Articles from 2012
Ofgem Shale Report: Better Never than Late?
- Written by Nick Grealy
- Published: 08 February 2012
I may mock the unfailingly polite people at Ofgem from time to time, but as a former civil servant myself I understand one of the basic disconnects of shale in government policy.
Simply put, government policy is very slow and shale is very fast. UK Energy policy derives from the pre-shale age. I imagine that policy papers in DECC and Ofgem start off the exact same as the policy papers I used to have to deal with at the Department of Health which always referenced some White Paper or policy that goes back years.
Not only people, but entire departments, sometimes even entire divisions, entire buildings of people, have career paths mapped out for them based on policy that made perfect sense five or three or ten years ago but which, events, dear boy events, marginalise.
So it is with shale. Shale has emerged at breathtaking speed. This description by Adam Sieminski, incoming head of the US Energy Information Administration underlines how fast and how completely shale changes everything.
“For 40 years, only politicians and the occasional author in Popular Mechanics magazine talked about achieving energy independence,” said Adam Sieminski, who has been nominated by President Barack Obama to head the U.S. Energy Information Administration. “Now it doesn’t seem such an outlandish idea.”
But many UK policy makers believe, or actively hope, that shale is outlandish or ludicrous or dangerous.Business and government policy is about providing future policy scenarios based on past experience. An a priori assumption is the future will be only a slightly different version of the past.Technological breakthroughs/inflection points that disrupt the narrative like shale take years to filter through the vested interest entirely due to that there is no experience to work on. Turning policy around can take years, like trying to stop the Titanic on a dime.
Peak Oil has been such a part of UK Energy Policy that it's sudden death brings screams of denial from perfectly decent people whose jobs depend on them not understanding it. They end up, sometimes directly but more often subconsciously looking to deny or slow down the inevitable.
I mention Peak Oil because bizarrely enough, one of it's undying proponents Art Berman makes an appearance in the Ofgem report The Impact of Unconventional Gas on Europe in an otherwise fairly decent report.
The report is complete, prudent but thoughtful and naturally as any academic, financial or government research must, has their scenarios. Scenarios, formerly known as models until models caused the financial crisis of 2008 are must haves in any study. But how to have research on future unknowns based on past knowns? The entire point of shale is that it is creating new models, new concepts and new opportunities at breathtaking speed.
The report isn't bad. It's simply out of date. This report was presented as policy in February 2012 but the report was completed in June 2011. It took a year and God knows how much money to produce but it has simply been made irrelevant by events. One of the authors of the report mentioned this en passant during the presentation last week. She presented the report and it's conclusions and then in a section that could more properly be called events, dear boy, events but they call Recent Developments
- In September 2011, Cuadrilla announced enormous potential shale gas resources near Blackpool and there have also been earth tremors
France and Bulgaria have banned fracking completely
There have been reports of disappointing early results from Poland and Hungary
The continued growth in shale gas production in the US has led to plans for the US to build capacity of up to 90bcm/year for the export of LNG
Or apart from minor little details like 1 and 4 above, full speed ahead on worrying about supply security and oil linked prices all of which make wind, nuclear and CCS attractive and logical alternatives.
Developments, dear boy, developments. Poyry stick to their guns in proposing that by 2020 the impact of shale in the UK will be only 5BCM per year instead of my potential estimate from Cuadrilla alone of 28 BCM per year and the UK Onshore Gas estimate of 25BCM per year with Cuadrilla and others (which they think conservative and which US analogies should agree upon.
But why the long face about UK development? Poyry give answer number one:
Environmental, planning and resource concerns make our Boom Scenario a low probability outcome
Is this "conclusion" self-fulfilling? Or self-serving?
The UK government is sendng us three messages:
1. There is no alternative to the austerity program
2. We have resources greater than the North Sea that could reduce the balance of payments by billions and would result in a conservative tax take for the economy of £3.6 billion
3. The resources aren't important enough that the Government should allay "concerns" over the environment. The government will continue to cower before opposition groups that simply don't have science on their side.
Civil servants and citizens alike facing the first message should be aware of the next two. But unfortunately, while journalists find stories about dead dogs, or flaming taps or earthquakes more interesting, we're stuck.