Category Archives: Energy Policy

Living to tell the tale

Indulge the elegiac tone here. It will soon be obvious why.

I have been so blessed in so many ways. Life is too short to be wasted on regret, but as Francis Albert Sinatra sang, I’ve had a few of those, and as I start thinking about my legacy, I’ll inevitably address the negative side of that over the next few weeks.  I intend to do that filtered via a collaborator who hopefully will curb my worst impulses. Continue reading Living to tell the tale

How could shale gas change the UK?

Call it dawdling, hand-wringing, wasted opportunity or simply the analysis paralysis rife in English public life, but there is one benefit from the UK delay in accessing (or even looking for) our shale resources.  That benefit is to learn from others, and the best example to use is Pennsylvania. In a very small way we learnt from the mistakes of early drillers there, but the biggest mistake may be our own petulant inability to accept good fortune.

Continue reading How could shale gas change the UK?

Shale gas replaces coal in steel making.

When I told people three and four years ago that the sudden emergence and future permanence of shale gas is the best news for the economy and the planet, I wasn’t thinking of stories like this on shale and the steel industry. This is as fundamental a shift to the steel industry as the invention of the Bessemer process in 1850’s. It also disrupts the world coal industry even more.  

World coal use is divided very roughly into coal for generation (lignite and thermal coal) and coal used as an intrinsic part of the steel making process, metallurgical coal or coking coal. On a global basis, about ten percent of coal is met coal. I’ve been trying to figure out the carbon implications of met coal use. On one hand, the process uses up  50% of the coal to produce the heat which fixes the carbon to the steel, which in this case can be seen as some sort of carbon capture and storage. That makes it harder to know the actual CO2 implication of this news from the US, as natural gas starts to replace met coal in steel making, where Voestalpline and Nucor are:

among at least five U.S. plants under consideration or being built that would use gas instead of coal to purify iron ore, the main ingredient in steel.

“That technology has been around 30 years, but for 29 years gas prices in the U.S. were so high that the technology was not economical,” said Michelle Applebaum, managing partner at consulting firm Steel Market Intelligence in Chicago. “This is how steel will be built moving forward.”

Continue reading Shale gas replaces coal in steel making.

Why didn’t the EPA bark on shale gas and water?

I’ve often pointed out how silence can speak as loud as words in the shale debate. Last Friday, the US Environmental Protection Agency released a preliminary report of it’s study into Potential Impacts of Hydraulic Fracturing on Drinking Water Resources.

The cynical may point out to the timing. Friday afternoon before Christmas is as good a time as any to bury bad news. But who is the report bad news for?  Allegations of water contamination lie at the heart of public concerns over shale. The debate has not lacked for emotive descriptions of actual or potential catastrophe from many quarters, repeated unchallenged in the press. Only one example here is Josh Fox, in France’s Libération newspaper

In France, media and politicians talk about the “miracle” of shale gas. What is it?

This is a nightmare. The use of these gases pollute the water, air and threaten health. Wells allow gas to escape and chemicals in groundwater.We can not grow anything. The landscape is devastated.

Significantly, even in a paper that makes the UK Guardian look like the Daily Express, the rest of Libé’s coverage has been very balanced. Certainly we have to ask ourselves how, in a mediaverse where US news events, meaningful and piddling alike are on continuous view thanks to rolling news, has anyone missed devastation,famine and poisoning on such a scale?

Continue reading Why didn’t the EPA bark on shale gas and water?

Ofgem’s (ex?) favourite consultant on UK Shale Gas

The crescendo is mounting on UK shale gas judging by Lord Lawson on Saturday, and today, London Mayor Boris Johnson’s wailing into the UK shale gas debate. Lawson doesn’t really convert anyone except the already converted, and probably turns off millions at the same time. But even if you didn’t vote for him, BoJo gets noticed, in his own inimitable style:

The extraction process alone would generate tens of thousands of jobs in parts of the country that desperately need them. And above all, the burning of gas to generate electricity is much, much cleaner – and produces less CO2 – than burning coal. What, as they say, is not to like?

In their mad denunciations of fracking, the Greens and the eco-warriors betray the mindset of people who cannot bear a piece of unadulterated good news. Beware this new technology, they wail. Do not tamper with the corsets of Gaia! Don’t probe her loamy undergarments with so much as a finger — or else the goddess of the earth will erupt with seismic revenge. Dig out this shale gas, they warn, and our water will be poisoned and our children will be stunted and our cattle will be victims of terrible intestinal explosions.

Jeez, people accuse me of being over the top. Probing loamy undergarments of Gaia? With one finger? What on earth is he on, God love him? BoJo is allegedly the stalking horse for Cameron and as one of the country’s most well known politicians, he will get noticed. He’s the first major politician, at least an elected one, who has said anything so positive.

Continue reading Ofgem’s (ex?) favourite consultant on UK Shale Gas

126 Weeks: UK Progress towards Shale Gas

So what happened today?  Some of  those who were hoping for a big bang of government support, permission for Cuadrilla to go ahead and a release of the resource estimate might think today a damp squib.  I think it’s the first in a series of fire cracker announcements.  First we had today’s news, which while incomplete, is still incredibly positive. Next we need some bones on this, starting with permission for Cuadrilla to return to work and, ASAP, an actual release of the figures. Then we also need to know that 14th Onshore Licensing Round, where every hydrocarbon company on earth wants to invest in British onshore oil, will happen as soon as possible.

On the resource estimate, I could write a book on why they weren’t released. And, let me assure you, I will. But they certainly weren’t released due to DECC and the British Geological Survey not finding any resource. The true reason is prosaically hilarious, and one day I’ll write about the reasons why. I know people accuse me of having a big mouth sometimes, but this blog is only the tip of iceberg of what I could print. Future generation will  laugh and roll their eyes. In the here and now, we can point out this gas has been around for 450 million years, what’s another few days or weeks. But given the disastrous economic performance of Plan A, one would think that George Osborne would remember: The next election must take place by May 7 2015. That’s 883 days or 126 weeks and a day. Oops, by the time he reads this, it will be only 882 days and 126 weeks even. If he thinks Plan A is such a success that he can be in no particular rush towards a clean and prosperous future, so be it. He may find the future (or that of his MPs), not so cheery on May 8 2015.

Today’s story is outside the energy industry, an entire yawn. No wonder three national TV News shows cancelled on me almost simultaneously. But having said, that we can learn a lot from parsing this announcement:


To many readers here, the headline is so obvious we forget how the exact opposite has been policy. Until this week, natural gas, shale or otherwise was  just another evil carbon fuel perpetuating the problem, enriching the Koch Brothers and Nigel Lawson ( I don’t go in for that  Lord stuff, John Gummer) while poisoning the earth via underground explosions, pin cushioning the entire country when we weren’t quaking in our beds after our fiery shower. At least until this week that was the narrative FOE, Greenpeace the Co-op and WWF were pushing.  These groups, and green hypocrites like Business Green (who won’t print my stuff because I can’t pay them), frequently cited DECC and Ofgem  to support them. Here’s DECC only last week:

Continue reading 126 Weeks: UK Progress towards Shale Gas

Islands in the Sun? Renewable Reality

Before I start on this, let me repeat for umpteenth time how I am not against renewables. There is a full and frank, if not perfect discussion about them in the Guardian today which I recommend. However the first few paragraphs need to have a reality check:

Before I went to St Briavels, I’d concluded – from the powerful certainties of the anti-wind subsidy lobby – that, whatever else was true of it, wind energy was very expensive. But when I saw the modestly sized Great Dunkilns turbine, which can supply electricity for the whole village, for 20 years, the real value finally penetrated my thick skull. The cost argument is a red herring, based on energy markets that are set by finite fuels and yet which imagine those fuels to be infinite. Besides which, the monetary value doesn’t ask any other questions, such as, “How much does it cost the environment?”

St Briavels population isn’t given, but the obvious queston here is how does modern life outside the village happen.  How do I keep my lights on in London? The other question is what happens when the wind isn’t blowing? No man is an energy island. 100% renewable sustainable electricty, simply isn’t ready for prime time.  I meet a huge number of people  who think renewables provide an alternative to gas, coal, oil and nuclear.  Let me make clear, this isn’t about money:  At any price whatsoever, full scale renewables simply do not work. For proof of that lets have a reality check in actual energy islands, the Hawaiian Islands:

Continue reading Islands in the Sun? Renewable Reality

Is Shale Gas Good for Climate Change?

Over the next week to a month, as we see any number of revelations and decisions over UK shale gas finally pop out the other end of the UK government energy policy sausage machine, we’ll also see what I would describe as a UK energy experts burning papers in the courtyard moment. On the one hand, it will be nice to see the experts finally change their minds now facts have changed, but what took them so long? On a basic scientific level, we don’t know anything more about shale today than was evident two years ago. There’s one proven case of water contamination out of 36,000 wells in the US. It won’t take up lots of the countryside because people won’t put up with it and it’s very expensive to drill that way.The earthquakes it may cause will remain as imperceptible as before. Chemicals will be revealed as nothing more dangerous than those lurking under a sink. 400 trucks will pass by but at the rate of one every 20 minutes for three weeks. The earth will be violated, if one’s definition of a hole the size of dinner plate going two miles below the surface is Gaia rape. After that we create not underground caverns unleashing the hounds of hell, but fissures measured in millimetres or soon, even microns.

For too long the debate about “controversial” shale gas has dragged on and valuable time has been wasted as energy experts face their true problem: They were wrong. True experts, such as Daniel Yergin and Dieter Helm are happy to admit that they, like everyone else, myself included of course, never predicted the shale revolution. It’s the more insecure experts, especially among journalists, who are more insecure about their abilities. Some of that reaction comes from how they set themselves up as some sort of priests reading the entrails of organic goats to a public that was asked to treat them like Green gods. Anyone who disrupted their narrative would be automatically castigated as right wing stooge.  I can serenely anticipate many of the same experts will suddenly convert to the shale side, now they smell money. It’s going to be abandon ship time for many and soon they’ll hope we forget about their youthful indiscretions.The Guardian Friday shows that while force of habit still intrudes, they’re definitely heading in the direction of the lifeboats. Women, if not children, first:

Continue reading Is Shale Gas Good for Climate Change?

UK Gas Price Manipulation: Years Old

As I noted here a few weeks back,  I’ve been in the UK gas business for almost twenty years on the commercial and industrial markets. I’ve bought literally billions of pounds worth of gas for end users ranging from chip shops to steel mills. To think tonight’s revelations are news is naive in the extreme. When I worked in that market (I’ve been gone for four years), unexplained gas price movement were a continual source of amusement and cynicism among those of us who knew anything about wholesale markets. Prices would constantly act in bizarre ways that acted counter to basic drivers. But they did so because Ofgem and the FSA was so essentially clueless. Alistair Buchanan should go because he is the Inspector Clouseau of energy markets. You could tell him anything.They would also openly manipulate the market via the Price Reporting Agency’s. I recall traders from one company telling me how that whenever the Heren Index reporter called at 1700 they would take turns to make things up when they explained price movements to her.

Ofgem said it had been given material “relating to trading in the gas market and is looking into the issue”. The energy regulator said it had limited powers in this area but would “consider carefully any evidence of market abuse brought to our attention as well as scope for action under all our other powers”.

The City and energy regulators are keenly aware of the growing political concern that high energy prices, which are linked to wholesale values, can increase fuel poverty and undermine economic growth. , he Green MP Caroline Lucas said: “If these revelations stand up to analysis by the FSA and Ofgem, then this is corruption on a massive scale and a shameful case of corporates coming together to exploit a public utility.”

But this starts of course with the really big lie. The Big Six, starting with the biggest one of them all Centrica has told Buchanan how they would have to raise (rarely lower) prices because they would buy gas months or years in advance.  And Ofgem believed them!  Notice how Ofgem is trying to weasel out of this. It’s never their fault.Has he never heard of a derivative? This from an RWE presentation of two years ago (Centrica wouldn’t release theirs from the same event) shows how complex the market actually is. I have no idea what this means either. I (and everyone else in the UK) simply had to take the price. With a regulator asleep, we had no other choice.

Continue reading UK Gas Price Manipulation: Years Old

Why do French Leaders have more balls than British ones?

Opposition to shale in Europe comes not only from Greens, although they have massive influence in the environment press where the debate in the UK has taken place. More insidiously, opposition comes from those with the real money to lose. This isn’t only about renewables. Nuclear, CCS, Smart Grid and a host of others see their business plans sailing over the horizon sunk by the new gas reality. That’s why we see so much opposition to European shale gas in business pages such as here at the FT, where we saw another example this past week. The FT is mad for shale in the US, China Argentina and Australia, but goes out of their way to deny anything except inconsequential prospects in Europe:

One factor restraining shale gas growth in central and eastern Europe is the spread of restrictions on “fracking” – injecting water, sand and chemicals at high pressure into shale to open fractures that release gas – across the continent. That reflects concerns that it can cause environmental damage, such as pollution of groundwater. Such concerns have become a bigger issue in Europe than in the US because of greater population density and more powerful environmental lobbies.

A moratorium imposed by France in 2011 has been followed by others in Germany’s North Rhine-Westphalia (where the country’s most promising reserves are situated), and Bulgaria. The Czech environment ministry has also proposed a temporary fracking ban until 2014, to allow time to develop new legislation to regulate the technology.

Everybody knows France has banned shale gas. Haven’t they? Technically the ban in France of using hydraulic fracturing dating from July 2011 still stands. President Hollande, although he made encouraging mention of the need not to reject shale during the presidential campaign itself,  now finds himself in a curious position. To propose that the debate shouldn’t be closed during the campaign was brave, where conventional wisdom was that it was the third rail of French politics.  

But now he has won, he has said the ban will continue. Curiously, this is after the presidential and subsequent legislative elections where his coalition partners EELV managed only 2.95% of the vote for 17 seats. The EELV is similar to other European Green parties, including the UK, where they can get out the vote for low turnout European elections , yet fail miserably at the national level where turnout is very high. The reality for France is that the Socialists’ can push the EELV out and still rule without them. The EELV threaten to leave if the ban on shale gas is overturned. But at 17 seats and less than 3% of the vote, it’s a mystery as to why Hollande needs them on board. Especially, as this slide from an upcoming presentation I’m making in Oxford next week makes clear, there is actually a very broad range of support for shale gas in France:

Continue reading Why do French Leaders have more balls than British ones?