Friday
Jul192013
by 
Bishop Hill
Bishop Hill Quote of the day
Jul 19, 2013 Climate: Parliament Energy: gas For [Caroline Lucas] to suggest that [shale] it will be extractable only in the States is really to express the belief that God is an American.
Peter Lilley, speaking at the Westminster Hall debate on shale. The transcript is here, and is well worth a read, particularly for Lilley's contributions.
Reader Comments (37)
"For [Caroline Lucas] to suggest that [shale] it will be extractable only in the States is really to express the belief that God is an American."
He's not?
Do Lucas and her ilk have any clue just how stupid they make themselves appear? We have the occassional world class political idiots, but we're development leaguers compared to yours. (Or maybe you're just better at exposing their retardosity.)
cheers,
gary
From the same debate:
"In the Met Office, we have the biggest supercomputers in the world, which are great at back-projecting climate, but their projections of climate into the future have all been inaccurate."
How true
http://www.epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=f4ace657-9490-4f4c-86f3-25d367e2085c
Dissent in the US Senate as well (though unfortunately a minority report)
Stringer deserves to be quote of the week:
"In the Met Office, we have the biggest supercomputers in the world, which are great at back-projecting climate, but their projections of climate into the future have all been inaccurate. "
As proud a Yorkshireman as I am, Graham Stringer alone could feasibly tempt me to uproot and take up residence on the other side of the Pennines.
I just now watched Osborne on TV announcing tax incentives for shale gas development, immediately followed by one Helen Rimmer, Friends of the Earth, whining about it yet again.
Marvellous stuff.
May God (even if he is American) bless Lilley, Stringer and the few other political 'bravehearts' who stand up on behalf of the real world.
Caroline Lucas has a point. In the United States gas production has increased because of a relatively simply process known as "fracking," but a different process would have to be used in Britain. As Jazznick pointed out in the previous thread, and as the BBC regularly reminds us, to extract shale gas in Britain we would have to use a much more complicated, water polluting, earthquake causing technique called "THECONTROVERSIALPROCESSOFFRACKING''.
That, as Caroline Lucas has informed us, is out of the question.
Extremists would see others freeze and starve rather than accept ideas counter to their obsessions.
+1 to Roy.
It's not easy working at the beeb. You need to stay on message with the house opinion on every subject under the sun. Probably including the sun itself - or "the controversial star known as 'the sun' which causes millions of deaths from skin cancer every year" .
It's always interesting when a new topic comes along - they're not sure who are the goodies and who are the baddies. I think there is some kind of pheromone process like bees in a hive to decide what the mood should be.
I remember when genetic testing for future diseases came along. Most people would view this as a good thing - but within 3 weeks the beebers decided it was bad bad bad. Lots of hand-wringing about how people would not be able to take the test then get medical insurance.
From the Marxist (Met) Office 'The heatwave warning is raised to "level three"'-( whatever that is?).
and gushingly regurgitated by the Biased Broadcasting Company
http://www.bbc.co.uk/news/uk/
Did we see similar scaremongering 3-4 months ago when it was freezing cold for days on end?
Of course not.
However the reality is that cold weather kills considerably more people than hot weather.
The number of excess winter deaths in England and Wales during 2011-12 was around 24,000.
http://www.ons.gov.uk/ons/rel/subnational-health2/excess-winter-mortality-in-england-and-wales/2011-12--provisional--and-2010-11--final-/index.html
Just how many of these excess deaths can be laid at the alter of "green" energy policies that have driven increasing numbers of vulnerable people into fuel poverty?
As a scientist/engineer and lawyer I read that transcript with AWE, so much grandstanding, un-truth and lack of understanding defies belief. None of these people should run a tuck shop let alone a great nation.
MFG, omb
Graham Stringer was excellent, he was honest, logical and pragmatic. Lilley and Dan Byles spoke logically and honestly but with the limitation that they accepted IPCC policies, Oh dear.
It is with great pleasure that I look forward to Caroline Lucas losing her seat at the next election.
I see the American shale experience in the same light as the american CDO experience. Everything looks good while the credit flows are going strong and everyone is looking the other way but things fall apart when someone starts to ask questions. The American shale gas producers destroyed their balance sheets even as everyone was cheering. From what I see the 10-Ks are showing the same thing for shale oil production. What I found interesting is the Bakken ND data. It shows that the number of wells increased by 43% in a year while average oil production FELL by 10%. Given the fact that new wells have the highest production rates that little revelation should terrify investors who are looking at an average production rate for wells, most of which have been drilled in the past 3 years, of 130 bpd. I guess that $60 billion in investment does not get you as much production as it used to in the conventional space. Anyone want to guess when we will see the first wave of write-downs?
Ever one to see the dark cloud rather than the silver lining, Vangel.
Why then is the price of gas in the U.S. about a third that it is here?
The only write-downs are going to be for wind and solar.
Looked at the Carbon market recently?
The same transcript, this from Southampton's very own Alan Whitehead (Labour):
"As I was saying, such a plant produces about a third of the gas over a 20-year period that a fracking well would produce over 7.5 years, but anaerobic digestion plants will produce gas continuously because the cows that provide the stuff that produces the gas continue to produce the feedstock, as do we from our own waste and our food. Therefore, anaerobic digestion plants do not deplete. A long-term strategy for gas supply security might concern itself with anaerobic digestion and biogas, rather than going for a gas bonanza."
Shale vs. cow shit. A serious alternate to help meet the country's energy needs. Hhhmmm, let me think ...
Ever one to see the dark cloud rather than the silver lining, Vangel.
Why then is the price of gas in the U.S. about a third that it is here?
Because of held for lease drilling and a collapse in demand.
The only write-downs are going to be for wind and solar.
Looked at the Carbon market recently?
I think that I can come up with at least $5 trillion of write-downs for shale gas just off the top of my head. I suggest that you actually look into the detail before you come to conclusions or you will make just as bad an error of judgment than the idiot greens did when they backed uneconomic alternative energy schemes.
Vangel - I don't see a "collapse in demand" for natural gas in the US - at least, not one that coincides with the increasing use of fracking in shales and tight formations, which really started in 2007 - 2010:
http://www.eia.gov/dnav/ng/hist/n9140us2A.htm
@ Vangel
i am no expert on this by the way or affilated with the companies.
question is for UK joe public - what have they got to lose ?
the scare stories are c**p, MSM should give realistic cartoon/geo based science to the public (hint-where do they think crude oil comes from, deep down, sometimes near the surface ?, does that hit water tables ? does it come out the sky as manna from heaven?)
America may have over extented on this Bonanza (old white & remember the show,Hose ?) but shale/oil has a lot of history in Scotland (my local area was deeply involved until cheaper Arab/middle east oil was found & exploited as i've posted before, google it)
"I think that I can come up with at least $5 trillion of write-downs for shale gas just off the top of my head."
OOPS. That should read billion. In 2010 range wrote down around $450 billion of Barnett Shale Assets. BHP took a $2.8 billion write-off of Fayetteville Shale assets. Exco wrote down around $700 million. Encana wrote down $1.7 billion of shale assets. The UK's third biggest natural gas producer BG Group took a $1.3 billion impairment on its American shale gas assets. Add Quicksilver, Noble, and Ultra and the number of companies who are telling us that shale is not all that it was said to be grows and grows. Perhaps we might considering paying attention.
Vangel - I don't see a "collapse in demand" for natural gas in the US - at least, not one that coincides with the increasing use of fracking in shales and tight formations, which really started in 2007 - 2010:
My error. I was thinking of industrial demand after the economic contraction but when gas prices fell sharply and the EPA began to close down coal plants there was a move to gas. Fortunately for consumers the 'held for production' drilling had to happen and prices kept falling to less than half what was needed just to break even without accounting for the leasing costs.
question is for UK joe public - what have they got to lose ?
Only their investment. The same question could have been (and was) asked about US mortgage paper. What did they have to lose? After all, national housing prices had never gone down before. So how much risk could there be buying mortgage paper that was backed by the credit of credit impaired borrowers? We found the answer to those questions very quickly.
Now do not get me wrong; in the core areas shale gas and oil can make sense. But those type of operations will only provide a little relief and will not make a dent in the supply problem. I do not know the North Sea formations very well but they seem like a much better place to look for gas than shale formations that will require $10 million wells, very expensive infrastructure, but will not pay back for themselves in most cases.
America may have over extented on this Bonanza (old white & remember the show,Hose ?) but shale/oil has a lot of history in Scotland (my local area was deeply involved until cheaper Arab/middle east oil was found & exploited as i've posted before, google it)
As I wrote above, there are areas in some formations where drilling makes a lot of sense. But the incentive for producers is to go big and that usually leads to capital destruction, which is why the American companies, and foreign companies that purchased shale gas leases, wrote down the value of assets on their balance sheets.
Barry Woods and Martin A, in quoting Graham Stringer's remark about the Met Office's poor climate forecasts but great back-projections, are clearly in a generous mood today. The Met Office isn't even any good at back-projections. See Steve McI's latest post on Met Office Hindcasts.
Has anyone noticed that Cuadrilla is struggling.
http://www.guardian.co.uk/environment/2013/mar/13/fracking-cuadrilla-halts-operations-lancashire
On 1st April 2011 the first earthquake deformed a well casing at their Preese Hall pad. They stopped all operations there a few weeks later and have not resumed.
At their Anna's Road pad drilling has continued, but no fracking has taken place.
They are also in dispute with the DECC about breaches of their planning agreement.
This is not a good advertisement for the industry which was supposed to solve all out energy problems!
Entropic Man
The earthquakes are common knowledge.
Whatever deformation took place did not affect the integrity of the well.
Under these circumstances there was no requirement for Cuadrilla to report the incident.
At the Anna's road pad no fracking has taken place because the government restrictions prevent anyone in the UK from fracking.
The dispute with the DECC about planning agreement related to unspecified dangers to birds and the need to stop operations on a certain date to safeguard the birds. It would be nice if the same restrictions applied to turbines.
Got any other idiot points to make EM?
Dung
My point is that your great white hope of cheap, plentiful shale gas is turning into a farce.
EM
Based on what? The points you raised are non issues.
{Snip. Unnecessary comment]
Vangel...a few more months have passed since your last lengthy and tedious and badly argued jeremiads....how many of those US frackers have gone into insolvency?
Dung
Cuadrilla have been on site three years and achieved very little.
The government is trying to bribe potential shale oil producers with tax breaks/subsidies twice as good as offered elsewhere, and still getting minimal interest. Shell has decided that the UK is too hostile a planning and operating environment to make shale gas worthwhile.
The US shale gas industry is turning into a gas bubble as overproduction to pay debt interest pushes the gas price to half the price needed for profitability.
Your optimism is badly misplaced.
diogenes
When my opponent in debate resorts to personal insult I know I've won. He/she has run out of valid arguments.
Entropic Man
Are you completely clueless??
Cuadrilla would have been fracking for a long time if idiots in government had allowed it. We would then have known by now just what we were sitting on.
Dung
Both Cuadrilla and the government are required to follow due process.
I never trust someone keen to shortcut planning laws. You never know what other laws they will ignore to achieve their goals.
Entropic Man - it takes a very strange mind-set to claim that you are winning an argument when you have not managed to convince anyone that you are in the right, mainly because you refuse to accept factual evidence.
...it takes a very strange mind-set to claim that you are winning an argument when you have not managed to convince anyone that you are in the right, mainly because you refuse to accept factual evidence.
What evidence would you be referring to? The US shale industry has written off more than $5 billion in the past two years and shows no sign of being able to self finance. The SEC filings show an explosion of debt and continued negative cash flows. The number of Bakken wells went up by 43% last year and even though new wells have the highest production rates the average production rate fell by 10% to 130 bpd. That is not economic.
I find it ironic that a site that is so good at exposing false claims by the AGW industry is so unwilling to look into the claims made by the shale sector.
Vangel
For the nth time: the problem with the US market is that gas exploration has been so successful that available gas has outstripped the ability of the economy to absorb it in the short term. The gas they have is in demand all over the world but they still do not have a terminal available to convert it to LNG and thus export it for great returns. If that was not enough there is concern over whether or not Obarmy will allow exports of US gas because he does not want it to succeed.
The US shale gas industry indeed has problems but none of them apply to the UK.
In the US many industries are relocating there for the cheap gas, trans american truckers are converting to gas and a chain of filling stations is being equipped to support that.
A number of terminals are being constructed to convert gas to LNG and export it. The future is bright!
Just noticed this from just before 3:09pm:
David Amess (Southend West, Conservative)
Now what does that remind you of?
http://stevengoddard.wordpress.com/2012/07/12/1988-james-hansen-and-tim-wirth-sabotaged-the-air-conditioning-in-congress/
"When my opponent in debate resorts to personal insult I know I've won. He/she has run out of valid arguments"
Because people can be annoying enough to have others resort to personal attacks I tend to disregard them. To me winning the argument is only about the facts and logic that support the argument. Whoever has more facts and better logic is winning.
So far the financials are showing that shale gas and oil companies in the US have destroyed investor capital and will have to repay a lot of debt. For that to happen they have to stop borrowing more cash and use the cash flows that come from production. That obviously is a problem for the shale promoters' side of the argument. For production to keep going up so must borrowing but that will mean even larger negative cash flows and even bigger write-downs in the future. And that is an even bigger problem for the shale promoters' side of the argument.
For the nth time: the problem with the US market is that gas exploration has been so successful that available gas has outstripped the ability of the economy to absorb it in the short term.
It is not a success if you enter into agreements that force you to produce gas at less than the cost of production. The American companies lost their shirts because outside of the core areas they needed very high prices just to break even. The costs in the UK would be much higher because the services sector is not geared towards shale activity.
The gas they have is in demand all over the world but they still do not have a terminal available to convert it to LNG and thus export it for great returns.
It is not economic to build LNG terminals to export gas when you don't have that much gas to export. Shale wells lose 70% or so of their production in the first year. American production will decline some time in the next two or three years if not sooner. The terminals could not be depreciated and would be uneconomic when the gas was no longer available.
If that was not enough there is concern over whether or not Obarmy will allow exports of US gas because he does not want it to succeed.
The Obama administration has not been a big problem so far and is less likely to be as intrusive as governments in the UK and western EU nations.
The US shale gas industry indeed has problems but none of them apply to the UK.
Of course they do. The depletion is rapid and the wells are uneconomic outside of the core areas.
In the US many industries are relocating there for the cheap gas, trans american truckers are converting to gas and a chain of filling stations is being equipped to support that.
Actually, there hasn't been all that much movement. Yes, the utilities have gone to gas. But that has been more due to the EPA threats and new regulations than gas. Nobody can get cheap long term commitments for supply. That makes the suggested investment volumes less likely to come true.
A number of terminals are being constructed to convert gas to LNG and export it. The future is bright!
Why? The last time the Americans built LNG terminals for imports they lost their shirts. I have little confidence that things will be better this time around.