Some parts of the UK press are ready to go to war with Argentina over Falklands/Malvinas oil.  Particularly bizarre in that they see no contradiction in refusing to countenance messing with potential oil 9,000 thousand miles away even as they rail with the nimbys against even exploration for the black stuff 9 miles south of the M25. Still, it won't be their kids dying in that war.

The last thing Argentina needs to do is to go war over oil.They have so much of the stuff that they don't need to. But watch out. If it actually came a to skirmish over sovereignity, this wouldn't be "two bald men fighting over a comb".

This could be one country with a lot of oil  against one allegedly so rich that it can afford to leave it in the ground. Guess who might stand a chance in that one?

 A big buzz lately has been the periodic renewal of the shale as Ponzi scheme narrative. Argentina had already announced last summer that the shale oil was getting to be more interesting. And here we have proof that the Ponzi scheme story was right.

According to that narrative, it simply isn't possible that that Argentina (or the UK, or the Marcellus, or France) could  turn from energy shortage to energy independence overnight. But they were proved right.  Increasing resources by five fold is ludicrous. Resources can increase by far greater multiples than a mere 1000% increase:

 YPF, the Argentine arm of Spanish oil major Repsol, said its Vaca Muerta shale prospect holds 22.8 billion barrels of oil and gas resources, a staggering amount that may double Argentina's oil and gas output within a decade.

The firm's previous, November estimate on Vaca Muerta, or "dead cow" in English, showed it held at least 927 million barrels of reserves in just a small sliver of the area YPF had explored so far

 The shale play has already drawn comparisons to the giant fields, such as Bakken in North Dakota and Eagle Ford in Texas, that have recently allowed the United States to stem decades of oil production declines and become a net exporter of refined oil products.  Mark Papa, the chief executive of EOG Resources, told a conference last year that Vaca Muerta could produce more oil than Eagle Ford, which has recently been pumping around 400,000 barrels a day. 

What's happening in Argentina over first gas, and now shale oil, holds a very important lesson for everyone in the world.

According to the "conventional" wisdom,  this can't happen. They can do studies that show that the UK simply doesn't have the resource, or that it's not going to change much at all. They do this because their  future conventional world is simply a continuation of the past. And why not? The past was a very comfortable place for them and they are desperate for the future to be no different. It is impossible for them to countenance that existing reserve estimates could be so wrong. When expert opinions tell them the UK has only150 BCM of gas onshore, yet the unconventional  opinion says 1.13 Trillion Cubic Metres (40 TCF recoverable from Cuadrilla alone), their gut explanation is unconventional industry charlatans spouting outlandish statements.

Back to way down south on a story that is over two years old here. The conventional wisdom said Argentina was the country that was richer than the UK 100 years ago and then blew it. There was certainly no future in natural gas or oil.  The total reserves of all Argentina in 2010 were for example 2.3 billion barrels of oil and gas far less. Let's go back to July 2010 and see the conventional wisdom

 Argentina’ natural gas reserves dropped to half their 2000 level when they totalled 378.862 million cubic metres, which means at the current consumption rate in seven and a half years the country will ran out of the vital fuel, according to a report released this week in Buenos Aires.

Six months later:

 Argentine President Cristina Fernández de Kirchner was in charge of leading the Tuesday ceremony in which Repsol-YPF announced the discovery of a massive shale gas reserve, the largest in 35 years that could help the country reduce its imports of the fuel.

Compare Argentina's enthusiasm with UK indifference towards even bigger resources and having energy policy based on six months old reports. Laugh or cry?  

 UPDATE:  Ofgem tell us that they paid £50,000 for that report, relatively cheap as those things go,  but not value for money in the circumstances. Go the library on the top right  and spot the difference between the Ofgem report wiritten by Poyry from Oxford and the Oxford Institute of Energy Studies report of December 2010 which was free.

 By the way,  look at Poyry's very pretty and expensive home page.  Note the references to fuel sources whose affordability is directly impacted by the cost of gas.  If gas was cheap,  those revenue streams would be, to be polite,  somewhat impicated.  If one could influence the perception that shale gas wouldn't change anything and was likely to be both insecure and relatively expensive,  it would appear to me that such the costs of such influence would be  money well spent.  In fact, one could say that if they paid Ofgem £50K it would be cheap.

I have no doubt that the writers of the report were unimpeachable behind their Chinese Walls.  As I often  say here I reject conspiracy theories of any type  as a matter of principle.  I do admire and dare I say, envy, the great good luck of getting paid £50K to insure present revenue streams continue.

 

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  • It is ironic to see the contrast. <br />I am old enough to have memories of politicos on photo-shoots in hard hats out on rigs or at onshore facilities when the North Sea was booming. It would be good to see that come round again...but with better fashion-sense!

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