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UK fracking - Forget cheap gas

#1
This really baffles me. I can't help but feel that the UK govt actually against this on the grounds that it's deny them taxes? In the US it has turned things around, but it seems the govt is throwing up various obstacles.

BBC News - UK shale gas bonanza 'not assured'

Shale gas in the UK could help secure domestic energy supplies but may not bring down prices, MPs report.

The US boom in shale gas has brought energy prices tumbling and revitalised heavy industry, but the Energy and Climate Change Committee warns conditions are different in Britain.
Admittedly, some of the reasons given seem reasonable enough, and typical of the BBc they allow the 'anti-anything' groups more page space for quotes than anyone else.
It seems to me we go out of our way to find reasons not to do things rather than cracking on.
 

jarrod248

LE
Gallery Guru
#2
Gas is only going to increase in price, coal is cheaper, logs can be free, get a multi-fuel stove fitted i'm saving a fortune. My gas bills were £1500 a year. Tonne of coal is £300, logs from my Dad nothing.
 
#7
Fracking will still go ahead regardless and the big conglomerates will reap the big bucks as usual.

Some rather nice bits of the UK and Ireland will be screwed for years after the rigs have gone.
 

FORMER_FYRDMAN

LE
Book Reviewer
#9
This really baffles me. I can't help but feel that the UK govt actually against this on the grounds that it's deny them taxes? In the US it has turned things around, but it seems the govt is throwing up various obstacles.

BBC News - UK shale gas bonanza 'not assured'



Admittedly, some of the reasons given seem reasonable enough, and typical of the BBc they allow the 'anti-anything' groups more page space for quotes than anyone else.
It seems to me we go out of our way to find reasons not to do things rather than cracking on.
Cheap gas is only in the interests of consumers and they don't count. In addition to some practical development issues, such as mineral ownership and exploitation rights in the UK v the US, there are strong systemic reasons holding back shale development.

1. The energy producers - they have made huge investments in LNG and the last thing they want is to see the value of these investments decimated by cheap shale gas, locally produced.
2. The energy deliverers - they have signed long term contracts with energy producers based on LNG prices. The availability of cheap, locally produced shale gas will undercut them to a degree where they can't possibly compete. It is in their interest to defer the introduction of shale gas into these markets for as long as possible in order to maximise current value, limit exposure and/or rebalance their portfolio and contract positions.
3. The alternative energy producers - with shale gas, the need for heavily subsidised alternatives goes away for a century or so, effectively wiping them out. These companies are extremely well-connected politically.
4. The Green lobby - the Greens are in no doubt that shale gas changes the debate entirely. 'Peak Oil' was always a flaky argument but the advent of shale gas destroys it completely, removing much of the imperative for the rapid development of alternatives and leaving them dependent on an increasingly challenged 'let's reduce CO2' argument.
5. Politicians - global warming has been a wonderful vote winner and money-raiser. All the mainstream parties are wedded to it and there will be electoral penalties if they try to modify their position before the population has been acclimatised to the idea.

All in all, you have an unholy but very powerful and well-funded group of aligned interests who have no interest in seeing the development of cheap power based on hydrocarbon development, certainly in the short to medium term - the need to boost the economy will eventually force shale development in the UK but a lot of people want to put that 'evil day' off for as long as possible and are heavily incentivised to do so.
 
#15
1. The energy producers - they have made huge investments in LNG and the last thing they want is to see the value of these investments decimated by cheap shale gas, locally produced.
Only if they're run by idiots with no concept of sunk cost. If a company can make more money selling shale gas than any other sort then it will - whether they've spent £1 on developing the other method or £1,000,000,000.
 
#17
Cheap gas is only in the interests of consumers and they don't count. In addition to some practical development issues, such as mineral ownership and exploitation rights in the UK v the US, there are strong systemic reasons holding back shale development.

1. The energy producers - they have made huge investments in LNG and the last thing they want is to see the value of these investments decimated by cheap shale gas, locally produced.
2. The energy deliverers - they have signed long term contracts with energy producers based on LNG prices. The availability of cheap, locally produced shale gas will undercut them to a degree where they can't possibly compete. It is in their interest to defer the introduction of shale gas into these markets for as long as possible in order to maximise current value, limit exposure and/or rebalance their portfolio and contract positions.
3. The alternative energy producers - with shale gas, the need for heavily subsidised alternatives goes away for a century or so, effectively wiping them out. These companies are extremely well-connected politically.
4. The Green lobby - the Greens are in no doubt that shale gas changes the debate entirely. 'Peak Oil' was always a flaky argument but the advent of shale gas destroys it completely, removing much of the imperative for the rapid development of alternatives and leaving them dependent on an increasingly challenged 'let's reduce CO2' argument.
5. Politicians - global warming has been a wonderful vote winner and money-raiser. All the mainstream parties are wedded to it and there will be electoral penalties if they try to modify their position before the population has been acclimatised to the idea.

All in all, you have an unholy but very powerful and well-funded group of aligned interests who have no interest in seeing the development of cheap power based on hydrocarbon development, certainly in the short to medium term - the need to boost the economy will eventually force shale development in the UK but a lot of people want to put that 'evil day' off for as long as possible and are heavily incentivised to do so.
I think the shale gas "boom" will happen. Only that it will be UK infrastructure stylee - ie a very slow and painfull process. We simply do not have the ability to act quickly like the US does. Neither do we have the ability to hire and fire workforces as North America does. If we look at the scale of US operations (number of rigs, frac proppant and fluids logistics, frac spreads, numbers of regular drilling and completion equipment and people) to what is available in UK we are literally years away from being able to deliver that scale. A few points on your points.
1) LNG accounted for only 14% of UK gas imports Q1 2013 (DECC). You're right in saying its a factor, but is not as significant as you propose.
2) You're right there are long term contracts - but see point 1.
 
#18
It seems to me we go out of our way to find reasons not to do things rather than cracking on.
That's exactly what we do. The UK is a nation of thinkers and squabblers.

It's a good basis for academia and a barrier to extremism and, when spurred into action by something like a world war, it creates a kind of ingenuity that no other nation can match.

Most of the time though, our insistence on second guessing ourselves and aversion to taking risks or committing to things properly simply perpetuates the status quo.

If you need evidence of the above, try approaching your local council for permission to have a tree cut down.
 

FORMER_FYRDMAN

LE
Book Reviewer
#19
Only if they're run by idiots with no concept of sunk cost. If a company can make more money selling shale gas than any other sort then it will - whether they've spent £1 on developing the other method or £1,000,000,000.
Except that's not how the financing works and there is the small matter of protecting asset value and sustaining ROI. The big LNG projects cost billions - not even Shell could afford to write off Sakhalin.
 
#20
Probably a bone question but - Do we actually have big proven reserves of shale gas and where are they ? All I've heard of so far is a few tests around Blackpool. On the basis that that there are big reserves can I request that this time round we actually make some decent use of the cash windfall - see Norway.
 

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