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
Showing posts with label Shale Gas. Show all posts
Showing posts with label Shale Gas. Show all posts
Tuesday, 5 November 2019
Monday, 29 October 2018
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
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
Monday, 8 October 2018
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.
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.
Tuesday, 3 April 2018
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" ...
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
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
Monday, 10 October 2016
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
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
Wednesday, 27 April 2016
Meanwhile, Back In The Markets ... Big Events
Has anyone reported this in Europe? On Monday, the new US LNG terminal at Sabine Pass was formally opened, sending out a cargo of gas bound for Portugal. Yes, folks, that's an export terminal. Shale gas is a-comin' our way.
The past week has seen a serious uptick across the energy commodities' forward curves - Brent up 7% across the whole structure, UK natural gas up 20% at the near-end, even coal up 5% at the back end. Brent is still in modest, uninformative contango (as is gas) so a parallel upwards shift doesn't betoken an end to basic oversupply. But hey, the producers will be happy enough to be able to lock in at higher prices. 20% in one week is not to be sneezed at - any fully-hedged UK utilities will be smiling broadly: any that were exposed will have been scrambling, maybe even to buy some of that US gas on a long-term contract.
And of course Sterling (spot) has had what some see has a post-Obama speech boost, though it's not at all as pronounced as the commodities - more within the range of general noise.
The opening ceremony at Sabine Pass could be seen as more significant than the COP21 "signing ceremony" in New York on Friday. Signing?
ND
The past week has seen a serious uptick across the energy commodities' forward curves - Brent up 7% across the whole structure, UK natural gas up 20% at the near-end, even coal up 5% at the back end. Brent is still in modest, uninformative contango (as is gas) so a parallel upwards shift doesn't betoken an end to basic oversupply. But hey, the producers will be happy enough to be able to lock in at higher prices. 20% in one week is not to be sneezed at - any fully-hedged UK utilities will be smiling broadly: any that were exposed will have been scrambling, maybe even to buy some of that US gas on a long-term contract.
And of course Sterling (spot) has had what some see has a post-Obama speech boost, though it's not at all as pronounced as the commodities - more within the range of general noise.
The opening ceremony at Sabine Pass could be seen as more significant than the COP21 "signing ceremony" in New York on Friday. Signing?
"The US, China and India - the three biggest climate polluters - have all committed to join the agreement, possibly as early as this year."Possibly as early as that, eh? Oh well.
ND
Thursday, 17 December 2015
Oil Price, Yes - and What About Gas?
We've had several cracks at this since it crashed through 60 a year ago - click on our 'oil price' thread if you fancy - and the geopolitics are still playing out. Saudi Arabia is behaving as though it reckons it can hold its breath; and of course little Volodya is disinclined to blink. US producers, debt-financing and all, will simply play the market game; and their stamina has long since confounded the ignorant.
Anyhow, today my subject is the parallel collapse in the price of natural gas. The current situation is that the world is divided into 3 gas markets: North America (cheapest); Europe (mid-range); and Far East (highest). Until the shale gas revolution really got into its stride, imported 'Atlantic' LNG was the marginal source for both USA and Europe, and so prices in these markets converged, with those of the Far East at much higher levels - even higher still after Fukushima, when Japan increased its gas burn significantly. However (cutting the long story short) North America is now self-sufficient but essentially unable to export, and so becomes a low-priced 'gas-island'; but LNG is now available in vast - and growing - quantities and demand is falling across Japan and Europe, so the Eu and Far East markets have converged (mediated again by LNG). The USA is now on the point of being able to export its shale surplus, and soon the whole world will be one gigantic, heavily over-supplied gas market.
With me so far?For reasons good, bad and historical, the price of gas can often be highly correlated to that of oil, and the weakness in oil is exacerbating the weakness in gas. None of these phenomena seem likely to go away imminently. So: the price of gas in the USA is set to rise a bit, and that in Europe + Far East to fall even lower. This has been brilliant for Japan & Korea. The Chinese don't use very much, but Russia of course would dearly like them to, and has at long last sold them some future supplies on terms so humiliating, they don't really like to talk about it. In the meantime some extraordinary power-politics has seen Gazprom trying to muscle back into the good books of their main hard-currency customer, playing their mighty German card for all it is worth, which is quite a lot. In any event they are doomed to another mammoth round of price renegotiations, as continental European buyers trigger their crazy Civil Code 'price re-opener' clauses and demand cuts or rebates by the billion.
So: some world-scale economic impacts, geo-politics, power politics - but what about us in Blighty? All this price-softening has come at a very good time for us because (a) our own North Sea gas production is in terminal decline and (b) one of our important sources of winter gas - the Dutch - are rapidly winding down production from the gigantic Groningen field (which kicked off the whole North Sea thing in the 1960's) in light of its increasing age, and propensity for causing serious earth tremors.
On the other hand it does nothing for stimulating a shale-gas industry here: but hey, that gas ain't going nowhere, it'll still be there when we need it. Genius George seems willing to burn some political capital to get the fracking underway, but I'm not really sure why.
It will directly impact two other industries (and indirectly, many more). Firstly, it will hasten the long drawn-out demise of European coal use, which has been enjoying an indian summer here and elsewhere. We are gradually seeing gas become cheaper for power generation once again after several years of being out-of-the-money; and of course government policy is to stimulate - somehow, they are not quite sure how - a new and very substantial 'dash-for-gas'. They "want" 30 or so new gas-fired power stations to spring into being, and sustained low gas prices are the way to get 'em.
Secondly, it trashes the prospects for renewables and nukes, because it will cause the price of electricity to fall, and make fixed-price subsidies ever more expensive. The whole low-carbon thing was predicated on ever-rising prices. The greens know this (despite loud denials) and we must draw a kindly veil over their ever-increasing misery. Everything has its cycle, and who knows how long this one will last? Long enough to cause tremors even greater than those Groningen earthquakes, I suggest. Many will wonder why domestic gas bills don't fall in proportion to the wholesale price: but that's not the only way consumers can benefit from these mega-trends.
ND
Wednesday, 3 July 2013
Energy Policy: Reductio Ad Absurdum
It is hard to know where begin a post on UK energy policy just now, though I feel vaguely obliged to try. Last week there were flurries of straws in the wind, adding up to what ought to be unavoidable recognition of the failure of the programme initiated by Ed Miliband when in power as Energy Secretary. His predecessor, John Hutton, was considerably more realistic but Miliband adopted a fantasy green agenda - arguably, part of Gordon Brown's overall scorched-earth strategy which we wrote about at the time - and with very few modifications the coalition swallowed it whole.
Now we have an updated forecast of reserve capacity which shows we can easily be up the proverbial creek by 2015 - no news to anyone reading C@W, I realise - and Ofgem scurrying for short-term fixes. Cue hysteria in the mainstream media (save for a curious silence in the Guardian).
The government and regulators will, of course, succeed in preventing large-scale black-outs, and probably even rolling brown-outs, although there could well be the odd isolated incident. How will they do this ? By throwing money at the problem, of course, because no politician will ever allow the lights to go out. Switching off large industrial customers, revving up diesel generators, paying the owners of mothballed gas-fired power plants to re-commission them, prolonging the lives of old nukes a bit - it isn't even very difficult. But it is far more expensive than it should be, and we shall all pay for it.
Perhaps - just perhaps - someone will also quietly finish off DECC's mad green + nuke agenda: because that is what all this ad-hoccery amounts to. The real problems are going to happen 2015-2020, when both Cameron and Miliband both hope to be holding the reins. So we might hope for a bit of belated realistic policy-making from now on.
They seem to have got the bit between their teeth on shale gas - (which, by the way, will bring forth the most astonishing amount of green fury). Some reckon that Ed Davey has lost faith in EDF's ability to come up with the nuclear goods, and not before time: EDF have given enough compelling evidence of their uselessness. Michael Fallon, the new safe-pair-of-hands energy minister (actually, minister for just about everything, it seems) seems pretty robust and clear-sighted. But he bullshits like the worst of them, and it's worth a few minutes to watch him in action against Andrew Neil (second item in this programme) - who asked a bunch of the right questions but allowed himself too easily to be fobbed off with Fallon's confident sophistry and bluster
It would be fun to fisk the whole interview but, sorry, I just don't have the time. Or energy. Sorry.
ND
Now we have an updated forecast of reserve capacity which shows we can easily be up the proverbial creek by 2015 - no news to anyone reading C@W, I realise - and Ofgem scurrying for short-term fixes. Cue hysteria in the mainstream media (save for a curious silence in the Guardian).
The government and regulators will, of course, succeed in preventing large-scale black-outs, and probably even rolling brown-outs, although there could well be the odd isolated incident. How will they do this ? By throwing money at the problem, of course, because no politician will ever allow the lights to go out. Switching off large industrial customers, revving up diesel generators, paying the owners of mothballed gas-fired power plants to re-commission them, prolonging the lives of old nukes a bit - it isn't even very difficult. But it is far more expensive than it should be, and we shall all pay for it.
Perhaps - just perhaps - someone will also quietly finish off DECC's mad green + nuke agenda: because that is what all this ad-hoccery amounts to. The real problems are going to happen 2015-2020, when both Cameron and Miliband both hope to be holding the reins. So we might hope for a bit of belated realistic policy-making from now on.
They seem to have got the bit between their teeth on shale gas - (which, by the way, will bring forth the most astonishing amount of green fury). Some reckon that Ed Davey has lost faith in EDF's ability to come up with the nuclear goods, and not before time: EDF have given enough compelling evidence of their uselessness. Michael Fallon, the new safe-pair-of-hands energy minister (actually, minister for just about everything, it seems) seems pretty robust and clear-sighted. But he bullshits like the worst of them, and it's worth a few minutes to watch him in action against Andrew Neil (second item in this programme) - who asked a bunch of the right questions but allowed himself too easily to be fobbed off with Fallon's confident sophistry and bluster
It would be fun to fisk the whole interview but, sorry, I just don't have the time. Or energy. Sorry.
ND
Saturday, 22 June 2013
Life Imitates Art. "Shale Causes Economic Crisis"
 |
| Talking It's Hind Legs Off |
This obviously wasn't a big enough challenge because in fact someone has taken it upon themselves to claim that shale gas could "create an economic crisis".
Yes, read all about it in the Grauniad from the pen of Dr Nafeez Ahmed, "executive director of the Institute for Policy Research & Development and author of A User's Guide to the Crisis of Civilisation: And How to Save It among other books".
Other books ... you mean there's more where this came from ?? While we all rush to Amazon to order his complete works, here's a weekend compo. Devise the best argument you can, for why shale gas production in the UK will cause gas prices to rise.
Yes, I know it's lacking in scope and ambition, but see what you can do.
ND
Wednesday, 19 June 2013
Shale and the Price of Gas
When push comes to shove, people really don't understand markets very well. Perusing the increasingly lively meeja coverage of putative shale gas in the UK, we find people who say shale discoveries will bring down the price of gas, and seemingly even more who say it won't - including, remarkably enough, the shale gas lobby itself. Wishing, I suppose, to be cautious in their claims, some of them say the effect will be minimal.
Let's put some perspective on this.
If and when it is produced in fair amounts (say, equivalent to 10-20% of UK demand - a lot less than some predict will flow) it will have the potential to impact on spot-gas prices not only in the UK but in Europe as a whole.
The absolute effect of this will hinge entirely on the detailed supply-demand dynamics of the time. This being a good few years into the future, we have no idea whatever what those will be.
OK ?
ND
UPDATE: The Horizon programme on shale 'n fracking was fairly balanced and well done. It's on again this evening, and here.
At a meeting for concerned residents at a potential fracking site in West Sussex, a Cuadrilla representative was asked to comment on whether shale gas could drive down customers' energy bills. “We've done an analysis and it's a very small…at the most it's a very small percentage…basically insignificant,” said Mark Linder, a public relations executive at Bell Pottinger who is also responsible for Cuadrilla's corporate development. (Inde)Some PR he is, eh? At least he didn't say prices would go up, though we may be sure that in due course someone will - the whole renewables policy is a massive bet on this. The argument seems to be that under EU trading laws we'll be 'forced' to sell it to the wretched continentals, (read: they'll offer to buy it, and if the price is right we'll sell it !), thus neutralising any tendency to lower UK prices. (Even Peter Lilley seems to be willing to concede this.)
Let's put some perspective on this.
- in 1994 a relatively small gas surplus in the UK brought down the price of (wholesale) gas by 60% in 8 months - and it stayed down for 5 years
- it went up again when in 1999 the UK became connected for the first time to the gas networks of the continent, where gas prices were higher - set by oil-indexed gas contracts. The quantities of gas being exported from the UK that effected this price-shifting arbitrage were relatively small (indeed, on a net year-round basis, extremely small, as UK gas was exported in summer, but there were imports from the continent in winter)
- European gas importers still paying oil-indexed prices (to Gazprom, Sonatrach et al) have been seriously hurt as spot prices have once more fallen, based on another relatively small surplus stemming from the 2009 industrial downturn. (In consequence they have forced Gazprom to reduce their prices.)
- US gas prices have been absolutely trashed by substantial amounts of shale gas, and have stayed low despite warnings for several years that this can't go on. Of course, as yet they are only able to export very small amounts of the net North American surplus (the US is still a net importer, from Canada).
If and when it is produced in fair amounts (say, equivalent to 10-20% of UK demand - a lot less than some predict will flow) it will have the potential to impact on spot-gas prices not only in the UK but in Europe as a whole.
The absolute effect of this will hinge entirely on the detailed supply-demand dynamics of the time. This being a good few years into the future, we have no idea whatever what those will be.
OK ?
ND
UPDATE: The Horizon programme on shale 'n fracking was fairly balanced and well done. It's on again this evening, and here.
Tuesday, 9 October 2012
Shale Gas - yeah!
For with Nukes closing, Coal too expensive under emissions schemes and renewable both fantastically expensive and unreliable, a worrisome situation was emerging.
On the other hand, presented to us was a solution. Shale Gas exists in large quantities and although more expensive to produce than normal gas, with some more environmental challenges too, it is much cleaner than coal and plugs straight into a redundant grid with many Gas power stations already in mothball.
So by announcing yesterday tax breaks yesterday we are at last moving forward with a solution to our self-created energy problem. Of course it is not just an energy shortage which is the issue. In the long-term, relying on expensive oil and nuclear will hammer our manufacturing competitiveness as input price inflation eats away at the competitiveness of products. Countries reliant on oil are going to find themselves mashed by the low price of US goods given their lower energy intensity production costs. So goodbye Japan and Germany in the medium-term - closing your nukes and having no alternatives ready and Goodbye France for deciding not to exploit shale.
At last, signs of a decent policy ahead, let's hope Ed Davey and the Liberal Democrats see sense and realise that the lights gong out is not something we want to contemplate and that a dash for gas is the most environmentally friendly option open to us.
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