Why is shale gas important?
On 27 June the Department of Energy and Climate Control (DECC) released a study by the British Geological Survey (BGS) showing that the shale gas resources under a swath of northern England, called Bowland-Hodder shale, could be enough to fuel the UK for 40 years.
As a headline this is remarkable; with hopes of emulating the boom experience by the US over the last 30 years, there is much excitement that UK shale gas could bring economic prosperity to regions rich in this resource and because it could mean UK energy independence. Looking deeply into the report and other materials suggests that we may want to hold off celebrating just yet.
Andrews, I.J. 2013. The Carboniferous Bowland Shale gas study: geology and resource estimation. British Geological Survey for Department of Energy and Climate Change, London, UK
The DECC / BGS estimate comes from data provided by a number of studies and by assuming that the Bowland-Hodder shale has the same characteristics as the Barnett Shale (Dallas Fort Worth area) in the US, as these shales are similar. This only gives the potential amount of gas ‘in place’ – 1329 trillion cubic feet. Recovery rates (how much we can get out) will be determined by ‘top down’ surveys (eg using exploratory wells). The numbers announced by commercial organisations, at this date, are also for gas ‘in place’.
Oil and gas companies in the US measure the financial viability of shale gas resources using thirteen criteria. Overall, in the Bowland-Hodder shale, five criteria are clearly met, two are satisfied using partial data, one fails and three are unknown. The failed criteria is the size of the ‘basins’ (small), and the high number of faults present in the UK prospectives; small basins and faults make gas extraction less productive.
2. Shale Gas is ‘fracked’ and the UK doesn’t have fracking expertise or equipment
Commercial experience of current fracking techniques[2] date back to 1996 in the US which also has a mature supply chain for equipment and chemicals. China has also – very quickly – become proficient at extracting tight gas, though it is not known how much money they have spent to develop their own fracking industry. The earliest proposed date for commercial gas production from Bowland-Hodder is 2015 and to succeed techniques specific to our geology have to be developed and proven.
3. Economic prosperity doesn’t happen automatically
In 1977 the Economist coined the term Dutch Disease or Oil Curse to describe the decline of manufacturing in the Netherlands after Natural Gas was discovered there in 1959. The full potential of the oil curse is seen in countries such as Nigeria where the wealth of oil has had no beneficial impact on the economy or the people or Venezuela where oil wealth was used to boost the economy for political ends. Some people feel that the wealth from North Sea oil and gas has been squandered in a similar way.
Given that fracking expertise and supply chains lie outside the UK, the best jobs are likely to go to foreign contractors and foreign factories will make the equipment and chemicals needed. While UK government will get income from licences and taxes, local industry will have to adapt very quickly to make the most of the boom.
Production from the Barnett shale started to ramp up in 2000 and is believed to have peaked in 2010. If the comparison is valid, then UK industry has around 10 years to build up expertise and put it in the field, because demand for equipment and experts will drop off with production.
4. What happens when the gas is all used up
As early as ten years and certainly in forty years’ time, extraction will have slowed, any economic benefits that have ‘trickled down’ will have dried up. Gas communities will face the same future as those built with coal and steel.
At the same time countries with larger reserves will be more than willing to sell gas to us…
5. Fracking is not a pretty industry
In the Barnett shale an average of 1.15 wells per km2 have been drilled. In some areas there are 6 wells per km2. Based on an average extraction rate of 1.44 billion cubic feet of gas per well, this means we will need 92 wells to extract 10% of the gas in place in the Bowland-Hodder shale. Wells sit on a pad that has space for equipment. Each well pad is a touch smaller than a football pitch. A pad can hold as many as six horizontal wells; each with a reach of up to two miles.
Good road access is needed to transport heavy equipment. Road transport may also be required to remove waste water and gas, unless the pad is connected to a gas pipeline or rail transport can be used.
If fracking licences are even-handed with quarrying and open cast mining licences, land disturbed by fracking will have to be restored when wells have stopped producing gas.
6. Safety and environmental record of the industry
Every oil and gas field has, inadvertently, let their product spill into the local environment; transport such as pipelines leak; rail and sea transport is equally prone to escapes. Methane is not like oil, it is invisible and doesn’t smell, leaks can be hard to find, with devastating consequences. The industry is not known for actively seeking to reduce such leaks, as demonstrated by our own experience.
The North Sea oil and gas fields have been active since 1851, next year will be the 50th anniversary of high volume production, this year saw the 25th anniversary of the Piper Alpha explosion (which killed 167 men) and during last month there were 55 reported leaks (reported to the DECC). Just over two years’ ago an explosion in a refinery in Pembrokeshire took the lives of four workers, there has been no inquest into the deaths as the enquiry into the cause of the explosion is not complete. That means there have also been no lessons learnt by the industry.
At all US fracking fields (oil and gas) burn gas in situ (flared) because it is disruptive, uneconomical to sell or because the infrastructure doesn’t exist to get the gas to market. US fracking fields can be seen from space and light pollution is one of the factors that the neighbours of fracking sites complain of the most. Noise and air pollution are also sources of disturbance.
7. Water
There are claims about methane from fractured rocks reaching underground water. None of these claims have been substantiated, however, Duke University has shown that methane escaping from poorly sealed wells has contaminated water and that injecting waste water into poorly sealed wells can result in pollution of waterways. Neighbours of fracking operations have also complained that holding ponds have leaked fracking fluid (a mix of water and chemicals).
Each well requires 20 to 30 million litres of water. Compared with Barnett shale that means we will use 2 billion litres of water (over forty years this is 0.000003% of the total amount of water we are likely to use in that time). It doesn’t sound much until you think that this means we will have to dispose of 2 billion litres of fracking fluids, contaminated with various other chemicals. In the US waste water is pumped back into old wells.
The Bowland-Hodder shale is in areas rich in cave systems and underground waterways, most of which are unmapped. It seems unlikely that this will be a suitable way of disposing of fracking fluid in the UK.
8. Local government will have to give planning permission
Outside of energy, one of the biggest issues facing the UK is a lack of housing, yet many people oppose government proposals to relax planning constraints for housing. Wind turbine projects do not leave the drawing board because of local opposition. It is likely that planning permission will be equally hard to get.
The government is already testing the water with plans to give communities a share of fracking profits (1%), but in a country where protestors live in trees to prevent road building will such pay offs work?
9. Access to land
In the US getting land to drill through is relatively easy – land prices are lower than in the UK – and in the US land owners have mineral rights, so those in fracking areas are incentivised to allow fracking on their land. The government owns all mineral rights in the UK, with one exception: the Duke of Devonshire owns oil rights for his lands in Derbyshire and Nottinghamshire.
As you can see from the map the Bowland-Hodder region covers several urban areas; outside these areas the country is rural and includes the North Yorkshire Moors. Who is going to sell land for well pads, roads and pipelines?
10. The price of gas isn’t going to go down
From the previous nine points you are possibly already thinking ‘that will make UK shale gas more expensive’ and you would be right; each of the points above will increase the cost of extracting gas from Bowland-Hodder shale.
In December 2012 The Independent reported the release of a study by Wood Mackenzie[3] “Wood Mackenzie estimates that in order to develop UK shale reserves, potential operators would need a gas price of $9.68 per million British thermal units (mbtu) for the project to make economic sense. This is considerably more than this year’s average UK spot price of $8.69 per mbtu and the $8 per mbtu that Bloomberg forecasts it will hover around between 2015 and 2020.” While the BGS report has the potential to improve these figures, in the US shale gas wells are closed when the gas price drops too far.
The bad news on pricing doesn’t end there. Supply and demand would suggest that, as gas replaces other fuels, ie coal and oil, it will be in greater demand and its price will rise.
Much is made of a huge price decrease in the US. I have pulled the Energy information Agency’s data on prices and can’t find much evidence of such a reduction. Here is that data in graphical form
Data from the US Energy Information Agency (Department of Energy).
Indeed in the ten years from January 2002 to December 2012, the price increased. It increased at the well head and at hubs, it also increased for every customer type – by up to 29%. I only found five instances where a previous price was more than 3 times larger than the price in December 2012, four improved Well Head and Hub prices and one gave Commercial users a bonus (though it was ten years earlier so they could be forgiven for not noticing).
The 29% increase came in the price of natural gas sold to electricity markets – the much heralded displacement of coal. As you would expect this price increase has been passed on to all electricity markets.
Data from the US Energy Information Agency (Department of Energy).
Previous ‘energy’ booms have brought prosperity because they enabled trade, commerce and consumerism. Coal allowed mass production and fuelled the railways. Oil brought cheaper energy, mass and personal transportation, and incredible materials. So far, the Shale gas boom has increased the profits of oil and gas companies.
In conclusion
You might think I am anti shale gas – but you would be wrong. I am against blindly putting all our energy eggs in one basket. Some shale gas extraction – done to our standards of safety and environmental care – is necessary and could be profitable / beneficial. But shale gas is not an energy silver bullet, it is an opportunity to power investment into renewable sources of energy and, if that is how we choose to go, nuclear power. We can’t afford to let political expediency and short-term thinking blind side us into an energy cul-de-sac .
Sources
Shell explain shale gas, tight gas – other gas, and fracking
Barnett shale production has peaked
Industry paper spells out the size, noise and air impacts of a well pad
The Huff did manage to get this out before I did
6000 oil spills in the US in 2012 – that is 16 a day and up 17% since 2010
UK Energy Minister spells out his love of shale gas
The Independent report a study by Wood Mackenzie
The BGS website including links to the 2013 report
[1] An earlier report listed three other areas of interest, the Weald and Wessex basins (pretty much the south coast, up to London / Bristol and ending around the Devon / Dorset border) and the Midland Microcraton (a triangle north of the Weald and Wessex basins, excluding East Anglia and taking in parts of western Wales). The Weald basin is being studied by the BGS and is of interest to Boris Johnson as it includes some parts of London. Return
[2] Horizontal drilling was introduced in 1991 and ‘slickwater’ or fracking fluid in 1996. Return
[3] Wood Mackenzie are a multinational research and consultancy group, specialising in global energy, metals and mining industries. Return
© Michelle Spaul and Leaving the world of work, 2013. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Michelle Spaul and Leaving the world of work with appropriate and specific direction to the original content.
Michelle Spaul 
I purposefully missed out any thing about earthquakes – but this morning this story broke https://www.sciencemag.org/content/341/6142/1225942.abstract – kind of makes 11 reasons…
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Let’s put the ‘earthquake’ concerns into some sort of perspective, please. One would think we never had any ‘quakes if you listen to the media.
Nothing could be further from the truth, as can be seen here;
http://www.earthquakes.bgs.ac.uk/earthquakes/recent_uk_events.html
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Thank you for the information, I will look at it in more detail. Do you know whether there is any research showing whether fracking induced quakes (including geothermal fracking) are statistically more frequent or ‘stronger’?
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Michellspaul
1. What are your thirteen criteria ? What is the source ?
2. I have been fracking for gas and oil for over 40 years, all over the world, including the USA.
We have many thousands of people with the knowledge. Aberdeen companies export knowledge and equipment to all the
world, including the USA.
3. What a load of cobblers. We are a very well regulated country, not a Nigeria or Venezuela.
(Given that fracking expertise and supply chains lie outside the UK) see 2 above.
The Barnett shale play, was the first to be exploited, more prolific gas plays have been discovered and produced. The price of
gas in the USA is about a quarter of what we pay. The number of wells being drilled in the Barnett has dropped because the
drillers have taken their rigs to drill for shale plays that produce oil – far more profitable.
4. (What happens when the gas is all used up)
It won’t. People have been worrying about “Peak Oil/Gas” ever since the year dot.
The shale formations all over the world lie under the formations that produced what is called “conventional gas and oil”
The penny has only recently dropped that it is the shale formations that fed all the oil and gas up to be trapped and drilled.
Often when we drilled down whilst exploring we found shale formations that produced hydrocarbon shows.
It was a guy called George Mitchell who found out the way to get the oil/gas out. By drilling down, then turning horizontal
, then fracturing the shale formation with shaped explosive charges, then pumping water and sand in to open up the
fractured rock.
We knew about horizontal drilling, shaped charges, pumping in water and sand, but we did not do it in the shales.
George did.
5. We will need many more than 92 wells. Pads today can drill 20 wells.
Do you know that we have an oil field producing oil and gas in the UK? Its very close to a nature reserve, in an area of
outstanding natural beauty frequented by tourists. Drilling began in 1997, wells go out up to 11 km from the pad. It is called Wytch Farm near Poole in Dorset.. You would probally miss it driving past.
6. (Methane is not like oil, it is invisible and doesn’t smell)
Methane is very dangerous, just 5% of methane in air is explosive. How on earth can you imagine people working in a potentially explosive area without being concerned ? It is very easy to detect. There are gas detectors everywhere, hundreds. I used to carry a personal one around.
Leaks are most uncommon, any leak detected is seriously investigated, any lapse by personnel results in Not Required Back.
1988 Piper Alpha explosion, (no lessons learnt by the industry). Lord Cullen produced his report in 1990. Please read about it.
The regulations in the UK are strickter than the USA. When exploring for gas there must be a safe way of dealing with excess gas – this is flaring the gas, when producing for sale you don’t want to waste it by flaring do you?, flaring in the UK is only for safety.
7. Cuadrilla will be drilling the Bowland shales for gas, the waste and environmental management specialists Remsol, will be dealing with any waste water. Employment for many people!
(The Bowland-Hodder shale is in areas rich in cave systems and underground waterways) What geology books do you study?
Caves and waterways are common in limestone rocks, not Namurian shale.
8. 9. The government proposed to give local communities a decent return for each drilling pad. You know, the ones, when producing you will walk past without noticing it. How sad there is no gas under my fields.
10. Did you know that Centrica, the largest supplier of gas to UK users has paid Cuadrilla £40m for a 25% share of Cuadrilla’s
licence areas. Cuadrilla has shown pictures of the core samples from their exporation drilling, these samples are fizzing methane under water. The most productive shale in the USA is the Marcellus Shale, this is about 300 feet thick. The Bowland Shale that Quadrilla has is three times thicker, potentially more gas. Marcellus gas today sells for $2.89/1000 cubic feet.
It will have to reach $4-$5/1000 cu/ft before drilling starts again.
http://oilshalegas.com/marcellusshale.html
As you see gas price is determined by supply and demand.
So if the Bowland Shale produces lots og gas, the price will go down.
You say that you are not anti shale, but you are renewables.
I am pro shale, anti renewables – regard them as a pipe dream.
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Hi Ian, thank you for taking the time to read my piece and make a point by point critique. I look forward to a interesting conversation about this. I have used your structure to respond. (Note I just lost points 1-6 and am going to be saving more regularly, so if you do check in and they are not all there, my apologies)
1. Not my criteria, selected by the British Geological Survey – this is what they say about them: “Table 2 summarises some of the most important geological, geochemical and geotechnical criteria that are widely used to define a successful shale gas play; some criteria are essential, others are desirable. The criteria are based on data from analogous shale gas plays in the USA, which are known to vary considerably from one another.”. The report makes interesting reading here is a link to the BGS web if you want to take a look http://www.bgs.ac.uk/shalegas/#ad-image-0
2. I am aware that fracking is a critical technology – my understanding is that in the UK it is still primarily used for tertiary extraction – is that correct? I know that there is manufacturing in Aberdeen – does it have spare capacity? I think that the 20-40 wells the government hope to see will only come if equipment and experts are pulled from other plays. That means our gas has to be more profitable and there is no evidence of that at the moment. Until exploratory wells have been drilled and properly analysed no one is going to swtich off profitable production on the off chance. So there is no ‘quick’ about the boom, certainly not quick enough for the projected 2016 energy shortage. The US will ship over equipment and specialists, which means less economic trickle down for the UK. China could have spare equipment more quickly if their expected economic nose dive happens. My guess the lack of ready equipment will mean that it won’t happen quickly and when it does it will be with foreign built equipment and expertise from the global oil and gas industry.
3. I really did ask for the cobblers! That point was very emotive. We are not a Nigeria or Venezuela, not because of regs but because our governments are capable of ensuring the economy enjoys permanent growth as a result of shale. Except really do you believe that? Has the US seen trickledown? The US census (https://www.census.gov/mycd/?eml=gd) suggests not, even in the shale rich states. Did the Dutch oversee a decline in manufacturing because they had unrealistic expectations of their North Sea gas? Has any UK government actually used North Sea revenues to directly benefit people – or just to balance bloated budgets? I am afraid I don’t see any evidence that any government is capable of managing an economy to that extent. You might be interested in this article about Alaskan Tax Breaks http://oilprice.com/Energy/Crude-Oil/Will-Big-Oil-Lose-its-Alaska-Tax-Break.html
4. Thank you for the fracking primer. To be clear I think this is incredible technology and a real testament to the skill and money put into R&D by the oil and gas industry. Further I am not against oil or gas. Indeed the people who complain about big oil and then jump in their cars, talking on their mobiles, to get to a supermarket to buy imported food MAKE ME MAD.
As you say this is about Peak Oil, not running out (another correction I shall be making). Peak Oil is about when the conventional resources are depleted and we have to turn to unconventional resources. They are more expensive. If oil and gas is more expensive then economies slow.
The economies that slow the quickest are the ones most heavily invested in gas and oil. I have read comparisons between Californian gold rush towns and the towns that fracking has left behind. Or the railroads. Closer to home we know what happened to mining and steel communities when the world changed. If we are to prevent that when the gas industry leaves we have to think about putting in place the right solutions now.
5. I am so embarrassed by that number, revising the Barnett Analogy I realise it is between 87 and 44 thousand wells. Clearly if our gas is in ‘thicker’ shale we will need fewer wells, though if the folds in the rocks occur too frequently we will more. Either way it is a lot of wells in regions that have lots of disused coal mines and lots of densely populated areas. Urban drilling, if it happens, will be subject to more regulations putting up the price. Drilling through coal seams will require new technology putting up the price. Or we will extract less.
I am aware of Wytch farm, I looked up all the UK’s drilling sites as I researched my piece and not all of them look like Wytch Farm. The sites in America also do not look like Wytch Farm. If all of the many thousands of well pads are to live up to the standards of Wytch Farm then our gas is going to be more expensive.
6. I have read Lord Cullen’s summary and conclusion. I have also seen that the North Sea wells reported 55 oil and gas leaks in June. I have read about 3 frackers killed by an explosion in West Virgina. I have found these two stories about a methane pipeline leak with a very cursory search http://seattletimes.com/html/businesstechnology/2021331722_frackingscrutinyxml.html, http://money.msn.com/business-news/article.aspx?feed=OBR&date=20130703&id=16668019. If any of the above happened in an Urban area – like alot of Bowland-Hodder, then it would be terrible. So yes we have to turn to standards and Lord Cullen feels that the lessons from Piper Alpha are working, I think was trying to be relevant by using that example and realise I could be charged with being emotive instead. Outside the UK (and the 55 leaks mentioned early) the litany of spills and pipeline leaks around the world, every day, would suggest the learning is local.
I have read industry reviews that say even when detection is made there are not the right procedures and properly funded contingencies in place to react to detection. The ‘current’ gas leak in the Gulf, the as yet unresolved leak of oil in Alberta would suggest that more is required.
And that means a higher price.
7. Geology – limestone is above shale, wells drill through limestone, wells leak – here is a link to the DUKE Univerity study http://www.nicholas.duke.edu/hydrofracking/methane-levels-17-times-higher-in-water-wells-near-hydrofracking-sites. If we can recycle wastewater that is great. But it is more expensive – which is probably why over 80% of US fracking water is reinjected.
As to the linked piece, the science is to recent to have hit books – here is a news article (with video) from 2011 showing how these limescale features link – the water you see travels miles http://www.bbc.co.uk/news/uk-15751695
8.9. A decent return – £100,000 won’t pay for the roads / road damage. 1% of profits is subject to finance calculations – how many businesses don’t make a profit in the UK? And forgive me for trusting local government’s ability to make long term investment even less than national government’s.
To planning permission, I think the system is truly flawed, will politician’s risk their votes by permitting fracking?
And if someone sells their land or rights (I suspect you might be in the minority), and they actually get a reasonable sum for doing so, it will only put up the price.
10. Supply rose in the US in 2008 and the price soared. This market is not purely driven by supply and demand. And as you say drilling will resume when the price increases, this gas is more expensive. For all the reasons above. If it is more expensive then the economy will slow, not grow. Of course then prices will drop (with supply) and the economy will grow again – boom and bust, I love it.
So Centrica bought – another view is that Cuadrilla sold – why where they willing to sell if this is so profitable? I am sure Centrica conducted due dilligence, but Cuadrilla have to be given equal consideration for their decision making processes.
I am pro renewable and love to understand why you think they are a pipe dream. But I am also pro fracking, I think we need it. I think it has to be conducted responsible, I think local and national governments have to plan to ensure the benefits trickle down and remain. I think there will be some time before we know how much can be recovered and I think those calculations will be based on an assumption of increasing prices.
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Reblogged this on Tallbloke's Talkshop and commented:
Some good info and points for debate in this article from Jonathan Michaels. All points of view about the UK’s energy future must be considered and discussed
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Thank you for the comment and the reblog – that really made my day. I look forward to continuing our discussions.
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I find the BGS/DECC report technically misleading. Most of the shale samples they’ve analysed do not meet their very relaxed criteria for what constitutes a viable shale unit for shale gas exploitation. The best sample reported would fall at the poor end of the scale as far as the US criteria are concerned. One can probably cut the resource estimate quite dramatically from the headline numbers to account for their relaxed cut-off limits. The next problem for DECC is that about 50% of the area they consider prospective lies beneath old coal mines which are going to pose a technical challenge to drill through the old mine workings. This will be expensive when a solution is found so any resources in these areas can probably be discounted for a decade – pity really, these are the areas with the greatest concentration of Brownfield sites which would be ideal for use by a new industry.
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Glad I am not the only one to have read the report! Noticing the typos in the introduction, I can’t help wondering how much pressure came to bear to issue prior to the spending review – need to be careful I might appear cynical.
I hadn’t made the connection with old coal mines, it is a good point, particularly about the brown field sites, they would be ideal. It would be especially good if CBM could be extracted by the same infrastructure. That might even reduce the cost.
Have you seen the number of towns and cities that lie in the area?
I am interested in the well density and the ‘throwaway line’ about folds in the Bowland-Hodder formations.
Between those two factors, I don’t think we can extract an awful lot of gas – there are two good papers giving the amount of gas that we can expect per well based on the Barnett Shale analogy (I agree about the relaxed criteria):
http://www.shale-gas-information-platform.org/categories/operations/the-basics.html
https://www.utexas.edu/news/2013/02/28/new-rigorous-assessment-of-shale-gas-reserves-forecasts-reliable-supply-from-barnett-shale-through-2030/
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Dave, horizontal drilling means drilling under coal fields nor through them. Hasn’t been problem in Pennsylvania, birthplace of US deep coal mining,
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Hi
I think the coal mine point is that to get to able to reduce planning issues and make use of existing infrastructure it would be great to be able to frack on the sites of old coal mines, as Dave says the Bowland-Hodder regions is littered with them. But to use those sites will mean drilling through or close to old seams – hence the (in my terms) higher prices as greenfield sites are sought.
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The ‘lack of equipment’ reason is a joke. You buy it, learn to build and operate it, and you use it.
The ‘only lasts 40 years’ reason is a deception. Cars don’t last 40 years, most oil wells don’t last 40 years, and many coal mines don’t. Wind turbines sure don’t last 40 years.
And no, economic benefits don’t come automatically. You have to work for them, remember?
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It terms of equipment you are emphasising my point, we need time and money to buy it – though there isn’t much on the open market, who is going to stop drilling in the US to drill here? And if the expertise is required to teach us to operate it, then job creation in the UK is slower.
The point about 40 years is not that I would want it to last longer, but that when it does run out – and let’s be honest we won’t know how long it will last until it actually runs out – we won’t have developed other energy sources as much as necessary.
Economic benefits from North Sea oil – many people think we squandered that – none of our politicians (indeed any politicians) have a track record of successfully extracting meaningful economic benefits from oil / gas wealth.
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Michael,
Please think before you write this stuff. The world has capacity to build more equipment. If drilling does not take place, it will not be built. You are either being a bit cynical or very naive.
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Hmm, I would have more confidence in your ability to debate if you took the trouble to get my name right – but basic manners aside.
I thought long and hard before I wrote this stuff. I am a manufacturing engineer and am aware that the world has the capacity. The UK does not. That means the promised economic benefits will not come to the UK, they will go to oil and gas companies in the US (and China).
I am not cynical – though according to science I have reached the age when cynicism is more common. I would be naive if I didn’t take the facts and interpret them. The fact we disagree is not an indication of naivity on either side.
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The rest of the list is compromised as well, by the way. But I have to get ready for the work day.
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Hope you find time to describe the compromises later
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Busy celebrating a birthday shared with the future sovereign, but will get back soon. I have reached, apparently, an age where people are surprised enough to seem me still emitting CO2 and causing other trouble that they want to see me in person to celebrate this days after the grand event itself. Your list is interesting in a sense: it forces one to think about why people come up with such excuses to not do something that works.
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I would have to guess you didn’t read my conclusion. I think we will frack for shale in the UK. Because of population density and our approach to life there will be more regs / standards to follow. That will put up the price, along with other pressures on price this means that it is unlikely to be an energy panacea, so we need to be thinking about what we do when it runs out – and it will run out.
That is pretty much all I am saying.
I hope you enjoyed the party, I am sure it is not just your age that makes people want to see you.
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It is a capital crime to project current capabilities onto the future. “Close the patent office because everything has already been invented”.
Resources are only adequate for 40 years, and always will be. Because that’s the legislated and practical planning window.
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Hi
I know you are busy, but I don’t understand your comment. I think you are saying that we will continue to make technological strides. I agree.
They will be in oil and gas
and
in renewables.
I agree that legislative changes have the potential to make more gas available, I am far from convinced that we have the space on our tiny, heavily populated island to take advantage of that.
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One big issue I notice. The shale under GB is much THICKER than any of the US deposits meaning much more gas per surface square mile and much more accessible from the same pad due to different depths accessible.
The reason gas has not gone down with increasing supply is due to the insane renewables in the US. Barry is shutting down coal fired plants and we are building inefficient gas plants to back up wind and solar. That and exports. Quite a bit of pressure even with the enormous and increasing supply. Can’t imagine what our economy would look like without the gas and oil from fracking.
It is likely that the shale deposit extends under water. Got any data on that??
http://www.reuters.com/article/2012/04/17/us-britain-shale-reserves-idUSBRE83G0LE20120417
http://www.thegwpf.org/britain-holds-biggest-shale-basin-world/
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/massive-gas-find-renews-shale-debate-in-uk/article12306783/
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Hi and thank you for the constructive input. Yes ‘our’ shale beds are thicker than the US shale beds and multiple wells on one pad does allow more extraction. The other geological difference is that ‘our’ shale has smaller plays and they have more folds. Not suggesting they balance out, but they are two pretty big differences from the assumed analogy with Barnett.
Eek on the renewables, during the heatwave in the US 9% of ‘back up’ power came from oil. Solar is reaching grid parity on cost (albeit with subsidies, but all energy sources are supported by the state). I think that fracking has eased the economic woes in some areas – but the US still has the biggest gap between wealthy and poor – suggesting the wealth doesn’t trickle very far.
There is shale under water along the west coast and out to Ireland (hence the Irish fracking industry), in many ways the UK experience of North Sea oil and gas would suggest that offshore is more likely to happen without resistance. There is also likely to be offshore deposits off the south coast, the Weald basin is being investigated by the BGS as we converse.
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michellespaul,
“Eek on the renewables, during the heatwave in the US 9% of ‘back up’ power came from oil. Solar is reaching grid parity on cost (albeit with subsidies, but all energy sources are supported by the state). I think that fracking has eased the economic woes in some areas – but the US still has the biggest gap between wealthy and poor – suggesting the wealth doesn’t trickle very far.”
I’m sorry. I thought I was conversing with someone who who was rational. Bye.
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I am sorry you feel that it irrational to measure prosperity by looking at the disparity of wealth. Or did you find it irrational to point out that the US has oil based energy plants on standby for peak power, and is, therefore, not building anything to back up unreliable wind and solar. Perhaps you just don’t like to be reminded that solar is reaching grid parity – at least US energy / utility companies are recognising the change. Though they response is a disappointing attempt to cling to the current paradigm, rather than seek new opportunities – do you think they have heard of Kodak’s rational response to a changing world?
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Most people have already said what I would say. After 5 years, I’ve heard it all before. Gas isn’t really there, we’re running out, blot the landscape etc etc
http://www.nohotair.co.uk/index.php?option=com_content&view=article&id=2446:myths-and-facts&catid=184:uncategorised&Itemid=232
I’m updating that soon to include how shale gas allegedly causes earthquakes, methane emissions, dead birds and venereal disease
The only big fear I share is about the planning story. But, as someone who want to work for CO2 reductions, the UK story is about as important as it’s emissions: Not very consequential at all.
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Oh Nick
Reductio ad absurdum is a valid debating technique, but it has to come from the other persons argument, not by seeking to ridicule.
Peak oil has been around since the early 20th century, and sure we have never run out, but the price has increased much faster than inflation. The point of Peak Oil is not that we will run out, but that we can’t afford to buy it.
I agree that the UK contributes less than some countries to emissions, I am not sure that is relevant. Because if we invest in lower carbon technologes industries we could sell to the non-oecd countries that are clamouring for energy without the on-going burden of paying for fuel.
We could also reduce our dependency on fossil fuels – particularly the imported one.
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Sorry, the idea that the rest of the world is going to beat a path to the UK doorstep to buy our wonderful technology seems doubtful at best.
For one thing, everyone else has shale gas and won’t need any carbon reduction technology. There is almost no country on earth without significant shale. The only ones I’ve discovered so far has been Finland, and perhaps Egypt. Liechtenstein is prospective for example.
The US is a great country, but as any US geologist will tell you, the idea they are somehow uniquely blessed with shale is ridiculous.
No one compares the UK with the Barnett, just as all shales are different. Each well is often different. There’s no secret sauce, but there’s no 11th commandment saying the UK is cursed either.
As for the no capacity, go to any shale conference and there are plenty of suppliers twiddling their thumbs. But since the UK seems to think planning permission is as sacred as the Windsors, a lot of them may well give up and go to a country where the government doesn’t jerk them around. People are flocking to Argentina like nobody’s business.
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Of course no one will beat a door, we have to go out and sell – just like the Germans are in the US and China is everywhere.
Most countries are signed up to reduce carbon emission, therefore they do need carbon reduction technologies. Yes the list of countries with shale gas is exhaustive – but how many can profitable extract, at the moment, that list is very short. For many of them it will take a price increase to start to extract.
Sorry but the BGS explicitly compares Bowland-Hodder with Barnett, it is used for several of the criteria used to establish Gas In Place (and American set of criteria).
I never said cursed, I said not all it is fracked up to be – and that I think we will frack, indeed need to.
There are different reports about capacity, as you have attended Shale conferences I shall take your word for that. The point you make about UK and planning permission is correct and will increase the price of UK gas.
So I think, while we have very different views about this, we can probably agree that the UK shale revolution is not going to be a European version of the US revolution?
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No, it will be a European version. Again, this concentration on the UK is pointless, and I note that despite what the paranoids at UKIP like to believe, the EU is pushing shale gas stronger than any other government in Europe.
The European version will be different in the way that African countries have great mobile phone networks, exceeding Western ones in many cases, because they use the newest technology.
A key error is to think that Europe will repeat the US model and mistakes. It will use incredibly efficient and incredibly productive – and thus far cheaper – technology than that of the Barnett of even two years ago. Shale is in it’s baby steps – the potential is enormous. And since the rest of the world will be using it, whatever the UK does or not do is irrelevant to the climate.
It’s pointless to talk about the BGS report ahead of drilling the six six inch holes in the ground that Cuadrilla are finding so problematic, but having spoken to the authors and geologists in the US , Canada and worldwide, making comparisons to the Barnett is pointless. Each shale is different. The Bowland is a world class shale, but if you don’t like it, we have others – both worldwide and in the rest of the UK. The Bowland study did not include other shales both above and below it for example, nor did the BGS study discuss the significant oil potential it also contains. Plenty of geologists are discussing exactly that.
Finally, THE report to read is the one Navigant prepared for DECC. Notably DECC sat on this for seven months as it made the rest of UK energy policy rather pointless. Any study of shale has a shelf life of a year tops before it becomes out of date, read this one quick!
https://www.gov.uk/government/publications/unconventional-gas-the-potential-impact-on-uk-gas-prices
http://www.nohotair.co.uk/index.php?option=com_content&view=article&id=3032:the-new-reality-of-uk-shale-gas&catid=204:political&Itemid=417
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Hi Nick
The UK is pushing hard I agree. When you say European equipment and capability do you mean non British?
Before you remind me that the focus on the UK is irrelevant, I just want to point out that the government is making fracking an UK economic argument by budgeting for fracking income. If the capability comes from overseas, then the tax revenues will be less (notwithstanding our inability to actually tax overseas companies).
Thank you for the links, on the Navigant study I see they assume a significant extraction rate of 100 bcm. Around 3.5tcf, more than we use today and about double our 2012 imports. As everyone has gas who are we going to sell that too? If we are going to use that ourselves then we have to convert our coal power stations to gas. Last year we burnt 399.3 TWh of coal, that is 1.3 tcf gas equivalent. Together with existing use we already have a ‘demand’ of over 4 tcf. So imports will continue. So much for the self sufficiency argument – or will carbon emissions go out the window? (this is only one of my eye rolling points about what the government is promising)
And what about vehicle fuel – the best figures I can get for those come from the EIA (which I find frankly embarrassing), if we convert all our road vehicle to NG we will need a further 0.6 tcf.
(On your piece (which I read via Twitter earlier today), I agree that the rent a crowd mobsters are just looking for a fight, let’s hope the local residents kick them out and proper conversations can take place between Cuadrilla, local government, national government and residents)
And all these numbers are based on 2012, so if the Chancellor is right about the economic growth, the UK supply of NG is far from enough to deliver what the government is promising.
So yeah, I think that planning permission and regulations will put up the cost of extraction and I think we as a nation state have a moral, as well as legal, obligation to reduce our emissions. But the real reason I just don’t think that shale gas is the miracle that the government and many parts of the ‘news media’ seem to think, is that we just can’t extract enough. (I am about to fail to not point out that the higher cost from Navigant is substantially higher than today’s prices or that all the Navigant price points are way above Henry Hub)
And I totally agree that the BGS report is irrelevant until proper drilling starts and the results are analysed, but you and I appear to be in the minority…
m
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Everything I have ever said about shale gas has come to pass. Production, oil, lowered costs, lowered prices, internationalisation, resources, geo politics, breaking the oil link, emergence of natural gas transport, impact on chemical industry, OPEC, Australia, Russia etc. The only errors have been in underestimating either the speed or the size of the transformation.
Europe should leave all coal in the ground, but so can everyone else. 100% Coal CCS. Leave it in the ground. The Golden Age of gas is also the Death of Coal.
I’m not in the minority at all. Navigant, Citi, IHS CERA and I are all saying the same thing: shale gas resources are ubiquitous and the coming era is one where the greatest problem is to create demand. Supply concerns are gone: forever.
Next thing we do is get rid of coal globally. It won’t happen overnight. But it will happen. As Dieter Helm says, we don’t have a climate crisis, we have a climate crisis arising from carbon consumption of Chinese coal.
Is the complete replacement of Chinese coal by 2040 not deliverable, but 80% European decarbonisation by 2050 is? And of course replacement of coal solves the climate crisis. 10 years sooner and at far lower cost. Let me assure you, the Chinese get shale and don’t bet against them. Economics of Chinese shale will be nowhere near as dire as some predict, but China doesn’t do conventional economics anyway: there are multiple political reasons to get rid of coal, domestically and otherwise.
http://www.ft.com/cms/s/0/7b41f4e0-cc67-11e2-9cf7-00144feab7de.html#axzz2aKT3SYbO
http://www.epmag.com/Production-Field-Development/Baker-Institute-Chinese-Shale-Gas-Rock-Asian-LNG-Markets_92893
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Hi
I really think we are talking at cross purposes. I admire your knowledge of the shale gas industry and I admire its technological capabilities.
I wish that coal would be left in the ground, but the US coal companies are already fighting hard against that. China, the biggest producer of coal, has the potential to convert – and is moving to shale gas and oil at an incredible rate. Australia and the other small producers will push coal for some time to come.
My reading is that just eliminating coal is not sufficient to hit climate targets – more is needed and, indeed, NG powered vehicles are part of the solution for that.
I believe the economic cost of converting to gas will slow its up-take. I guess most UK power stations that converted back to coal over the last three years can be converted back reasonably quickly – would hate to have to negotiate that with our over subsidised utilities. I have not be able to find any estimates for European or Asian conversions. In the US NG fueling stations cost about 10 times as much as petrol stations, there would have to be a big pull to justify that level of expenditure, but until it is made then who will buy a NG powered car or convert to one? In the US the uptake of NG has been led by local government and companies with huge ‘gas’ bills.
When I said you and I are alone in reading the report we were talking about a different audiences. I am talking about the media, the general public, you are talking about the industry. Of course the industry has read the documentation and the industry will continue to lobby. But until the public and the media get the need for fracking they will continue to resist, if nothing else delaying the start of drilling (though I expect also putting the government in the position of having to both increase regulations and provide further financial stimulus – as you say, there are plenty of countries who are welcoming the industry with open arms.
While you are ‘assuring me’ about the Chinese, please have the courtesy to remember that I still think it will be Chinese equipment and operators we see in the UK gas plays.
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I’d love to see some figures for getting rid of coal. I think everyone has thought it so impossible they haven’t studied it.
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Used World Coal association site – they say this
Coal provides 30.3% of global primary energy needs and generates 42% of the world’s electricity
I don’t think the 30.3% has much scope for displacement, this is because 13% of hard coal is used for steel production
This is another interesting quote In 2011 coal was the fastest growing form of energy outside renewables.
They estimate that in 2011 7678 Mt of coal were used world wide and that the average growth rate of coal since 1999 is 4.4%. 7678 Mt of coal is equivalent (in energy terms) to 200,975,490,070,000 cf gas. (178 tcf of which comes from ‘hard coal’).
Coking coal – that used for primary energy production – produced by the top ten producers equals 920 Mt, steaming coal – that used for electricity production – produced by the top ten producers equals 5432 Mt.
If we split the difference proportionally then 967 Mt of coal can only be displaced with commercial, municipal and private investments, which means it has to be a lot cheaper than coal.
That leaves 6875 Mt of coal used for electricity generation, per year and not taking any growth into consideration. Let’s run out to 2050, that would be 31737 Mt – assuming the continuation of the modest growth of coal (4.4%). That’s 855 tcf of gas per year.
The sum of coal consumption out to 2050 is 653300.4204 Mt of coal – that is 1.76e+16 cf or 17,610 tcf.
How much gas did you say there was? If we replace all this coal will the price be a) low enough to replace all this coal operationally b) will users be able to finance the capital investment
m
m
http://www.worldcoal.org/resources/coal-statistics/
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Regarding steel http://www.nohotair.co.uk/index.php?option=com_content&view=article&id=2724:shale-gas-and-the-steel-industry&catid=168:energy-policy&Itemid=170
Natural gas replacing coal in steel is possible – and happening
You seem to be saying that coal won’t be replaced by gas on cost grounds. But, as environmentalists, in this case correctly, constantly tell us, there are more important things than money.
This is particularly true in China, where again, usual capitalist economics don’t apply. Having been getting bored with the UK, I am concentrating on China lately, and let me assure you, shale will happen. Again, I’ve written about this before. Hate to sound an old roué about this, but I there is unlikely to be any (meaningful) objection I have not heard about in five years experience of shale on six continents
http://www.nohotair.co.uk/index.php?option=com_content&view=article&id=3026:why-greens-need-to-go-to-china&catid=204:political&Itemid=417
Again, I’m Anglo American and I CHOSE to live here. (My in laws in the North just don’t get that at all BTW. They think anyone who chooses not to live in Eldorado is mad). Unfortunately this means both countries drive me up the wall in different ways, but the UK (sorry English) way of constantly seeking to find fault, to expend far more energy objecting than doing, becomes wearisome. So speaking to people in China, Algeria, Argentina and even Russia and France who get shale is stimulating.
The UK is simply depressing.
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Regarding steel http://www.nohotair.co.uk/index.php?option=com_content&view=article&id=2724:shale-gas-and-the-steel-industry&catid=168:energy-policy&Itemid=170
Natural gas replacing coal in steel is possible – and happening
I know, but…
You seem to be saying that coal won’t be replaced by gas on cost grounds. But, as environmentalists, in this case correctly, constantly tell us, there are more important things than money.
It is not the ‘environmentalists’ who get to decide, but businesses with share holders to satisfy and financiers to convince.
This is particularly true in China, where again, usual capitalist economics don’t apply. Having been getting bored with the UK, I am concentrating on China lately, and let me assure you, shale will happen. Again, I’ve written about this before. Hate to sound an old roué about this, but I there is unlikely to be any (meaningful) objection I have not heard about in five years experience of shale on six continents
http://www.nohotair.co.uk/index.php?option=com_content&view=article&id=3026:why-greens-need-to-go-to-china&catid=204:political&Itemid=417
You keep assuring me on this point, but as I keep saying I fully believe China will overtake everyone in this regard. Firstly they have already put shale gas on line in ‘record time’ and secondly they are looking for exports, if your manufactured goods are not affordable, what better than to replace them that expertise and equipment for energy extraction.
I think that our definition of meaningful is quite different. I expect much tighter regs than in the US – though probably not as tight as Germany. I also think political expediency will make the chancellor dither, for example, I read one interpretation (on my Twitter feed) that to get access to land the government may have to use the 1988 Petroleum act to compulsory purchase land and relocate people. (this is from an investment group). If they did that they would lose votes from the relocatees and the people who they move to. (more importantly they have to pay and that comes out of the revenues and that doesn’t help GDP).
Again, I’m Anglo American and I CHOSE to live here. (My in laws in the North just don’t get that at all BTW. They think anyone who chooses not to live in Eldorado is mad). Unfortunately this means both countries drive me up the wall in different ways, but the UK (sorry English) way of constantly seeking to find fault, to expend far more energy objecting than doing, becomes wearisome. So speaking to people in China, Algeria, Argentina and even Russia and France who get shale is stimulating.
I am sorry that your perspective is ‘seeking fault’, I genuinely belief that I am trying to understand risks and the impact of those risks (hazards in Risk Management parlance).
The UK is simply depressing.
Every country has upsides and downsides, I think you probably know quite a few people in the UK who ‘get shale’.
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Risk is the English disease. Me, I like to take the risk that something good will happen.
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In Risk Management terms we consider hazards – negative risks and opportunities – positive risks.
Considering hazards should never be an excuse to stop, but to ensure our plans are robust. Similarly considering opportunities is necessary to maximise returns.
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