Shale Gas News and Information
Bring on the wildcatters
- Written by Nick Grealy
- Published: 07 January 2014
Internationally, 2013 was the year when any doubts about shale energy potential evaporated in the face of production of both natural gas and oil in the US achieved levels that were simply prodigious. The shale “bubble” theory was beloved not only by hybocarbondhriac shale antis, but also by many in the financial community, especially in Europe. Friends of the Earth and Co may have reputational capital at stake in the energy debate, but it was the financial capital invested in not only renewable technologies but elsewhere in energy that was felt to be at risk. Thus proponents of any number of expensive energy projects fear the emergence of a world where oil and gas were not running out. Whether shale lowers prices or not is both open to question and besides the point. What shale certainly proves is that prices will not be going up.
Among other things, the shale revolution is starting to put an end to “big” energy. Nuclear, Nabucco, Shtokman, Severn Barrage and Desertec are some examples, but 2014 will start to see the unwinding of positions in other mega projects. Even some major offshore projects, and the LNG projects attached, are likely to be disrupted or postponed this year. The lesson from the USA is simple: There are hydrocarbons almost everywhere and we no longer need to go to the ends of the earth to chase them. The new energy paradigm is a world where the most attractive projects are those closest to markets. In the older “conventional” model costs and geology were paramount, and Big Oil would consider undertaking any resource project anywhere. Today, in natural gas at least, local markets are key and oil is going to go feel some of that effect. OPEC oil and Russian gas will never be unimportant, but they do have to cast off some outdated concepts around resource scarcity that they shared, often unwittingly, with Big Green. A world where oil is abundant under not only the US, but in the UK, France, Germany, Argentina and Australian sub-surface as well, makes several new off-shore projects look expensive. West of Shetland, Arctic Oil and offshore Brazil suddenly don’t seem so important anymore. Mature provinces in the North Sea and Gulf of Mexico will thrive because they have both existing take away capacity and will be able to use some tight oil technology to produce more, but gone are the days when Big Oil was desperate enough to show up in the back of beyond producing expensive oil in habitats that were environmentally fragile and politically dubious.
When capital providers say that, for example, UK oil has both physical geology and political constraints that will make the industry difficult, one has to ask the old question: Compared to what exactly? A barrier to world shale energy has been the perception that the US was the exception and the rest of the world, especially key markets such as Europe and China would be either unable or unwilling to face up to the new reality. The US shows that even a fraction of their success will be game changing world-wide.
Getting better all the time
- Written by Nick Grealy
- Published: 02 January 2014
A piece of good news consistently misunderstood by both sides in the energy debate is that we use far less energy that we once did. From the right, the argument is that energy creates wealth and we can ignore any consequences, but from the left, equally misinformed, is the idea that using energy is inherently unsustainable in a world of declining resources. We need to go back to the most consistently wrong scientist of all time, Thomas Malthus, followed by the even more depressing William Jevons to find the root of these misconceptions. As usual, the simplest theories are often the wrongest. Flat earth, earth at center of universe ,moon made of cheese and flames coming out of taps sounds logical to primitive societies, but history has proved that more people and more energy have improved the world, not destroyed it.
An excellent recent book Paul Sabin’s “The Bet” provides a history of the modern energy debate of the last 60 years. Bill Gates, said it was one of his favourite books of 2013, and this is a man who can afford a book habit:
Greenpeace and Arctic oil: Both becoming irrelevant.
- Written by Nick Grealy
- Published: 30 December 2013
One of my favourite quotes is from Oscar Wilde, who said that there are two great tragedies in life: Not getting your heart’s desire and getting it. I’ve used it before to describe Big Green NGO’s attitude towards shale energy. They’ve constantly lobbied for low cost, sustainable, local and lower carbon energy solutions, but they weren’t expecting natural gas -and now local oil - to provide them. All of a sudden, the low-carbon future they sought a few years ago has been replaced with seeking a no carbon at all destiny.
The true tragedy of Big Green is not achieving low carbon aims, but to have their business model overturned. Greenpeace,et al exist not to cut carbon, but to talk about cutting carbon. To raise awareness of cutting carbon. To organise a new bureaucracy that provides a good living hugging the problem- but not the hard part of solving it. In this respect they are no different from another of the great scourges of our age, management consultants.