Shale gas goes international. Paranoia follows

The NYT final story of 2011 on shale is a bit worrying.  Shale goes international and Ian Urbina’s exaggeration and mis-information follows.

 South Africa is among the growing number of countries that want to unlock previously inaccessible natural gas reserves trapped in shale deep underground. The drilling technology — hydraulic fracturing, or “fracking,” for short — holds the promise of generating new revenue through taxes on the gas, creating thousands of jobs for one of the country’s poorest regions, and fueling power plants to provide electricity to roughly 10 million South Africans who live without it.

I’m not South African, but permit me to ask a question:  Where were all these (white) farmers protests during the battle against apartheid?

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Coal to gas

A key trend of 2012 will be the acceleration from coal to gas in generation.  That’s a win for the environment and a win for energy security. Most people don’t realise that in 2009 for example, 70% of UK coal was  imported and 70% of that came from Russia. Coal prices soared in 2010 making imports less attractive but still 50% of the total.   

Coal has been around so long that the energy experts who missed shale gas haven’t thought about coal either. Coal was always considered to be so prevalent and cheap that it was the first choice for electricity generation worldwide, especially in emerging countries. China and India were considered so desperate to electrify on cost alone that the expert opinion of coal as the fuel to beat was as cast in stone as the idea that natural gas was expensive and insecure.

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How big a number is that from the Barnett Shale

Let’s put the latest numbers of Barnett Shale Production from October 2011 in perspective:

 Tarrant County is still a runaway No. 1 in natural gas production among Texas’ 254 counties, according to the latest data released by the Texas Railroad Commssion, the chief regulator of the state’s oil and gas industry. Tarrant’s gas output was 62.2 billion cubic feet in October, the latest month for which data is available. Johnson County, Tarrant’s neighbor to the south, is No. 2, at 39.4 billion cubic feet. Denton County is No. 4, at 19.7 billion, while Wise County is No. 5, at 19.2 billion. All four counties are on the list because they are leaders in production from North Texas’ natural gas-rich Barnett Shale. Prior to the Barnett play, Tarrant County’s production historically had been nil.

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UK’s shale free zone carbon calculator

David MacKay is a physics professor who is also chief scientific advisor to the UK Department of Energy and Climate Change. 

From the Guardian today:

Every person in Britain will need to pay about £5,000 a year between now and 2050 on rebuilding and using the nation’s entire energy system, according to government figures. But the cost of developing clean and sustainable electricity, heating and transport will be very similar to replacing today’s ageing and polluting power stations, the analysis finds.

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Another UK Shale play?

The takeover of Greenpark Energy by partner Dart Energy for $42 Million signifies someone else besides Cuadrilla sees potential in UK Shale:

 The Greenpark acreage is complementary to Dart’s existing UK footprint, it said, with similar coal bed methane and shale potential, a large resource base and an early stage development option.

This is a complex transaction, with Polish and German acreage also involved. The mystery here is why would BG,  the only party with any money want to get out?

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More from AJ Lucas on Cuadrilla

More interesting comment from AJ Lucas ahead of their restart of today’s trading after a seven month suspension, during which their stake in Cuadrilla is turning into a very interesting play.  On one hand, one can’t expect them to talk the story any way but up,  but their spin is interesting nevertheless:

 Lucas’s crown jewel is an effective 56 per cent interest in the Bowland prospect near Blackpool in Britain via a 25 per cent direct stake and a 42 per cent holding in Cuadrilla, which since its drilling results at the Preece Hall 1 well may hold the key to a new phase in the British gas supply industry.

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Cuadrilla’s Oz partner trades again

AJ Lucas,  the Australian drilling services provider has had shares suspended since May for other reasons, but trading starts Wednesday Oz time. AJL is the only way of outside investors getting into Cuadrilla Resources the UK company which  has had some promising initial results and estimates in Lancashire, so they are naturally interested in talking up their investment.  AJL holds 42% of Cuadrilla, with the rest held by hedge fund Riverstone and the management team. So we shouldn’t be surprised if the CEO of AJL tells the Sydney Morning Herald

If the science is what we think it is, it’s a very substantial resource,” the chief executive of AJ Lucas, Allan Campbell, tells BusinessDay. ”It comes down to what the rocks say – they’ve got all the answers.

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Coal v Gas: The 2012 battleground

A key objection of the UK’s Tyndall Centre report on shale gas depends on a key misunderstanding about the impact of gas on electricity generation. Gas is not the enemy of renewables. In fact, current renewable solar and wind tech just won’t work without gas as back up.  In that sense,  plentiful gas, which naturally becomes both physically secure and not open to price spikes, enables renewables.  But the Tyndall Centre doesn’t see it that way:

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Thousand year plus history of methane and UK water contamination.

A guest post here from  Graham Dean of Reach Coal Seam Gas, who also chairs the UK Unconventional Gas Group, puts the old flaming faucet theory into historical perspective:

It’s not just in the US that gas comes out of water taps – it happens here in the UK too. 

I was reminded of this when I went to collect the Christmas turkey from some farming friends.  They live in Desford in Leicestershire and they told me how their water supply used to produce gas with their water.  Their water used to be supplied from an electric pump at the bottom of an old hand-dug water well.  To reduce the problem of gas in the water taps, the space above the water in the old well was used to catch the gas bubbles so that they were not pumped into the house.  The disadvantage of this system was that when the pump broke down my friends had to leave the well uncapped for a day to allow the gas to escape before it was safe to go down the well.

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What happened in US shale in 2011

I’ve been looking at shale gas in the US for over three years, long enough to have seen every enviromental objection disproved, but even more interesting is how every prediction about shale gas economics has been disproved in spectacular fashion.  For example

 Dec. 21 (Bloomberg) — Booming U.S. natural gas production from shale formations and slowing demand from households, factories and power plants are poised to send prices down for an unprecedented fifth year in 2012.

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