Bishop Hill Welsh shale
Oct 22, 2013 Climate: Parliament Energy: gas 
The Welsh Affairs Select Committee is meeting today to discuss shale gas. As usual they have have a mixture of scientists (Hywel Thomas who was involved in the Royal Society report on shale and Richard Davies of Durham, a geologist specialising in the area) and people who campaign against economic development (Kevin Anderson, and bods from Friends of the Earth and WWF. As usual nobody speaks for the consumer.
The Welsh Affairs Committee will hold its first evidence session on Shale Gas in Wales on Tuesday 22 October at 10.00 am. The Committee will take evidence from academics and environmental groups.
- Nick Molho, Head of Policy, Climate and Energy, WWF
- Gareth Clubb, Director, Friends of the Earth Cymru
- Trefor Owen, Executive Director for National Services, Natural Resources Wales
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- Professor Hywel Thomas, Royal Society and Royal Academy of Engineering (Cardiff University)
- Professor Richard Davies, Durham University
- Professor Kevin Anderson, Deputy Director, Tyndall Centre for Climate Change Research
- Trefor Owen, Executive Director for National Services, Natural Resources Wales
- Gareth Clubb, Director, Friends of the Earth Cymru
- Nick Molho, Head of Policy, Climate and Energy, WWF
10.45am
Shale gas is natural gas (predominately methane) found in shale rocks. Advances in technology – notably hydraulic fracturing or ‘fracking’ - over the last decade have made shale gas development economically viable. Planning permission has been given at a number of sites in Wales for exploratory drilling for shale gas. Further planning permission would be required for a full-scale extraction process.
The Committee will examine the potential for shale gas exploration and commercial level extraction in Wales. It will also explore the environmental and economic impact of shale gas and whether the current regulatory regime covering such activity is adequate.
Evidence session details:
Date: Tuesday 22 October 2013
Time: 10.00 am
Location: Wilson Room, Portcullis HouseWitnesses
10.00am
10.45am
Reader Comments (93)
Has anyone worked out how many shale gas wells would need to be sunk in order to shift the price of gas significantly on European markets (assuming average US-achieved production rates and drop-offs per well)?
Would anyone on the Welsh Affairs Select Committee know the difference between evidence and opinion?
Chandra
Are we talking with or without additional levies to support all the renewable nonsense?
Who there will present and explain the seismic data, geophysical interpretation, production profiles, etc. ?
Personally, I am coming round to the opinion that in UK we should leave the stuff in the ground FOR THE TIME BEING.
a) The regulations being built round it are likely to make the economic gains marginal.
b) The price of gas to the consumer will be very little affected as a consequence.
c) We should exploit it later when even less intrusive and cheaper means of extraction and distribution are in place (and the CO2 racket has run its course)
It is a shame that we are going to miss out on the jobs which fracking would produce but there you are. We do not really need them do we? (sarc)
I notice that the Committee has identified "academics" and "environmental groups" as important players in deciding the issues. It's an interesting conceptualisation of who the heavy hitters in public debate are these days.
As the Bish points out, consumers are not represented. And what about engineers and geologists who work in the field? What about people who plan (allegedly) energy policy and infrastructure for the future? What about suppliers of natural gas?
Nup, the wisdom resides with academics and environmentalists, apparently.
Oct 22, 2013 at 8:46 AM | Jack Savage
Personally, I am coming round to the opinion that in UK we should leave the stuff in the ground FOR THE TIME BEING.
I think we should do the exact opposite and develop shale gas now instead of nuclear power. Construction of the new power station that the government has got the Chinese and French to agree to build will take a long time, and it is quite likely that the design will seem obsolescent by the time it starts producing electricity. Furthermore, the price agreed for the electricity may well turn out to be too high.
In contrast it should not take very long to start producing shale gas and production could be scaled up fairly quickly, given the political will. Nuclear power will probably be needed eventually but if we develop shale gas now then we can afford to wait another 10 or 15 years before choosing a type of reactor. By that time the designs available may show considerable improvements on the one the British government has chosen.
Jack Savage:
Good idea. Let’s join Chandra and the Brownwar and Enemies of the Earth warriors in their yurts, weaving grass mats, and eating the roots and berries that are so plentiful in this country, all year round. We can all skip merrily through the meadows in our home-spun clothes, enjoying all the fluffy bunnies and pretty birds, with not a care in the world…. aaahh… bliss!
You do live in a yurt, don’t you, Chandra? You have eschewed all the luxuries that evil Big Business is forcing upon you, haven’t you? If not, one can only be suspicious of your desires for those of us who think differently.
I believe we should leave it up to private enterprise to just get on with it! As I've said before, the great thing about shale is that not one single penny of tax payers money is needed to get the gas out of the ground. As it's a REAL form of energy, unlike that not created by windmills, mirrors and ground unicorn horn, shale gas has actual value.
The sooner we get on with it the better for the consumer!
Mailman
What is the point of this meeting? Yet another talking shop amongst self satisfied naysayers.
We can tell exactly what will be said, given the attendees, yes we could do it, but we mustn't.
I could save the tax payer a lot of money ;-)
Does anyone think that there is a similarity between the current reaction to shale gas and the reaction there was to GM technology about 15 years ago? My impression is that the opposition to GM among environmental groups has died down – Greenpeace, for example, has stopped campaigning on it – although that could be because they have found that AGW is a more lucrative vehicle for their agenda rather than because of any change in mindset.
If MPs wish to hear the views of those who care about the countryside:where most fracking takes place: why don't they call on organisations such as The Countryside Alliance? Such an organisation is for conservation, and countryside protection in its widest sense. It is not driven by the political ideology that believes all industrial development is wrong; and that the developed countries must suffer, and their wealth distributed among the developing nations.
Oh silly me, I forgot that the CA supports hunting, shooting and fishing: so would be far too right wing to advise the government on environmental or conservation matters.
Roy
Your idea is far too sensible. Try again!
Charlie, I gather that Greenpeace is still opposing Golden Rice, which some say has caused immense harm to children.
SandyS, levies are irrelevant. Proponents of shale suggest it will reduce UK gas prices. The UK is well connected to international markets with both import and export facilities. So to move UK prices we have to move international prices (who is going to sell gas cheap in the UK when they can export it for a better price?). To reduce UK prices significantly we have to pump so much gas that we "flood" the international market (in the same way that US shale flooded its market, which has limited export facilities). So how much gas makes a flood? In other words how much gas do we have to extract to have a significant effect on international gas prices and how many wells are needed to supply that amount of gas?
Whoops. I meant the campaign depriving children of Golden Rice of course is what has done harm.
Chandra, are you 12?
Chandra perhaps politicians can move markets. If Miliband really can force energy companies to sell gas at a price he likes, then why can government not similarly force frackers to sell their gas in UK first (possibly at cheaper levels than international markets) and only the surplus to be exported? Or perhaps your view is right, international markets can't be bucked, and Miliband is just throwing bones to the genetically challenged in places like Rotherham who actually vote for the hypocrisy and stupidity party.
While the UK has limited Gas storage capabilities it is forced to buy little and often and to buy at winter peaks, with shale or greater storage facilities it could 'Dip Buy' on the markets eg have enough in reserve stored or flowing so it can pick and choose when to buy, eg buying at the summer minimums.
Bill, international gas prices are not the same as consumer prices. Miliband is talking about the latter. Obviously if the former change significantly, his promise is worthless.
Justice4Rinka, explain please.
Did the price of gas in the US drop because of the shift in international prices? Your argument is nonsense and another transparent attempt to stop shale gas development.
Donna Laframboise has written on this recently.
It seems that green activists are a bit like the pagan hordes of old - wherever they forage they leave scorched earth, death & destruction in their wake.
"Ban DDT" - millions die from malaria.
"Ban GM Golden Rice" - millions die from vitamin A deficiency
"Ban cheap energy" - millions die from cold in North & lack of refrigeration in South.
"Caring" folk - aren't they?
Chandra - are you suggesting that if the UK exploited it's shale gas reserves, the UK price would not drop? Do you have a problem with supply/demand and/or understanding simple graphical information?
US, European and Japanese Natural Gas prices, 1992 - 2012, Michael E. Webber
[Source page - http://www.c2es.org/publications/looming-natural-gas-transition-united-states ].
Economic ignorance abounds here. Fraccing provides employment plus internal and external gas sales. The latter reduces the balance of payments' deficit so helps reduce the deficit and in time taxes, both of which increase employment.
The disgraceful eco-fascist Greens apparently want to kill off tens of millions from poverty and cold and raise unemployment.
Thankyou Alec M.
I tried a small taster of Economics 101 on our latest troll the other day and got roundly insulted for my pains.
J4R
I think the answer to your question is 'not yet'.
Come now Mike. You must know by now that greens believe that the laws of supply and demand can, and should, be repealed by an Act of Parliament.
If you disagree with that proposition, you are just a planet-destroying, grandchildren-murdering, nature-hating, right wing shill of Big Something.
What Welsh shale formations specifically? Carboniferous?
That golden rice has vitamin A in it and that millions of children go blind from Vit A deficiency are two independent, different observations. Golden rice is not the cure to Vitamin A related blindness. It would help, of course, but the reasons for Vitamin A deficiency are not simple.
I am at a loss why this is being discussed by the MPs. The planning decision will be made by the Welsh government, the UK lot will only come in when it requires for planning permission over 50MW generation capacity . For what its worth, south Wales has oodles of methane in old drifts, levels and pits which could be exploited without much opposition, after all this is an area which is used to mining and extraction. Even wind-farms under TAN 8 in the valleys have gone up with hardly any opposition. Ironically, the area where is opposition is in the Vale of Glamorgan near Cardiff which is brimful of yummy mummies, greens and rural urbanites.
Chandra is Entropic man. I claim my £5! :)
Regards
Mailman
@mike fowle re Golden Rice
Here in the Philippines, Greenpeace got GR trial fields destroyed recently. They peddle nonsense and lies to support this; claims that you must eat kilos of it to get any benefit, that it will displace local "ethnic" rice varieties. The truth is that they are condemning hundreds of millions of children and pregnant women across Asia to Vitamin A deficiency.
Even Patrick Moore, one of the founders of Greenpeace has set up a group to protect Greenpeace's activity against GR.
I hope the Russians throw away the key on those terrorists who occupied the oil rig and Western governments grow a pair and do the same to future illegal activities by these fascists.
Very simple answer. Require all testimony to be in Welsh (y Gymraeg). Surely any self respecting council in Wales would do no less ...
Chandra
Think Wilkins Micawber in reverse for supplier prices.
"Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery"
So a flood should not needed just a slight over supply, just because the UK exploits shale it doesn't mean that everyone else (Norway, Russia, Dubai, USA, Canada in particular) will stop producing.
So
the EU consumes 461,500,000,000 M^3 and produces 167,600,000,000 M^3
Norway consumes 6,500,000,000 M^3 and produces 103,100,000,000 M^3 (Production 2011 figures consumption 2007 )
Russia consumes 506,700,000,000 M^3 and produces 3,359,000,000,000 M^3
Now
The UK consumes 82,210,000,000 M^3 and produces 47,430,000,000 M^3 (2011 figures)
So taking a wild guess using the Micawber principle then one could say that if the UK is the only EU country to use shale gas then by producing 40,000,000,000 M^3 (assuming North Sea production has remained roughly constant) then the UK would become a net exporter of gas. This would have two immediate benefits. First the balance of payments would improve, any tax/levy on gas produced in UK jurisdiction would double. A third less obvious benefit would be that the UK's minimal gas storage capacity would cease to be a major problem letting politicians off the hook.
Indirectly there would be 40,000,000,000 M^3 "spare" in Europe. Apparently the US is building a third gas export terminal, and for gas is still a net importer (marginally at 10% of demand) mainly from Canada (over production 60,000,000,000 M^3). I don't think full production from Marcellus Shale has started yet.
Unless there is a Gas equivalent of OPEC, which seems unlikely, market forces of supply/demand and profit will drive the wholesale prices. Unfortunately the EU interferes with the free market.
So in answer to your question market forces should be allowed to decide the wholesale gas prices. Shale production of 40,000,000,000 M^3 to 80,000,000,000 M^3 would see the UK becoming a net exporter with major benefits to the country.
Whether or not prices come down is in the hands of politicians and environmentalists not the market.
We should be surprised that it is felt necessary to even ask WWF, FoE, et al for their opinions. Their answer will almost invariably amount to little more than "Let them eat slate".
SandyS, I agree with your point entirely, but I hope you'll forgive me for being a pedant. The SI unit of the metre is symbolised with a lower-case "m".
michael
So it is, perils of copy and paste when units weren't in the original data. I should have noticed something like that though.
I found it hard to be brief and clear so concentrated on that aspect.
The correlation between anti-GM fanatics and AGW fanatics seems to be quite strong.
This correlation is, if you think about, pretty damning evidence that Lewdowsky's work is simply his political posturing dressed up with lipstick and many words.
hunter
And yet wasn't it the Great Nurse, he of the Nobel Prize and the Knighthood and the Presidency of the Royal Society who lumped we "anti-science" sceptics in with the "anti-science" opponents of GM crops?
I never did work out if he was making a dishonest political point or whether he is just another ignorant pillock out of his depth when outside his speciality.
As for Lewthingy, was there ever any doubt?
Steve Jones, no US gas prices fell because the US was/is not well integrated into international gas markets. Nobody corrected you, but those who understand the issue will see that your statement nonsense, not mine.
Lapogus, no, I'm asking how much needs to be produced for prices to drop. My question was really clear. Your pretty graph just shows what happened in the US where no export facilities existed to get rid of the surplus. That situation does not exist here.
Mike Jackson, as I pointed out, those who berate others for not knowing economics 101 probably do so because 101 is the only course they took or understood.
SandyS, thats for a thoughful answer. I think your analysis might be wrong however. It seems very unlikely that in a market where by your figures Russia produces 3600 trillion m3 the UK producing an extra 40 trillion m3 (about 1% of Russia's gas) could move the price. But let's assume that it might. How many wells is that going to take?
Chandra, do yourself a favour and go and read "The Prize" by Daniel Yergin. Then come back and comment about the success or otherwise of free markets, energy supply and the amazing ability of the oil industry to provide cheap, available energy all funded and risked by private enterprise and private capital.
If oil companies want to spend private capital exploiting shale gas, the only thing government should be doing is ensuring HSE and planning and environmental regulation are appropriate and enforced. What they should not be doing is distorting markets and levying outrageous taxes, duties and other costs onto the oil companies and consumers all in the name of ill founded social and environmental policies.
I see Chandra doesn't know the difference between billions and trillions.
I don't know much about gas production, but I do know that reserves are quoted in trillions, so I would think twice before stating production in trillions. Also, I can read.
A telling mistake.
# Philip Would anyone on the Welsh Affairs Select Committee know the difference between evidence and opinion?
@ Er, yes Philip, having been subject to questioning by various WAG select committees I can confirm they are a pretty sharp bunch. How were they when you were questioned?
On October 14th the wholesale gas price was 66.75p/therm, equivalent to $10.68/mcf.
What would be the wholesale price for shale gas?
Entropic Man: "What would be the wholesale price for shale gas?"
Who cares? Why speculate on it? What relevance does it have? If oil companies, who are highly successfully at producing oil and gas and making a profit, using their own private capital and investment, want to have a go at shale gas then they should be left to get on with it (subject to necessary and proper HSE, planning and environmental regulation and enforcement).
Please show me an example in the past where there has been some debate and discussion about whether oil companies should employ new technology or go after oil/gas in more difficult geological targets? Deepwater? West of Shetlands?, horizontal drilling?, hydraulic fracturing?, move from onshore to offshore drilling? The whole premise of the argument being made is pointless and irrelevent and just an attempt to control something because it goes against the agenda of the ecofascists.
If oil companies think its competitive/profitable to produce shale gas, let them get on with it. This is free market enterprise and private capital at work and without it we would not enjoy the high standards of living in the world that we do today. Oil companies have been staggeringly successful at this for a century, without subsidies or state handouts (albeit with the need for HSE and environmental and planning regulation which was lacking in the early days). Oil and gas are still cheap in real terms and are kept artificially high by taxes and duties in the UK. What other raw and essential input to the whole economy is taxed at such eyewatering levels? Imagine how much growth the UK economy could have without such short-sighted taxation policies.
Chandra
Demand = 1000000 supply = 999990 = shortage -> price goes up and demand goes down
Demand = 1000000 supply = 1000010 = surplus -> price comes down and demand goes up
As Wilkins Micawber astutely observes the difference between misery and happiness is not a lot in financial terms.
In the case of gas demand going down is domestic users turning off heating and manufacturing reducing output.
demand going up is the opposite.
Reposted from Topsy-turvyland by Garethman's request. TM
SandyS, your Micawberish comparisons don't really suffice. If the UK stops importing 40bcm a year, the suppliers who would have supplied us with 40bcm don't just put it in the pipes anyway. If the market is growing (which seems likely) it will be sold somewhere else, otherwise it will stay in the ground. Expecting large price falls just because we start exporting 1% of the market seems silly.
But anyway, you seem to have the figures, so how many wells will it take (both good ones and bad) to produce your 40bcm yearly?
Thinking Scientist, not levying taxes? It is our oil/gas. You might want to give it away to a private company, but most people will want to see the money benefit the UK. Gas companies are our agents, extracting the gas on our behalf. They have to make a profit in doing so, but don't forget who's boss.
Chandra, natural resources like oil, gas and minerals are worthless until someone extracts them, treats them (if necessary), transports, distributes and sells them. It's not "our" oil and gas, because it doesn't exist unless someone spends a shedload of money (with concomitant risks) into turning it into a marketable item.
Perhaps you think the State should run the business, with all the attendant costs and risks. If so, then say so. But apart from complying with legal requirements, including paying taxes, resource companies should be treated no differently to any other kind of business.
It is a mystery to me why you persevere with making a fool of yourself by dabbling in economics, about which you are not just ignorant, but positively destructive in your opinions.
The people making fools of themselves are those who think that adding 1% to European supply will cause a large drop in the price of gas. Try that with any other commodity - add 1% to world supply of gold, silver, tin, copper, iron and ask yourself whether the market price will change significantly. Also ask yourself whether the producer of that 1% or of the other 99% have an interest in the price falling and what they would do if it did.
I don't think the state should run things, just that, if drilling is determined to be desirable, we should extract the maximum possible tax revenue that is compatible with giving gas co.s an incentive to drill.
Chandra - why do you care? And, if you are such a whizz-bang seer into the future of energy markets, a squillion dollar job in the finance industry awaits. Just go and peddle your predictions in the marketplace (where people spend their own money) and see how far you get.
Now, off you go and play with your blocks.