Bishop Hill The geopolitics of shale
Mar 8, 2014 Energy: gas The Ukrainian crisis certainly seems to be concentrating some politicians' minds on the subject of shale gas.
The US, awash with cheap hydrocarbons, is immune to Russian threats to switch off the gas supply. European countries have to play a much more cautious game. The result, according to this article in the New York Times, is that there is now huge pressure in America to speed up the development of export facilities. This will all be too late for the Ukrainians of course, but political strategists at least hope to curb Putin's ambitions in future.
What effect the new political reality will have within David Cameron's cabinet is anyone's guess. The Liberal Democrats have an interesting political calculation to make. A core-vote strategy will see them stick to their "dead-slow" strategy on shale, but this will make them look so entirely divorced from the geopolitical reality that their credibility as a party will be at an end.
Reader Comments (35)
Perish the thought the EU try develop its own cheap hydrocarbons!!
Remember in the geopolitical sense we are less susceptible than the Germans since we still have our own ( if diminishing) supply of North Sea gas and well developed liquefied gas provision in Milford Haven. This gives the Lib-dems the luxury of a little posturing.The Germans on the other hand must be looking rather wistfully at the folly of their option for green energy which is rendered useless in this sort of immediate crisis when a hard-man turns off the taps. I am always amazed how the green arguments always disappear when an energy crisis bites.
This is the problem with unbalanced coalitions - we had it previously with the Greens in the Scottish Parliament.
A party with virtually no public support has a major say in policy.
It's clear from recent by election results that the LibDems have no credibility whatsoever with the electorate and will implode at the next GE. They have just come dead last in a council by election, beaten by "Bus pass Elvis"!
RR
Almost word for word what I was saying to Mrs J as I clicked my way through to the comments!
I'm afraid that it will take a lot more than Putin's bluster or even action to shake the average British voter of his/her torpor. The British ability to see only what is convenient or pleasurable to see has reached a pitch of near-perfection in the last two or three decades.
'Will be'?
New low for Liberal Democrats - beaten by Bus-Pass Elvis Party (67 votes to LibDem's 56) in Clifton North by-election
http://metro.co.uk/2014/03/07/lib-dems-beaten-by-bus-pass-elvis-party-in-clifton-north-by-election-4457529/
Thankfully the mild winter in Europe (due to climate change of course) means German gas storage facilities are quite full for the time of year ;-)
According to an article in the DT, we get about 20% of our gas from Russia.
As we are at the end of the pipe, any cutbacks in supply will probably hit us first. Also we have very little storage compared to the rest of Europe so will be the first to feel the effects.
Hope it stays warm....
I only hope that the Didcot shutdown has not gone beyond its point of no return. should have started fracking months ago. When Russia turns off the gas taps, and it will, we are in a desperate position with 30+% generating capacity gone.
And end without a start?
When Kerry announced 1 billion dollars US to be given to the Ukraine he either did not know or ignored the fact that the Ukraine will simply give the money to Russis to help pay their energy bill. To paraphrase an old quote from Thomas Jefferson, "those that refuse to develop cheap energy will be ruled by those that do".
Energy is life. Cheap energy is prosperity.
Thank you, MJ, it is good to know that I am not the only one!
Perhaps we ought to realise that most of the significant changes in history have been… well… revolutionary. And revolution results in massive kicks up the backside for many people – which is how the British have tended to have revolutions; they prefer leave the mass murder and mayhem to Johnny Foreigner. Perhaps we should look forward to the blackouts and, erm, gas-outs(?). Only then will the general populace, no longer able to get their fix of Strictly Get Me Eastend On Ice Street Talent while shivering over cold meals, wake up and ponder the benefits of only doing what their parents and grandparents did and consider other options.
@ mikeh Mar 8, 2014 at 11:14 AM
"Also we have very little (gas) storage compared to the rest of Europe ........"
Not so.
The Rough Storage Facility has a storage capacity of 2.8 BCM which is approximately 70% of the UK's gas storage capacity. Rough can supply 10% of the UK's peak gas demand and as such is an important part of the UK's gas infrastructure.
http://en.wikipedia.org/wiki/Rough_(facility)
Wake up and smell the gas.
I wasn't aware that the Lib Dems had any credibility left to lose.
Presumably it was in full knowledge and specifically to get that debt monkey off their back. I hope things settle down in Ukraine - there is some interesting development drilling to be done there.
A core-vote strategy will see them stick to their "dead-slow" strategy on shale...
A 'core-vote strategy' might be rather pointless - your core-vote will vote for you whatever you do. The Conservatives are working on that principle...
"their credibility as a party will be at an end"
Oops, I seem to have anticipated that by quite a few years.
Interesting question for us Scots too.
The SNP are busy bringing in as many new regulations here as needed to stop shale.
Had the current SNP had this power in the 1970s the question of who gets the oil money would never have arisen because the industry would not have been allowed into existence.
Hopefully, when Putin decides to turn off the tap (as he surely will) it will coincide with a huge anticyclone stuck over Western Europe, so that there's no chance of wind making up any of the electricity generating shortfall...
Radical Rodent: "Oh, would that be so! Sadly, the intelligence of the average voter will remain the defence of popularity of the Big Three parties."
Sadly true, RR. When you consider that the silly (English) girl, Gemma Worrall, who tweeted about 'Barraco Barner is our president: why is he getting involved with Russia?' I am in despair: She is twenty years old and has a vote!!!
Do you seriously think the wind-proponents will let such facts interrupt their claims?
The USA is developing port facilities to export LNG but Britain will be unable to import such shipments prior to, the USA government permits hydrocarbon export and until such times as it US-gov' can agree some sort of trade deal with the European Union.
Brussels again? Directly and indirectly..........................
Geopolitics and Energy security? What a joke! our lot don't do joined up thinking. So, no security of supply - not if the green NGO's, Ed Miliband and the Liberal Democrats can help scupper it.
But so help me, it's not just Vlad who can turn the lights out is it?
Thanks to the LCPD Britain will be closing
someall of its largest generating plant in the next 2 years. Then, Osbornes' carbon floor price will soon be set at £18/tonne and it inevitably will kill off the remnants of the British coal mining industry.Double Whammy!
There is an abundance of shale gas under England's green and pleasant land but we can't touch it and as the North sea investment is tailing off.
Double whammy.
Ed Davey, questions the mental abilities of anyone who doubts the green mantras and Mankind induced global warming I'd like to talk with him about that after the lights over England go out - he'd better bring some friends, though I very much doubt if he'll be able to find any.
Nothing exposes the extreme vulnerabilities created by the green agenda better than a geopolitical crisis. Energy security is key to a nation's sovereignty and resiliency. Europe has ably demonstrated yet another consequence of the ridiculous policies advocated by wealthy but scientifically illiterate politicians and their equally ignorant followers. Putin has deftly out-maneuvered the west who were too preoccupied with the greatest non-crisis that never was. This is another wake up call. Anybody listening?
The good news is that the lib dems are now just a Zombie party who will stagger on, dead eyed and moaning, until the electorate decapitates them at the next election.
E-bombing Putin has its attractions. It attacks him in Russia's most vulnerable spot, her financial gain from gas exports.
Four questions-
1) Can Obama fast-track the Keystone pipeline and LNG export infrastructure?
2 Can European economies survivea short term gas shortage and long term price increase by stopping gas imports from Russia/
3) Can this strategy be maintained in the long term?
4) Would European voters be willing to accept the inconvenience/
No. Please no pranks. We need Putin to sort out the the Ukraine as quickly as he can.
Joe Public; Rough is our only sizeable gas storage and it is small compared to Germany, for example, which has 4 times our capacity and is building more (their gas consumption is similar to ours). Our only significant storage expansion project was cancelled last year.
The green agenda has failed at every level.
From preparing cities like New Orleans, to regions like SW England, from bush fires in Australia to flooding in Australia, to preparing for non-hurricane Sandy, to water shortages in California, and now to the basics of life- electricity and food supply, everything the greens claimed to care about or demanded they be put in charge of has been screwed up.
Now Europe is facing a calamity of green manufacture.
And the US is out claiming that 'cliamte change' is the most dangerous thing in the world. In a sense this is correct: The entirely predictable failures of policy are due to climate obsessed kooks being charge of stuff they have no competence in dealing with.
Good job the West is dependent on Russian Gas otherwise we would be at Def Com 4 by now.
Putin need our Western Luxuries and we need their Gas to keep both our peoples happy . So Ukraine Crisis so as long it just stays at just throwing Handbags and not Nukes each other and soldiers and civilians all standing around looking bored.
Yes, the USA is in a better position wrt natural gas etc., but the NY Times article blasts the irony meter into orbit..... this wonderful counter-leverage to Putin comes despite, not because of, the efforts of the Obama administration and their greenie allies at all levels of govt. New York and California (state govts) have massively obstructed development of extensive natural gas supplies in those areas, and the Obama (federal/national) govt has obstructed much and done little or nothing to improve the energy situation.
To the extent that USA supplies are a countervailing influence to Putin/Russia, it is in the face of massive green obstructionism. There could be such a greater output and export from the USA by now that Putin would be in a far weaker position right now, in geostrategic terms.
In a real sense, the greens have given us Putin in the Ukraine as well as many other failings of contemporary EU/USA policies.
Putin turning the gas off to Europe is probably the worst thing that could happen to the catastrophiliacs because this act will only highlight just how bankrupt their cause is.
Mailman
Harry Passfield (Mar 8, 2014 at 2:54 PM): the girl proves that…. Worrall do-o-o-omed!
One does wonder what the situation in London and the Southeast would have been like had the “Greens” had the power in the fifties and sixties, when the Thames defences were being planned and built.
However, on every issue except climate change the Liberals remain the most sensible party by a helluva long way. The other two just repeat old dogmata that have long been refuted by actual facts. Yes the smearing continues but only because both big parties realise that their own more extremist views will likely be tempered by a coalition partner, which frankly hasn't done Germany any harm. Tories resent not being alowed to give their xenophobia full vent, having to consider the poor and pretend to punish their banker buddies for gross incompetence. Labourites pretend that the Liberals are allowing the nasty party to get their own way, when in fact Labour were every bit as nasty when in power.
Would that we had had such a coalition buffer during the anti-industry, pro-banking bias of the Thatcher-Blair years - we may actually have retained some industry and not been subject to a banking crisis at all. That people are not allowed to become dictators and must actually discuss important policy rather than make it up on the hoof is a strength, not a weakness of this system and PR would have made it better.
Here we go again; everyone is pointing to shale gas as some kind of miracle that will push aside our worries about energy. Yet, the country that has produced the most amount of shale gas wound up DESTROYING CAPITAL as the costs of producing shale were greater than the market price, mostly because the AVERAGE well in the AVERAGE formation requires a higher energy input to extract, process, and transport the shale than is contained in the shale that is delivered to the customer. So far we have seen more than $10 billion be written off by the majors as none of their shale acquisitions turned out to be profitable. More will surely follow.
Before I end this let me point out that in the core areas of good formation shale gas makes sense because it is very cheap to produce. A driller who pops a few wells in such formations can make a great deal of profit and make his shareholders very happy. The problem is that these areas are small and have a very limited amount of gas. While they will help as soon as producers succumb to the market pressures and move outside of the core areas capital will be destroyed. And that is not going to benefit anyone other than the promoters who got rich by selling equity in a rising stock market.
Let me also note that I have no trouble being proven wrong. All that it would take for that is to point me to 10-K statements in which primary shale producers show the ability to self finance their gas or liquids operations or report a profit that does not depend on using depreciation schedules that come from ESTIMATED ultimate returns rather than ACTUAL production-data-based ultimate return calculations.