Thursday
Jan162014
by 
Bishop Hill
Bishop Hill A tale of two hearings
Jan 16, 2014 Energy: gas I have summarised the two shale gas hearings this week for the benefit of readers of the Spectator's Coffee House blog.
Late on Tuesday afternoon, and within minutes of each other, two separate hearings in the Palace of Westminster examined the prospects for shale gas in the UK.
Reader Comments (11)
'You might therefore have assumed that he would be right on top of the question of whether the shale gas regulatory regime was fit for purpose.'
With Cameron - very hard to tell - he like to please (fool) everyone, fit for purpose, or fit up for purpose.
With Cameron - very hard to tell - he like to please (fool) everyone, fit for purpose, or fit up for purpose."
On the contrary, Camoron is simply too thick to understand what is going on and what REAL experts like Chris Wright are actually saying.
Camoron is playing politics with gas from fracking, he has no idea that he is playing with people's lives and livelihoods.
"Camoron is playing politics with gas from fracking, he has no idea that he is playing with people's lives and livelihoods." --Stephen Brown
Perhaps he's under the delusion that the EU is in charge of the entire UK government, excepting his Ministry of Silly Walks. Oh, wait...
While there is much excitement over Total investing around £40m in UK shale prospects, they have just cut a deal with the Chinese for a £4bn scheme to produce liquid fuels from coal.
Gives a bit of perspective.....
We've been here before. Fracking is widely used in the USA, so I wonder what it is that David Cameron knows that the US Environmental Protection Agency (EPA) doesn't, and can anyone give a link to which specific regulations actually apply to fracking operations?
Before starting a procedure, UK laboratory chemists are quite familiar with performing their own hazard/risk assessments under the COSHH regulations (Control of Substances Hazardous to Health Regulations 2002). These are usually bearable, though sometimes tedious for those that might be frequently performing diverse chemistries or research. The substances employed are, of course, usually manufactured, used, degraded, or disposed of, above the water table. Not several miles underneath the effective base.
Critically, the major hazards and risks arise from the hydrocarbons removed from the well, not the substances injected in the fracking recipe.
Andrew, I appreciate that you and many of your readers are keen on shale development. But your article lays out why I still think it is going to be impractical in the UK. It is a form of Ponzi scheme. You drill a thousand wells, declines of 20 to 40% rob you of your cash flow, and so you have to drill the next 2000 wells faster and better to keep production growing - it just ain't going to happen in middle England.
In the US, the drilling company shows up at a farm and offers the farmer $500,000 (or whatever the lease rates are) to drill on his farm. He says yippee and the drilling crew moves in the following week. Things are quite simply different in Britain. I do think that excessive environmental regulation will be used to block shale development - allowing the politicians to claim they are supportive while the industry walks away.
I'm not against shale but would compare its utility to nuclear power. I've not done the sums yet (will do soon), as a wild guess 2 nuclear power stations (6 GW) may produce equivalent electricity to a fully developed shale industry in England.
Most of your readers will already have seen these, but here they are again for those who have not:
What is the real cost of shale gas?
Marcellus shale gas Bradford Co Pennsylvania: production history and declines
And off topic:
The Arab Spring - Impact on Oil Production
There's still a lot of disruption throughout MENA with 2 million bpd oil production currently off line - very sparse reporting of this in MSM.
Euanmearns; you might want to have another stab at that wild guess. If shale can be fully developed, it will meet all of our gas needs for many years. That would include supplying our gas-fired power plants which typically generate up to 20GW each day (and likely to increase as the old nukes and coal plants shut down).
Have you read Daniel Yergin's brilliant book, "The Prize"? It describes the development of the oil industry. The early days were very like the current state of shale: madcap expansion; overproduction to generate cash flow; overpayment for leases; inadequate finances; etc..
It will all settle down after some bankruptcies and take-overs. Meanwhile the technology continues to improve, bringing down costs and enhancing output.
That said, I agree with you that our politicians are intent on snatching defeat from the jaws of victory.
The longer term consequences of America's oil and gas boom will be horrendous for Europe. I saw a report recently that Europe imported around 10% more polyethylene last year than in 2012. Yet Europe's PE plants are running well below optimum capacity. My guess is that this is the start of an avalanche of cheap output from the US based on using shale gas and liquids as feedstock (equivalent to oil at around $20 per barrel).
euanmearns wrote
quote
I'm not against shale but would compare its utility to nuclear power. I've not done the sums yet (will do soon), as a wild guess 2 nuclear power stations (6 GW) may produce equivalent electricity to a fully developed shale industry in England.
unquote
I've not done any calculations sither, but that looks remarkably low. The figures I've read make me suspect that we can actually produce enough gas to run our entire fossil fuel power station fleet on gas. The shale oil will be too valuable to burn in power stations but with the panic STOR response to the energy crisis who knows.
Your figures for tail off are well worth contemplating -- the Bowland shale is much thicker than most and it will be interesting to watch just how tiny the actual footprint for shale development is in practice. Because of that, and because it is not taxpayers' money that is being used, I'm happy to go for it. No it won't bankrupt oil firms and no it won't occupy vast swathes of the countryside.
Nuclear won't cut it in time.The crunch is almost here and we can't afford to wait. Once shale gas takes off we can quickly build gas-fired power stations, cheap and small.
quote
There's still a lot of disruption throughout MENA with 2 million bpd oil production currently off line - very sparse reporting of this in MSM.
unquote
And there is no spike in oil prices. Here's why: shale oil production will shortly make the USA a bigger producer than Saudi Arabia. North Dakota oil shale production, for example, rose 500 kb/d in 4 years. That is the true fracking prize, freedom from the volatile politics of the Middle East.
I'd rather frack than fight.
JF
No Hot Air blog is the place to read up on this subject.
The seemingly likely intervention by the EU to cripple fracking initiatives appears to have stalled for the time being. According to a post today on EU Referendum:
I simply look at this from a different perspective. For a start, we haven't drilled any wells and so the whole conversation is moot. And if I was an exploration company about to spend hundreds of millions on exploration I'd want to be sure that if successful I was guaranteed a route to develop the resource. Simply knowing how cumbersome the planning system is and how obstructive Brits can be when they want to be I just can't see the industry being allowed to gain the momentum required for shale development. But I wish you luck, but also bet you that in 10 years time UK is producing or planning to produce most of its electricity from U or Th.
Writing a post on the Bolland Shale is on my to do list - I'll do the calculation properly re number of nukes versus number of shale wells - I think its an important and interesting statistic to have. The fact that Bolland is so much thicker is certainly a major benefit.
Re N american shale oil, I agree that that is principle cause for static oil price confronted with the loss of 2 M bpd in MENA - that's what I say in my post. The UK and Europe are seriously f*d regarding energy costs and security and competition with N America. The petrochemicals industry is going to suffer badly. What chance EU abandons CO2 reduction targets?
To be fair...
The US Energy Act of 2005 granted a small exemption to the Clean Water Act in order to encourage fracking fluid experimentation. Of course the political price for that small exemption was subsidy for windmill's and solar panel's.
Unfortunately in the UK..you've already done the subsidy thing for windmills and solar panels...so you really don't have anything to trade the environ whacko's for the necessary small exemption to your clean water act.