Is Global Shale ready for takeoff?

freak outIt’s been a long time taxiing around the apron, and at Paris CDG it’s not even at the departure gate, but could it be that global shale energy is about to take off?  Could high international gas prices be the mother of invention to the necessities of the international service sector?

A number of political and economic factors are aligning to make me think that we are moving forward on global shale, and that as a result, the shale revolution is going to be exported far sooner than many have predicted. What’s happening in the US provides indicators equally as important as local factors. The international demand for services and equipment cycle is picking up just as US demand is falling, a victim of its success.

Oilfield equipment and services cover the whole production sector: drilling, completion, fracturing, well design, steel, sand, water tanks, and everything that makes up the high cost of drilling.

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Where’s the Great Oil Gala?

shale oilThe House of Lords Select Committee inquiry “The Economic Impact on UK Energy Policy of Shale Gas and Oil” has had some interesting evidence that hasn’t appeared anywhere else, possibly because reporters would have to read the evidence rather than recycle press releases.

The environmental day on October 22 showed the gulf between UK greens and those on the rest of the planet on policy, but the evidence from Mike Stevenson and Toni Harvey of DECC from October 15 was very interesting on several fronts. Mike and Toni did a great job explaining geology to the noble Lords that would be understandable to most commoners.

As scientists and civil servants, they don’t have an axe to grind and are thus the soul of neutrality and caution. This from Mike Stephenson on the question of whether or not UK shales are different, or not, from US shale is informative:

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My China Syndrome

RevOpera01-FrQTIt’s a sign of the times that next week I was invited to five shale events the same day, two in London, and one each in Copenhagen, Tunis and Beijing.

Tough choice, but also an easy one. The FT Shale Summit was very tempting being on the door step and the chance to see Ed Morse of Citi alone would be worth it. For entertainment value the prospect of Charif Souki, Bill Richardson and John Hofmeister in the same room as Josh Fox promises to be a lot of fun.Hopefully we can see the video, this could well be the Great Shale Shakedown. 

The climate debate, as Nick Butler of the FT noted the other day, won’t be solved in Somerset. Neither will it be in Lancashire, Balcombe, or France. As Bill Clinton said about the economy, “it’s all about China stupid”. And by stupid, we can add the shale bitter enders by whichever side of the road a few dozen of them pitch up next. This week’s report on all forms of energy (they even have a peat section) from the  World Energy Council is worth reading for a reality check on all forms of energy.  It’s 486 pages, but you don’t have to read it all, the news is there early at page 8:

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UK’s belief in the competition fairy

whichReaders in many countries must be scratching their heads as to how on earth something as mundane as natural gas bills climb to the top of the UK political agenda. Last year at this time I wrote What’s Wrong With UK Energy Prices and How to Fix Them. Nothing has changed. Belief in the competition fairy in the retail sector still reigns.

What would be unfortunate is for either side to drag shale into the debate. People can’t complain that shale will or will not bring down prices as the commodity cost of utility bills is completely hidden. Meanwhile the insane idea that most European gas trading takes place in hidden OTC (Over The Counter) markets instead of in public exchanges is still accepted by UK and EU governments. 

Even worse, is the lack of any transparency about prices themselves.The UK Consumers Association publishers of Which? Magazine, has a campaign for simple energy prices. It’s a pretty basic start, and the idea that we need one is symptom number one of the utter failure of any government over the past 18 years to understand the issue. There are allegedly issues surrounding health, education, the economy and an international issue or two that needs correction. Can’t we talk about them instead?

Shale skeptics are wrong

john cleeseAs long as I’ve been looking at shale, there have been doubts raised in a handful of industry quarters, subsequently jumped upon by antis, over shale economics.

The existential threat European greens fear on shale stems from the belief that various subsidies paid to solar and wind producers rested on the foundation of ever rising gas prices founded on the peak oil and peak gas narrative. The US experience shows that not to be true, but particularly twisted European utility economics are present, explained relatively clearly here at the Economist recently.

The idea that shale is just a mirage is one that antis have clung to all along. Just as they hope against hope and argue against argument that shale will be proved damaging or climate killing, they’ve argued against reality on the economic of shale. I’ve mentioned Art Berman and John Dizard on shale as far back as 2009. They were wrong then and ever since, but both of them stick to their guns, Dizard here in the FT this week and an entertaining video of the foolish, but undeniably brave, Berman at the Houston Geological Society recently.

The question of decline curves and economics is very complex and I’ve pointed out several sources to counter the theory, the most complete and up to date being here at RBN Energy. But thanks to John Kemp of Reuters, the best energy journalist in the UK, we now have a complete and even readable response that will set the standard for clarity in this esoteric field:

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Greenpeace’s desperation to protect their Green Economy

dbpix-china-pollution2-tmagArticleSince this is a children’s story, let’s start with Once upon a time. Once upon a time, Greenpeace was a respected serious organisation that successfully achieved many positive things.  Sadly, those days have long gone and today UK Greenpeace illustrates all that’s wrong with the environmental movement. Greenpeace today is a recycling machine for old ideas and new money. 

Greenpeace think that it’s far more important to hang on to a fun job talking about climate change than actually doing anything about it. Intern slaves like the poor guys harassing people on the street for funds are there either for a few months out of desperation or can afford to be subsidized by the Bank of Mum and Dad as they wait for an eventual opening elsewhere in the green economy. Judging by the year long gaps between successes on their web site (zero successes from the UK), you would think Greenpeace would learn that cunning stunts may make people feel better (and feed the Greenpeace coffers) but achieve nothing.  What does overwhelm on the web site is ways to separate you, or young children, from your money. The real money at Greenpeace is finding a way to get a piece of the green. On that, I’m not taking the piss, but Greenpeace is giving it to you.

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The coming wave of shale gas in Europe

clean energyNot only does UK/EU shale gas have to deal with environmental myths about shale gas, we also have to contend with an unremitting litany of despair from parts of the financial community. Before pointing out that their track record on predicting shale is often poor in the US, lets point out that they often have a financial interest in competing energy technology no less strong than the emotional investment green opponents hold.

They insist that they don’t, but judging from the giveaway of their name, I make the not entirely unreasonable assumption that Bloomberg New Energy Finance, (a unit separate from Bloomberg News but deriving some residual reputation therefrom), has more than a passing interest in, well, financing new energy. 

Recently,  BNEF told the House of Lords Standing Committee on the economic impact of shale gas and oil that

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To my friends in France

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Once upon a time, in the nineteen seventies, I was a student in Paris. Today, I’m at the age where I often forget words in my mother tongue, so I hope readers of the French version of this will understand what I’m about to say.

By way of introduction, I have always had the highest respect for France, a respect often lacking among the two ethnic groups I belong to, the British and Americans. I actually have Irish nationality, but that may complicate this narrative. 

But ever since I first started studying France’s language, history and culture, I’ve always been attracted to it because of the fundamental bedrock of rationality.  Long before the world changing ideas of a society based on liberty, equality and fraternity, there were Descartes and Pascal followed by Voltaire and Rousseau.  They provided the basis for science as much as Isaac Newton and although Pasteur, Fourier and Curie are well known French scientists, it was Henry Darcy who gave his name to the darcy, the unit of fluid permeability still in use today by the geologists who developed hydraulic fracturing.

Today, Henry Darcy, father of hydrogeology, and other Sages of the past, would be horrified at the science behind the current French debate on hydraulic fracturing. 

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A nos amis en France

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Il était une fois, dans les années soixante-dix, j’étais étudiant à Paris. Aujourd’hui, je suis à l’âge où j’oublie souvent des mots dans ma langue maternelle, alors j’espère que les lecteurs de la version française de cette article comprendront ce que je m’apprête à dire.

En guise d’introduction, j’ai toujours eu le plus grand respect pour la France, un rapport faisant souvent défaut entre les deux groupes ethniques j’appartiens, les Britanniques et les Américains. En fait, j’ai la nationalité irlandaise, mais qui peuvent compliquer ce récit. En bref, je suis un ami de France,  mais il faut, de temps en temps, que amis doivent être honnêtes et affronter leurs amis avec une réalité qui peut être inconfortable.

Mais depuis que j’ai commencé à étudier la langue, l’histoire et la culture de la France, j’ai toujours été attiré par elle en raison de l’assise fondamentale de la rationalité. Bien avant que l’évolution du monde des idées d’une société fondée sur la liberté, l’égalité et la fraternité, il y avait Descartes et Pascal suivis par Voltaire et Rousseau. Ils ont servi de base pour la science autant que Isaac Newton et bien Pasteur, Curie, Fourier est sont bien connus des scientifiques français, mais je pense aussi du Henry Darcy  qui a donné son nom à la Darcy, l’unité de la perméabilité aux fluides encore en usage aujourd’hui par les géologues qui ont développé la fracturation hydraulique .

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