UK cost of shale gas

When people like the Policy Exchange start jumping on the shale bandwagon, I must admit to some mixed feelings. Firstly, it’s without a doubt a very positive step for shale’s visibility. Second, although the most beautiful words in the English language are not I love you, but I told you so, it’s disconcerting to see the conventional wisdom turn on a dime and suddenly become converts.

Gas Works? Shale gas and its policy implications says that the government is “unnecessarily gambling with billpayers’ money”. It says that the UK’s energy generation plans are based on forecasting future gas prices which is a flawed strategy, potentially resulting in the UK missing out on the potential economic and environmental benefits of shale gas.

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Daniel Yergin on Shale Gas

Daniel Yergin, the premier gas and oil expert in the US has mentioned shale in the past as being so significant because of its sudden emergence.  The sign of a true expert is when they tell of how wrong they were. Here in the UK, we tend to have insecure energy experts in both meanings of the word.They simply can’t countenance how wrong they were while insisting against reality that gas will continue to be insecure and expensive because the changes in the US just aren’t for the likes of us.  Back to Yergin and lets ask ourselves why is shale one continent’s game changer but not ours?:

THE DAWN OF THE SHALE GAS REVOLUTION has happened really fast, and it’s happening in parts of the country that are densely populated and are not accustomed to this kind of energy development.

As for the efforts to extract the shale gas, it is extremely unlikely that any of the small amounts of chemicals that are used in the hydraulic fracturing process could go through thousands of feet of impermeable rock into the water supply.

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FT on the Golden Age of Gas

In the better late than never category, one of the big guns of conventional economic wisdom, the FT’s Martin Wolf discovers the Golden Age of Gas that the IEA published last June:

The world is in the midst of a natural gas revolution. Even the sober International Energy Agency refers to a scenario it calls a “golden age of gas”. If such optimism proves right, the implications would not only be far greater than those of the eurozone’s painful dissolution, but would also be economically positive. Never forget that ours is a civilisation built on cheap supplies of commercial energy. The economic rise of emerging countries is bound to make the demand for commercial energy increase dramatically in the decades ahead. Gas matters.

None FT subscribers can find it in the clear via the Irish Times.

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Europe -and the Euro – and shale

Alan Riley and I have shared enough stages at various places around Europe, including Kiev next week, that we generally agree on shale but writing in the WSJ,  he has a slightly more pessimistic take than me:

The prospects for shale gas production in the European Union appear to be weakening. Bulgaria has become the second EU state after France to ban hydraulic fracturing to extract it from the ground. The environmental movement across Europe is building its campaign against the technology, spreading alarm wherever energy companies express interest in developing a shale play.

Is this because I trust that people will be open to facts over emotion, or is that as a lawyer he has a less generous, if probably more realistic, view of human nature?

But one thing we agree on:

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Two Texas shale stories

Couple of stories not to be missed from Texas.  First, off the father of modern shale George Mitchell may be 93 in a few months, but he’s still pushing shale:

Natural gas is a wondrous fuel. It emits less carbon dioxide, less mercury, less nitrogen oxide, less sulfur oxide than any other hydrocarbon energy source. Natural gas is the perfect bridge fuel on the way to a less carbon-dependent economy. There is no question that accidents have occurred and mistakes have been made during the rush to develop this vast new resource, but this remarkable resource can be developed by industry following region-specific best practices and regulators carefully monitoring industry activities.

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What won’t happen if the Straits of Hormuz are closed

Something immediately clear about energy traders is that they are overwhelmingly young.Trading is a business where if don’t make enough money to retire after a few years,you probably got fired long before.

 A story comes to mind as we see traders ramping up near term oil and LNG curves based on a risk premium stemming from perceptions that if the Straits of Hormuz are bottled up,so too will be the gas production of the largest LNG gas exporter Qatar.  

I remember being on a plane from New York to London in early 1991 when we were woken half way over the Atlantic for the pilot to make an emotional announcement that the war to liberate Kuwait had started.That happened because this was a Kuwait Airways flight. Because of course, not all KA flights had been on the ground at home, leading to an airline in exile that kept on flying.That also made KA flights insanely cheap which explained my presence.

Similarly,today only a half dozen or less LNG tankers would be bottled up in the Gulf.  

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Peak Oil is Dead say Citibank

Some days there isn’t much news, some days there’s too much. Check the Twitter Feed for interesting stories: Gazprom talking the old poison about shale, Gazprom saying (hoping? praying?) that US LNG won’t amount to much, Santos revealing big Cooper Basin shale gasfind in Oz and of course the various contortions around the world reacting to the UT report.

But best of all is this from Citibank:

 Death of the Peak Oil Hypothesis    

Look I try to keep it clean around here, but if Peak Oil is dead, I say where’s the grave: I need to take a leak.

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Poland agrees with Texas on shale safety

This is unlikely to convince those who don’t wish to be convinced, but a report on an upcoming Polish Geological Institute report on shale is significant in that it gives us an up to date and most importantly, a European perspective on the impact shale is having underneath our feet.

The UT study will be dismissed out of hand by the hard core antis, but the battleground for public acceptance is in the middle, not with ultra antis who never wish to hear actual facts. On the other hand seeking support from those who already support you on the right strikes me as being a waste of money.

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Public Perception of shale “overwhelmingly negative”

Big developing story 

 Claims that a controversial method of extracting natural gas contaminates water supplies are not backed by scientific evidence, experts have concluded.

The technique, known as hydraulic fracturing or “fracking”, involves shattering shale rock with high-pressure injections of water and chemicals deep underground.

Test drilling for shale gas in Lancashire is already believed to have triggered minor earthquakes.

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Bulgaria’s shale ban- and France’s

In what seems to be a rather desperate straw to clutch, shale antis have sometimes jumped on Bulgaria’s shale “ban” as a  spark that will enable other countries to see the error of their ways. 

 Pavel Drumev who is a passionate opponent of fracking said, “People across Europe are waking up to the dangers of fracking after seeing the damage done in America. The Bulgarian ban is just the start. We hope that we will create momentum for a Europe-wide ban and full support for renewables instead.”

Let’s face it,  France banning shale is impressive. But I don’t think that we are yet so desperate that we conceive of Bulgaria as cutting edge in economic development. Meaning no disrespect, it just doesn’t have that  inspiring ring to it. This story from Bulgaria is enlightening.

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