The Wright stuff

The House of Lords Economic Affairs Committee had another in its long running series of hearings on shale gas today. The first witness, it is fair to say, will have been an eye opener. Chris Wright is the boss of an American shale gas company, someone who has actually done fracking, made it work and made it pay - in other words someone who could, rather than discussing hypothetical opportunities and hypothetical problems, explain the realities on the ground. He exudes all-American get up and go and is therefore a rather different kettle of fish to most of the world-weary Brits who appear to before the committee. Some of the peers seemed to eye him rather suspiciously at first, as if he might suddenly leap up and achieve something tangible without asking first, but they seemed to warm to him as the hearing went on and there were some moments of communal good humour and bonhomie.

I was struck by the fact that several of their lordships didn't seem to have grasped that the impact of shale wells is essentially a squad of drilling rigs moving around the country, leaving behind them lots of wellheads of trivial visual impact. So it was good that Wright was able to correct their misconceptions and they will have got a lot from his appearance, for example his thoughts on the idea that population density might be a barrier to shale gas development in the UK:

I've driven across Northern England...it looks like North Dakota after it has rained...The Barnett shale, where the shale gas revolution began, was under Fort Worth...my company has worked on frack treatments in Beverley Hills and Los Angeles.

On the idea that shale development will not cause gas prices to fall in the UK

I read those [suggestions] and I've been quite puzzled to read it. Obviously the United States is connected by pipeline to Canada and Mexico and our gas market is much larger than the European market, so if it caused a big decline in the US I have trouble imagining why it wouldn't in Europe. If you increase the supply of a commodity it's going to have an impact...The price of gas [in the US] is quite different all across the country. In fact there are places in the country where the price of gas is less than $2.

If you ran 35 drilling rigs in England and you produced the entire UK production from British gas wells, there's no question about it, you'd have a significant drop in British gas prices; probably a dramatic drop

And lastly his certainty that the UK regulatory regime is not currently fit for purpose and, repeatedly, the need for a regulatory regime that will allow operators to try different things without having to get new permissions each time.

Not right now. I'm in favour of strict regulation myself and if you had rigorous but crisp and clear environmental regulations and you had a way to align the community and you had a way to move quickly...I'd do it in a heartbeat, but that's not there today...the shale gas was discovered years ago and none's come to the surface yet...

Every rock is different, every rock you've got to innovate, this didn't work you've got to target the rock in a different place or we need a different frack recipe...you have to be able to move quickly to figure out the right formula to make it work.

To make it work with British rocks...You've got a different stress regime, you've got different microfracturing in the rocks. You don't understand these yet and to make it work is going to require innovation. The first well is going to produce some gas and it's going to have some shortcomings and some problems and you say well, "we should have done this". And the second well...There's going to be a learning curve. And if it takes a year to permit each one of those wells noone is going to be around for the learning curve and it won't happen...if you have some certainty and can move quickly it will happen in the UK. If it is slow and cumbersome, I don't know if it will happen.

Which brings us neatly on to witness two, the Deputy Director General of Environment at EU Commission, whose very appearance led one to a morbid certainty that a slick regulatory regime is nowhere on the horizon.

Mobile users may need to watch via this link.

Comments

[AngusPangus]

I can think of several reasons why EM, and Dark Greens generally, want to see high and higher gas prices.

I can think of no reasons why EM, and Dark Greens generally, might suddenly have developed a heartfelt concern for the future profitability of Big Oil's gas plays, the security of Big Oil's shareholders, or the sustainability of gas guzzling consumers' gas appliance purchases.

I conclude that EM, and Dark Greens generally, are being deceitful.

Again.

[RTX1138]

Could EM please post a link to some example of the Wall Street school of thought he mentioned?

[Harry Passfield]

Well, I never thought I'd see the day when EM got his own blog! What d'ya mean, he hasn't? It's the Bishop's?? Well I never...

Anyway, I have a few thoughts to add to the mix:

EM: "My own strategy is to allow drilliing and let the dubious economics become apparent. 'Allow'??? How very bloody noble of you. Have you told Total they need to get your permission?

Jud: Quite right. Who'd rather have expensive wind energy when there is cheap gas - for however long?

James Dyson: When the cost of production (of my vacs) exceeded the price I got for them I moved the operaiton to where things were the other way round. It may not be very patriotic but it keeps alive an industry that pays taxes.

If EM had been around in 1912 in Kitty Hawk he would have told the Wrights that the thousands of deaths that would occur as a result of their development should mean that it should never ever be allowed.

There's only one 'gas bubble' I can detect here: it's an EM F*rt.

[Mydogsgotnonose]

EM is a typical lefty. Such people should be given their own State to run as they see fit. I suggest he and his fellow travellers be allowed the colonise the isle of Wight. Open trading with the mainland should enable them to survive but I suspect that the last two to remain alive would still be arguing about who had the right to dig the other's grave.......:o)

[John B]

It's just sooooo good, and amusing, to see the Greens in the form of that font of all knowledge, EM, express such concern for the profitability of the gas and oil companies. His (or her) concern is truly touching.

[jaffa]

"EM is a typical lefty. Such people should be given their own State to run as they see fit."

I'd settle for them just practicing what they preach.

Greens are either hypocrites with a hidden agenda (usually to impose extreme socialism on others - not themselves as someone needs to rule) or they're well meaning people who are a bit thick and fall for the marketing. I don't know which type EM is.

[Radical Rodent]

EM was a teacher. Throughout his working life, he has known more than his prime audience; that sort of life will tend to make you believe that you know more than anyone else, no matter who your audience is.

[jferguson]

Radical Rodent:

"EM was a teacher. Throughout his working life, he has known more than his prime audience; that sort of life will tend to make you believe that you know more than anyone else, no matter who your audience is."

This is a very interesting, and i suspect accurate observation. We find symptoms of this among our retired teacher acquaintances. Frequently their level of understanding of some of the issues of the day tracks the grade level they taught. I would see this as one of the costs of a career in education.

Do you suppose this is a well known effect?

[hunter]

Jferguson makes a good point about retired teachers- and often, active teachers, as well.
By that standard, it would be fair to say that EM is stuck somewhere close to what in the US is called second grade: 7 & 8 year olds. He has all the hall marks of someone not used to dealing with adult concepts. Repetitiveness, shallow range, lack of understanding, obvious reliance on indoctrination rather than critical thinking, reliance on argument from authority, etc.

[kellydown]

Wright has some good points.

The most active shale gas country in the EU, Poland, had, (the last time I asked) an average 12-month processing time for a drilling permit, compared to an average 1-month in Canada and USA and god knows how long in the UK. It may be just bureaucrats' inertia, but one suspects a deliberate campaign of frustration and blocking by activists who are against all drilling, because .. well .. it's bad. Everybody knows it's bad, end of discussion.

[Rick Bradford]

... as if he might suddenly leap up and achieve something tangible without asking first,

One of the classic, immortal observations.

Of course, being American, he wouldn't know what a faux-pas that would have been.

[Keith]

Re gas prices etc., in the US, around 2005 gas prices were around $9 /mcf and the fraccing revolution really got underway, although the techniques were already being tested 25 years ago by Mitchell Oil for example. From 2005 to 2009 / 2010, the gas price collapsed to < $3 / Mcf. In 2009, the ratio of rigs drilling for gas as opposed to oil was 80 / 20, and the US was importing 62% of its oil.
With the gas price collapse, companies had to react because they were losing money. Many switched rigs to areas within producing basins where they either produced condensate (methane, CH4, stays as gas but other longer chain molecules, C3 - C5 for example condense at surface pressures) or black oil. Now the ratio of wells targetting gas versus oil has reversed and is 20 / 80. The result has been a massive increase in condensate and oil production from shale plays. US oil production has sky-rocketed. The US is importing only 37% of its oil. 2013 saw the biggest increase in US oil production since the industry began in 1859, and at present US production outstrips Saudi Arabia. Apart from impacting internal US gas prices from 2005 onwards, the latest issue will be the effect of increased US production on global oil prices.
All this from allowing innovative drilling, fraccing and completion techniques. Gas in the US is cheaper for Joe Public and industry. CO2 emissions are down (if you think that is important). Maybe global oil prices will come down too, depending on the evolution of the market. What is not to like?

[kellydown]

What is not to like is that anti-drilling activists thought "peak oil" would make it all go away. Instead "peak oil" has receded ever further into the future and unlocking shale gas has done more to reduce CO2 emissions than all the wind turbines and solar panels in the world combined.

So now the antis either have to support shale gas drilling (at least) or admit they're just retrogressive snobs and against any kind of worthwhile development. Pretty much all their desperate recent utterances and flailing about economics is demonstrating the latter.

[Entropic man]

Fascinating reading, gentlemen. It feels odd having so many straw man images projected onto me.

As the one living between these ears, I can assure you that the leftie conspirator green is a pigment of your imagination.

[Entropic man]

http://www.usatoday.com/story/money/business/2013/08/25/natural-gas-boom-overkill/2692767/

http://www.nofrackingway.us/2013/01/31/industry-emails-confirm-most-shale-gas-plays-are-ponzi-schemes/

[Entropic man]

http://crown.kings.edu/?p=1833

http://energypolicyforum.org/portfolio/was-the-decline-in-natural-gas-prices-orchestrated/

[kellydown]

Blessed are the cheesemakers.
http://energyindepth.org/marcellus/deborah-rogers-goat-farmer-cheesemaker-and-mode/

[tomo]

kellydown

Debs is a charmer eh?

Scott Cline has another (justified) pop at the lady :

One of my pet peeves in the shale gas debate is people going around lecturing on topics in which they have no expertise and the media blindly labeling them as experts without checking their “facts”. I see this time and again:

where a
* PhD biologist, as part of the lecture, begins talking about fracture stimulation and theorizes how it could open pathways to the surface to communicate with groundwater,

* Chemistry professors lecturing on horizontal drilling and fracture stimulation technology

* Even lawyers speaking to communities about well construction cementing and casing!

Good grief, apparently having a PhD in anything, gathering non-expert information at anti-natural gas meetings and surfing the Internet now makes a subject matter expert. In these ways myths and falsehoods are endlessly spread and perpetuated.

The rest of the article is well worth a read.

No doubt the lady is well acquainted with the mendacious demagogue wannabe Josh Fox. Helen Caldicott comes to mind - not much of a leap really...

[Hoi Polloi]

EM, like all other acid p!ssers, is obsessed by shale gas while if he would actually read other comments and look into the matter a little more than the usual anti fracking rags he would know that it all revolves around shale liquids.

Chesapeake Energy should have been bankrupt already for 2-3 years (according the "experts") however seems to have had no a bad year in 2013 and 2014 is looking even better. This because they shifted from shale gas to oil exploration, 62% of their exploration is now shale oil.

Doom and gloom stories do well with the armchair "experts", while the real entrepeneurs go out and and actually do business and, if necessary, change their strategy instead of p!ssing acid...

[jollyfarmer]

"Fascinating reading, gentlemen."

Somewhat sexist, wouldn't you agree, EM?

[stewgreen]

Go and deliberately waste some CO2 in honour of the people who come to this forum not to add to the discussion, but rather deliberately and maliciously seek to disrupt it, drive you off topic away from the Bish's post etc
.. Honour a flight in their name
.. But it's your fault for enaging, but you are polite and rational unlike the hystetical, namecalling bile I see on alarmist sites
... Logc will conquer the world ..one day.-

[Entropic man]

Jollyfarmer

Would you prefer "Ladies, gentlemen and others" ?

[Entropic man]

Jollyfarmer

Would you prefer "Ladies, gentlemen and others" ?

[hunter]

EM refers to the inside of his head, as if we should respect the voices he hears in there.

[Wijnand]

From EM's link
http://www.usatoday.com/story/money/business/2013/08/25/natural-gas-boom-overkill/2692767/

The boom in domestic production of both oil and natural gas even provided the United States with 84% of its energy requirements last year, the highest annual level since 1991.

The shale gas revolution swiftly changed the economics of natural gas. It prompted the industry to launch more than 100 projects in the past several years — specifically aimed at taking advantage of low prices — with investments totaling billions of dollars and 50,000 jobs created.

Not long ago, the domestic supply of natural gas was so limited that facilities were constructed in U.S. ports to import natural gas. However, fracking changed the supply situation. Now, the United States produces more natural gas than it can use. As a result, prices have plummeted to approximately $4 per thousand cubic feet.

That is why natural gas producers, like Exxon Mobil have pushed the Department of Energy to speed up its approval of applications to export natural gas.. Last month, the department gave permission to export to a facility owned partly by ConocoPhillips, a move that came two years after the first export license was granted to Cheniere Energy. Now, more than 20 applications are pending.

Approvals were delayed by two years because the Energy Department was waiting for studies on how gas exports would impact the economy to be finished. While oil and gas companies have argued in favor of exportation, as it would raise prices between 3% to 9%, American manufacturers expressed concern that prices would increase their costs. Some economists even worried that the increase in costs would cause manufacturers to leave the U.S., taking jobs out of the economy. But, in general, all reports have indicated that gas exports would benefit the economy, according to CNN.

Score own goals much? Nothing but reasons to get fracking here asap!

I stopped reading after http://www.nofrackinway though, I hope you understand...

[Mike Jackson]

I can assure you that the leftie conspirator green is a pigment of your imagination.
Jan 15, 2014 at 3:52 PM | Unregistered CommenterEntropic man

At least let's give him some credit for that one!
(Unless it's a typo, of course)

[kellydown]

A serendipitous typo, if so.
I wouldn't normally approve of the ad hominem, or ad feminam, attacks on Deborah Rogers but she appeared in several of the links provided by Entropio.
Her "expertise" appears to be moderate at best, about on the level with "bloke down the pub" who's read a few websites and offers food for thought but not someone you'd cite to clinch an argument.

[Entropic man]

No typo. :-)

I don't know definitely whether Rogers is right or not. Chasapeakes behaviour, selling out of shale gas at the peak of the market, is suspicious.
It is worth a serious look. If she's right, one of the main arguments for profitable UK shale gas evaporates.

Wijnand highlights one of my points, that opening the US export market will increase prices. It is only the glut that is keeping prices low. Another argument against cheap gas here.

One thing that would convince me of UK shale gas viability would be a properly analysed business case. I presume Centrica and Total have produced these for internal consumption.

Can you refer me to a good published analysis, rather that all this political hype?

[sHx]

kellydown (5:27PM):

Blessed are the cheesemakers.
http://energyindepth.org/marcellus/deborah-rogers-goat-farmer-cheesemaker-and-mode/

There was a video presentation by Deborah Rogers in that link which is described as thus:

There are several notable things about this set of remarks. First, Rogers simultaneously argues the natural gas industry is headed toward bankruptcy (14:00) and “very handy profits” (35:15). She does so by suggesting current overcapacity has driven prices so low that natural gas companies are unable to make money (17:00) but then positing that exportation will generate all kinds of money (30:30). Similarly, she argues natural gas from shale is not adding supply, but only replacing conventional gas (6:40) and then says there is more capacity than ever (14:20). She never explains why exports, thought to a be a good thing with respect to any other product, are somehow bad when it comes to natural gas (31:35), instead claiming that foreign demand will inevitably put Americans in a price squeeze once they have become dependent on low cost natural gas (33:00).

When a model claims expertise on fracking and drilling and then says fracking and drilling is bad it is time to move on to a smarter model.

[sHx]

Awrright, here is more:

Rogers also says it is inevitable prices “will go through the roof” once exportation begins (34:50) after earlier describing a treadmill situation where companies were developing wells as fast as they could just to pay mortgages (7:40). She also claims well yields are so bad her county had less revenues after quadrupling its number of wells (8:30), implying this was attributable to the production curve, but never explaining this was as much a matter of price reduction as gas production and probably much more. Her message, no subtlety delivered, is that natural gas is bad when it’s expensive and bad when it’s cheap, leaving the listener to wonder what they just heard, except that most of her listeners are, sadly, already programmed to believe natural gas is bad.

She doesn’t stop there. She begins her talk with plaudits for the New York Times article quoting her (no surprise there) and at about 2:10 she suggests St. Lawrence County is part of the shale gas region, which, of course, it’s not. She also challenges the notion of the “shale gas revolution,” a term used by the Dallas Federal Reserve Bank in the above-referenced article written after she supposedly set them straight (3:15). One supposes that’s what she meant when she said she was “ever the contrarian” (3:30). She also improperly quotes a very shallow Penn State report to argue the costs of shale gas development were greater than the income produced to municipalities (12:05), alleges benzene was detected without ever saying how much (9:55) and falsely claimed “roads were being torn out” by gas companies despite mountains of evidence companies have improved road conditions (12:20).

[Entropic man]

http://econintersect.com/b2evolution/blog1.php/2013/04/15/engdahl-shale-energy-is-a-ponzi-scheme

http://econintersect.com/b2evolution/blog1.php/2013/04/17/eia-increased-u-s-nat-gas-production-through-2040

Two more links, one on each side of the debate.

[kellydown]

In other words, a straightforward anti drilling activist pretending she has some some motivation. They pretend they're specifically against fracking, or deep water drilling, out Arctic drilling, or drilling in populated areas, or drilling in unpopulated areas ... and so on.

They're against drilling in national parks, drilling near national parks, drilling nowhere near national parks but we must declare a national park now! to prevent drilling ...

They're against drilling because it's too profitable, because it's not profitable at all, because the companies are ripping local people off, or because they're "bribing" them with too much money, because it harms the fish, because it harms the fishermen (what did they imagine the fishermen did, keep the fish for pets?) ... ad desperandum

Unless they're drilling for geothermal power, using exactly the same techniques and equipment, probably with much greater but still minimal risk of contaminating drinking water ... but hey, it's "green".

[Entropic man]

Two more links on the Chesapeake fraud, one from each side.

http://econintersect.com/b2evolution/blog1.php/2013/04/15/engdahl-shale-energy-is-a-ponzi-scheme

http://econintersect.com/b2evolution/blog1.php/2013/04/17/eia-increased-u-s-nat-gas-production-through-2040

[sHx]

Here is the full sentence:

Some of the peers seemed to eye him rather suspiciously at first, as if he might suddenly leap up and achieve something tangible without asking first, but they seemed to warm to him as the hearing went on and there were some moments of communal good humour and bonhomie.

This is one of the reasons I have taken residence in this village. The Hitch would have approved.

Meanwhile, congratulations to Richard Betts for the gongs. I thought I might bury my congrats here so that no one from the Met Office will notice he is a double agent working for this heretic village. Anyone who is working for the Met, excluding Julia Slingo, who is afraid of the opprobrium to follow once the working classes and the poor masses realise they have been 'opiated', can seek the protection of Richard Betts now that our double agent has ingratiated himself fully with the powers that be.

[sHx]

The Hitch!

http://en.wikipedia.org/wiki/Christopher_Hitchens