Bishop Hill Birol on geology
Nov 13, 2013 Energy: gas 
Today, Fiona Harvey watches from the sidelines as European industry is priced out of existence and concludes that it just can't be helped. Her case seems to be that high energy prices are simply unavoidable, firstly because green energy levies are nugatory and secondly because the shale revolution can't happen here. The second part of this argument is justified with a quote from Fatih Birol, the chief economist at the International Energy Agency.
Europe is unlikely to be able to emulate the US's exploitation of shale gas and oil, partly because it lacks the natural resources and favourable geology, and also because the continent is so much more densely populated.
This seems a bit strange to me. What are these "natural resources" that we lack? There's undoubtedly an enormous resource of oil and gas-bearing shales in Europe, not least here in the UK.
The unfavourable geology argument is also one that has been contradicted by actual shale geologists. It seems that the geology is different in every shale play:
the Appalachian Plateau is a foreland fold thrust belt of the first order.......fractured, faulted, and folded to no end...Other North American Gas shale plays that are about as structurally complex including the Woodford and Fayetteville. While the Barnett and Eagle Ford are somewhat less complex they are also faulted. Only the Haynesville might approach a layer cake and even this as some subtle complexities.
And as for the dense population, this cuts both ways. Although shale developments make a very small impact on the environment, there will be inevitable planning delays this side of the pond, but the dense population also brings great advantages, with gas and other infrastructure likely to be close to the wells, bringing cost advantages and avoiding the large numbers of truck movements needed stateside.
Reader Comments (94)
European greens and their political pawns will not allow shale to develop until energy costs really start to bite and there is civil unrest as a result.
So what's her solution then? Mass suicide?
I really think it needs a few blackouts to concentrate the minds of the politicians. They are too comfortable on their own little planet until then.
The idea that because of dense population means we can't do hydraulic stimulation is ridiculous, as you can see over at Frack-land blog, http://frackland.blogspot.com/2013/10/spot-wells-part-ii-downtown-la.html these show photographs of 50 wells right behind a shopping mall, right in the centre of Beverley Hills, and most people don't even know they are there producing 500,000 barrels a year.
Intelligent politicians.
From the start of her article:
"":The finding has profound consequences for jobs, the economic recovery and climate change policies, and will send shockwaves through European industry.""
From the end of the article:
"" Gareth Stace, head of environment and climate policy at the EEF, which represents manufacturers, said: "The IEA report confirms what industry in the UK knows, namely that high energy prices, especially for energy intensive companies are damaging our competitiveness and the ability of companies to invest in energy efficiency. ""
So which is it to be Guardian? Shockwaves, or they already know?
No wonder the Grauniad is losing circulation.
"European greens and their political pawns will not allow shale to develop until energy costs really start to bite and there is civil unrest as a result."
At which point it will be nationalised and, after a few speedy sympathetic reports, re-branded as Euro-oil, the saviour of the EU economy. The Greens will get a huge cut of the profits to keep them on board.
MinTruth will edit the web history. EuroOil is GOOD. EuroOil has always been GOOD.
DoublePlusGood!
We are all green, but I am sick of the Fundamentalist Five percent stomping their feet & telling the 95% what to do at the same time as hyping up the interests of their GreenHedgeFund eco-subsidy farming mates.
Fiona Harvey take a flying jump. Instead of stomping your feet and saying "they must not do that", let's fix the worlds problems by allowing innovation. Let private investors look for opportunities risk their own money in new businesses properly regulated & unsubsidised, so they pay for the consequences of negative impacts.
--- Other Fundamentalist Five percent foot stomping today --
*also features George Clooney (Climate Loony) ...Transcript by Alex Cull1. The full video of journalist Mark Hertsgaard (The Nation magazine) shouting down Roy Spencer on CNN * Discussion
2. World Bank President Jim Yong Kim's was allowed to shout up alarm with Evan Davis feeding him some easy lines Today's Today prog Direct Audio link
- Jim Yong Kim's alarmist article
- Why no direct debates on TV ?" 'smuggling in' the issues is more likely to be effective in informing the UK public in the long term, it was suggested. Alarmists report into Climate Broadcasting
European shale won't be cheap because the energy companies don't want it to be and don't need it to be. Which one of them is going to break from the fold and reduce prices or even freeze prices for any length of time? They're also going to continue to flog us high price electricity from wind wherever they can. Add the green taxes on top and hey presto, no cheap gas.
forester126:
[See:] Frack-land blog: http://frackland.blogspot.com
Thanks for that link - I think it's the first place I've read something sensible about the technology.
Whatever next?
Bishop, you say that European industry will be "priced out of existence", but the article talks about 10% of energy intensive industry leaving the EU. Is 10% what you mean by being priced out of existence?
The factsheet to the report has lots to say, among which I found
oops..my mistake. Deleted
Nov 13, 2013 at 1:54 PM Chandra
And you believe all that? When did you last audit a company and try to work out how much energy it was 'wasting'? What renewable energy will be cheaper or even at parity than coal in the near future? And if you're relying on international agreements, fine, just get them signed and policed first.
"Birol said the analysis showed that green measures should not be abandoned"
How's that?
We're being force marched - goose stepped towards industrial shutdown and economic oblivion - the Berlaymont Commission, Greenpeace, French government/ nuclear power/EDF, Gazprom will make it nigh on impossible to exploit shale gas in the UK, or anywhere else in the EU.
While the USA goes from strength to strength. What I can't quite fathom, Birol and Harvey tell us this in a round about way - yet they are unable to join the dots and still fall back into the green mantra's - it's OK to be green.
We'll see, heavy industry in Germany are receiving tax breaks from regional government - it remains to be seen if our lot in Westminster, more particularly in the treasury are so forgiving.
But tax breaks aren't enough - are they?
There is so much more that they [Treasury and government] could do to facilitate a renaissance in British industry - the will is however not even in the consciousness of any of our feeble minded politicians.
All of our industry or, what is left of it here in the UK faces an impossible battle - in that, set against the legions of green press, vacillating eejits in the political sphere, the terrorists of greenpeace, FoE and the DECC and every quango from the EA to the recycling loons in the councils - no one but no one is on the side of UK industry and manufacturing.
The nation of; Telford, G. Stephenson, Brunel, Smeaton, Watt and so many other greats - what happened? It is, a great legacy coming to an end.
Chandra: You quoted this (in part): "High energy prices do not have to result in onerous energy costs for end users or the national economy. Energy efficiency improvements could mitigate high energy costs..."
What that actually means, as those who bang on about 'sustainable energy usage' and 'energy efficiency' really mean, is that we should pay more for less. It's like saying, here's a car that does double the mpg of your old car. What a great saving for you! However, the cost of the fuel needed to run it has doubled in price: you're no further forward. It's a CON job.
To be fair , I think your expecting too much form what is 'the human photocopying mechine ' for all things green .
Given that do you actual think Fiona as do any reaserch or thinking rather than the normal push what ever the greens have feed her?
oops my error in linking to the Piers Morgan video I put the same link twice
The first link was the full length video
The second link should be the discussion on Dr Roy Spencer's page
@ chandra Nov 13, 2013 at 1:54 PM
The fact sheet you quoted:-
"High energy prices do not have to result in onerous energy costs for end users or the national economy. Energy efficiency improvements could mitigate high energy costs ..........." is logical codswallop.
Energy efficiency improvements are (only) carried out by users as a consequence of high energy prices.
There has to be a pay-back period, which is inversely proportional to energy cost.
Therefore there's no mitigation, but there is a very real risk that potential savings were exaggerated.
chandra seems unable to realize there is a cascade effect when companies leave one country for another.
A big company leaves, some of the companies that supply the big company then scale back, lay off staff or just go bankrupt. Then the other big companies have less reason to stay because the pool of suppliers and trained employees is shrinking and their profit margins are being squeezed by the companies that have already left,
And so on ...
"The orange glow is just one sign of an historic transformation occurring in the U.S. chemical industry and stretching from Western Pennsylvania to the Texas coast. The plant was recently modified to pipe ethane—a key component found in natural gas, especially in shale formations—through its furnaces.
The plant can make more than two billion of pounds a year of ethylene, a key component of plastic that’s used in everything from diapers to antifreeze to plastic bags.
This is where the building blocks for those products begin, said Miller, a manager for BASF. “It starts here.”
Miller’s plant is one of several around the country that have expanded to take advantage of shale gas. In addition, six brand new “world-scale” crackers -- where ethane is ‘cracked’ to make ethylene -- are slated for construction in Texas and Louisiana.
Royal Dutch Shell has proposed building a cracker plant in Western Pennsylvania, in the heart of the ethane-rich Marcellus Shale. It would be the first ethane cracker of its size in the Appalachian region. "
http://publicsource.org/investigations/gulf-coast-s-chemical-industry-bounces-back-with-natural-gas-cracker-plants
An addition to my above quote:
"An industry-funded study from research firm IHS estimates that the chemical industry will make $129 billion in new investments nationwide as a direct result of shale gas, adding more than 50,000 permanent jobs to a workforce of around 800,000."
TinyCO2, do you question just that one paragraph? If that paragraph is wrong why should the rest be any better? Because it agrees with what you want to believe? Do you think companies cannot improve their efficiency? That would be odd.
And then of course there is the assumption that hale gas extraction here could give us energy prices comparable to those in parts of the US. That is unproven and provable only by doing it. Sort of a "build it and they will come" mentality.
The US 'Oil Boom' is centered on Willisden, North Dakota.
Willisden had a population of 12,000 in the year 2000 census.
It is easy enough for the Oil Companies to 'buy off' enough of the residents so that there is little to no objection to the various inconveniences that go along with an oil boom....I.E. Medical Clinics, Fire Stations, Schools, Libraries etc for 12,000 residents is chump change compared to the value of the oil....never mind payments to farmers for the pumping gear/pipelines that have to go thru their properties.
Even if the Oil Companies managed to pollute all the water to the point of being undrinkable...trucking in enough bottled water for 12,000 residents would still be cump change compared to the value of the oil.
Put high density population in the picture you end up with the politics of shale oil/gas in New York.
The other day I said here that I sensed a change in mood among MPs on green issues. (It was a comment on the Lord Stern exchanges with the MPs). It must have been a rush of blood to the head that caused this rash judgment which I hereby retract. The UK is well and truly stuffed. There is no way out unless and until enough UK voters do what Australian voters have done, which is elect a government to overturn the offending legislation. That, it seems to me, is still a long way off and, in all probability will be too late if and when that day ever arrives. I have gloomingly concluded that it will not be in my lifetime.
Chandra
"Build it and they will come" should work in a subsidy free market. If shale gas is not economically viable you have nothing to worry about, so your argument is moot.
The additional cumulative emissions argument may be clear cut for those who are concerned about the CO2 issue, but arguing that fracking is not technically or financially feasible in Europe is silly. We can easily find out by allowing limited development, on an unsubsidized basis of course. If it is uneconomic, it won't be sustained.
With Brilliant timing the UK Govt started to ratchet up prices and tinker with the continuity of supply at exactly the time temperatures in Britain started to plummet. My own MP was interested to see my chart showing this effect. Yours might be interested also
http://climatereason.com/Graphs/Graph11.png
It doesn't need a genius to point out tat energy costs are already hurting, and if we need more energy because of falling temperatures that will likely be a major reason for more cold related deaths, personal hardship and a change of govt (ironically back to the gang who created this energy mess in the first place)
tonyb
Eddieo, "The additional cumulative emissions argument may be clear cut for those who are concerned about the CO2 issue"
Yes. 40% less CO2 per joule if you burn natural gas instead of oil. And the green luddites still hate it.
@ Chandra Nov 13, 2013 at 4:47 PM
The irony of your reply questioning just one critic will not be lost on the Bishop's readership.
"And then of course there is the assumption that hale [sic] gas extraction here could give us energy prices comparable to those in parts of the US." is an irrelevant statement.
The impact of shale gas to UK gas prices has to be beneficial to consumers. Simple economics dictates that additional sources of supply, closer to the market will drive down prices. If it didn't, developers wouldn't develop.
And that's before we factor the crucial additional benefit of security of supply.
"Fatih Birol, chief economist at the IEA and one of the world's foremost analysts of energy.."
Could've fooled me.
Joe Public
Simple economics has not encouraged shale gas inveatment in the UK. Nobody seems keen to go ahead and drill production wells.
Bowland Shale is about 6000ft thick whereas Barnett Shale is down to a few tens of feet. Faulting itself is not important , what is , is the impact on gas flow.
In some towns in the UK, worked coal seams were only a few feet below cellars. In fact some people had coal fires and methane from the seams burnt in the fireplace. Vast areas of industrial Britain are underlain by worked coal seams. Tunnelling in London is much higher risk activity than fracking.
Entropic Man says: "Simple economics has not encouraged shale gas inveatment in the UK. Nobody seems keen to go ahead and drill production wells."
Errr... I think you will find that they haven't gone ahead and drilled production wells for shale gas in the UK because the UK government has not granted any licences for shale gas production yet.
Chandra "TinyCO2, do you question just that one paragraph? If that paragraph is wrong why should the rest be any better? Because it agrees with what you want to believe? Do you think companies cannot improve their efficiency? That would be odd."
I don't need to believe the article, I know the competition from cheap imports is real. I've experienced it first hand and energy was right at the heart of the problem.
Of course companies can improve efficiency... so far, but tell me, is your life as efficient as it could be? Has it got every energy saving element it could? Have you given up all uneccessary travelling or consumerism? No? Why not? Because there are costs that are too great. That might be financial or the sheer difficulty in conducting your day to day existence. Why do you think businesses are any different? If a company is big enough then it will move somewhere cheaper, if it can't it will try to extract more money from its customers. If those customers stop buying, then the company goes bust.
What makes you doubt this?
If the trolls were really as keen on energy efficiency as all that, they would cease and desist wasting electrons by continually spewing their vile and puerile drivel on here.
Re Chandra: attempting debate with an individual who is determined to obstinately follow his religion's line is utterly pointless.
Thinking scientist
How many have applied for licenses?
It seems to me it is not only the Greens the UK have to worry about. I watched abit on a CNN business program last night ( I'm in NZ) --there were two British "business analysts" discussing the state of the UK economy. They both repeated several times that the UK had lost alot of the manufacturing businesess as the UK turned into a service economy. They seemed to see this as a major achievement and a move in the right direction. So according to their thinking the increase in energy costs for business is not that much of an issue -- utter rubbish in my view. An economy turning into a service economy is only going to go one way.
Joe Public, I said nothing about "just one critic". The report that the blog post relates to contains a fact sheet - I quoted just one paragraph of that sheet. It would be reasonable to assume that the paragraph I quoted was written by the same authors as the rest.
You said:
Each sentence is problematic.
The impact of shale..., you don't and can't know the impact shale would have. There are many possible impacts, which would depend on the quantity of gas, the infrastructure and environmental effects, the effects on gas prices, if any, the effect on the currency. In no way can you say for certain that all of these combined will be beneficial.
Simple economics dictates..., in my experience those who berate others with words like "simple economics" and "economics 101" are likely only to have any knowledge of economics at that level or below. Supply is normally considered in tandem with demand, so any analysis that considers just one is likely to be wrong or incomplete. And the UK has good connections to international markets and so the gas can be sold abroad as easily as it can be sold here. Expecting a significant effect on prices is like expecting the gas companies to give us a discount when they can obtain better prices elsewhere. To move the price you would need a lot of gas. On another thread, I tried to get boosters to quantify how many wells they thought would need to be drilled in order to move the price significantly, but nobody has a clue.
If it didn't, developers wouldn't develop, what? Duh! Is that what your simple economics tells you - that developers will only develop if their doing so moves the price of their product down?
TinyCO2, you said, "Have you given up all uneccessary travelling or consumerism?", and asked, "Why not?". You then answered, "Because there are costs that are too great." But that is not the only answer. It might equally be because I don't need to. Companies have many costs and can often find locations where some or all of those costs are lower. Energy is not the only one.
And when industry does move, you'll have no difficulty finding economists arguing that off-shoring of one activity or another is "economically efficient" and that we are all better off through moving jobs to India or China or eastern Europe where the work is done cheaper, because the resulting products are cheaper for us to buy. That argument seems acceptable to many when applied to the costs of employing people or the costs of environmental regulations etc, but somehow is not when it applies to energy. That inconsistency undermines economic arguments as a whole (if undermining trust in economics any further is still possible).
Martin Brumby, vile, puerile drivel is your line I think.
Chandra " That argument seems acceptable to many when applied to the costs of employing people or the costs of environmental regulations etc" Nope, it applies to everything and on many Front the British are pricing themselves out of a job.
Yes, it's nice to buy cheaper goods from China but ultimately, what will we do for money to pay fot those goods? We've been living on banking and North Sea oil for decades but we can't do that forever.
So you don't think you need do ruthlessly cut your CO2? Why not? Unless you're down to 2 tonnes of emissions, you're not doing your bit.
Chandra and EM,
Shale gas and oil are the driving forces behind the economic resurgence of the US due to the positive effect they are having on energy prices. You are deliberately ignoring this simple to grasp principle. Your convoluted nonsense in trying to dismiss the likelihood of something similar in the UK fools nobody.
@oldtimer
( new idea for troll vengeance
If they don't layoff, I'll print up a few leaflets explaining how crap these solar panels that they flog are)
@ Ross
"So according to their thinking the increase in energy costs for business is not that much of an issue -- utter rubbish in my view. An economy turning into a service economy is only going to go one way."
------------------------------------------------------
Nope. There is a hierarchy of economies, which runs: agrarian (poorest); manufacturing based (middle) and service based (richest). Apple and Microsoft are service companies - the physical products they sell are mostly manufactured in middle economies, but they would not exist without the intellectual, or service, firepower at head office in the US.
Rich economies still do agriculture and manufacturing when it makes sense to do so, but they are declining in relative importance, both in terms of GDP and employment. For example, Australia is a large food exporter in world terms for commodities such as wheat, because we are good at it and the climate suits. But agriculture is only about 3% of the economy and employs very few people. Education exports (i.e. bringing in overseas students) is larger than agriculture and employs a lot more people - and it is a service industry.
Service industries based on brainpower are more profitable than either agriculture or manufacturing. Mining and energy companies are also very profitable, but what they do requires cutting edge technology - it's not just digging holes and getting rich. Finding and profitably exploiting natural resources is a very hi-tech business these days.
@ Chandra Nov 13, 2013 at 8:01 PM
You state "Each sentence is problematic."
"The impact of shale..., you don't and can't know the impact shale would have." You have no idea about the breadth or depth (or otherwise) of my knowledge. But at least I wouldn't look a gift-horse in the mouth.
I agree shale gas won't have a significant effect on prices; but it will have a beneficial-to-the-UK financial impact.
"To move the price you would need a lot of gas." We have a lot of gas. And it's right on (well under) our doorstep. It isn't in some Siberian field, where it has to be transported via diplomatically challenging (for Russia) neighbours.
"If it didn't, developers wouldn't develop, what? Duh! Is that what your simple economics tells you - that developers will only develop if their doing so moves the price of their product down?" It seems my Economics teacher trumped yours. New entrants to a market having lower cost sources of a commodity, will always thrive.
TinyCO2, if we are pricing ourselves out of jobs, what is the answer? To work for Chinese rates? To adopt Chinese environmental and labour standards? These seem to be unacceptable choices. Oh and my CO2 emissions are irrelevant but are in fact very low.
Steve Jones says that I am deliberately ignoring the principle that shale gas and oil are the driving forces behind the economic resurgence of the US due to the positive effect they are having on energy prices. I wasn't aware that I had addressed that 'principle' at all.
But all the same, is it true? Can you prove that shale is the cause and that other factors are not behind the 'resurgence'? It is a big economy and there are lots of factors that could have an effect in a recovery from a deep recession. And maybe we'd expect to see some effects if one group (shale investors losing their money) decide to subsidize another group (gas consumers). But what makes you so confident that this special set of circumstances can be replicated in the UK?
But the Brittish were promissed cheep "free" energy from wind. Whatever happened to that?
Someone who cares need to dig up some quotes from the many advocates of cheep renewables, and get some answers from them.
Chandra "TinyCO2, if we are pricing ourselves out of jobs, what is the answer? To work for Chinese rates? To adopt Chinese environmental and labour standards?"
Eventually we may have to, or if we keep a lid on things they may catch up. Devaluing the currency is how it's traditionally done. People still get paid the same, it's just worth less. However, what you buy goes up in price because it still uses things that are imported. Many of the things we consider essential get worse (eg NHS). People struggle to afford heat. It's not pretty. Parts of the Eurozone are in deeper trouble because they can't devalue and boost sales. Their employees have to take real pay cuts or lose their jobs altogether. Many of the rules and regs that the EU sets out are quietly ignored.
Of course there are other avenues that can bring in money but ultimately the UK is losing money. The only thing that staved that off before was our own supply of oil and gas and some hefty assests that have now been sold. Our banking system and the popularity of London may keep us afloat but not if taxes start swamping the benefits of doing business here. Worse still would be if we started having regular power cuts because in a World that is hugely influenced by appearances, acting like a third world country doesn't inspire confidence. Losing a banking sector is very easy, as Iceland discovered.
Incidentally, I don't think fracking would bring cheap energy, it would just slow the rises down and only then so long as the Government doesn't make up the difference with taxes.
Cheep renewables- (9.14pm) -that's for the birds, surely?
Johanna
I accept your argument to some extent but I'd say using brainpower / technology in manufacturing is better than service industries. One example the development of nanotechnology.
But what makes you so confident that this special set of circumstances can be replicated in the UK?
Nov 13, 2013 at 9:04 PM | Chandra
Well, there is one way to find out isn't there? The greens are terrified of shale gas success which is why they are desperate to stop it in its tracks before the public sees the benefits.
As for the benefits of shale in the US, just try reading the US financial press.
Joe Public, I missed your comment earlier... In response to my saying that you don't and can't know the impact shale would have, you said that I have "...no idea about the breadth or depth (or otherwise) of my knowledge". Forgive me, but unless you are some omnipotent being (in which case go and sort out some of the world's problems), you have as much knowledge of the future impact of shale on the UK as me and my dog.
We might or might not have a lot of gas but that evades the point. How much does it take to move the market and how many wells does that take? I guess that point is moot now, as you accept that there will be no significant effect on prices. I'm heartened to find that you and TinyCO2 confirm this and hope that you will both try to ensure that the Bishop and others here are as realistic. That will be an uphill struggle, I think. The premis of this thread after all is that European industry will be "priced out of existence" by energy costs if we don't get fracking and I have seen little dissent from this view, except from you.
You now say that "New entrants to a market having lower cost sources of a commodity, will always thrive", which is less clearly silly than what you said before, namely that "Simple economics dictates that additional sources of supply, closer to the market will drive down prices. If it didn't, developers wouldn't develop." However, where your "new entrants" are pumping expensive shale gas and the existing players are pumping from conventional fields, the "lower cost" plank of your argument is clearly fragile. So the only advantage shale would have is locality, and even then the gas still has to get from well to pipe.
Steve Jones, talk to Joe Public and TinyCO2 if what you mean by seeing "benefits" refers to lower prices.