Bishop Hill A very slow motion car crash
Nov 23, 2013 Climate: Parliament Energy: grid 
Last week Dieter Helm gave evidence to the House of Lords Economic Affairs Committee as part of their inquiry into shale gas. This was powerful stuff from a very clear-thinking witness and some of his comments were devastating. Here are his thoughts on the impact of US shale on European coal prices:
The immediate price impact [of US shale] to drive down the price of coal in Europe. The coal burn has expanded very substantially in Europe, and since the coal burn has gone up a lot in Britain and the coal price has gone down, you might have expected that electricity prices would be falling in the UK rather than going up.
On the effect of government policies on energy intensive industry:
It is not so much that energy-intensive companies in Europe are leaving Europe; it is just that no investment is being made in energy-intensive activities across the whole of Europe.
On the potential for a worldwide shale gas revoluion
...it is a complete illusion to think that in the medium term [shale gas] is a US phenomenon.
On the government betting the house on rising gas prices
I personally have no particular reason for believing that the gas price is going to go up in the medium term. There are quite good reasons for thinking that it is going to go down. It is abundant in supply, and I think one should be very sceptical about this Government and the last Government embarking on policies that require them to assume that the oil and gas prices are going to go up and then pursuing those policies and not being willing to contemplate the consequence of that not being the case.
And his overall assessment?
...we have a major energy crisis to get through between now and [2018]...[in] the [Energy] Bill at the moment [it] is almost as if the underlying fundamentals of what is happening in our energy market are happening on another planet...It is a very, very slow-motion car crash.
And if he were Secretary of State what would he do about it?
I would probably emigrate as quickly as possible;
Reader Comments (171)
Euan: "In the Bakken, associated gas is simply flared."
Bull****
"Oneok Partners LP has announced plans to build a 200 million cubic foot per day natural gas processing facility in McKenzie County, N.D. The facility will utilize gas produced from the Bakken shale. The Lonesome Creek plant will be the company’s sixth natural gas plant built in the region since 2010. "
"Roughly 1 billion cubic feet of associated gas is produced in the Williston Basin per day."
http://thebakken.com/articles/425/oneok-partners-to-build-7th-bakken-natural-gas-plant
Phelim McAleer is set to give evidence on the 26th.
http://www.parliament.uk/business/committees/committees-a-z/lords-select/economic-affairs-committee/
Why have retail prices for coal not come down in Britain ?
There doesn't appear to be enough competition in the market, that can let prices have gone up again in September.
What we can learn from the windfarm scam is that opposition CAN be overcome and energy developments can take place if the political will is there. If they can sell the huge visual impact of wind generation with its negligible output completely unrelated to demand and usually situated in scenic rural areas, there should be no problem persuading people to live with discreet gas wells in relatively small numbers and size relative to wind which actually do a useful job.
For a start, just do what the wind outfits do and pour money into the local communities involved. Read any community council minutes in places anywhere near a big windfarm to see this in action. The sums involved are paltry relative to the rest of the development costs but represent a fortune to groups used to begging a few hundred pounds from the council.
What people can do personally is write in support of gas developments in their area to balance out the inevitable NIMBY and watermelon opposition. One problem with this is that the planning system is geared towards objections and if you are not careful your positive response can easily be counted as an objection.
The planning system generally needs reformed to allow objections only from those directly and substantially affected to be considered.
@ Bruce, thanks for the link. For many years gas was also flared in UK N Sea, until they built the gas gathering system.
http://aleklett.files.wordpress.com/2013/01/bakken1.jpg
"Oneok Partners LP has announced plans to build a 200 million cubic foot per day natural gas processing facility in McKenzie County, N.D. The facility will utilize gas produced from the Bakken shale. The Lonesome Creek plant will be the company’s sixth natural gas plant built in the region since 2010. “Production in the Williston Basin continues to increase with no signs of leveling off or slowing,” said Terry Spencer, president of Oneok Partners. The new facility will help gas producers in the area with essential gas processing capacity, and, according to Spencer, the facility will also help reduce flaring in the region."
This might help bring UK gas prices down. Unfortunately it would make it even harder for UK shale gas to turn a profit.
"Although U.S. propane production from shale gas has been rising for a while, a lack of export infrastructure has kept most at home, pulling U.S. prices well below international levels. But high global prices have attracted investment and U.S. export capacity is now rising fast.
Texas-based Enterprise Products (EPD.N), announced early in October it would build a 6 million barrel a month LPG export terminal. Last week, Phillips 66 (PSX.N) also said it would develop a $1 billion LPG export terminal at Freeport, Texas, with a capacity of 4.4 million barrels per month."
http://uk.reuters.com/article/2013/11/04/us-energy-lpg-idUKBRE9A30G820131104
Euan
I've been out at the annual Club de l'amitie dinner since noon. Having read some of your comments I'm not sure that we disagree as much as I thought we might. My reading of history suggests to me that human progress makes major leaps forward when new and cheaper energy sources are discovered and utilised. My feeling is that shale gas may be the next.
Latimer
I left a comment for you at the end of our last information exchange, don't know if you saw it?
And natural gas exports from Eagle Ford and the Permian Basin to Mexico are also booming:
http://oilandgas-investments.com/2013/investing/natural-gas-export-mexico/
After all Texas state law only allows flaring gas for ten days, extendable by permit to 180 days while North Dakota allows flaring for one year. At he moment about 30% of the gas is flared in Bakken.
and the gas companies in the Bakken are getting sued for flaring.
http://oilprice.com/Energy/Natural-Gas/Bakken-Companies-Sued-for-Wasting-Gas-Royalties.html
Speaking of royalty owners in the Bakken....
What is the distribution of royalty ownership for UK shale gas resources?
Are they owned by the state (i.e. controled by politicians motivated by power and less by profit)
Are they owned by the surface land holders... many of whom might rather get public subsidy for wind farms while the getting is good, or who's profits are taxed to the point of irrelvance.
Or does local governments participate in royalty revenue?
If local governments and local citizenry fail to benefit from gas extraction, except by third-party benefits from the locals employed, then there is little incentive to approve or accelerate gas extraction.
The US shale boom owes its birth more to the private ownership of the resources as much as the technology. Shale gas and shale oil resources owned by the Federal government have not participated in the boom because the owners place profit well below other political interests.
Follow the money. Note well where there is a lack of it.
@Euan,
You say you are for the "exploration" of the fracking resources.
That is the wrong way to think about it. It isn't a case of exploring for it, but appraising what we know is there. Fracking is production. You appraise as you produce. The questions are "How?", "Where?", "When?", and "What price?" not "Whether?" You may not stay with a play. You may move resources from one play to another. It is all dependent upon facility and pipeline availability and capacity.
Haven't you folks worked this out yet?
It's to kill half or more of the UK population to ensure the elite maintain control.
@SandyS
I hope you will excuse me if I can't in detail recall all the responses I made on this thread. But the quote above summarises the point at issue in my opinion. And so it boils down to "cheaper" and "size" i.e. scalability. US shale gas is more expensive than historic conventional gas, but then you have to wander off into all sorts of price comparisons between shale gas and different energy sources.
On a $ basis, US shale gas IS more expensive than historical conventional gas in USA. But it may be extremely abundant. So how do you bring a more expensive but more abundant source into a capitalist market where quantity lowers price?
I could sit here and write for hours on this,but my fingers ain't working so good;-) Suffice to say that the energy is there but it is going to cost more? And with respect to your quote above, you may have to replace leap with another word. Energy costing more to get may sound like a good thing - more jobs! But the reality is that the more people that work at getting our energy means that the energy is more expensive and there are fewer folks around to do other stuff - like work in hospitals. I'm happy to sit here for hours discussing these concepts. If you build in energy efficiency gains it may boil down to maintaining not lowering living standards. But IMO the growing, cheaper supplies era of FF is over.
But finally, the crux of my discussion point, and I don't know the answer for sure, is it better to drill shale or to simply build 15, 3 GW nukes in the UK?
E
PS I would quite like to exit this discussion but the quality of the discussion is improving exponentially and I'm happy to stick around in a civil debate for so long as it takes for everyone to understand each others point of view
@ Stephen: An extremely good point you make. In the USA they have 1650 rigs drilling, basically doing experiments. I'm sure someone will be contouring the results, and they zero in on first sweet spots and then hot spots. But with 1650 rigs drilling they are talking about 140 wells / month to add to their data base. In the UK we have 2 rigs and zero data. IMO the UK must appraise this resource, but it ain't going to happen with the Climate Change Act and CCS hanging over development costs. Any ideas?
F*k that should be at least 1650 wells/month to add to their data base.
Euan Mearns
At £14billion each, like the proposed new Hinkley point nuclear power station, your 15 stations would cost £210billion.
There's not enough money in the UK energy market to allow that sort of investment, which is why the UK is teetering on the edge of its own energy incident pit.
Here is the video:
http://www.parliamentlive.tv/Main/Player.aspx?meetingId=14254
"What is the distribution of royalty ownership for UK shale gas resources?"
Stephen Rasey
"Under the Petroleum Act 1988, shale gas belongs to the Crown and not to the landowner and a Government licence is needed to extract it. The licence holder can obtain ancillary rights under the Mines (Working Facilities and Support) Act 1966 - for example, to occupy land, to obtain a water supply, to dispose of effluent, to erect buildings and to lay pipes. Such rights will be granted by the court if it is not reasonably practicable to obtain them by private negotiation. The landowner is entitled to compensation."
http://www.boodlehatfield.com/the-firm/articles/shale-gas-implications-for-landowners-and-trustees.aspx
Stephen Rasey
The link goes on to say that the landowner is entitled to compensation for losses. Any profit for the landowner would have to come from selling land for pads, or from a private deal with the producer.
Euan Mearns, perhaps some of us were a bit quick to judge you. But, honestly, what do you expect when you said that you thought that the case against windmills was unproven in your view? How could any person who is interested in energy policy and is not in the thrall of CAGW say such a thing?
Your factual errors such as re Estonia and flaring didn't help either.
Making assertions in this corner of the blogosphere has a much higher test than publishing in "Nature." :)
But good on you for being here and engaging in discussion. That process gave your paper a lot more credibility than the usual "take it or leave it" approach. The same thing happened over at Judy Curry's when Marcia Wyatt spent a day on the blog answering questions about her and Curry's "stadium wave" paper.
I hope that this is a signpost to how research, and especially scientific research, will be conducted in the future.
fwiw
The Ivans are really betting the farm on oil+gas exports it would seem. The numbers seem to indicate they could get quite desperate if sales values drop off due to enhanced gas recovery techniques taking off in western Europe - and embarrass the funding of the Nord Stream pipes - it would also see some annoyed Germans I suspect.
As for Bakken flaring gas: "The Lonesome Creek plant will be the company’s sixth natural gas plant built in the region since 2010."
They are finding gas faster than they can build pipelines and processing facilities. But they are building a lot of processing facilities in a really short time and they will catch up.
Honestly, EM, you just don't give up do you? I'm beginning to suspect your motives. It seems like you want shale gas development to be prevented 'because it won't bring prices down', or 'because private enterprise can't make a profit out of it'. Or both. Or anything.
"Neh mind around 30,000 a year die between November and March in England alone due to cold related illnesses!.." --Mailman
Every winter, somewhere deep in the bowels of the organization pretending to be the UK government, a functionary reads the latest mortalilty figures and exhibits this expression:
https://lh3.googleusercontent.com/-2j9egkUX5FU/TX122f9kJUI/AAAAAAAAB1o/oq1j_2g0Y8w/s1600/Alec+Guinness+The+Lavender+Hill+Mob.PNG
@Euan
But with 1650 rigs drilling they are talking about 140 wells / month to add to their data base.
No, it is more like 2000 wells / month ! Each well is 4 to 10 BCF.
At the August 2013 Unconventional Reserves Tech Conference in Denver, Continental Resources described their operations in the Bakken as: "Two miles down, two miles horizonal, in 20 days." 16 wells per rig per year.
In the Bakken, they have reduced it to an assembly line. They build a 20 acre drilling pad in the far NW corner of a 4 section block (2 miles square). They drill down two miles, then two mile on a bearing 175. Frack it. Skid the rig over a few meters and repeat, this time with a bearing of 167 deg. Repeat, each time drilling on a bearing 7 or 8 deg further east until the last well on the pad is drilled on a 95 deg bearing. When they are done, they are draining 2560 acres from a 20 acre pad with tanks, pipelines and facilities, a 1% footprint on the land. Pack the whole drilling and fracking lot up and move to the new pad prepared in the play. They then remediate the portion of the pad they no longer need to maintain the wells.
Each play is different. But practice brings up the pace and keeps the cost/well down. But they are "drinking from a firehose" when it comes to data.
@Euan
In the USA they have 1650 rigs drilling, basically doing experiments.
Forgive the harping on this point, but... "doing EXPERIMENTS" ??!!
Unconventional Oil&Gas drilling rigs are doing experiments no more so than a steel mill does experiments on a batch of steel. Each batch has different feed stock and needs different additives to make spec. But it is routine. The drilling rig has become a factory floor, with almost 100% probability of success and good prediction of results.
This is not like conventional exploration where there is a 50-95% chance of failure but a big development prize if you are successful. No, here in unconventional, each well is drilled as a development/production well.
@Entropic Man 12:00 am
Well that sucks for the landowners and townfolk. They are "entitled to be compensated for losses". Oh how nice, how civilized. But to get a share in the profit for their trouble? Nothing doing!
To think! .. Adam Smith was a Scott.
Under those circumstances of encouragement, it is no wonder fracking has gone nowhere in the UK. The only people who profit from drilling rigs are the anti-frack crusaders raising funds for their Cause. The local residents gain little from the activity unless they are employed in the logistics supply train.
Euan
I'm quite happy for you to quit the discussion, neither of us can tell the future, you are passistic about shale gas v natural gas I'm optimistic about shale gas v overall energy costs. Let's leave it to time and markets to see how it pans out, my main concern is politicians messing for our "comfort and safety"
@ Bruce, I will return to one of my original points. Shale gas is "expensive" not cheap. By that I mean it is more expensive than conventional gas, still affordable, but folks who spend more on their energy bill will have less to spend on other stuff. Those who could only just afford their energy may freeze - as mailman likes to point out. Much / most shale gas has been produced at a loss since over supply dumped the price - great for consumers, not so good for the producers - Rex Tillerson, CEO of Exxon Mobil conformed this with his "losing his shirt" comment to the WSJ. And so about 3 years ago there was a MASSIVE switch in the USA from drilling shale gas to drilling shale oil - Bakken and Eagleford (I'll show a chart that demonstrates this in my next post). They switched these wells on immediately to get the liquids and flared the gas. Now they are building the pipelines and process plants.
@ SandyS - "my main concern is politicians messing for our "comfort and safety"
Mine too! I gotta teach a class at 11 today and have a tonne of other stuff to do. But I want to respond to most of the points being raised here.
@ Mailman - this is how I open my post part 1
"With energy prices rising once again and frost creeping under the doors of many pensioner's homes in Scotland, politicians are blaming everyone but themselves for our energy plight."
All that is required for inactivity to triumph is for the government to stand aside and do nothing - or just leave the rules unclear..
Unlike in the US, all mineral rights in the UK are owned by the Crown, which then delegates authority to the appropriate Government Ministry. No matter how much any private investor might want to invest in an onshore hydrocarbon play in the UK, first and foremost, he must have an Exploration and Production Licence granted by the UK government. The UK government can set the Licence terms to allow staged approvals for seismic acquisition, exploration drilling, appraisal activity and development - and historically has done so. It can also pile on potentially lethal discretionary clauses which increase the commercial risk on the Licence to the point where investors cannot undertake the front-end investment.
In any event an Environmental Impact Assessment is always going to be required, in parallel, at each stage and must conform to EU directives. Additionally, wayleaves and access rights need to be separately negotiated with landowners.
So one thing the government can do is just leave completely unclear the rules which will pertain.
From the Oil and Gas UK site (the industry's association):-
Seems like a great way of guaranteeing absolute paralysis of investment without getting your name in the headlines..
Euan, in matters not that shale gas is more expensive than “conventional” gas but that it is still cheaper than the hare-brained alternatives, such as wind or PV. As for nuclear, our beloved leaders have, once again, sold us down the river to Johnny Foreigner, with the French and Chinese being brought in to build already out-dated nuclear power stations to provide electricity at twice the price. Am I the only one beginning to suspect that our own government actually hates us?
For the shale enthusiast the reasonable proposition should be 'Let's drill a few holes and find out'. Nothing more is really justifiable until we know.
For the anti-shale folks, it seems that the same position is a reasonable one. If your arguments are based on how much there is and how much it will cost. It seems too much to shout and scream that it shouldn't be even tried based on those arguments. What harm could there be if we drilled a few holes at the expense of private enterprise. If we can find any exploration companies who can afford to lose their shirts searching for a resource which, if successful, will cause them to lose their shirts again according to the Vangels of the world.
If you are anti-shale per se, that is where you should base any logical position, not on the economics, which will look after themselves. I find EM's position, well, puzzling.
Nov 23, 2013 at 3:58 PM | Registered Commenter johanna
Johanna,
You are thinking economically. The reason that people like Euan spend so much time putting down individuals and talking up the risk for companies that want to spend their own money exploring for, drilling/fracking for and then selling oil and gas, is control. If private industry (in both senses of the word) can provide cheap energy to the public, where does that leave the 'large government' people of DECC? The only thing DECC could do is try to tax the new energy source out of existence OR hold up licensing for their drilling, currently they are doing the latter, expect the former if there are any successful wells. The entire 'green' apparatus is actually set up to move control of energy supplies to central government.
As I have said on here before my experience of eco-activists as that they as plausible as you could possibly want; they could (to mix a metaphor) convince the hind leg of a donkey. How else could otherwise reasonable people believe that a 2,2 in Eng Lit makes them either a. a scientist, or b. any sort of expert on anything let alone something as complex as climate.
Sooner or later the scales fall from people's eyes but where malice is added to fanaticism as it seems to be here that may take a while.
Mike, up to fairly recently, I would have agreed with you, but Cam-the-moron has taken things a step further with this nuclear deal. To have created it such that the two countries are guaranteed to make shed-loads of money from the British tax-payer does make it seem to a form of punishment for those who disagree with him; in other words, most of the disaffected tax-payers of this country – including you and me. It is a poke in the eye for those who chunter on about the EU, and moan that the only austerity being meted out is on those who work hard and cannot afford an accountant to avoid the penalties of being one who actually earns their keep. It is time that he be reminded that, not only do we, the tax-payers, pay his income and his expenses, we also are effectively paying his tax, too.
stewgreen
..recently UK annual extra borrowing has been £150bn/year and now it's £99bn (what not 100 ?)
I think that you missed a zero and possibly a two or three (four?) from your estimate... 1,300
Windmills: I can't recall what I said, but one of the starting points for me in considering our energy situation is declining indigenous UK primary energy production and the rising cost of imports. Now someone made a comment a couple of days ago that trade deficit wasn't important - I would appreciate elaboration of that point. If it is true, why don't we just import all our gas from Qatar and be done? I will continue on assumption that it is preferable for a number of reasons for the UK to produce its own energy. As I see it there are only 4 options at present 1) expansion of renewables, 2) nuclear, 3) CO2 EOR + other EOR and 4) shale. The comment I made about wind is the context of where we actually find ourselves and not where we would prefer to be. Last winter, for spells our coal and nuclear plant was running at capacity and our gas storage was run down to near zero. It is a fact (I believe and I don't have time right now to run a quadruple check) that without the electricity supplied by wind our gas situation would have been worse - we may have had blackouts. Now you shouldn't read into this that I am a wind enthusiast. In the same post I point out that the utilities that are providing the valuable balancing service are being squeezed out of the market by subsidised class 3 electricity. Running two electricity systems instead of one is clearly at the root of escalating energy costs. But we are short of gas - most LNG is heading East drawn by sky high prices, and this too is adding to UK energy costs. My mind is "made up" that the most sensible route to follow is nuclear - and I quite often don't give other options too serious consideration because of that. Why pursue shale when you can do the same with nuclear? - now I'm quite happy to debate the pros and cons of that.
My factual errors on Flaring - I'm afraid you lost me completely! Bakken gas was flared, and I give explanation up thread.
My factual errors on Estonia. Estonia entered the discussion because somone threw out a red herring on oil shale while we were supposedly having a discussion about shale oil and gas. I still don't know if all readers here are so well informed about these things that it is not worth discussing - I'll take a risk and assume that some may appreciate enlightenment. Oil shales are typically high grade oil source rocks - high organic matter content much greater than 15%, that are immature, ie not been buried and heated enough to convert the organic matter (kerogen) to oil or gas. And so to get liquid fuel out of that you need to add energy, lots of it, probably more than you will get out.
Shale oil on the other hand is a low grade organic shale that has been buried enough to generate oil and gas but it is still trapped in shale - hence the need to frac it. I could go into the ERoEI of these various things but want to be brief;-)
FYI I used to be one of the principles at The Oil Drum where we had peak traffic of more than 70,000 per day. Site eventually got greener and greener as time passed and I stopped blogging there since it became impossible to hold any form of sensible conversation - I have to admit that this place is almost as strange. Anyone who calls me a Green Troll is pretty badly informed.
I had a post on UK climate change on Climate etc a couple of weeks ago. Spent 2 days answering comments, would and should have stayed longer, but I had some folks posting comments to my own blog and when there is "50 of them" and 1 of you, you get swamped and overwhelmed. Once Climate etc thread went over 150 comments I got lost and gave up. Biggest thread I ever had on TOD was more than 600 comments.
Now I'll be doing a post on 2050 pathways in a week or two. Now I assuming that folks here may not like MacKay of DECC - but I try and engage with them. Certain folks in DECC have extraordinarily helpful to me over the years. In my 2050 pathway I have zero wind - do I need to say more?
I'm glad I came over and had this discussion - I've picked up a few important bits of information and learned a bit more about what the readership here thinks. E
Euan, shale gas is cheap. Really, really cheap. It isn't just the gas. It is all the steel pipe needed for drilling and distribution. And all the jobs making the steel pipe.
To not drill for shale in the UK would mean the government hates its own people.
As for Estonia ...
"Estonia has been digging shale for a century. The methods have hardly changed, though Alstom filters have slashed sulphur pollution. Vast plants from the Soviet era still crunch shale rocks and burn them in 40 year-old cylinders near Narva.
They used to supply Leningrad with electricity. They are now under Eesti’s control and serve the opposite purpose, keeping Russia at bay.
Eesti is about to open the world’s biggest oil shale plant, Enefit 280, to double output of kerogen oil to 22,000 bpd, shifting the focus from power to the more lucrative business of car diesel."
"“It is a good rock,” said geologist Hardi Aosaar, holding a chunk in his hand. “It works both ways. If you add oxygen it burns. If you don’t, it turns into oil.”"
Bruce, the main point I want to make about price is that most folks believe that gas is cheap in the USA because shale gas is so cheap to produce when in fact it is amongst the most expensive gas to produce and that most companies over there are losing money - it is hard to believe but as far as I know true. Production cost is $4 t $8 / million btu confirmed by a very useful comment posted a couple of days ago. Where you are on the $4 to $8 band depends on the depth you have to drill and the quality of the resource. Producing gas at a loss is not sustainable and so the US wants to get rid of surplus via LNG - great! But they are chasing $16 / million btu in Japan not $3 / million btu in UK!
But you're right $5 / million btu in absolute terms is cheap - agreed! So this is interesting discussion for me to have regarding presentation and semantics.
This in my mail box today that some may find interesting:
stewgreen
I owe you an apology having re-read what you actually wrote instead of my hurried reading of it.
In my defence I was simultaneously reading other comments, dealing with an insistent three year old and trying to make sense of a film about a Bear, a Deer and some brawling Scottish Squirrels (don't ask).
Bruce, the main point I want to make about price is that most folks believe that gas is cheap in the USA because shale gas is so cheap to produce when in fact it is amongst the most expensive gas to produce and that most companies over there are losing money - it is hard to believe but as far as I know true. Production cost is $4 t $8 / million btu confirmed by a very useful comment posted a couple of days ago. Where you are on the $4 to $8 band depends on the depth you have to drill and the quality of the resource. Producing gas at a loss is not sustainable and so the US wants to get rid of surplus via LNG - great! But they are chasing $16 / million btu in Japan not $3 / million btu in UK!
But you're right $5 / million btu in absolute terms is cheap - agreed! So this is interesting discussion for me to have regarding presentation and semantics.
This in my mail box today that some may find interesting:
"Don't forget Bowland shale is 4000 ft think, 10 times Marcellus, so may be 10 lateral wells from each vertical! Unbelievable potential, by 2015 we should have done data, not long to wait!"
Bruce, the main point I want to make about price is that most folks believe that gas is cheap in the USA because shale gas is so cheap to produce when in fact it is amongst the most expensive gas to produce and that most companies over there are losing money - it is hard to believe but as far as I know true. Production cost is $4 t $8 / million btu confirmed by a very useful comment posted a couple of days ago. Where you are on the $4 to $8 band depends on the depth you have to drill and the quality of the resource. Producing gas at a loss is not sustainable and so the US wants to get rid of surplus via LNG - great! But they are chasing $16 / million btu in Japan not $3 / million btu in UK!
But you're right $5 / million btu in absolute terms is cheap - agreed! So this is interesting discussion for me to have regarding presentation and semantics.
This in my mail box today that some may find interesting:
Euan, in the discussion section on this blog, I did a short summary of the British Energy Challenge in Newcastle in September, that included an 'audience participation' creation of a 2050 pathway that you may find of use.
I have been involved with importing fracking commodities like proppants into the US. And I actually know a bit about fracking- that it has been around since 1947, for instance. Additinoally, I have had the pleasure of meeting some of the developers of the modern and emerging fracking technologies.
Reading anyone who claims to be informed about fracking treating it as if it is a new, unknown, dangerous technology is a real laugh. Anyone who claims fracking is somehow new fangled, dangerous or untested is either very ignorant, a fibber, or both ignorant and deceitful.
Fracking, along with the CO2 obsession of the enviro extremists may be the two areas that help the public to finally recognize the basic deceits, rent seeking and noble cause corruption that has energized the so-called green movement for decades.
@ Bruce and Radical Rodent, I'm having a problem posting and lost a couple of posts, so will keep this brief. My point is that production cost of shale is $4 to $8 / million btu, confirmed by a helpful comment the other day. The producers are "losing their shirt". US wants to export LNG to raise price in USA. I now understand why we are talking past each other.
I agree with you that $5 / million btu is cheap for the UK. But you try telling that to an American when LNG exports push up their nat gas prices which must happen;-) Virtually all the discussion I have had on this topic before has been with Americans...
Seems to me that everyone is arguing from a massive state of ignorance. Truth to be told, we could be sitting on a 'gold mine' or nothing at all. Only time and actual exploration will tell.
What may or may not be going on in various 'plays' in the US is largely irrelevant. We have absolutely no idea what The UK or Europe is sitting on, what it may be worth or even if ,'Politically', we would currently be 'allowed' to tap it anyway.
As far as I am concerned, I'm not going to see any direct benefit even if the 'gold mine' scenario plays out. As with Petrol, Alcohol or Cigarettes the consumer price of (shale) Gas will have nothing at all to do with 'production costs'. HMG believes that the way to reduce consumption is to apply taxes. HMG is (currently) as committed to reducing consumption of Fossil Fuels as it is to reducing the consumption of cigarettes. It knows only one way to achieve its goals, make them so expensive that only addicts will pay the contrived price.
While Alcohol and Cigarettes may be life style choices, according to some, heating ones home come Winter is most certainly not. Fact is, at 53N, people die when the poisonous dwarves of Whitehall steal their Winter fuel.
To those at the younger end of the spectrum who seem to fundamentally believe that using 'taxes' to kill off 'codgers' is some kind of planet saving necessity I can only tell you that, before you know it, you too will be in the firing line.
Genocide never stops with just one group. When the group is gone, one needs another target. Momentum is all.
(moving a little OT (but not much)) Had to laugh (in that bang your head on a wall sense) at this f££king idiot at the Grun. He wants the current dross embedded for all all time via the expedient of 'state funding' for the 'LibLabCon' - in perpetuity. Pass a law that divorces 'The Party' finally from ever again having to put up with the 'membership', 'the donors' and, most of all, 'the electorate'. What could possibly go wrong?
Killing off the poor via 'carbon taxes' and robbing what's left standing to keep themselves in power for ever. So much for 'The Mother of all Parliaments'. If China wants to invade The UK - I'm already taking lessons in Cantonese. The door is open. Show trials of our previous 'leadership' will be most welcome. Firing squads even more so. If I may suggest ... PPV firing squads could recover the costs of the 'trials' and so cost the state nothing.
All, bit disappointed that this has gone so quiet. I've learned more here from blogging than I have done for many years. Part 2 of my post on shale gas will be very much improved as a result!
I'm still a bit surprised at all the enthusiasm here for shale - drilling the sh*t out of England when a few nukes will do the job. But I am genuinely unsure about the society and environmental impact of drilling shale - 8,000,000 truck loads of stuff - I'm not sure if that is a lot or not? But what I am sure about is that some local folks where this is going on are going to do all they can to stop it. You may wish for something but may not get it.
UK used to be a leading nuclear power until Westinghouse got sold for a song. I'm unsure of the history here, but this is what wikipedia has to say:
http://en.wikipedia.org/wiki/Westinghouse_Electric_Company
We also used to have leading technology in breeder reactors until Dounreay got closed - only breeder reactor in the world to produce commercial electricity from waste. I've been told by engineers who worked there that it was Greens who closed it.
The best energy sources are those that provide least jobs! By definition those are the cheapest energy sources.
I am a pretty raw capitalist. But i recognise that a lot of the energy infrastructure that sustains us was built by The State. And for good reason. The investment required is so large that companies will not take risks when policies may change every 4 years.
All, bit disappointed that this has gone so quiet. I've learned more here from blogging than I have done for many years. Part 2 of my post on shale gas will be very much improved as a result!
I'm still a bit surprised at all the enthusiasm here for shale - drilling the sh*t out of England when a few nukes will do the job. But I am genuinely unsure about the society and environmental impact of drilling shale - 8,000,000 truck loads of stuff - I'm not sure if that is a lot or not? But what I am sure about is that some local folks where this is going on are going to do all they can to stop it. You may wish for something but may not get it.
UK used to be a leading nuclear power until Westinghouse got sold for a song. I'm unsure of the history here, but this is what wikipedia has to say:
http://en.wikipedia.org/wiki/Westinghouse_Electric_Company
We also used to have leading technology in breeder reactors until Dounreay got closed - only breeder reactor in the world to produce commercial electricity from waste. I've been told by engineers who worked there that it was Greens who closed it.
The best energy sources are those that provide least jobs! By definition those are the cheapest energy sources.
I am a pretty raw capitalist. But i recognise that a lot of the energy infrastructure that sustains us was built by The State. And for good reason. The investment required is so large that companies will not take risks when policies may change every 4 years.