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.

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  • Sad situation.<br />All it needs is a bit of dynamism: sanction exploration to find out what is there; carry out an expert review in parallel of best practices, environmental protection, etc; use outcomes to assess - and publish - benefits and risks; decide; implement.<br />Simples!<br />We need a bit of the "Action this day" spirit.

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  • tommie william

    I am not sure why you are so pessimistic about shale gas development in UK. From what i read in the report of Parliamentary Inquiry it seems all agree shale gas development is important for UK and should go ahead with proper regulation. You won't be able to get everyone agree with and happy for your passion brings, be it due to their vested interest or not. If shale gas exploration/production get the go ahead to prove up what it claims then it is all one (shale gas) can ask for. You are not believing UK government will ban shale gas over these hypothetical and unproven environment risks flying around, are you? Let just give them time to make the decision and let shale gas go ahead to prove it for themself.

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  • Glad to hear some optimism, but I hear continual put downs of shale at the highest levels of UK government which are slowing things down. At the Parliamentary Inquiry they asked me what subsidy shale needed and I got a laugh and a lot of support by saying "we want to give YOU money".<br /><br />The support we need is more political. Everyone has plenty of reasons not to make it work or wish it would go away, we need the new Energy Secretary to at least mention shale once in a while in a positive tone.

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  • tommie william

    Nick Grealy

    Thanks for your reply. Just heard you have a new minister and some former chancellor is already calling for him to quit already. Does the new minister have a view on shale gas or wind/solar, you think?<br /><br />Also another observation. Is this a British trait of taking things very cautiously when anything suddendly appears in front of them looking too good in too many things (shale gas being good for CO2 emission at same time efficient, cost effective and good for economy, consumer, government tax/security).<br /><br />I work with a Brit on a new therapeutic drugs and we have our lab data to back up all of its potentials and then several other independent lab's publication in support of its potential but yet he still think it is too good to be true and very slow to accept it. Are they very cautious people with something appears to be too much of an excitement or is it the politics of vested interest you think??

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  • Brit's on the public payroll are usually even more institutionalised than the rest of the population .<br /><br />The nanny state knows what is best for us and how important it is to protect us from ourselves - cradle to grave .<br /><br />The thought that people should be free to take risks is an anathema and Britain is sinking fast under the weight of all the vested interests .

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  • The most depressing quote I ever heard about the English is from the book of the same name by Jeremy Paxman, a major news personality: To the true Englishman, any change at all is a change for the worse.<br /><br />I'm sure that the new Secretary is more open to a plan b for both energy and the economy, but he could get institutionalised real quick. What if he reads the 8 month old report for example and plans policy accordingly?<br /><br />I keep on trying to reach out to major end users but the promise of cheap gas is so far away that all they can think of right now is earthquakes.

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  • I am actually optimistic that common sense - and sheer necessity - will prevail. However, I agree with Nick (to coin a phrase) about the sheer inertia and resistance of the bureaucracy and vested interests. As the well-known saying goes....you can rely on our government to do the right thing once it has exhausted all the other possibilities! <br />What is also disappointing is the lack of advocacy from mainstream groups such as suppliers to the power industry, the generators themselves, producers of fuels, chemicals, fertilisers, etc.. In particular, where are the unions? Looking at the job opportunities created in the States and the prospects for "onshoring" new investments, why are they not jumping up and down?

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  • I think you've inadvertently answered your own question .<br /><br />Q) "Where are the Unions"<br /><br />A) "Looking at the job opportunities created in the States"<br /><br /><br />Where were the unions when it came to protecting their members from the consequences of mass immigration , removal of defined benefits pensions from the private sector ?<br /><br />What does the Shale industry need from Govt other than a removal of the moratorium on fracking ? Not subsidies .<br /><br />The outcome is likely to be better if the solution evolves from the bottom up - the producers of fertilisers and chemicals you mention , gas to liquids companies , go-getters at the local level who will create jobs and create demand .

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  • Dung

    British Gas has signed a deal to import LNG from The US for 25 years starting in 2015 at a price which is 50% higher than than the current price withing the US. This deal can not start until 2015 because a huge terminal that the US was building to brinh IN LNG has to be converted to be able to export it.<br />Silly old me is thinking that our own internal price on Shale gas (which is effectively what BG is importing) should not be any higher than in the US.<br />Will will the government make sure out ghas stay in the ground to help BG make money at our expense or will this idiot deal break BG?

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  • Morten Frisch

    Nick, thank you for continuing to carry the gas banner high! I am pleased that you are doing this whether it is for gas in general or for shale gas. <br /><br />As a Norwegian that has been working in natural gas for some forty years including conducting studies of US shale gas developments since 2002, I simply fail to understand the negative reactions shale gas exploration activities are having in most European countries. A year ago I addressed an international gas industry audience that included high level French delegations. This was the time the French government in a nee jerk reaction to shale gas developments introduced laws banning hydraulic fracturing. My message to the French delegations was that as a Norwegian I was very pleased France had decided on a shale gas policy that would make certain the country remained a large importer of Norwegian gas also in the future. Since I live in the UK, it is my sincere hope that I will not be able to make a similar statement in this country.

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