This week we had an announcement from Igas of another UK shale gas find. Igas said they had recoveable resources of approximately 10 Trillion Cubic Feet. Iin all of 2010, the UK used 3.3 TCF or 93.8 Billion Cubic Meters. One reason why this news went down like a wet fish is that energy is all about numbers far too big for most people, including journalists, to comprehend. With the caveat about approximate numbers, and yes I too can bore people to death with calorific values and energy values at different pressures, the following numbers are there or thereabouts enough for most people. If not, then this is the site for you.
The UK produced 40 BCM, imported 35 BCM via pipeline, 28 from Norway, most of the rest from Holland and, contrarary to popular opinion, zero from Russia. At the same time we imported 18.7 BCM in LNG, 75% of which came from Qatar, most of the rest from Trinidad & Tobago and Algeria. You can find these figures at the BP World Energy Statistics site.
This is as good time as any to remember millions, billions and trillions: A million seconds is 11 and a half days, a billion seconds is 31 years and a trillion 31,000 years.
One cubic metre contains roughly 11 kWhs, and the typical family typically uses 17,000 kWhs per year, of which typically they would use 17% during January, 2.2% in June. That works out as 262 cubic metres in January, 34 in June.
It makes more sense to think of this in costs: At approximately 20 pence per cubic meter, the commodity cost of gas should be less than £7 in June, £52 in January and £310 year round. This is not the place to explain why those costs don't add up to any sort of reality on your actual bill, speak to Ofgem about that. Not that they will give you an intelligible answer, but that is why Centrica confuse them too.
20 pence per cubic metre is there or thereabout considering it's 53 pence or so per therm, which to confuse matters further is the unit used in UK wholesale markets. To confuse matters again, the US uses MMBTU, which is 10 therms.
I point this out to prove that I can be as anally retentive as anyone on natural gas pricing, but I chose to get a life instead. What we need is to translate the Trillions of Cubic Feet into money we can all understand, which means tranlating it back to cubic meters on an annual basis. But before we do that, we need to consider how big a number is the Igas number? As per above, the Igas find is three years of the entire UK use. In other words, not one drop of North Sea production, not a kWh of Qatari LNG and not so much as a glimmer of the blue flame from Norway.
Now if you don't quite get natural gas production, often because renewables or nuclear or clean coal advocates don't really want to, one can dismiss only three years worth of production as not big enough to warrant abandoning renewables for.What they ignore, or hope others will, is that naturally the North Sea and Norway will continue to provide two third of UK production. Those fields won't shut down for three years waiting to come back up once Igas runs out of gas anymore than Qatar will keep the tankers in harbour or send them all to Japan.
This is also a good time to point out that Cuadrilla's recoverable resource is likely to be 4 times that of Igas, or over twelve years of entire UK use.
At the risk of boring people to death again (I'm sure most UK journalists have nodded off by now), what will likely happen is the UK shale fields will produce 1 TCF annually for about 50 years.That ignores further UK potential resources and the fact that the first few years production is likely to noticeably higher. Put those figures together and a total annual production by 2022 could easily be 2 TCF per year, but not wanting to confuse people, or be accused of being anything less than conservative projections, lets stick with 1 TCF or 28 BCM of production.
28 BCM has a value today of £5.6 billion pounds The UK government tax take would be 62% or £3.47 billion.The Q1 2012 deficit was £8.4 billion but assuming that 40% of UK gas would be imported during the winter quarter, UK shale production could reduce the current account deficit in that quarter by over 25%.
Having bored you with gas statistics, I won't push my luck by pointing out the multiplier effect of the reduction in the current account and budge deficit, or the job creation in other services. But I do have to underline again how the impact of shale gas would be massive but the overwhelming narrative in the UK press is fear, fear and more fear:
The nascent onshore industry has the backing of the government and environmental regulators. But there are fears that if it can't convince a skeptical public its operations are safe, the U.K. could miss out on the economic benefit of a revival in domestic energy production.
Yet the potentially very large Bowland shale discovery in the north of England last September by Cuadrilla Resources Ltd., which could more than match remaining North Sea gas reserves, was hardly welcomed. Instead, it provoked a wave of media anxiety and public opposition due to fears of water pollution, damage to the countryside and earthquakes.
If the industry doesn't take action to convince the public of its safety, the groundswell of opposition could ultimately block a U.S.-style increase in domestic energy production, said Fatih Birol, the chief economist of the International Energy Agency.
Notably this article comes from the WSJ, not the UK press. The UK press this week completely ignored the story with the exception of the Guardian who were at least honest enough to print a Reuters report. Rabid anti-shale Guardian writers such as Fiona Harvey or Damian Carrington generally jump on the merest hint of shale problems, but were missing in inaction . To the paper's credit, the story wasn't even thought worthy of comment by anyone else or the BBC.
Locally, Wales On Line, the on line division of the largest newspaper group in Wales, chose to accentuate the negative:
More than half of the Welsh population could be affected by shale gas drilling in the future if proposed licence areas were granted, a government report has revealed.
A green group labelled the situation a recipe to “fry the earth” and to blow Wales’ climate change commitments “out of the water”.
As bad as this story is, it at least opens the debate, albeit on grounds that immediately put the industry on the defensive. The continuing silence over the best news for the economy and the environment in years is befuddling, worrisome and ultimately dangerous. We could lose the shale debate in the UK by default, not only because we so often hear the FOE view, but because we hear only silence from David Cameron.