Bosses at the giant petrochemical plant issued an apology to residents in the town on Monday, whilst outlining their reason for the extreme flame.
They said engineers were working on an issue at one of their manufacturing sites.
Locals shared pictures of the sky online, with people taking to social media and reporting seeing the orange glow from around 20 miles away.
Shoppers at Hermiston Gait Retail Park in Edinburgh, thought a huge fire had broke out nearby.
While people in Plains, North Lanarkshire, also thought a blaze had erupted.
Lisa, who lives in Grangemouth, said: “It felt like I was sleeping with my bedroom light on.
“I also have a baby too and because the room was glowing, he just didn’t want to go to sleep.
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“Thankfully the noise wasn’t so bad, that had died down a lot.
“My friend who lives in Plains, in North Lanarkshire, thought a fire had broke out near her – she was on the phone to me while walking her dog.
“I couldn’t believe it when we realised it was INEOS, Plains is miles away. It’s quite scary to think the glow could be seen that far.”
Falkirk East MSP Michelle Thomson advised residents to report INEOS to the Scottish Environmental Protection Agency.
In a statement yesterday, INEOS said: “Following an unplanned shutdown this morning on on of our manufacturing plants and subsequent flaring, we are now in the process of re-starting.
“Local residents and those in the vicinity of the site may note intermitted controlled elevated flaring from later today, Monday, through to Wednesday as we bring the plant back on line.
“We will make every effort to reduce the level of duration of the flaring, and minimise any noise from this activity where possible.
“We apologise in advance for an inconvenience and thank you for your patience .
“We remain committed to informing you of an activities that may result in flaring.”