The Unconventional GasConference last week in Vienna provided solutions to the issues the conventional wisdom at the European Gas Conference were seeing as problems. Too bad they didn't cross the hall that often, here's some of what they missed.
Mark Sundland of Anadarko, a company which only entered shale in 2009, provided an update on what is happening now in the US. This is what gas could look like, with many of the problems having solutions. One eye opening statistic was that they were now drilling wells in less than six days. Mark and other speakers highlighted how US shale is far more abundant, affordable and efficient than the models some investors use to determine shale profitability. Too much of European thinking is based on what happened in the US in the past as model. Europe has the advantage of backwardness. We’ll have faster drills, with faster drill bits, using less power, less water, less chemicals and less money.
Mark, like other Americans present were bemused over how slow European regulation was happening. Bill Marble of Poland’s Wisent is a US shale pioneer who provided much of the expertise to Chesapeake when he sold Hallwood to them ten years ago. He, like others, is frustrated at how the simplest decisions in Poland are taking months instead of days. Poland, as I noted last month is rapidly losing it’s advantage of first mover. It can easily regain this, but it needs leadership at the national scale translated into local action.
One of the most interesting presentations was from Serge Catoire of the French Ministry of Economy. M. Catoire said that France was very interested in developments in the UK and Poland and success there could “unfreeze” the French shale debate. “For now, the situation is frozen in France. We will look elsewhere. We hope that what is frozen might melt”.
This puts even more pressure on Cuadrilla, although they seem equal to the task. The shale gas ball is now in the UK’s court. It is not an understatement to say that every country in Europe is depending on Cuadrilla to show them the money and not to mess it up. One can't underestimate just how much is riding on this. That makes it all the more surprising that a large part of the international economy is at risk of decisions by a council planning committee frozen in the headlights by nimbys and a few cement obsessed blowhards. This is big picture stuff that runs the risk of being dragged down by pygmies.
The common theme from speakers and delegates from Germany, Poland, Denmark, the UK and Spain was that something had to be done about public acceptance. But we’ve had that discussion for what seems like, and sadly, actually is, years, and somewhat like Mark Twain said about the weather, everybody complains about it, but nobody does anything about it. I for one am getting bored with that and I’m actively trying to do something more than this blog if anyone wants to get in touch.
The next day there were developments in France that would have been unthinkable last year. I can’t find much in English on the subject, but essentially the Parliamentary committee on Science evaluation unanimously voted to open a new study on shale gas. This was followed by statements from Serge Catoire's boss Arnaud Montebourg who finally seems to be understanding that shale gas in France is a mere side show to shale oil.
That immediately bought protests from the Green partners in the coalition who said that shale was a red line that couldn’t be crossed. My view is that perhaps the government, who need not depend on the Greens for a majority and despite their other troubles are still faced with fractured right wing opponents (more likely to support shale anyway), wouldn’t be especially bothered to see them go.
That would have political implications in the UK, where a right wing government in coalition with lukewarm Lib Dem support for shale gas, wouldn’t be too concerned if that came to pass in the UK. The UK Lib Dems are confused (I voted for them for example!), but not suicidal. The EELV Greens in France labour under the delusion UK greens share, of thinking they have far more support than they really have.
UK Greens live in an echo chamber where they all agree with one another and point blank refuse to engage with pragmatists. From that perspective they actually think that green policies are vote winners and the world today is the same as ten years ago. UK greens could take down the rest of their policies with them, causing untold damage to progressive politics as fallout from their bitter ender approach to all or nothing green policies. But the UK green establishment is becoming separated from some of their base, even if it is currently a small minority. Greens have particularly poisonous discussions within themselves and I’m not going to embarrass anyone. Yet. But as with the US Tea Party post-Obama, whether they choose to face new realities or not, history will not absolve them but simply go on regardless.
Finally, the interesting chatter at conferences is always offside. Conventional and Unconventional people alike risk missing that the rest of the world is becoming increasingly aware of shale. By that I don’t only mean the Asian investors who are getting more interested in Europe, nor the US mid caps who see potential in Europe as well, nor the well-informed and horrified OPEC countries present.
Shale gas and oil implications are too important to be left to policy makers in environment ministries. When the political and military think tanks start sniffing around as much as they were in Vienna, expect shale to start being discussed at the top table by all the cabinets of Europe. The recent Algerian events for example were much discussed in the context of a realignment of risk perceptions. Shale gas in Europe may seem financially risk but no one is coming home in a coffin as a Japanese pointed out to me.
This past weekend, some of the same security policy wonks were at a European security conference in Munich where the heavy energy hitters were talking big picture.
The shale gas and oil boom is already underway. As Europe continues to debate it, North America is reaping the advantages," said Jorma Ollila, Chairman of Royal Dutch Shell .
"Observing this from across the Atlantic it is really quite remarkable that there should be a ban or a go-slow on this development in Europe, really without any facts," said Daniel Yergin, Vice-Chairman of IHS Cambridge Energy Research.
Climate policy is interesting, energy is important, money is key but military power is where the rubber really hits the road. That is why Europe, eventually, inevitably will embrace shale. Nudging it politely along is OK, but this could be the start of some actual kicking.