maybe fill 15pc of that 82pc fossil fuel (share of the) energy mix, and that is why it is interesting. As part of an integrated energy mix. I think it will play a big part,” he says.

Ineos’ vast experience of operating electrolysers in its vinyl chloride production gives it a competitive edge in green hydrogen, Gilvary says. “Trust me, while people are out there saying they could create green energy from electrolysers, you need to know how to run an industrial electrolyser, and Ineos has the largest electrolyser fleet in Europe through our vinyl chloride business.”

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Author: Stuart Penson