Thursday
Jan202011
by 
Bishop Hill
Bishop Hill Shale bonanza
Matt Ridley looks at the shale gas revolution, which he says changes everything. Well, perhaps. But then again perhaps not everything. The impression you get from Andrew Orlowski's article on the same subject is that Britain's Department of Energy and Climate Change are entirely unmoved by the bonanza taking place around the world and indeed on our own back door here in the UK.
No doubt some wag will soon start to refer to the denizens of DECC as "shale gas deniers". It's just as well we are above that sort of thing here.
Reader Comments (72)
Might I suggest that the scientists who really do change the world are geologists?
It was good old boy, small time independent oil and gas companies from the US of A, without any government subsidies, no Department of Energy research who figured out the technical methods of drilling and enhanced production and who recognized the huge potential of shale reservoirs. Before you know it, the US has another 100 years of clean energy.
And what is happening in the US will affect Europe too. Consider Poland. After they and the rest of Europe were held hostage to intermittent Russian gas supplies in the last decade, the Poles have now embarked on their own shale-gas drilling in their huge shale basins. With enough drill rigs in 10 years when the Russians try the gas line "interruptions" stunt, Poland and the rest of western Europe will simply yawn and turn up the thermostat.
History is punctuated with stone, copper, bronze and iron ages but it skips over the persons who found and produced what was beforehand a useless lump of rock. And with shale gas, we will see history in action again.
A little useful context from the recent Tyndall Centre press release:
http://www.tyndall.ac.uk/shalegasreport
Kevin Anderson… name rings a bell.
Yeah geologists are cool. The fact that they could come up with cyanide heap leach ming to extract gold from the elements at the headwaters of the Missouri River is pretty ingenious.
I don't understand why archeologists aren't jumping at the chance to uncover cool stuff in the shale mines. I had similar thoughts after we bombed Iraq. Can you imagine the cool Babylonian stuff that could have been uncovered? Not sure why the archeologists' lobby wasn't more active.
Just some thoughts...not to be taken too seriously....
Simple seeker and BBD:
You might want to consider that the days of the Barnett Shale, which was the initial reservoir that got everyone excited about seem to have passed. You can go to the Haynesville Shale website and see that Chesapeake admit to an 85% production drop in the first year as the average from 56 wells.
And you might also care to note that in their forecast that came out today BP have suggested that liquid fuels production will continue to rise over the next two decades, but predicated this on the strong growth in biofuels (this in the week that Range Fuels shut their production facility for cellulosic ethanol, after having spent $320 million and failed to make it work right). At the same time they have dropped their anticipated production from Irag from 10 mbd to 6.5 mbd by 2020, over the past year - perhaps not quite that strong a recommendation for their role as prophets.
GasLand debunked here: http://www.energyindepth.org/wp-content/uploads/2010/06/Gasland-Fact-Sheet-FINAL-062110.pdf
Poster of fracking fluid composition: http://www.energyindepth.org/frac-fluid.pdf
Hydraulic fracking timeline: http://www.energyindepth.org/PDF/timeline2.pdf
Energy-in-depth.org has much more useful information and worth a visit.
On the lighter side: In the UK energy suppliers often sell more than one 'utility' product. As a colleague pointed out, with water and gas coming down the same pipeline, maybe they could supply power and internet/telephone access down it too? Just think of the cost and energy savings! ;-)
nmv: Well said.
Interesting to note the agendas of those raising environmental concerns - Gazprom threatened with loss of monopoly and lower prices, and Tyndall Centre where Prof Anderson's Malthusian dream of rationing the British people and forcing blackouts through the use of useless renewables could be threatened. So monopolist corporates and authoritarian academics do not like the shale gas breakthrough. Surprise, surprise.
The Orlowski article also suggested that DECC is of the view that the USA will not want to export any shale gas. Odd then that there are proposals to convert LNG import terminals in the US into export terminals for the Central and South American markets, at prices linked to Hemry Hub, not Brent. Why is the political, bureaucratic and acaemic elite in the UK nowadays so off the pace? I think I answered that question myself earlier in this thread.
Heading Out,
This whole 'game changer' thing is new (to me) but is certainly attracting attention and opinions ranging from 'leave it in the ground' to 'solves emission targets'. Facts are however, scarce. I have no axe to grind either way other than with the usual suspects who wish to advise me on how to think (in my own best interests, of course):)
Via GWPF:
Unconventional hydrocarbon resources, as the name suggests, are relatively new in the West but better known in the Russia and some linked countries.
http://www2.chinadaily.com.cn/china/2011-01/17/content_11861839.htm
The big SG question is not weather it's there, or weather it's ecologically safe to extract, it's at what price is it profitable. "It is true: at $15/mcf there are many trillions of cf of NG to develop. At $3.50 per mcf not nearly so much."
http://www.hawaiicleanpower.com/arthur-berman-leaves-world-oil-after-raising-natural-gas-questions/
"I think it is likely that Berman is fairly close to right, but it would be good to have confirmation from others looking at the question in different ways. Hopefully, with greater diligence by auditors, there will be some convergence with company indications in the not too distant future.
Natural gas is one substance where there really does seems to be a lot of resource available, if the price is high enough. But for the price to be high enough, there needs to be a huge amount of debt based financing available, for all of the players involved: the natural gas companies obtaining the land and doing the drilling; the companies building pipelines and storage; and the companies building infrastructure for end use (adapting busses and cars to natural gas use; building fueling stations; installing natural gas home heating where oil was previously used). It may turn out that inability to obtain debt financing will be a big obstacle to development.
Natural gas policy is one where one really would like to have good information on how much resource is available at what price. One also needs to know what costs would be involved in new infrastructure development, and how many years these need to be amortized over to make the infrastructure worthwhile. There are other issues too–what should we really be using this resource for–chemical uses, fertilizer, commercial vehicle fuel, private passenger auto fuel? Or should we be saving it for use for balancing electrical power, when the wind is not blowing. At this point, I don’t think we really know enough to make good decisions."
This 250 year supply thing....
The oceans have all the gold we'll ever need to pay for it too, problem solved! BBD we're rich!
A comment from France :
1. It looks like all european (continental) countries - most particularly in northern Europe - are delivering permits for exploring unconventional gaz, either shale or coalbed. In France it looks like we have such permits in place since early 2010 covering 50 000 Km2, in the south east and Paris area for shale, and on any ancient coal site for coalbed gas ! Many US players arekey players on these permits. A preliminary target would be to identify resources covering 10% of France's consumption ; any figure is really very premature ! The State has a huge vested interest, as he has ownership of resources under the soil ( a key difference with the US !)
2. unconventional gas will have a huge effect on the market ; you may remember that many gas new importation terminals were planed and being built in the US, in Europe, and so on. In the US already, it is already clear these import terminals are of no use for the foreseeable future, unless they revert into export terminals (China being a volunteer for importing US gas). it also has an effect on US appetite for a relaunch of nuclear energy, which apparently alrady disappeared !
3. Abundance of gas has had till now no sizable effect on gas price for consumers. Indeed most gas importers / retailers do buy gas from Russia and other producers based on long term contracts with fixed prices, and set their price list on same basis. Only at contract renewal will they be able to take advantage of lower, spot, gas prices and pass it on to consumers...Unconventional gas may bring some more competition on energy price
4. This will take time to develop, at least half a decade, and many environmental aspects will have to be looked at, as shown by many anecdotical evidence in the US.
Frosty
"We do not know enough to make decisions" says the paper. Not true, we know enough to make enough decisions to let the market do the rest. Have we not learned enough yet of the failures of excessive central planning and its capture by vested interests that oppose customer chice?
when shale was big in broxburn, Scotland (i remember the paraffin oil heaters well brrrrr, cold winters)
just for a ref on shale history from my old home town -
http://www.undiscoveredscotland.co.uk/broxburn/broxburn/index.html
So the question is, should I lease the mineral rights for what they are offering me, or should I hold out for more? The second question is, will New York lift the drilling moratorium? :-)
@ Kay
There is plenty of incentive for Shale Gas companies to do the right thing - they wouldn't want bad press and bad reputation for causing any pollution and it wouldn't help their plans for further ventures. In the Uk, there are plenty of regulatory regimes already in place to keep things in check - for a flavour of this please see this from the Environment Agency's website here:
http://www.environment-agency.gov.uk/business/topics/126689.aspx
Spot the odd one out: (i) biofuels, (ii) wind farms, (iii) PV solar farms, (iv) shale gas facilities [Hint: government subsidies].
Jane Coles
There's another way of looking at the list: only gas turbines actually work as advertised.
But you are dead right about the subsidies. And subsidies mean political commitment (and private gain).
Which means lots and lots of vested interest.
Feathers will fly.
@ Kay
I love the juxtaposition.
"Halliburton's involvement"
and
"Poisoning the well"
As a geologist who's not into hydrocarbons, can I ask a question?
Is the frac-ing a continuous process for shale gas?
Reason that I ask, is in mining, methane problems are mostly related to breaking rock. When you stop breaking it, the amount of methane coming in drops. Long mine tunnels through shale have a history of methane explosions, even at relatively shallow depths of a few tens of metres.
If this stuff is real, and not just another classical defrauding of investors (mining has a very long and dishonourable tradition of these):
The best use for the gas would be to crack it and use the hydrogen to make liquid fuels out of our own coal.
Coal is the stuff power stations should be running on, not gas.
Keith,
Fracking is a one time process. It is a technique that pumps liquids, often containing small sized material designed to wedge open pores and channels and allow oil or gas to flow better.
http://www.investopedia.com/terms/f/fracking.asp
The controversy is that the liquids used are allegedly leaking into surrounding ground water.
This seems unlikely, since the production zones for shale gas and zones for ground water do not typically communicate.
But the science is not settled, is it?
The problem for me is that enviro-claims are so full of lies and deliberate deception I tend to doubt anything they claim. And in the US plaintiff attorneys aligning with enviro-groups is a potent mix for rent seeking corruption.
I feel that the development of shale gas should have a catchphrase..
Oh - I've got it...
'An Inconvenient Truth'....