Bishop Hill Shale gas dropped?
May 20, 2012 The Independent is reporting that shale gas is not seen as a solution to the UK's energy crisis.
The Government has rejected shale gas technology as a solution to Britain's energy crisis, conceding it will do little to cut bills or keep the lights on.
Supporters of the fracking technology – which blasts water, sand and chemicals at extreme pressures to release gas trapped deep in rock – argue it could be the single greatest factor in transforming Britain's energy market, reducing our reliance on foreign imports and dramatically reducing costs.
But The Independent on Sunday has learned that industry experts made clear at a meeting attended by senior ministers, including David Cameron and Ed Davey, the Lib Dem energy secretary, that the UK's reserves were smaller than first thought and could be uneconomical to extract.
I must say, I would treat this report with caution. I think this is just a somewhat hyped version of the story about the Downing Street seminar that I published a few days ago.
(H/T Martin)
Bishop Hill
More coverage of this story at the No Hot Air blog, which notes the identities of several of the participating businesses. They seem not to include any companies actually involved in fracking.
This makes Ed Davey look thoroughly dishonest.
Reader Comments (65)
Sure. The figures per thousand cubic feet (according to Lucas') are $2 - $3 in the US and $9 - $10 in the UK. Since everyone seems to agree that at least some US shale is viable at $7ish a certain amount of shale gas production seems set to be commercially viable in the UK - the question is how much. Well, the other question is whether UK shale gas will be undercut by still cheaper gas (shale or not) imported from abroad, but that would obviously be a nice problem for the UK to have. (Actually, Heading Out suggested that the US could import LNG at much less than $7 per thousand cu. ft. - it's not clear to me why the UK isn't already doing so if that is the case.) If you read the article closely, this seems to be pretty much in line with what the Centrica man and the "senior government source" are saying, as distinct from the spin from Greenpeace and (presumably) sources close to Ed Davey.
Mike H
This smells like a political fix.
Of course.
Frac jobs have been routine offshore for yonks, in tightish conventional reservoirs.
some clarification on shale gas can be read here:http://pugshoes.blogspot.co.uk/
It's technical. It's not clear that shale gas will work anywhere but the Marcellus formation in the USA. Shale gas drilling in Poland has been a financial disaster...
Just greens putting their mouth where other people's money is. Cuadrilla are drilling: and its not through the floor of some Whitehall office. If they put sweet f-a into the grid then what's the problem? If it works out for them then take the tax while considering the impacts.
Meanwhile back in the real world, as opposed to Ed Davey's Indy la-la-land, shale gas is expected to redefine geopolitics in favour of the US over the next 20 years.
http://www.iol.co.za/business/features/us-shale-gas-production-boom-europe-glut-to-alter-the-energy-and-oil-landscape-1.1300239
£1 = $1 = €1.50, anyone?
It is pretty clear that gas, especially shale gas, is the Greens' worst nightmare and they are pushing back all over the world. In the US and Australia, there have been a spate of scare campaigns, legal challenges and attempts to introduce exploration and production bans. In fact, Vermont's legislature has just banned shale gas extraction outright, which is funny because they don't actually have any identified deposits. It's just symbolic opposition to fossil fuels across the board which drives this sort of nonsense.
I don't know anything about UK deposits, but the figures that are coming in from all over the world indicate that there will be plenty to go around. If you can't produce it cheaply enough you will be able to import it cheaply. As others have remarked, the real problem seems to be that cheap fossil fuels will be opposed tooth and nail by people with certain ideological and financial interests. Look out for big tax gouges on gas to keep the price high and the depleted government coffers topped up (under the guise of saving the plant, of course).
"That should give you some idea of either how ill informed or how stupid our apparent energy policy is." --Dung
I wouldn't rule out malicious just yet.
One of the companies attending No10 was Shell according to Ed Davey on Sunday Politics. Is it any coincidence that Shell has signed an agreement with the Chinese to extract Shale Gas. Call me cynical but suggesting the UK does not exploit its reserves is perhaps market protection by Shell? The Chinese may choose to use the gas or export it and a natural market ( where Shale Gas exploitation is not allowed) would be the UK.
@anonym
26 October 2011
BG Group signs long-term US LNG purchase agreement
BG Group announced today that it has signed a fully-termed sale and purchase agreement with Sabine Pass Liquefaction, LLC, a subsidiary of Cheniere Energy Partners, L.P., for the purchase of 3.5 million tonnes per annum (mtpa) of liquefied natural gas (LNG) over a 20-year period from the Sabine Pass LNG terminal located in Louisiana, USA.
Cheniere will sell the LNG to BG for 115 percent of U.S. benchmark Henry Hub prices, plus a $2.25 premium.
"The 15 percent will be used for fuel and sourcing the gas, so we will make $2.25 (per million British thermal units)," Souki said.
Henry Hub price is currently $2.66 per million BTU so if that was the price when the deal comes into operation (est 2015) BG will have gas (landed and regasified) at a cost of $3.09 + $2.25 = $5.34.
Do they want UK shale gas to develop? I dont think so and the government should not have asked their advice (but then the government probably does not know about the deal?).
correction:
$5.34 plus shipping and regassification costs.
@Pharos
Thanks for the clarification of the terms in use.
No doubt the opposition to the development of shale gas in the UK will be fierce. If ministers and their advisors are really concerned about energy security, as they have said in the past, they should be encouraging it. Imports are an obvious alternative though the timescales needed to develop resources are long and the supply contracts even longer.
I noted that the article mentioned some of those present included Shell, Centrica and Schlumberger. Nothing strange about that and we don't know who else was there do we? They are just some well known names.
As regards some of the comment about whether a major has signed a deal with X, Y or Z and whether or not they are worried about competing with other resources (eg Centrica) and all the Machiavelian undertones being ascribed to different names, well I think this is pretty naive. I work in the oil industry and oil companies do not worry much about those things, only about return on investment. If they think the return on investment will be better from shale gas or gas from Mars or some such, they will shift in that direction.
What primarily drives investment in a particular country are (a) the fiscal terms offered by the host government and (b) whether those terms are subject to sudden worsening without notice. In that regard successive UK governments over the last 15 years have a very poor track record of changing tax regime and terms without consultation. In the company I used to work for contracts for exploration and production in Libya were regarded as far more reliable for investment than contracts in the UK for this reason and our country risking scroes ranked the UK as "politically risky" for this reason.
If the government, for whatever strategic reason, decided it wanted to open up shale gas in the UK it just has to offer advantageous terms and announce a licensing round.
Shouldn't it be up to private enterprise to risk money on discovering whether extraction of shale gas is, or is not, "economical"? Why should the government have any say in the matter? How does the government claim any expertise in this area? This is a case of a libdim minister's shamelessly trawling for votes among a tiny minority of the public, while sentencing the population as a whole to black-outs and, in many cases, to death by hypothermia. Meanwhile, Britain's economy will come to resemble that of Honduras.
Job done, Mr Davey?
I am at a loss of sensible words. I would like to launch into a tirade, but it would be ignored. Those who oppose are those who will dispose. The vested interests here are now so entrenched that the only way to remove them is .....
I'm in the industry - and the best ANYone can say is: "we don't know". All the rest is speculation - lots of questions to address in the mean time. The question may not be so much about how much gas is in place, rather a question of the likelihood of exploiting it economically. If a few statements about caution and importance of geology and constraints on develoNMRnt are all it takes for a government to tuck tail and run, then - so be it. The capital and jobs will go elsewhere is all.