Still silence from the UK mainstream media and energy on the game changing possibilities from any European replication of the stunningly quick turnaround in fortunes for US gas markets from shale gas. Firstly lets remind ourselves again, with this quote from Barclays Capital via Platts
"The emergence of low-cost unconventional, and especially shale gas, resources may lead to lower than expected natural gas prices for the next five to 10 years," Driscoll said. "Shale — along with other low-cost unconventional gas — could provide 75% to 90% of new gas supply over the next several years and set the marginal cost of new supply."
Which raises an interesting point. We think that calling something "unconventional" puts many people off. But up to 90% of gas supply from land based, environmentally sound and relatively un-intrusive technology sounds normal to us. Its drilling for gas four thousand meters under the sea or importing it from totally weird spots like Equatorial Guinea sounds a bit radical. Which explains why many UK experts are skeptical. We haven't found a skeptical US one yet by the way, please do put one our way if there is such an animal. But even the elephant in the world wide energy room is now talking:
Development of natural gas projects from shale formations worldwide boasts a "bright future" and supermajor ExxonMobil hopes to participate in that growth through key positions it is building in Canada, the Marcellus Shale of the US, Eastern Europe and Germany, ExxonMobil CEO Rex Tillerson said Wednesday… "The technology has come a long way," he said. "In terms of shale gas there is a pretty bright future."
Addressing reporters after the company's annual meeting, Tillerson said he still considers shale play asset acquisition opportunities "pricey," but called shale acreage an "expanding part" of ExxonMobil's acquisition strategy
Playing devil's advocate here, assume that Exxon doesn't know their head from their hat and all these European shale gas plays come to nothing. But what about the rest of the world? We'd need only one place for a new shale gas industry to develop to upset the energy apple cart. If we can't have Europe, we'd settle for China:
Q: What is the potential of shale gas in China?
A: There has been no shale gas development in China. However, initial analysis indicates the likelihood of huge reserves. Discovery of commercial quantities would significantly increase availability of hydrocarbons and possibly do much to relieve the global energy crisis. The opportunity to produce shale gas in China is very similar to what has already taken place in the U.S., such as in the highly productive Barnett Shale
Relieve the global energy crisis! From boring old gas? The same gas that's going to run out in the UK and leave little girls crying in the cold and dark on the front page of the Telegraph? Or is that the same gas that would mean we can build lots more gas plants, sooner, quicker and cheaper than building nuclear plants, wind farms, carbon capture coal plants and pipelines to Kurdistan? Who are these people?
What is the Harding SheltonGroup?
A: Harding Shelton Group is comprised of Harding & Shelton Inc.in Oklahoma City and Harding Energy Partners LLCin Dallas. Team members together have more than 450 years of experience in oil and gas exploration and production, most recently leading a joint venture with ExxonMobilin the Barnett Shale.
Q: How did an independent company in Oklahoma find its way to China?
A: The Harding Shelton Group has personal and professional relationships with Chinese nationals in the U.S. and in China. PetroChina representatives made inquiries of us as to how they might learn more about the U.S. shale gas plays.
As if this isn't bad enough, there is this from the University of Leicester:
Shale gas sourced in mudstones in shallow water seaways could provide the future alternative to fuel modern society in the wake of demands to find new energy sources, according to the doctoral research. These mudstones, now exposed across central and northern England, contain up to 14% carbon.
In closing lets go to back to the BarCap story:
Conventional gas is being displaced by unconventional gas," Driscolls said and it may take "20 years for natural gas prices to recover."
Or could it be that conventional energy theory will end up being displaced by unconventional energy theory and the experts will need 20 years to recover? But that would be impossible. That would be just a rare event that it would be the energy equivalent of a Black Swan. Nassim Nicholas Taleb has been on one or our favourites since "Fooled by Randomness". His Black Swan Theory states that what matters the most is not the normal (conventional) events, or theories that are the mundane and expected white swans, but the outliers, the completely unexpected “black swans”. Taleb predicted the financial mess. Could it be that shale gas will prove that black swans can also glide into view carrying extremely good luck (for the majority who are not energy experts) in their wake?
Experts never get it wrong…
Banks hire dull people and train them to be even more dull. If they look conservative, it's only because their loans go bust on rare, very rare occasions. But (…)bankers are not conservative at all. They are just phenomenally skilled at self-deception by burying the possibility of a large, devastating loss under the rug.