When does fracking sidle back onto the UK agenda?

It's kinda noteworthy that, the ruckus over the Cambo field notwithstanding, several more North Sea licences are under consideration.   And the Climate Change Committee (under silly "Lord Deben") has correctly opined that, while they'd prefer new licences not be granted, it's a purely political matter having nothing to do with objective reckoning of whether it would increase global CO2 emissions (which it wouldn't).  Ah, COP26 seems so long ago now ...

Of course the greenie-left is trying to get its retaliation in first, having spotted (again, correctly) what they take to be a great argument, namely that increased UK production would have no impact on the world price of oil or gas - so we wouldn't pay any less for our domestic energy.  AND - shock, horror - we might even export the stuff!  True, as far as it goes - but it misses two critical details that in my book invalidate the objection entirely.  (a) they are wrong about the price impact as regards local prices which would indeed fall (by a small amount), that being the transportation cost differential between home-grown and imports; (b) the Exchequer would gain mightily from the tax they would levy on the profits arising, there being clear daylight between production costs and today's high oil & gas prices.  All this atop the jobs created etc etc.

So:  perhaps some new offshore O&G licences first, & then see how the land lies?  Before getting back to the really interesting topic of fracking.  Incidentally, I am the last one to minimise the practical difficulties involved in fracking in the UK (we had many a thread on this several years ago); but the amounts of gas are so immense, and the value so high, we could afford to do the job really well and avoid, minimise, or handsomely compensate for any downsides.  There's no getting away from the political price that would be paid just now ...  but give it time: that shale gas ain't going anywhere.  And Germany seems to have changed its energy policy (as well as its military policy) quite significantly in the past few days.  The Ukraine factor might yet have transformative effects here, too.

ND  

UK Fracking Saga: Here Endeth the First Chapter

And so it came to pass that Boris the Populist, observing the extreme unpopularity of fracking in many northern parliamentary constituencies of a Conservative bent, decided to call an end to the experiment.  

This, I believe, is part of what the sage Lynton Crosby calls scraping the barnacles off the boat before an election, in stark contrast to the imbecile May who danced into the 2017 gig allowing people to think she was about to offer (inter alia) a free vote on foxhunting.  FFS

And who's to say Boris is wrong?  One can of course always work up a righteous lather over points of principle and U-turns etc: but does it really matter?   No.  The moment has passed.  It had become abundantly evident that, despite the epic quantities of natural gas the frackies reckon they've identified within these shores, it would have been a very long time indeed - if ever - before it could be turned into a windfall for the economy.  The primary beneficiaries thus far have been PR companies and the serried ranks of Plods on overtime.  

Maybe things could have been done differently and better, but they weren't.  Meanwhile there's a global glut of gas anyway, which will continue unless the Chinese accelerate their usage beyond what Russia can easily supply from entirely new eastern gasfields.  The Chinese don't show much sign of this (nor India, for that matter), despite a great deal of wishful thinking in all the great gas producing centres around the globe.  

But if the glut dries up a bit, there are any number of faraway places with equally epic resources of shale gas that will be much easier to develop than hereabouts - because there are no people in the vicinity to object; and/or no democracy.  Algeria springs quickly to mind.

And, of course, if things change utterly, well, that UK shale gas ain't going anywhere ...

Here endeth the UK shale gas saga, for the next short while at least.

ND

Fracking: Small Tremors, Big Impact

At the start of the month I suggested the government may be about to lose its nerve on shale gas.  Well now the actual fracking has commenced and we may shortly find out.

Because, inevitably, there have been tremors.  Duh!  Way too small to be felt, still less do any surface damage of course, but there they are, day after day, faithfully recorded and published on Cuadrilla's website.  Interestingly, so far the MSM have been fairly non-inflammatory about it: even the Grauniad acknowledges that "the 0.8-magnitude event [the larger of the two more noteworthy incidents] was about 200 times smaller than the 2.3-magnitude tremor recorded in 2011 that led to fracking being suspended" (it's a logarithmic scale, and the 200x refers to energy released): but of course they also report Zac Goldsmith's witterings.

So.  What next?  If there's an election any time soon, I just can't see any party - including the Tories -  being willing to endorse continued fracking.  The supposed lesson of the 2017 GE hint on fox-hunting has been learned.  Cuadrilla et al had better find something impressive PDQ, or it'll be curtains for at least two election cycles. 

ND

Coming Soon: a Total Ban on Plastic

Recently I was sent a slickly-made, hour-long UK anti-fracking vid.  It was designed to seem really homespun, but the production qualities were just too high, and the chap fronting it (a bluff, endlessly personable northerner) turns out to be based in a New York film studio.

Anyhow, it took the form of extended voxpop clips interviewing nice, concerned folks in the shale gas exploration areas of the midlands and the north.  They were avowedly activists, but with one exception (of which, more below) they were all just-like-your-old-mum-and-dad types.  One was an eccentric: but Swampy was nowhere in sight.

Obviously, they were all spouting alarmist rubbish as though it were true, whilst all the time claiming not to be Nimbys.  There's nothing wrong with being a Nimby, BTW, though it's more honest to admit to it.   But here's the thing.  They'd obviously been fed the line that INEOS (one of the would-be frackers) is the wickedest company on the planet, and that the reason they are exploring for shale gas is to use it for making (*gasps*) - PLASTIC++.  And as one of the women being interviewed says:  "... and we don't need plastic".

We don't need plastic ...  As a society we are, of course, deep into personal unicorn territory now.  Given his success with promising to cancel student loans, we might imagine there isn't anything Corbyn won't offer at the next election and it will be swallowed by hundreds of thousands of voters.  Right this minute, with wall-to-wall dying turtles on TV, I'd guess the promise of a *total ban on plastic* would have a significant segment of the electorate rushing to the voting booths in a state of high excitement.

More plausibly, however, there must be very short odds on Labour making a fracking ban a headline policy - notwithstanding the unions who support pretty much any realistic industrial prospects, as well they might.  In the aforementioned vid, all the voxpop interviewees were earnest and articulate B/C1/C2s, eminently likely to bestir themselves on polling day, who have been told that fracking will (a) kill them and even more saliently, (b) trash their house price.

Which brings me to the other interviewee.  It was Lee Rowley, a Tory MP, who has clearly decided that, because he is their leader, he'd better follow them.  He can't conceivably be alone on his side of the green benches.  I had been assuming Tory policy was one of getting some exploratory fracking done ASAP, prove up vast reserves (or not, as the case may be), and if there's as much gas there as INEOS, Cuadrilla et al believe, generate cash giveaways on a scale to make even Nimbys think again, comfortably in time for GE 2022.

And if there's an early election?  Or if Corbyn is 5% ahead in the polls in 2021?  I think we will find every single UK party pledging to put a stop to it all.  In an era of fake news and slick vids on social media and personal unicorns being promised for all, this one is starting to get the middle classes seriously exercised.  And who's going to tough it out against that sort of opposition?

ND


++ given that Jim Ratcliffe ostentatiously imported a cargo of "shale gas" (actually ethane of course, and not methane) as a plastics feedstock, there is a kernel of truth in this.  What a dick he is!  The oil and gas industry may live to rue the day they let amateurs front for the UK fracking industry.

Fracking: Off to the Races (soon ...)

Here we go: Cuadrilla have completed their first well at the new Lancashire site and will shortly be ready to frack: and not before time - it's been nearly 7 years since their first attempt.  The antis are limbering up for 13 weeks of colourful protests, so it should all be very jolly.

For some while now I have been working on the hypothesis the government reckons it might as well use the 4 or so years potentially left to it, to encourage the drilling companies to get on and prove up whatever shale reserves there are.  Then, if Labour really wants to turn its back on the wealth the gas represents, well, it's been sitting under the ground for eons and it ain't going anywhere else in a hurry.  When it comes to serious development and production prospects, t'unions might have ideas quite different from "Nanas against fracking" ...

It rains in Lancs.  Who knew?   Not Cuadrilla

What slightly troubles me is that Cuadrilla are a pretty useless crew (ditto Third Energy).  They have made a pig's ear of the drill pad up in Lancs, allowing it to flood everywhere and breaching their permits several times.  (That's water in the pic, not ultra-smooth concrete - and it's never been entirely clear where it came from, though Cuadrilla says rain.)  Given that handling immense quantities of liquids is what the fracking game is all about - both in the pumping-down phase of the operation, and perhaps more significantly in the flow-back phase when a substantial proportion of the fluids that've been sent down come back up again, often heavily polluted - it doesn't bode well that these jokers can't even handle suface water.  Who knew it rained in Lancashire, eh?  Bloody amateurs.

Still, the big boys were always reckoning to let the minnows take the flak, then move in once the reserves have been proven.  A good long-term strategy?  If it allows the game to be brought into terminal disrepute, I'm not so sure.

ND 

Fracking Across The Globe

Been a bit busy of late but a couple of Grauniad headlines still caught the attention over the weekend, starting with the latest update from the increasingly active northern shale gas drilling scene:

Shale gas firm Cuadrilla brands anti-fracking activists 'irresponsible'  -  CEO Francis Egan complains about protesters ‘harassing’ contractors supplying Preston New Road site in Lancashire

Yes, after a very long hiatus the North of England Shale Show is back on the road!  Or being hindered by a roadblock, as it would seem, because there's plenty of pesky opposition - the usual combination of genuinely local nimbys, misinformed 'ordinary people' with too much time on their hands, and itinerant swampies now trading as Reclaim The Power.  (You'd imagine the hyperventilating hoards of Momentum wouldn't be far behind, except that they are fully occupied with fratricide just now.  And I'm guessing t'unions may have told Corbyn to keep out of it, based on how they made him support nuclear in Copeland.)   An enjoyable line in outdoor relief for all concerned (plus overtime for Old Bill) - except for the local contractors.

But shale in the UK never looked to be a near-term phenomenon (we've discussed this all before).  Even if the reserves are as big as Cuadrilla believe, in broad-spectrum practical terms they just ain't particularly accessible.  A far cry from the USA, where the recent OPEC-driven rise in oil price is, though rather modest by the standards of 2010-2014 prices, more than enough to re-ignite the mighty shale-drilling activity there, oil and gas.  This comes as a big shock to legions of idiots who consoled themselves with the thought that shale needed a price of $100 - or was it $80? - or $60? - to be viable.  Sorry, but technology doesn't work like that: it gets better and better, cheaper and cheaper, and always surprises idiots.  If in doubt, go short - because there's always more stuff out there than anyone thinks. 

This leads to another mighty quandry for all the antis who thought they could put moral / financial pressure on big companies and pension funds etc, to effect some kind of investment boycott of the fossil fuel industries, and force the authorities to mark down oil company oil reserves as stranded and worthless.  Why, the Grauniad itself even tried to run a campaign along these lines. Which brings us to the second headline:

Environmentalists urge French bank not to finance Texas fracking project Activist points to ‘hypocrisy’ in BNP Paribas’s involvement in south Texas export terminal, given bank’s claimed commitment to the environment

Well, sorry guys but shale in the USA is 100% mainstream now and you won't actually find a major bank or indeed any other financial institution that isn't already 'in'.  Because, as we know, shale is going to make the USA self-sufficient in energy as far forward as anyone can see, with momentous geo-political implications.  And that's before Venezuela lets rip, because they have more accessible shale oil reserves than Saudi has 'conventional' oil.  And (when they need the extra reserves) Russia has more gas than the world will ever need.

And the IEA - which is seriously schizophrenic on this issue, BTW - thinks we need much, much more oil ... (well, that's what it thinks this month).

Anyhow, Swampy and Cuadrilla will no doubt continue to slug it out in Lancashire.  But they are a sideshow of such small proportions, it'll make Paul Mason's head explode one day.

ND

$50 Oil. Everything's Relative

We've long noted that everyone, from Saudi Arabia to the Green Party, misunderstands the logic of the US onshore oil & gas industry, namely that it (a) is rational; (b) is flexible; (c) understands sunk costs; (d) has ready access to equally flexible and rational finance; and (e) is constantly innovating - in the direction of reducing costs.  And thus it defies predictions every time.

This cartoon says it all really.

http://www.upstreamonline.com/

If you want some words to go with it, there's always Nick 'sometimes useless, sometimes not' Butler blogging in the FT.

[Saudi] strategy has not only failed but has caused serious damage to the Saudis themselves. Prices fell much further than anyone anticipated because other participants in the market did not respond as expected. The Saudi increase in production has not destroyed the US industry – American output has fallen only marginally despite a 70 per cent drop in prices. The kingdom simply underestimated the resilience of the US producers and their ability to cut costs.

Ain't that the truth.  

ND

Let The Fracking Commence. Maybe.

The go-ahead given by government for the resumption of exploration drilling by Cuadrilla in Lancs - in the face of refusal by the county council - presumably marks the start of the much-delayed Round 2 of UK shale-fracking activity.  

There was another, rather quirky shale-related development when the larger-than-life Jim Ratcliffe of INEOS shipped in a cargo of 'shale gas' to Grangemouth.  This ostentatious display was, I assume, designed to soften the Scotties up to the idea that shale gas is coming anyway, so we might as well develop it here.  They do need something to replace the North Sea revenues, after all - so maybe a bit of a conundrum for the SNP.

(Of course, what INEOS was shipping in was ethane - a by-product of natural gas production - for use as a chemical feedstock. As a fairly pure chemical, it would generally be difficult or indeed impossible to identify the precise source of a tankful of ethane; but maybe this batch came from a gas processing plant that only takes in shale gas in the first place.)

So there is at least the possibility of new shale-related activities in this country in several places at once.  This might then dilute the protesters' efforts, I suppose: but with the newfound enthusiasm for people with too much time on their hands taking to the streets evinced by Momentum et al, maybe it will stimulate significant new outbreaks of civil disobedience, and overtime for the Old Bill.

As we've noted many times before, the current surplus of gas worldwide (caused by shale production in the USA, and a massive over-development in LNG liquefaction capacity worldwide with more still to come onstream in the next 3-4 years) makes for depressed prices, which won't help a UK shale industry get off the ground.  But the motivation to explore, if not then to develop immediately, is always great.  Ding dong, seconds out, round 2 ...

ND

Tory Shale Policy - Cooking on Gas Yet?

On Tuesday we had a look at the surprisingly robust implementation of Tory manifesto promises on onshore windfarm development - but what of the pro-shale policy ?  Towards the tail-end of the comments, someone mentioned shale fleetingly; but Lancashire County Council seems not to have got the message.

When we discussed this last year I opined that the protest-tide may have turned, in the face of new-found determination on the pro-shale side  -  see, for example, this publicity stunt: 'students for shale' !  The anti-shale independent beat the LibDems and Geens in Fylde at the election, but still came only fourth.  Going into the election, Labour had a cautious and rather qualified but nonetheless pro-shale policy, but some of the leadership candidates clearly intend to backslide to a more comfortable anti-everything position.  Evidently the daft old left has decided to get out onto the streets again, so a revived anti-shale movement may be afoot.

What larks.  I don't detect the newly emboldened Cameron has any time for faffing around on settled policy issues, nor any truck with the swampy brigade, but the Country Squire set still has a bit of influence with him.  Osborne is just plain pro, and Lancashire is presumably part of his Northern Powerhouse.  Amber Rudd is said to be taking the summer off to devise a new energy policy.  Let's see what she comes back with after the hols.


ND

Tories allow Labour to block Fracking - 100 days to election today

So last night in the House of Commons, the Tories agreed to Labour amendments to the Infrastructure Bill which means that 13 loopholes have to be closed in the environmental legislation before Fracking can go ahead.

Following planning rulings earlier this week, it has been a bad week for the future of Fracking in the UK. See below for how the IGAS share price has fared this year as a proxy to for how the prospects of fracking have fared:

It is down from a high of 148p to, er, 20p today.

It is not surprising with an election coming up that the Government will want to be seen to be giving into celebrity backed campaigns (Bianca Jagger says NO TO FRACKING, etc) with loony Green agendas as this helps bolster the Governments credentials on easy U-turns Green issues.

With the low oil price in any event, the strange turn of events is that this won't make much difference. Much like the last North Sea reserves, with oil below $50 none of the more expensive extraction ideas are going to be implemented. So the new North Sea fields and the Fracking are going to have to wait anyway for the recovery of the oil market; much as the rest of us don't want that to happen!

More worrying long-term is the nature of the complaints. For the first time in Parliament a key issue raised against fracking has been missing carbon targets. This is nonsense as Fracking is better than coal or oil. Guido wrote a super piece yesterday outlining how the anti-fracking lobby is full of hot air and waffle with hand-wringing communists as the centre of it, but has captured the Environmental committee. Even the Tory chair, Anne Macintosh, was a potential rebel last night.

Whilst I am in full agreement that unlike the US we should proceed with a safety first approach, we should indeed look to proceed. Modern Government seems paralysed by the intellectually incoherent green waffle and renewable subsidy-junkie lobbying.

With Labour, Greens and SNP on the march to winning an election between them, prospects for long-term cheap energy supply in the UK look to be in danger.

Oil Price: More Whistling In The Dark

Before we get to the frantic whistling, here's an observation from Old Drew's collection of historical anecdotes.

Back in 1994 there was a big overhang of gas supply in the UK, which came about for a variety of reasons I won't bore you with.   The spot market had just started and liquidity was building nicely.  Over the period August '94 to January '95, the price fell from 22 pence per therm to 9 p/th and there it stayed, with seasonal fluctuations, for the next four years:  a fall of 60%.  Why it settled at 9 has no obvious arithmetic rationale - there was plenty of North Sea gas available at lower cost than that - but hey, that's how markets work.  The price of a house has little or nothing to do with the cost of bricks.

Anyhow, one cannot fail to be struck by the similarities between this, and what's been happening to oil.  Maybe January is a good month for bottoming out after a rapid halving of prices.  Then again, for anyone taking cheer at the prospect of finding a bottom there's the unhappy prospect of 50 (or 45?) becoming a new baseline for several years.  As I've pointed out before, only in 2008 did a big oil-price movement ever reverse inside one year.  

I'm not sure how all this sits with the conspiracy theories, but I'd be very surprised if anyone has seriously and consciously engineered $48 oil.  They may have to live with it anyway.

As we all know, among the many parties who'll suffer will be the greenies - amusing bedfellows for Russia and Iran.  The greens of course (and perhaps also the reds), hope in turn that frackers will be hurting to the point of extinction: they'll see the hurt happening alright, but that'll be the limit of their gratification, I suggest.

Here's another source of whistling and bleating - along with some more sensible reflections.  The International Renewable Energy Agency ('IRENA') is one of those annoying and spurious international bodies - 'an intergovernmental organisation', no less - that busies itself at our expense promoting a special interest group.  They've clearly been working for quite a while on a substantial report on the costs of renewables which contains some interesting stuff, albeit spun about with quite disingenuous and misleading puffery.  

Just as they get to publication date, the oil price kicks them in the goolies.  But their jolly Director General, one Adnan Z. Amin, puts on a brave face.

Renewable power generation will keep getting cheaper over time, even in a period of falling oil prices, which history tells us will in all probability be transitory. Renewables development and deployment represents the most secure long-term hedge against fuel price volatility, the best route to reducing greenhouse gas emissions, and a sound financial investment. Their future is bright indeed. 

That would be the long term future, Adnan, because a chilly draft is coming in the short- to medium-term.  'Transitory' won't be measured in months, and there may be a drop-off in demand for energy volatility hedges, ask Ed Miliband.  Ad's right about costs coming down though - they'll have to, it's the only response possible.  Oil costs.  Coal costs.  Wind costs.  Even, dare I suggest, nuclear costs.  Come on you engineers, you know you can do it - you always have done in the past.

And solar PV costs in particular.  Here, technology really is moving forward apace.  Based on some fairly uncontentious projections, it is well within the bounds of plausibility for solar power one day to be economic.  (That's really economic, not 'economic when supported by subsidy'.)  Some even say, we may not need to wait for cheap & efficient electricity storage before solar makes it to economic respectability.

In the meantime, despite the waffle they all still want subsidies.  Which will be in increasingly short supply, with the alternatives at rock-bottom price for a while.  That Paris jamboree will be pandemonium.

ND

Fracking and Fantasizing

As we've often discussed, cheap fossil fuel is a dagger in the heart of the green agenda, which tries so desperately to trade under the false flags of security of supply and lower long-run cost.  The sophistry with which DECC argues that its policies will result in "lower energy bills than they would otherwise have been" would delight a Jesuit wrangler or medieval schoolman.  The tortuous counterfactuals are mind-boggling.

With coal already dirt cheap (and I do mean dirt), oil at $50 or so, and gas following them down, the hollowness of this rhetoric sounds louder than ever.  And since (a) the government's new subsidy of choice - the Contract-for-Difference - settles against market price*, and (b) there is an overall £bn cap on the amount paid out, an awful lot of would-be renewables projects are looking increasingly fanciful (not to mention Hinkley C, which must surely now be cancelled - surely?).

Amusing, then, to hear loud whistling-in-the-dark from the direction of the Grauniad's Environment section:

Plummeting oil price casts shadow over fracking's future
The price of oil has dropped to around $55 per barrel, but fracking companies need prices of $60-100 to break even.

Hold tight fellahs, before you get your hopes up: let's just watch and see what happens. First thing will be, yes, a reduction in CO2 emissions, haha!, as even more coal gets displaced by cheaper natural gas.  Funny, eh?  

But no, the US fracking industry will not implode.  US onshore drilling is one of the most price-sensitive things known to man so, sure enough, the number of new wells drilled will fall.  This happens every cycle and is called The Laws of Supply and Demand, nothing unusual there.  But the Sunk Costs phenomenon will also be at work; and a shale producer with debt to service has nothing to do except keep producing, at whatever price, right down to his marginal cost of production (rather lower than "$60-100 oil eqivalent").  If he goes bust,  as some will, one of the big boys will gladly relieve him of his assets.

I still wonder when someone somewhere well to the east of the US shale industry with access to high explosives will take matters into his own hands.  Barring that, settle down for a big disappointment for our greenies, plus the usual surge of cost-cutting innovations the price-slump will certainly engender, facilitating the next round of new developments.

ND 

--------------
* I acknowledge that the Energy Act gives DECC the power to rig the market price of electricity.  However, they'd probably find it hard to do more than give it a bit of a nudge before serious repercussions came their way 

Fracking & A Rare Example of Political Will

Fracking has the hallmarks of an issue best left until after the election, like Blair studiously did with Nuclear before 2005.  Swampy doesn't vote, so let him fester in his damp hole and get mistaken for a badger: but actual middle class people are known to take fright at the prospect of a drilling rig in their back yard.  In the likely scheme of any UK shale developments what practical difference does a year make?  I'm as big an enthusiast on shale as anyone, and a great believer in Political Will: and still my answer would be: not a jot.  The gas ain't going anywhere; and there's a good chance there may be nothing to show for any exploration conducted between now and next May.  But there could be some messy headlines.

Nonetheless, the government has got religion on this, and has been plugging on rather purposefully for a good few months.  Do they actually fancy running battles with Greens down country lanes  ? (I'm quite sure PC Plod does ...)  Is this part of the great Crosby playbook ?

For what its worth, I'd say the shale policy is being pursued fairly intelligently (everything is relative, mind) with a 50:50 chance of positive political outcome.  The most recent announcement (full steam ahead but careful of the National Parks) is sensibly cast.  There's a section of the population that likes the smack of firm government; energy security-of-supply is a well-known refuge for political scoundrels (and little Putin is certainly playing his part); and there's another part of the population that generally knuckles down to the inevitable, so long as it is mildly sugar-coated - which this one is.  Even the Guardian's critique is qualified, and resigned to the inevitable.

I can also tell you (from the front line, first hand) that the drilling companies have taken the signal and are intent on playing hardball: not Henry Ford-style, but with serious determination, based on the understanding the government has their backs.  Local councils will generally play along with a determined developer, particularly when there's that bit of sugar-coating on offer; so persistence will win out.  And the academics - who some assume are greens to a man - are in fact pragmatists to a man, always on the look-out for sponsored research opportunities.  They will largely be onside too, with a whole new industry in prospect. 

Yes, 95% go with whichever way the wind is blowing, and the government has decided to blow.  Of course, they're showing the same steely resolve with nuclear and all manner of 'renewables' lunacy too, so it may be viewed as all of a piece*.   Energy policy, misguided or otherwise, seems to have that effect on people.  You don't get forgiven for letting the lights go on the blink.

ND
 _____________________

* Funnily enough, all of this - the fracking and the faffing - is undermined by falling gas prices, happening across Europe and Asia without any help from UK shale !

Three Causes for (Modest) Optimism

There's enough in the news to make for grinding of the teeth (not to mention things that give rise to CU's regular threats to emigrate) that I am inclined to register a little cluster of recent items which redress the balance a bit.

(1) The tenor of the latest IPCC report: as several commentators have noted, adaptation to climate change has started to feature as a mainstream topic instead of being viewed as tantamount to abject surrender of the greenie-lefty desideratum of abatement-only policies by diktat, in not-so-subtle pursuit of their goal of World Government.  Adaptation is the correct direction of travel, and it is to be hoped that after another 5 years of slow progress, public policy will be substantially redirected to this potentially quite urgent end.  The only vague excuse for windfarms has been as a programme of Keynsian public works, and intelligent flood defences etc are infinitely better on that score - saints preserve us, they could even show a genuine return on investment !

(2) The interview with Caroline Lucas in the Grauniad 

For Lucas, the big problem with fracking has nothing to do with the risk that it will cause earthquakes, contaminate the water table or pollute the soil. In fact, she thinks it possible that stringent regulations could minimise those risks. "It's not that fracking itself is necessarily worse than ordinary gas extraction ... Lucas accepts that we do need gas ...

These words (my emphasis) are a cut-out-and-keep collectors item.

(3) The re-opening of the Dawlish stretch of railway.   When it was first washed away, everyone shook their heads sadly and proclaimed it would take 6 months and more to fix.  And who could disagree, given the shocking length of time that British civil engineering projects generally take ?  Makes the blood boil: FFS, World War 2 only took 6 years!  Anyhow, for once the finger was pulled out and the job was done in good time.  The same attitude needs adopting rather more widely: hey, maybe even for implementation of, errr, adaptation policies ...

So - credit where it's due, and a modest round of applause to these three disparate entities for their belated but worthwhile conversions to the ways of righteousness.  There is more rejoicing in Heaven, etc etc: and no-one is beyond salvation !

ND

Surveying Shale at the Start of Round 2

This blog isn't going to become a shale cheer-leader forum (go to NoHotAir for that) but our friend 'Hovis' has taken the time to bake a lengthy rejoinder (in the Comments) which deserves acknowledgement and response.  Echoing the 'phoney war' idiom from my earlier post, Hovis fairly recognises that Round 1 has finished, so now we contemplate the state of play at the start of Round 2.  I'm going to take his/her main points head-on rather than endlessly refer back to previous postings, and here we go.  Switch off now if the whole subject leaves you numb. 

I have not seen why, in a Hitch-Hiker's Guide To The Galaxy type of way you believe it is a “Good Thing”

What I consider a Good Thing is the following:

•  that private companies should be allowed to establish, at their own expense and risk, whether there are shale gas (and/or other 'unconventional') resources, in economically viable quantities in the UK and elsewhere
• that this should be done in a safe and environmentally responsible way, under Proper Regulations
• that bullshit on the subject from any party should be exposed to reasoned and factual analysis
• Rule of Law should prevail etc etc

It may not be a Bad Thing that local communities see some direct share of economic benefit; and of course the planning process shouldn't be subverted by this (see Proper Regs passim).  For the avoidance of doubt, it is however a Bad Thing - not least because totally unnecessary - that tax breaks are being given (this just adds to my already poor opinion of Osborne).  As you surely know, around these parts we are generally hostile to the socialisation of normal business risk (again, in this case, completely unnecessary).  And, as you kindly acknowledge, I have always said it is Bad that the regulatory regime is so flimsy, though not, I think, entirely non-existent as you suggest - see final point below.

And finally, of course, I think it would be a Great Thing if plentiful economically viable shale gas were to be found.  By 'economically viable' I include bearing the full costs of producing the stuff in the safest and cleanest ways known to man - which isn't some utopian fantasy, it just means doing things properly.

I utterly disagree with you that anti arguments are mendacious

And I have never said that all of them are: there are several that have a grounding in fact, and need proper response.  But many of the 'environmental' scare stories are indeed mendacious; along with other crazy statements like 'there isn't enough water', or 'the UK isn't big enough'.  Space here doesn't permit.

"Shale will bring major benefits to the UK" [is] doubly mendacious

It is absolutely fair to say that some purely speculative tripe is being talked.  No-one even knows if any gas is there !  "74,000 jobs" is, of course, a finger-in-the-air exercise - I have no time for such stuff.  BUT - if  there is even a fraction of what is seen as the potential, there will indeed be huge benefits to the UK:

• gas prices will soften, if not fall significantly (big topic, for another time)
• to exactly the same extent the price doesn't fall (because of exports at the margin to continental Europe), tax revenues will increase
• there will be a boost to UK jobs, industry, expertise and GDP generally
• we gain greater security of supply in gas, a commodity we need in large quantities for the next several decades in all meaningful UK energy scenarios
• we demonstrate the fallacy of 'renewables being cheaper in the long run'
• plus a huge increase in PC Plod's overtime (whoops, sorry !)

At what point do yo [sic] recognise there will be no regulation Nick? ... My question to you is, if there is no regulation should Fracking go ahead on a large scale in this country ?

My answer is - No !    OK ?

ND

Anti-Frackers: A Telling Snap-shot

Earlier this week I suggested that the UK anti-fracking 'movement' was a very broad front, with three potentially formidable bourgeois wings identifiable (the radical intellectuals, the well-informed 'technical' objectors and the county nimbies) amongst the swampies, renta-mobs and all-purpose left-wing trouble-makers.  This mix will presumably be found in varying proportions other nations' anti-fracking brigades, along with some entirely local mutations for which we have no precise equivalent here.

They've all assembled (doubtless via the magic of the interweb - GCHQ will know ...) to hatch a joint 'open letter' to "President Barroso; Commissioners from DG ENVI, ENER, CLIMA, ENTR, AGRI; European Council Members; national heads of state (Presidents, Prime Ministers); Ministers concerned; Members of the European Parliament."  (Not sure whether the various Euro-monarchs have been spared this diatribe under the 'heads of state' category, but I digress.)  You may find it interesting.  

Several points strike me as noteworthy:

• it really is no mean feat of coordination to get quite so many organisations on board: one shouldn't take fright, but one shouldn't underestimate it either
• look how many anti groups there are in countries (e.g. France, Spain, Germany, Romania) where fracking is more or less banned at present
• as always, the primary thrust of the hard core is anti fossil fuels in toto.  Fracking is just a pretext. (Gasland is exactly the same: a few minutes on fracking to start with, then a diatribe against the US natural gas industry as a whole)  

And a splendid flash of light relief: one of the UK signatory-groups is Pagans United.  How they go down with the hard men of the French Left, we can only guess.  But Asterix would probably approve.

The UK's man on the drafting pen is the indefatigable and worthy Mike Hill, who comes under the well-informed technical objector banner.  He is omni-present on the web, promoting his views on what proper regulations would look like.  I can't imagine he subscribes to the 'anti everything' strand, but in a coalition as, *ahem*, broad as this one (not to say thick) he'll have to settle for some kind of messy compromise if he wants to join in at all.

Significantly, Hill's recent tweets seem to indicate he thinks the UK government has triumphed in the latest round of skirmishing in EC circles, by getting Barroso et al off the idea of EU-wide regulations.  Cameron, it seems, can be quite effective in Europe when he wants to be.  The anti-frackers will be getting increasingly desperate, and who knows how that will manifest itself.  At least some of those many signatories look like fairly hard nuts, and even in cosy England the violence seems to be escalating a bit.

The Barroso worm has turned on more than just fracking.  Several years ago we opined he was barking up the wrong tree on renewables, and that GDP concerns would eventually prevail over GHG.  He seems to have twigged - and it won't just be the anti-frackers who'll be tearing their brightly-dyed hair, it will be the entire green movement, and the subsidy-grasping renewables industries.  Boy, this is going to get noisy.

ND  

Kicking Off the Silly Season with David Howell

David Howell was an ineffectual energy secretary in Margaret Thatcher's first cabinet, and was given the bum's rush shortly after.  He doesn't improve with age, does he ?

As a long-time energy player myself I bumped into this cove several times.  He had the type of early career that was somewhat less usual in the 60's and 70's than now.  From Eton and Kings he went straight into the Westminster / Fleet Street village and - to his pleasure and mild surprise - was ushered onto the fast track to a safe seat in his 20's.  Ever keen to please, he decided his contribution to the Tory Party would be books and newspaper articles in support of whatever he judged to be the prevailing orthodoxy, in the manner of the Vicar of Bray.  Thus, during the early days of Heath's supremacy, he was scornful of monetarism; but changed his tune adroitly in order to find favour with Thatcher.

And thus he found himself, wildly out of his depth, in Thatcher's cabinet.  Only one thing of note happened during his feeble period of tenure at Energy: the introduction of the Gas Levy and associated measures - a highly technical intervention in what passed for a gas market in those British Gas monopoly days. [I can explain it if anyone is really bored ...]  But he could take no credit: it was driven by the technocrats, in the days when civil servants knew their business (before Atilla the Hen kicked the s**t out of them and replaced them in the policy-making pecking-order with lobbyists and consultants) and were confident enough to tell useless ministers what to do. Anyhow, Howell was rumbled as a duffer and it all ended in tears.

Fast-forward nearly 30 years and in 2010 this superannuated simpleton  fetched up as an improbable junior minister in Cameron's first line-up. By coincidence, he is Boy Osborne's father-in-law ...

ND

Shale-tastic scares

And lo they came to pass. Today it is quango Water UK railing against potential shale gas fracking. Now of course the highly regulated utilities are not going to benefit from other companies making money, so they have no incentive not to complain about fracking.

Indeed, they do have valid concerns about potential damage to the water table. It is true to say that much frackin in the US is done far away from population centres, major water pipes and infrastrcuture which is not the case in the South East of England.

So of course, Caudrilla and their ilk will have to plan on different and more expensive ways of fracking to make sure their enviromental impact is limited to acceptable levels.

Together with news for the Government giving tax breaks to Shale Gas companies, err, in line with what everyone in the industry gets (and lets face it it, in upstream industry the net tax rates is 63% last time I checked, so the breaks are always off-set in successful cases of extraction). It means that Shale exlporation and development is proceeding nicely.

All good then, as we desperately need this supply of gas to help boost the economy and keep the lights on when we have months like now of NO WIND, which is not doing great things for the useless London array and other such greenwash projects.

Fracktious

In comments the other day, the subject of Gasland flickered briefly and BQ suggested it deserved a post.

It's hardly new: but perhaps it is getting a second wind as drilling for shale gas is set to re-commence around Britain.  We heralded the potential significance of shale to the economy when the first UK discovery was announced (and discussed it many times since), and it is fast becoming a political dividing-line. From a basic C@W standpoint there is the obvious 'what's not to like?' angle, countered by the inevitable CiF chorus of 'gas = hydrocarbon = wicked'.

In fact it has even more dramatic potential than that.  The whole UK / EU decarbonisation policy hinges on the prices of hydrocarbon fuels rising indefinitely: it is, as someone said recently, a gigantic speculative long position.  But hey, prices go down as well as up, and (as we they used to say at Enron) - if in doubt, go short.  A lot of greenies know this and are likely to get very agitated - and if drilling does indeed re-commence on a serious scale, there will be no end of sites at which NoDashForGas can make a serious nuisance of themselves.

Anyhow: you may be seeing Gasland again on a screen near you, and here's what I said in the comments.

Gasland  is a rather well-made piece of pure polemic, quite easy on the eye and very beguiling for people who are in the market for an anti-energy diatribe.  It is very cavalier (and sometimes outright dishonest) in its use of facts, and full of crafty non-sequiturs which any logician would spot, even if they knew nothing of the detail.

Also, it has bugger-all to do with fracking (which is one of its main non-seqs) - it starts on fracking right enough, but about one-third of the way in then seamlessly segues into just an attack on the practices of the US natural gas industry in general.  Somehow, people come away thinking they've seen a devastating case against fracking, but they haven't.

For completeness, let it be said that in some states of the USA there are virtually no environmental regulations at all (or if any, they are not enforced) and so there is a solid body of entirely legitimate attack that can be made on some genuine ongoing life-threatening health-hazards that would not be tolerated anywhere else this side of China.  (If anyone disputes this I invite them to move with their families and live in the environs of the refinery belt at the Houston Ship Channel. No? Thought not)

Gasland's valid hits are scored on this ground - but again, this has very little to do with fracking.

ND

Offshore Fracking and North Sea Regulations

An interesting development that demonstrates in some of the poor decision making by the coalition and the challenge of financing all in one.

Trapoil, a real tiddler of a North Sea explorer, has made a big fanfare about starting to do off-shore fracking in the North Sea. Regular readers will know how immensely keen we are here on fracking for gas and oil  as it has the potential to solve our long-term energy needs in a way that wind farms simply won't.

And so to do it off-shore, all the better. However, since 2011 the North Sea has been a complete disaster zone for finance. George Osborne's tax raid inflicted massive damage on tall the smaller AIM listed oil companies that had moved in to replace the majors. Even the majors cut back on investment and since then falls in oil production have held down UK GDP and caused a double dip recession.

Now there are some hints at changes to the rules and regulations which will allow a better shot at exploration. But there is another problem that has reared its head and that is as the big deposits are all discovered, the smaller companies are not having such a good strike rate with their prospective drilling.

This means that the banks who used to lend to the companies are quite sceptical about lending more money, plus of course they are in financial difficulties themselves and much more risk averse to high risk lending than they were. Prior to 2008/10 Lloyds was the largest lender to the companies in the region and of course now this is one of the banks in the worst condition.

So whilst it is great that the Coalition Government are now looking to change the DECC rules to try and encourage the sector, it is only after two very deep self-inflicted wounds have been taken. It's a long way back from here and I doubt North Sea production is going to recover in time to boost the economy before the election.