The Little Britain opponents of UK shale appear desperate to save their part of the planet while ignoring any implications of global energy industry trends on the rest of it. A constant objection by FOE and WWF is that shale must stop because it will upset UK climate targets (not actual emissions as we'll see in an upcoming post). So to those who think this post only concerns far away countries of which they know nothing and care less, stick to the end.  

Proving shale gas isn't everything and conventional natural gas still has a lot of life left in it, i.e. bang goes the peak conventional gas theory, a recent study by Oxford Institute of Energy Studies asks the question East Mediterranean Gas: What kind of Game Changer? The title infers it at least could be a game changer. A refreshing change from an OIES study of over two years ago which asked a similar question about European shale and gave any number of reasons why not.  

I admit to more interest in the decade's other big discovery, offshore East Africa, than gas in the literally explosive area of the Eastern Med. For those who've missed the African story:

 Eni SpA and Anadarko Petroleum Corp. agreed to build the world’s second-largest liquefied natural gas plant in Mozambique to start exporting fuel in 2018.

Italy’s largest oil company and Anadarko will coordinate development of gas fields and cooperate in the construction of the plant in the Cabo Delgado province of northern Mozambique, which could have an eventual capacity of about 50 million tons a year, The Woodlands, Texas-based company said today in a statement. That would make it the largest LNG plant outside Qatar, the world’s biggest exporter of the fuel.

 50 million tons of LNG is something the world LNG industry needs like a hole in the head. The story of only ten years ago was natural gas in short supply everywhere, even in the US which would be supplied by Qatar, escorted out of the Gulf by the Sixth Fleet. Whimper went that theory, as the US didn't need any LNG after shale, which meant Qatar had to sell it to either Japan or Europe. Then Australian LNG emerged, aimed at Japan and setting up a price war with Qatar. In the meantime, the US and Canada start planning exports. Fortunately Qatar is a tiny place, anyone else would have declared war by now. To add insult to injury East Africa LNG emerges aimed at the strongest Qatari markets left, India and SE Asia. Thailand's PTT has already bought up a chunk of the discovery. I haven't even mentioned emerging African and Australian shale industries. What could be worse for both Qatar in particular and expensive gas fans in general? How about this?:

The discovery of sizable gas resources in the Levant Basin, a geological structure that straddles the territorial waters of Cyprus, Israel, the Palestinian Territories, Lebanon, and Syria, has the potential to be game-changing for the East Mediterranean region. Hitherto net energy importers, these countries are now faced with the prospect of long-term energy self-sufficiency and the development of a new revenue stream for the economy. With the resource potential of the Levant Basin believed to be much higher than the 35 Tcf of gas discovered recently, the East Mediterranean is now the focus of much interest on the part of major upstream investors. 

It's intriguing how energy can bring together enemies. Build something really, really big, and suddenly people with even a small share have an incentive to preserve it. It's worth recalling how upset the US was over German imports of Soviet Gas, yet the only interruptions to supply started after the fall of the CCCP. During the entire madness of the Cultural Revolution, the only part of China that functioned with no interference was the oil industry.Today, the other unlikely prospect is Russia to South Korea via North Korea gas. So if that can work (I think it's inevitable  but don't ask me for a date), surely this project could? In fact we've already seen the only thing Israel and Gaza successfully negotiate has been off shore exploration. The conventional wisdom of left/greens is oil and gas causes conflict, but the reality is it more often gets implacable enemies talking.  Ever since spooky friends told me even the Taliban were on board about the TAPI pipeline, I've been thinking perhaps the Levant Basin might work, despite initial misgivings that building flammable infrastructure in the area was asking for trouble. In this area, Israel, Palestine, Lebanon, Syria and Gaza are the least of worries.

levantbasin

 

Northern Cyprus claims large sections of the East Mediterranean offshore on the northern side of the island as international interest in Cyprus’ hydrocarbon resources has grown. Both the governments of Northern Cyprus, and of Turkey, have called for a halt to current hydrocarbon exploration and development efforts offshore Cyprus until a comprehensive political settlement has been found for the island. Turkey has repeatedly issued statements that the Turkish-Cypriots ‘have equal and inherent rights over the natural resources located on the whole continental shelf of the island’ 
 
Throw in further confusion as Egypt is the supplier via the same pipeline of some of its own offshore gas to Israel, Jordan Lebanon and Syria, underlining my point of energy creating strange bedfellows.That gas has been interrupted by various bomb blasts in the Sinai and pricing issues. That leaves Lebanon and Cyprus almost 100% dependent on oil for electricity, so for the greens, going gas saves 30% CO2, and for everyone else it's a huge amount of money, Lebanon alone uses 15% of GDP on oil for generation imports. At the same time, gas shortages have led to power cuts of up to ten hours there and even in Israel. Before anyone asks, Lebanon's energy plan fo 2030 sees gas at 66% and renewables at 12%.That makes an interesting aside: if Lebanon and Cyprus currently use oil, the most expensive way of producing power bar none, shouldn't that give a far greater incentive than the UK or Germany have for example, to implement renewables? Why aren't they? Could it just be that renewables, even in a low latitude, sunny and mild climate, simply aren't ready for prime time even with the greatest incentives? Israel is also one of the most scientifically advanced societies going, but their plans are similar. Just noticing.
 
It may seem there are so many players looking for a piece of the action in the Levant there may not be much left. But if the action is big enough, everyone's a winner. The current best plan seems to be the Israeli gas will go both onshore to home and undersea to Cyprus. Cyprus could be a new gas hub linking Lebanon, Syria and Turkey by pipeline with plenty left over for an LNG export terminal.  BTW, another aside is this would be the only LNG export terminal in the Eurozone. That wouldn't have a great impact on the Eurozone balance of payments, but it wouldn't hurt either. Italy, France, Spain and Portugal should be happier to pay for LNG in Euro than dollars.
 
But what strikes me about this play is the size. This prospect is currently looking at 35 TCF of reserves,which may go higher, but could well be lower when development proves the resources. It's held up, and rightly so, as a game changer. It also cuts carbon. Instead of countries living off-grid involuntarily 10 hours a day, they get richer. The reserves also have significant peace building ramifications: the gas issue has great conflict resolution potential. Lord knows everything else has been tried in this neck of the woods. Give people something and they then have an incentive not to blow either it, themselves or innocent bystanders, up. In short, what's to hate? I'm confident the Friends of the (English) Earth will find something.
 
Yet, and getting to the UK point: Why should 35 TCF reserves in such a problematic part of the world be seen as an obvious game changer, whereas 200 TCF resource in the Bowland Basin is given such short shrift and disrespect by UK energy policy makers?  One can't help getting the feeling most of them think it's all too much trouble and should go away. This is before even mentioning Cuadrilla said they see 200 TCF as conservative and BTW, they could convert up to 40% of it to reserves. Add to this, the other inconvenient fact that the Cuadrilla license is likely to be only the opening act of far greater UK resources in the Bowland and elsewhere.
 
This isn't only a question for green opponents but also for the Treasury, DECC and all the conventional wisdom experts who tell us UK's shale impact is years away if it ever arrives at all.  One can't help but getting the impression that this is too disruptive to experts who backed various other horses. It involves change, and for many English people, or at least the clinically depressed newspapers they read, any change at all can only be a change for the worse.
 
The result is an attempt to convince the rest of us that, next to the Middle East, Korea and Afghanistan, planning permission battles in Wales, worries about one extra truck every twenty minutes in Sussex, or obsessions with imperceptible earth tremors in Lancashire are intractable issues we here in the UK are incapable of solving so let's not even try.  
 
How sad they have such low expectations for themselves, us and their country. We wish Hillary Clinton a good rest and invite her to Blackpool to show her a real challenge. Imagine dealing with the Blackpool Green Party. That would be the real test of a future President.
 
 
 

 

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  • Draughtsman

    UK energy policy is predicated on the assumption repeated ad nauseam by the 'government' that gas will continue to increase in price at the same frantic rate that it has done in recent years. This will make the so called renewable sources and nuclear cheaper in the long term so of course shale gas it is totally disruptive to this scenario and is going to make the 'experts' look foolish if it comes in much cheaper than forecast. Because of this I have the feeling that the slightest problem with shale gas extraction will be seized upon as justification for its suspension. There we told you it was no good - we were right with our renewables all along.

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  • You can see why the 'Better Place' initiative of battery exchanges has bitten the dust.....with all that gas, Israel can and will run all its vehicles on its own CNG....a bit like Iran is doing......there is a bit of an irony. Middle East countries run their cars, buses and trucks on natural gas and export oil to EU and Far East.....<br /><br />At least the CNG and LNG vehicle penny has dropped in the US.

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  • Jacob

    Israel is already spending about 150 million dollars annually, committed for 20 years, for solar subsidies, for 250 MW solar capacity installed,. It has also just approve further 270MW of PV solar, and a further 120 MW of thermal solar, So the subsidy for solar (feed in tariffs above market prices) will rise to near half a billion dollars per year, committed for 20 years.<br />Israel is perpetrating the very same folly that the European countries do, the same hysteria, the same insane money waste. The discovery of the gas hasn't brought the politicians to their senses, they just copy all the idiocies from abroad, without much independent thinking.

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  • Andy

    Some people* in the US view a shale gas revolution that does not require statesmen to worry about North Korean agreement to a pipeline through their land or Pashtun approval for a pipeline to be a feature and not a bug!<br /><br />*Like, uh, me!

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  • Roger

    If the Chinese consumed natural gas at the same amount per head as we do in the UK china would need ~1,700 BCM of natural gas per year.<br /><br />If the Indians did the same they would need ~1,600 BCM of natural gas per year.<br /><br />Lets call it a round 3,300 BCM of more demand in the works just for those two nations.<br /><br />Compare that to the massively successful USA shale gas industry edging towards 250BCM<br />We are going to need every drop…..<br /><br />Shale gas in other countries is both vital and inevitable. Either it will happen by force (ie higher prices) or the more sane route of countries like France, UK, Poland, Germany, Aus, China, India etc encouraging timely development.<br /><br />Also why would Russia export NG via north Korea to South Korea when it could just LNG it and avoid all the headache? Or even just pipe it down to china would be happy to take all of Russia exports twice over, at an acceptable price.

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