Bishop Hill North Sea salvation
Dec 11, 2013 Energy: gas 
The Lords took a couple more evidence sessions on shale gas yesterday, parts of which were well worth watching. The first session, featuring an environmental consultant, somebody from the Institute of Directors and a pair from "Residents’ Action on Fylde Fracking", was mostly worth missing although I was intrigued by one of the anti-frackers. Tina Rothery turns out to have been an organiser for the Occupy the London Stock Exchange protests and revealed during the course of the hearings that she had spent most of the summer in Balcombe. This made me wonder to what extent she is actually a Lancashire resident, whether Fylde against Fracking is genuinely a movement of local residents or whether it is just a part of the green anti-capitalist movement.
The more interesting part (from 16:38 ish) was the second session with no-nonsense energy analysts in the shape of Liberum Capital's Peter Atherton, and two independents consultants, Peter Hughes and Philip Lambert. The take-home message was that the pace of shale development is too slow to make any difference to the impending energy crisis. At the current snail's pace we will not even know if there is economically extractable gas present before the storm is upon us, and the gearing up to full production capacity will take even longer than that.
The solution, all seemed to agree, was to deal with the decline in North Sea production. We have proven reserves, infrastructure and skills all available right now, but because of the insane fiscal regime for oil and gas in the UK these are being allowed to wither away.
It's funny how people say that capitalists are short-sighted.
Reader Comments (40)
When you look at the newspaper reports of those arrested at Barton Moss for obstructing the highway it quickly becomes apparent that most are not local. The RAFF group is basically a few useful idiots who have been hijacked by the occupy movement to continue the anti-fossil fuel campaign. A campaign that aims to drive us back to the medieval age with a serious lack of energy to power our modern world.
"Tina Rothery turns out to have been an organiser for the Occupy the London Stock Exchange protests and revealed during the course of the hearings that she had spent most of the summer in Balcombe."
So why was this professional raving lunatic actually allowed a platform for her propaganda in the first place?
...This made me wonder to what extent she is actually a Lancashire resident, whether Fylde against Fracking is genuinely a movement of local residents or whether it is just a part of the green anti-capitalist movement....
If you really ARE wondering that, then I have this bridge in London which you might be interested in buying...
The government really needs to crack on with promoting fracking, regardless of the protesting greenies. Peaceful protest is a right: but obstructing those going about their lawful business needs firm treatment by law enforcers.
Considering all the money raised at "Occupy" was funneled into an account held by "climate camp" which was set up before the occupy protest, you have to wonder if there's not something more sinister going on behind these "activists"
Tina was a reporter for the Hong Kong daily press, having cut her activist teeth in the "ant-war movement" around 2006, she looks to be a professional PR type these days.
Useful idiot, or controlled opposition?
The 'shale takeway' from the qualified (as opposed to activist) witnesses was that we owe it to the people of the UK to find out what we really have, and that 20 test wells drilled in (say) three sites over the next 3 years should give us a definite yes/no indicator. The advice that national interest *must* trump any and all of the swampies' delaying tactics in this was the standout for me.
Wonder if it will happen.
UK oil and gas reserves
Andrew, my own take on UK reserves and production is that the UK North Sea party could be all but over by the end of the decade unless some drastic action is taken to develop the myriad small fields and to stem decline in the existing large fields. Sir Ian Wood has a plan I feel obliged to support. Don't know if it will work, but if nothing is done to change operating practices production will carry on down, lifted temporarily along the way by Jasmine (now on) Clair ridge and Lagan.
Maximising Economic Recovery: the Wood Review
As for shale gas, I've been reading the BGS report - a good piece of work. We've drilled one well and didn't frac it. The government should be demanding that companies get out there and explore to at least determine what the potential might be.
All supporters of CAGW should voluntarily stop the use of all fossil fuels (and all of their derivatives) right now for the sake of the environment and for the good of the rest of us.
They should be glad to do it and, quite frankly, I'm surprised thay have not done so already.
I noticed that the other RAFF member deliberately stated at the start that they were just "concerned local residents".
Isn't that known as being economical with the truth?
The businessman was not a very good choice; without impugning his business skill, surely, the Institute of Directors could have put forward someone with a bit more presence, and better debating and oratory skill.
The pair from “RAFF” were being somewhat disingenuous in their claim that they were not lifelong activists; it is a statement that is accurate, just as I have not been a lifelong brain-surgeon (fit whatever profession, interest, hobby you want); however, I have been a brain-surgeon long enough to have made a significant impact upon the field. As they were to reveal that at least one of them had, in fact, been a long-term activist, why should anyone accept the words of someone who is so free and easy with facts? To emphasise your point, Messenger (12:34 PM); when does "economical with the truth" become outright lying?
As for Tiny Tina’s arguments: 1 in 6 or 1 in 9 – which? Prepare your facts, lady. So, when a well head fails at the top, during a point where they putting in chemicals or withdrawing flow-back water – this will tarnish the ground so much that it will affect the quality of cheese. Then the risk to tourism (which daffymills will have no effect on, despite
ruining, erm, enhancing many views) – with shale gas extraction you get methane burn-off… Do you? Surely the methane, being the bulk of the extracted fuel, is exactly what they are fracking for – it is the fuel that they want to sell! So why should they want to burn it off?What nasty chemicals? There is a site which lists the chemicals that could be used (note: could, not would); most of these chemicals can be found under the kitchen sink. Lawson managed to raise that point, to which the harpie replied that one of them was hydrogen chloride… or chlorine… she couldn’t remember which, but she did not want the risk of spillage of it in concentrated form from the lorries. What about the methane and other chemicals pumped out continuously by your “beloved” cows, lady? Scare, scare, scare… that is all she was capable of. As the concentrated form of hydrochloric acid (which is probably what she was thinking (ha! choice word!) of would most likely be in drums, the chances of contamination are bound to be negligible, even if there were a spill. Facts are important, and, if you cannot get even the most basic facts right, what hope is there for the rest of your argument? Oh, then she brings in the che-e-eldren…
Will no-one rid us of these troublesome pricks?
It seems that UK politicians are just as stupid as politicians in other countries. Fracking is very safe and there is no environmental problem. The surface risks are very low in the UK because of regulations. That removes the biggest safety problem with the process. And as long as the cement casing is done according to the typical industry standard there is no groundwater contamination issue to speak of.
The risks are still primarily financial. And on that front let investors and lenders take risks with their own money and see how things work out. Production in the core areas should generate a profit. Production outside of the core areas will lead to steep looses. As long as markets are allowed to work producers will only work on properties that make sense and consumers will benefit along with investors.
"spent most of the summer in Balcombe"
I wonder where she signs on - or is she actually employed?
North Sea oil and gas is declining..?
For goodness' sake don't let Alec Salmond know - he's pinning his whole 'Yes' campaign on the assumption that he's going to fund an independent Scotland from the proceeds...!
Can't wait to see the Barton Moss camp covered in a few inches of global warming........
These Green/Leftist protests are populated by those who can afford stupidity.
Most people have to work for a crust.
Radical Rodent
Oil companies hate it when frackers spill hydrochloric acid on their well sites. The hydrochloric acid breaks down calcium carbonates and release nutrients that result in excessive plant growth.
euanmearns
Fine in theory, but the North Sea small fields will only be worth developing if the price remains high and the politivcal atmosphere favourable. The same applies to shale gas.
All of the political parties from Labour to UKIP are currently playing to the crowd and promising the energy equivalent of bread and circuses.
If anything the political climate is driving existing investors out of the UK energy market, rather than encouraging new investors to come in.
Jamesp she is employed by a high street cosmetic chain called Lush.
Lush claim to be public limited company but shares are issued on invite only.
Imagine one of the Bishophillbillies buying a few shares standing up at their AGM and asking the directors why are they putting company profits into Left Wing Extremists
Andrew Montford is an accountant just ask Lush to see their company accounts .Find their secret left wing slush funds.
Imagine the furor if Rupert Murdock or Philip Green were openly financing Right Wing groups.
Lush claim to pay full UK Corporation Tax and made a profit of 260 million last year.
Same thing happened with Anita Rodick and Bodyshop they were inadvertently financing Violent Anarchist groups who caused who caused wide spread disturbance at the various G7 G20 summits.Lot of innocent bystanders were caught up in it were hurt including Ian Tomlinson.
These protestors don't claim benefits obviously don't work and Lush is financing them.
She was organizing the Anti Shale Balcombe protests and the Stock Exchange Protests
She is a proxy carrying out political agitating on wims of the owners of Lush
Only way you could possibly take down Lush if they have been sponsoring extremist anarchist and animal right groups
Best bit is that the husband and Wife team that own Lush were both awarded OBEs for services to the Beauty Industry
and they are financing anti capitalist left wing political agitators.
Entropic man
At < $80 / bbl I think the North Sea is history, and perhaps Britain with it. Members of the public need to understand that getting at remaining reserves is difficult and expensive, not cheap. Many / most wells are producing mainly water. Rune Likvern has concluded that costs of small deep water Norway are now converging with shale oil - both "expensive" not cheap. The public also need to distinguish between difficult to get at "expensive" energy and government policies designed to make energy expensive.
Millibands promise to freeze energy prices is bonkers. This would limit the amount of energy we could buy to the price cap, leaving power stations idle and filling stations empty. The worrying thing is that Milliband should have been a sitting duck for the Tories who decided instead to shoot themselves in the foot.
At Sherlock, Alex Salmond is pipe dreaming and I aim to be in the vanguard of exposing how ridiculous some of his claims are.
Euan, so what was all the "earthquake" fuss about?
Re: Chemicals. I'm on the drilling side rather than completion (where fracking resides), but I thought the success of the fracking revolution was partly due to the fact that the fluids used *fewer* chemicals than conventional frac water?
And , speaking of groundwater - nobody in their right mind would drink untreated groundwater anyway.
I've also heard that many projects are not viable at less than $80 or $85/bbl. But I'm fairly optimistic about advances in extraction technology and practices helping to reduce costs. Although it's a long time since oil was as low as $85/bbl, I do remember losing my job along with thousands of others in the 1986 slump and such conditions could arise again.
The SNP's promise of living off oil revenue while being a Green Energy powerhouse surely rings false with the public who are being told repeatedly elsewhere that Fossil Fuels and "Green" are not compatible.
Kelly, OK they fracked it, caused a "tremor" and were forced to abandon operations without completion and well test - as far as I know. Don't hold me to this, I've just done one quick read of the BGS report.
Kelly, I don't think oil price is heading down any time soon, not unless shale oil fracking in USA creates a huge glut. They have advantage there of being onshore and small unit costs - don't need to build the worlds biggest ship for example for floating LNG. Companies are already reigning in expenditure that will likely feed through to declining production in OECD and positive price response.
Better extraction techniques offshore are very expensive. CO2 injection, for example, I've been told £1 billion a pop per platform. But you can get 20% more oil out. BP are progressing with desal water injection west of Shetland.
The professional protestors these days are keen to invite the "dole scrounger" description so that they can refute it. This is because things have moved on and the anticapitalist movement has so much money they can afford to bankroll these characters. It seems they even have nominal jobs which allow them to deny being professional protestors although clearly if their jobs were real and worthwhile they couldn't spend so much time on the protest line.
Kelly, I don't think oil price is heading down any time soon, not unless shale oil fracking in USA creates a huge glut.
If oil prices fall any lower in the US the shale producers cannot hide the fact that they are cash flow negative and that much of their balance sheets will need to be written off. That would remove shale as a viable new source and would leave only the heavy oil deposits and a few ultra-deep fields as possible new supply that could satisfy demand. And since the Bakken data is showing a decline of more than 60K barrels from existing new wells we are looking at a peak some time next year unless there is a massive increase in new drilling activity. The trouble is that the average well from the Bakken is now producing less oil than it did three years ago.
The facts are that the North Sea is in decline as are most of the world's conventional fields. The production of light sweet crude is not any higher today than it was seven years ago. And with the shale scam about to be exposed for what it is the environmental fools who have been trying to stop development every step of the way are about to get what is coming to them.
If oil prices fall any lower, it means that supplies are abundant and new sources are not needed.
One key observation is that Brent is trading on $110 that seems to be the median for the last 3 years. No sign of oil prices falling lower.
Interesting article on shale economics in the Marcellus field: http://naturalgasnow.org/cabot-oil-gas-offers-economic-lessons-deborah-rogers/
This quote caught my eye: "Cabot Oil & Gas, whose main operation is now in Dimock, Susquehanna County, Pennsylvania, can make money, and begin earning a return on their investment, on any gas they sell at a price of $1.20 per thousand cubic feet (Mcf) or more."
That is less than one third of the current - depressed - price.
"If you really ARE wondering that, then I have this bridge in London which you might be interested in buying..."
Dec 11, 2013 at 9:33 AM | Dodgy Geezer
If I'm not mistaken, the eponymous bridge is now in Lake Havasu City, AZ. Of course in Arizona, they sell ocean front property to the rubes. :-)
cheers,
gary
"One key observation is that Brent is trading on $110 that seems to be the median for the last 3 years. No sign of oil prices falling lower."
Given the fact that real economic activity in the US and Europe has collapsed shouldn't oil have gone down if there is sufficient production?
I don't think real economic activity has collapsed everywhere. Quite the contrary. In UK unreal economic activity - banking and finance - has collapsed. Presumably the painful process of rebuilding real economic activity is under way. But there are clear signs of polarisiation. Two speed economy in USA and UK - the haves getting more. And economic activity in the Eurozone periphery has certainly collapsed - their oil consumption is way down.
This quote caught my eye: "Cabot Oil & Gas, whose main operation is now in Dimock, Susquehanna County, Pennsylvania, can make money, and begin earning a return on their investment, on any gas they sell at a price of $1.20 per thousand cubic feet (Mcf) or more."
That is less than one third of the current - depressed - price.
You might want to look into the numbers. I think you are looking at the cash costs that ignore the lease acquisition costs and accruals. And you might want to look to the 10-K filings and have a close examination of some of the notes regarding the possibility of changing the DD&A numbers and of write-downs of assets on the balance sheet.
Euan
When you talk about the Eurozone periphery, does that include Estonia and Latvia? Their economies have taken a kicking over the past few years but they are now booming - they took the short-term pain, as did Iceland.
@jamesp, She's employed as a marketing bod of some sort by a web design company "orbiting" about Blackpool as well as working for Lush. Though by the number of tweets from that company she's probably only part time, and considering her involvement with @occupy a bit of a liability.
test - was my comment received?
What I find troubling, apart from the obvious lack of preparedness, poor grasp of facts and predisposition for scaremongering, is the fact that Ms Rothery appears to have misled Parliament dears.
Because she quite clearly says they haven't, in the last 2 years, protested at the roadside or blocked trucks and yet her picture was in The Times over the summer during the unrest at Balcombe.
If she's prepared to be economic with the truth in the House of Lords, how are we to trust a word she says?
It seems to me, pumpkins, as though the two RAFF witnesses hold the House in contempt judging by this:
http://stopfyldefracking.org.uk/latest-news/so-this-is-how-politics-works-raffs-attendance-at-the-house-of-lords/
I also note she says they've spent the last two years writing to politicians, "lobbying their MP's and councillors" sweeties - and yet complains at what she perceives to be industry lobbying. I find this sort of double standard very distasteful.
Here's the picture from The Times:
https://twitter.com/aunty_fracker/status/411482063960027136
I thought the environmental guy in the first session did a great job of setting out the true risks and putting the over-stated RAFF claims into perspective. If he's right that it can be done safely and that the regulations we have are up to scratch, then we need to get on with at least doing some more exploration to prove this stuff can even be produced. I thought it was funny when Lawson tried to lure him into some RAFF bashing at the start, bet the guy wanted to demolish their credibility but had to be all diplomatic instead!
So, when Mr Roberts told Peers that RAFF are just a group of concerned residents, was he deliberately trying to mislead Parliament, cherubs, or did he really not know that Tina Rothery was a prominent organiser behind the Occupy London Stock Exchange and therefore a seasoned activist protestor? She even unashamedly describes herself as an activist on her @tinalouiseuk Twitter bio.
Here she is quoted by Sky News in 2011:
http://news.sky.com/story/897730/st-pauls-eviction-bid-halted-until-new-year
When Ms Rothery describes herself as just a concerned Blackpool resident and doting grandmother, dears, I think she's being more than economic with the truth. Something she accuses the fracking industry of all the time. Which, of course poppets, means she's also a hypocrite xxx
Do we have an acknowledgement from Rothery that blocking roads etc is 'doing the bad stuff'?