US LNG exports to Europe

The Co-op ICM and You Gov polls on shale highlighted in the Guardian earlier this week confirmed my suspicions that the energy debate in the UK outside of shale is open to all sorts of misconceptions, misunderstandings and just plain ignorance.  

The YouGov poll showed that 55% of people want more windfarms, compared to just 17% who want more gas power stations. It also showed that less than one in three people thinks the government should give the go-ahead to fracking. RenewableUK’s deputy chief executive, Maf Smith, said: “Support for renewable energy is consistently strong, in this and other independent polls. One stark message from this survey is the public’s evident disenchantment with fossil fuels, including the unpopularity of fracking.”

This hostility show that the shale debate is now poisoning conventional natural gas as well, which should mean that the entire natural gas industry, including Gazprom and Qatar also need to get involved.  The reality is shale gas molecules can be no more removed from anyone’s natural gas supply than one can choose to buy petrol that only comes from the North Sea and doesn’t include any refined from Iranian, Venezuelan, Nigerian or anyone else’s product.

Although we have yet to produce so much as a molecule in Europe, the time is fast approaching when US shale gas as LNG hits Europe in massive quantities. The moral choice for the shale antis will then be that if they truly believe that Pennsylvania is being poisoned, then they should put their money where their mouth is and stop using natural gas to heat homes or cook food and boycott all businesses that continue to use “just another fossil fuel”

This slide from Bentek Energy at the Platts LNG Forum earlier this month shows the current state of US LNG exports. It was only two years ago that Cheniere Energy proposed exporting shale to LNG from the Gulf Coast and at the time, the conventional wisdom said it would never happen:

I am not sure the economics work out in Cheniere’s favor,” said Zach Allen at Pan Eurasian analysts in Raleigh North Carolina.

“Cheniere is either projecting some change in the market that is going to force LNG prices up to oil parity or it doesn’t work.”

But since then Cheniere have actually started construction on two trains, and has proposed four more.But they are not alone with multiple LNG projects on the horizon. We can certainly expect that not all of them will make it, just as few of the projected import terminals in 2004 ever reached Final Investment Decision

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The UK’s great good luck on shale gas resources

The Parliamentary Committee on Energy and Climate Change asked for evidence on the subject of The Impact of Shale Gas on Energy Markets.  There were 30 submissions, but the one I went to right away was from Cuadrilla Resources, the only company who have actually drilled for any.

Here in public, although currently ignored by the press, are some revelations and hypotheses about the potential for shale that could have important international implications. Hang on to your hats. Everything you thought you knew about UK energy is out of date. Read it all, but here are the key points. For busy journalists, I’ve underlined some key points.

It is apparent from our exploration and appraisal of the Bowland Shale formation in Lancashire that the UK has a very large amount of onshore gas in place. Our prior estimate for gas in place (OGIP) in the Bowland licence area alone was 200 TCF. We will review this estimate after further analysis of the 3D seismic survey we completed over the licence area, as well as analysis of data from the next well, which we are drilling at the Anna’s Road site near Blackpool.

1. What are the estimates for the amount of shale gas in place in the UK, Europe, and the rest of the world, and what proportion is recoverable?

1.1 Cuadrilla believes that the prospects for shale gas in the UK and in parts of continental Europe are very promising, based on assessments of a number of geological formations that are not dissimilar in scale to US and Canadian sites where major deposits of natural gas have been discovered.

Continue reading The UK’s great good luck on shale gas resources

Russia faces reality on shale

I’ve never been one who sees Russian money behind anti-fracking groups in Europe (and Pennsylvania), but it will be interesting to see if some antis fall by the wayside now that Vladimir Putin has completed the Russian change of heart we’ve seen evolving over the past few months. First there was the pact between Exxon Mobil and Russia in June to use fracking techniques to exploit the oil in the Bazhenov Shale. Since then we’ve seen signs from Energy Minister Novak and others who openly criticised Gazprom for reacting badly to the the shale gas challenge. This shift from gas to oil may explain the recent rise of Rosneft over Gazprom. This week in Russia, Putin did what the UK presswould call a giant U turn and the US would charcterise as a flip-flop. I call it waking up to reality:

Overseeing the official launch of the Bovanenkovo natural-gas field in the Arctic by video link from his residence outside Moscow, Russian President Vladimir Putin called on Russian gas monopoly Gazprom, which supplies about a quarter of Europe’s gas demand through a pipeline network, to reconfigure its strategy to adapt to the growing threat from shale gas. Russia is the world’s second-largest producer of natural gas after the United States.

Politicians, experts and businessmen are talking about shale revolution, the Kremlin leader said, adding that shale-gas developments and growing trade in liquefied gas is reshaping the market.

“We must take in account the current developments and have a clear view how the situation will develop not only in the next two to three years, but through the next decade,” he said. “The priorities should be supplies to the domestic market, our own economy and our enterprises, as well as diversification of markets to account for the prospective Asian segment and means of delivery,” Putin told a meeting on 23 October of a Kremlin energy policy commission.

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Another cost of shale gas denial

In my experience, few of us realise that in the UK and North America there are three broadly equal uses for gas.  Everyone knows about heating, some know about the role of gas generation in electricity but only a small minority realise the huge role that natural gas plays in providing raw material for the chemical industry.  

Greens especially are often unaware of how pervasive chemicals are not only today, but in their role in history and the development of the Industrial Revolution.  Chemicals are a huge industry and one of the few to give the energy industry industries a run for their money.This chart shows how large they actually are.

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US Shale Gas Reality Check vital for Europe

I’m often surprised how often I still get asked “Isn’t shale gas expensive?” The question is reasonable, but it’s also often asked by those who seek comfort with two other strands  of shale denial, shale gas as Ponzi scheme, and the rapid decline curve theory. Paul Stevens of Chatham House is a big proponent of the theory, essentially stating shale gas is really very expensive and simply an accounting trick that will come back in a couple of years and leave us saddled with very expensive gas. His work,and that of the Ofgem Pøyry Report of last year is in turn based on an Oxford Institute for Energy Studies report of 2010 which asked, and replied, mostly in the negative: Can Unconventional Gas be a Game Changer for Europe? I’ve said before that the main problem with the OIES study is that it’s based on a study of the US shale industry pre 2009. It’s not wrong, it’s simply out of date.

The European shale industry will not need to re-invent the wheel. Economics of shale gas production in the US pre 2009 are as irrelevant to us today as many of the production techniques of that era are in providing road maps to environmental impacts. European production will be based on best practice of water, chemical disclosure and footprint that make Gasland era fears out of date. But what about cost?  Have they changed since 2010? These slides are part of a Bentek Energy (now a part of Platts) presentation last week in London. A key metric of costs is time to drill a well, but drill times are also key in physical footprint, a key concern for those who see Europe as too crowded.

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The Myth of UK Public Opposition to Shale Gas

The Guardian is to put it mildly, antipathetic to shale, especially the environment editor Damian Carrington, who has consistently distorted reality in a way that makes Josh Fox look like Abe Lincoln. He’s at it again today:

More than two-thirds of people would rather have a wind turbine than a shale gas well near their home, according to a new opinion poll published on Tuesday.

Asked to choose between having the two energy sources within two miles of their home, 67% of respondents favoured a turbine, compared to just 11% who would support the gas development.

The findings of the UK-wide ICM survey shows that only nuclear power and coal are less popular than shale gas developments.

The YouGov poll showed that 55% of people want more windfarms, compared to just 17% who want more gas power stations. It also showed that less than one in three people thinks the government should give the go-ahead to fracking. RenewableUK’s deputy chief exective, Maf Smith, said: “Support for renewable energy is consistently strong, in this and other independent polls. One stark message from this survey is the public’s evident disenchantment with fossil fuels, including the unpopularity of fracking.”

 The Guardian doesn’t provide a link to the actual results, but you can find them on page 9 and 10 here.

As usual in the shale debate, things are a little more nuanced :

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If the facts don’t fit, make them up

An article here from Yale Environment 360 highlights the problem some environmentalists are having with that science stuff. Which is a bit surprising since they don’t have any problem, as neither do I, on the science behind anthropogenic climate change, but suddenly lose the plot when it comes to  the science of shale.

Last, let’s look at the latest source of green angst: shale gas and the drilling technique of hydraulic fracturing, or fracking, used to extract it. There are probably good reasons for not developing shale gas in many places. Its extraction can pollute water and cause minor earth tremors, for instance. But at root this is an argument about carbon — a genuinely double-edged issue that needs debating. For there is a good environmental case to be made that shale gas, like nuclear energy, can be part of the solution to climate change. That case should be heard and not shouted down.

Opponents of shale gas rightly say it is a carbon-based fossil fuel. But it is a much less dangerous fossil fuel than coal. Carbon emissions from burning natural gas are roughly half those from burning coal. A switch from coal to shale gas is the main reason why, in 2011, U.S. CO2 emissions fell by almost 2 percent.

We cannot ignore that. With coal’s share of the world’s energy supply rising from 25 to 30 percent in the past half decade, a good argument can be made that a dash to exploit cheap shale gas and undercut this surge in coal would do more to cut carbon emissions than almost anything else. The noted environmental economist Dieter Helm of the University of Oxford argues just this in a new book, The Carbon Crunch, out this month. 

I must admit that I haven’t heard of the author Fred Pearce before but must seek him out.  Now we can say there are at least two progressives in the UK who support shale gas!

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More Marcellus Shale Gas and cheaper than ever

I’m still surprised by the number of people I meet in London who know very little about the reality of US shale. They often have significant reason not to understand it, so disruptive is shale to either their world view or business models. They are only postponing the day of reckoning:  Shale gas is not so much a revolution (and of course we’re British so we don’t go in for that American stuff) but an avalanche, a physical force that no one can avoid. The other day I met three separate people who were convinced that shale gas was depleting and wouldn’t provide a threat to UK energy policy. What can you do?  You try to warn people, but if they insist nothing is changing,  then that’s their lookout. One thing to look out for is the story of the Marcellus Shale in the US:

There’s been plenty of debate over the Marcellus Shale natural gas field, but new research adds a twist that could impact political and environmental battles. Two independent financial firms say the Marcellus isn’t just the biggest natural gas field in the country — it’s the cheapest place for energy companies to drill.

One of the reports adds that the Marcellus reserves that lie below parts of Pennsylvania, West Virginia, Ohio and New York are far larger than recent government estimates, while another said the powerful combination of resource, cost and location is altering natural gas prices and market trends across the nation.

The Marcellus could contain “almost half of the current proven natural gas reserves in the U.S,” a report from Standard & Poor’s issued this week said.

Which is good news for 99% of us:

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Shale gas, windmills, solar and crowding

As I have made clear many, many times, I have nothing against renewables and indeed see natural gas as an inevitable enabler of both wind and solar. One thing I can’t quite get my head around is the seeming contradiction from those who say that Europe is too crowed for shale gas. But not for windmills or solar?

Let’s recall that under best practice US technology that we’ll be using in Europe, we’ll be using multiple well from one pad which would probably take up 3 to 5 acres or up to 2 hectares. The surface impact isn’t relevant at the high end, that is one could put ten, twenty, fifty or more wells from the same 2 hectares.  John Baldwin of CNG Services is an engineer and this is his take on how many windmills would be needed to supply the energy of a gas well, assuming an average of 4 mcfd production

4 million cubic feet is 40,000 therms a day which is 1.2 million kwh per day which is around 50,000 kwh per hour or 50 MW . 

So if its a 30 per cent load factor I would say needs around 170 MW worth of onshore wind turbines or 30 turbines of 5 MW each.

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