Coffee House

Osborne to back fracking and 30 new gas power stations

4 December 2012

8:51 AM

4 December 2012

8:51 AM

Coalition tensions over energy won’t relax with George Osborne’s gas strategy, which he will launch alongside the Autumn Statement tomorrow. The Financial Times reports that the Chancellor’s strategy will approve as many as 30 gas-fired power stations and – in a move that will delight those in his own party – a regulatory regime for shale gas exploitation.

Fraser extolled the virtues of shale gas in his Telegraph column in September, describing it as ‘the greatest single opportunity’ facing the government, with the potential to transform energy supply. But Energy Secretary Ed Davey is less enthusiastic, arguing in May that Tory support for shale gas exploitation – known as fracking – was a means of undermining renewable energy generation. He said:

‘The right wing of the Tory party are trying to make out shale gas is the answer, but I’m afraid the evidence does not bear it out.’

The Energy department has been in battle mode for months now, with Davey fighting not just those in other departments as the Quad struggled to agree on energy policy, but enemies within, too: his spat over wind farms with John Hayes has been well-documented. He did launch his own Energy Bill last week which aims to decarbonise the electricity market, but Osborne is adamant that gas will continue to play an essential part in supplying the UK’s energy needs, hence tomorrow’s strategy. Davey is now in Doha for the UN climate summit, attempting to persuade other countries to cut their carbon emissions, while green campaigners back here cry foul about the effects of Osborne’s strategy. How the two men work together on the regulatory framework for fracking, and for any tax breaks that Osborne is keen to include to promote the shale gas industry, will be Davey’s next test.


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Show comments
  • Lupulco

    I thought that it had been proved that fracking causes contamination of the ground water due to the solvents used. I know that some companies deny this but what happens if it turns out they were wrong.

    Who picks up the tab, the Government [you & me the tax payer] the Water Companies [again you and me the tax payer]

    • Daniel Maris

      There is definitely, most definitely, polluted water put into the ground. The issue is whether it then leaks out into aquifers and so on we use for drinking water.

      There is also the issue of whether the gas gets pushed into water courses.

      There are a lot of issues with fracking which is why I think on our crowded island (where the effect of all pollution gets “magnified” due to population density) we need to proceed cautiously.

      A study hitting the media today announces that “Monitoring
      of 7,500 men from 1989 to 2002 found average sperm counts declined from
      87million sperm per millilitre of semen to 62million.” That’s an incredible decline in such a short period of time and I think it underlines the importance of a precautionary approach.

      There are already huge amounts of microplastics in our water sources that could be causing these sorts of problems.

      People here who claim to be patriots should think seriously about the environment.

      • the viceroy’s gin

        People who claim to be patriots should think seriously about listening to poorly educated zealots shrieking hysterically about subjects they are completely ignorant of.

  • Daniel Maris

    Population density of Lancashire: 475 people per square kilometre

    Population density of South Dakota: 4 people per square kilometre.

    That, in a nutshell, is one of the key differences between prospects for fracking in the UK and in the USA. To ignore that difference is to live in cloud cuckooland.

    France – not noted as energy “sentimentalists” – have already banned fracking.

    I think everything points to the need to proceed with caution. I think shale gas will be part of our march to energy independence but it is never going to be the whole story and exploiting shale gas in the UK will be much more difficult than in the USA.to

    • the viceroy’s gin

      A few years ago, I had a petro well drilled a couple miles from my house, in the middle of subdivisions and commercial propery and millions of people. Population density has nothing and I do mean N O T H I N G to do with the ability to extract oil and gas from teh ground. Los Angeles has had oil wells for well over a century now.

      Again, you don’t know what you’re talking about. You’re completely ignorant of the subject on a technical and practical level. You know nothing about petro product exploration and production. Suggest rather than running your mouth and having the likes of me heap dung on you, you educate yourself a bit.

      • Daniel Maris

        Aha…in the “middle of subdivisions”….

        That is a phrase not known to a true Brit…I had to look it up on Google. A “subdivision” is a word use in Canada – equivalent I guess to parish or district here. So – I put it to you: are you some Fracking Interloper posing as a Brit? Are you a Canadian? What the f*** would you know about population density if you were! LOL

        Of course population density is important. That’s why we didn’t exploit coalfields in certain conurbations – because there would be far too many issues of subsidence.

        • the viceroy’s gin

          Again with your ignorant declarative statements? Coal mines have been exploited under cities for centuries, son.

          Shouldn’t you educate yourself on these matters, and quit blathering ignorantly?

      • El_Sid

        @tvgThat mix of arrogance and naivete is exactly what made Monsanto’s PR people the best weapon of the anti-GM crowd in the UK. If you’re trying to make the British anti-shale, then you’re going the right way about it.

        Population does make a difference, but it’s a more complicated equation than either of you make out. The worst sort of population is heavily populated countryside, where the population is spread out (and tends to have middle-class preoccupations) – somewhere like the High Weald has a population density of about 85/sqkm. There have been a few oil wells drilled in the Home Counties but it’s been a real fight to get planning permission for each one, it takes years to get the permits.

        It’s actually easier in the North West than in the less populated Weald, because the population is concentrated in towns/cities and the countryside is emptier than the environs of Tunbridge Wells. Plus there’s a lot of brownfield sites where planning issues are much easier.

        The other consideration is the fact it rains a lot in Manchester – or more precisely, the NW gets its drinking water mainly from surface water, whereas the Weald relies mainly on groundwater. The NIMBYs get a lot more active when they perceive a threat to their drinking water. It’s for that combination of factors that I think shale drilling in the Weald is pretty much not going to happen – the nearest analogy is the bit of the Marcellus under the New York water supply.

        And as has been mentioned, US laws on mineral rights make a huge difference – it’s much easier to get the neighbours onside when they are getting juicy royalty payments.

        The Bowland shale is a different kettle of fish – at least you have a hope of getting planning permission, but drilling sites will be a lot more constrained than somewhere like the Bakken. You’re not going to be knocking out 13,500′ wells for under $5m like companies are doing in the Green River.

        Daniel Maris – that French decision wasn’t much to do with France’s proud tradition in science, it was everything to do with their ability to launch massive demonstrations at the slightest provocation. With an election looming Sarkozy just chucked his hand in rather than risk inflaming things further. I saw some of it at close hand – it really was quite scary how divorced the antis were from reality, but they got what they wanted.

        • the viceroy’s gin

          Oh, I’m not talking about NIMBY or BANANA effects here. The poor lad was implying that population density precluded shale exploration. It clearly doesn’t, as the examples I provided showed.

          And the reason NIMBY and BANANA effects are so pronounced is that ignorance is celebrated, as appears to be the case with certain posters here. Silence the ignorant, empower the knowledgeable, and the public isn’t so prone to NIMBYism.

          • El_Sid

            It was pretty clear to my mind that he was not being as black-and-white as you imply, he was just saying that it’s a lot more difficult to get planning permission. While DM may not be a fan of tight gas, I don’t recall him ever saying that there were showstoppers in the UK, just that the environment here is more difficult than in the US. I think most people would agree on that – from the planning regime to the mineral rights thing to the poorly developed market for onshore drilling kit. It’s a question of degree rather than absolute no-nos. People may be surprised that there’s several oil wells in Surrey, perhaps the archetypal place for finding NIMBYs – but at the same time most potential drilling sites in the Home Counties don’t even make it to planning permission, and I’d guess the majority of those that do get rejected, at least initially. So you get that grey area – wells do get drilled, but you’re never going to get wells being drilled on a 5-acre spacing like in the deserts of the US. Or even multi-well pads on a 40 acre spacing.

            • Daniel Maris

              Thanks for writing out in longhand my shorthand objections.

              I certainly am not saying that we should never ever use hydraulic facturing. I just think we should (and in case will probably have to) proceed cautiously given we live on a crowded island with limited water resources.

              If UK fracking gas ends up being more expensive than gas available on the international market, then the argument for it is pretty weak I would say, though it may be able to make a contribution to energy independence.

            • the viceroy’s gin

              No, he was saying what he was saying, not what you imagine he was saying. I responded to what he was saying.

              Yes, I’d agree that the ignorant have great voice, and such as shale gas is squelched accordingly, as the ignorant are given voice.

              And yes, I expect shale gas to take off, once the ignorant are knocked back in their box. It’s cash flow positive. That generally gets things moving, over time.

              And again, you’re making the same comparison the first guy did. Deserts are not highly populated areas, so no need introducing that comparison. Petro drilling can and does take place in highly populated areas. Why? The ignorant are heard out, and then ignored. That’s what happens ultimately, in many of these cases.

  • george

    please stop the lib idiots from ruining are energy industry

  • dalai guevara

    Here we go: modern CCGT power plant as back up for viceroy’s beloved power turbines, who would have thunk it? Before we know it, the Arabs and Stalins can keep their fossil fuel for themselves, as we finally move closer to energy independence.

    And the nuclear door salesmen will find that they have been outsmarted. €2bn more for that nuclear power station in France? Bet those margins will now tumble like a jenga tower about to collapse…I never thought I would write this: good move, George

    • http://elfnhappiness.blogspot.com/ eeore

      I’m not sure why you point the finger at the Russians and the Arabs, as currently the Americans are the largest producer.

      • dalai guevara

        They ‘want to be’ by 2020. Quite a difference.

        • http://elfnhappiness.blogspot.com/ eeore

          They are now, hence my use of the word currently.

    • the viceroy’s gin

      Playing power engineer again, son? That’s sorta funny. But you can venture back into that discussion a while back, and answer those questions you left unanswered then.

      But ’til then… you’re still stupid re power engineering and economics, and are to be ignored.

  • Olaf

    Should I expect my gas bill to come down then?

    Nope, didn’t think so.

    • FF42

      Shale gas is costly to extract. A sustainable industry that improves our energy security depends on keeping prices high. The same principle applies to other alternative forms of energy such as wind and nuclear. US natural gas prices are probably at a temporary low that is only partly related to extra shale gas capacity. This article has a neat graph showing the divergence between the US and Europe: http://ourfiniteworld.com/2012/03/23/why-us-natural-gas-prices-are-so-low-are-changes-needed/

      • itdoesntaddup

        Onshore shale gas is likely to prove much cheaper than offshore conventional plays in ever deeper and more remote waters. It’s also likely to have a much lower environmental impact than its equivalent in windmills.

        • FF42

          I agree with your first statement, which basically says there are no cheap options in the UK. I don’t agree or disagree with your second statement. We just don’t know the environmental impact of fracking, and in particular the risk of contamination of water supplies. Limited research in the US hasn’t found evidence of contamination but it hasn’t demonstrated the negative either.

          • the viceroy’s gin

            The US has been “fracking” for at least a century now, pumping material underground to facilitate extraction of resources. This isn’t a new concept, although the technology and usage has evolved recently. You’ll want to veer away from the tapwater inferno type of discussions, or risk ridicule.

            • FF42

              I am happy to risk ridicule. It’s more a case of “we haven’t bothered to check” than “to the best of our knowledge”. Companies and authorities in the US don’t apparently do systematic monitoring of water quality.

              • the viceroy’s gin

                Yes, county authorities in the US require a laboratory water approval before a potable water well can be sited.

                I think you should stop now. Fabricating facts also tends to draw ridicule.

                • FF42

                  Sure. But that wasn’t what I was talking about.

                • the viceroy’s gin

                  Well then you don’t know what it is you’re talking about, which is a common occurrence amongst you who attempt to play engineer.

                • FF42

                  Of course I know what I am talking about. What a stupid comment!

                • the viceroy’s gin

                  I count at least 3 wannabe-engineer dolts in this discussion. You’re one of them.

                • Daniel Maris

                  FF42 – you have my sympathy. Viceroy seems to think that giving the magical imprecation “You’re not an engineer.” somehow makes everything he says true. Anyways, he’s just a Canadian Fracker with an undeclared interest in all this.

                • Daniel Maris

                  I think you’ll find that we rely on the fracking industry for a lot of our data on the effects of fracking. It’s a bit like relying on the auto industry for objective information about air pollution from motor vehicles.

                • the viceroy’s gin

                  Son, you wouldn’t know about or be able to rely on data if it walked up and bit you. In any arena: fossil fuel exploration, automotive emissions or otherwise.

                  Educate yourself and quit running your mouth ignorantly, is my suggestion.

              • itdoesntaddup
                • FF42

                  What I mean is that they don’t systematically monitor the effect of fracking on the quality of water in the neighbourhood. First do baseline checks on groundwater before fracking and then test regularly afterwards. That’s a different question from the safety of tapwater that consumers drink. That is obviously tested and guaranteed.

                • the viceroy’s gin

                  The “baseline checks” are a part of the county certification I spoke of earlier. You’re simply ignorant of the subject you’re discussing.

                  You should stop now.

                • FF42

                  Again you are talking about different vaildations

                • the viceroy’s gin

                  Again, you don’t know what you’re talking about.

                • FF42

                  “You don’t know what you are talking about” is the last refuge of an intellectually bankrupt troll. Others come to the forum with insights – and prejudices – that inform the debate and which we learn from. Viceroy Gin, you too could join the discussion in this spirit and so doing appreciate the distinction between dreary insult and lively debate.

                • the viceroy’s gin

                  Perhaps rather than nannying this discussion, and whining about what I post, you should ignore what I post. Because it’s not important what you think of my posts, and thus you’re the one trolling, if you whine about them.

                  Oh, and you don’t know what you’re talking about, which is why I mentioned it.

                  Oh and I’ll let you know if you provide anything resembling “lively discussion”, son. So far, it’s been pretty much worthless backwash from you, from what I can make out.

            • Daniel Maris

              Are you an expert in the disturbance of methane by hydraulic fracturing or the movement of waste water from fracking through aquifers?

              If so, please give full details of the chemistry and geologic factors involved.

              Otherwise, your comments are completely worthless.

              • the viceroy’s gin

                I might be expert at it, but you’ll never know because you’re completely ignorant and uneducated re the topic, and couldn’t follow any discussion enough to determine it.

                And you’re the second wannabe-engineer dolt, in case you were curious.

                • Daniel Maris

                  I have no wish to be an engineer, though of all the professions I probably value that above all else. However, I can read and – just as you comment on lots of things outside your immediate area of expertise – so do I, but having read what the experts say.

                • the viceroy’s gin

                  You have no wish to be an engineer, and that’s a good thing because you show no aptitude for the profession, judging from your posts.

                  And again, you have no ability to judge or understand what the “experts” say, or what my area(s) of expertise are, because you have not the experience, education or background to do so. So your comments on those areas of my expertise, or anyone else’s, have no value… because they come lacking the judgement necessary.

          • itdoesntaddup

            North Sea gas was commercially developed originally for prices of under 2p/therm. We’re currently paying over 60p/therm at NBP. Much of that goes in tax. I don’t think you have a handle on the economics.

        • El_Sid

          @itdoesntaddup In general your first statement is true, but it’s not really the point at debate. From the UK perspective we’re interested in any sources of gas, so domestic tight gas is up against not just conventional reservoirs in the Arctic or southern Africa, but also options such as converting gas from US shale to LNG. I suspect that when all’s said and done, there won’t be massive differences in price between any of those options.

          In reality we need them all, it’s a false dichotomy to pretend that one source will be uniformly better than any other. Certainly I think people are being a bit optimistic about importing gas from US shale – once it’s gone via LNG I can’t see it happening for less than $10, which in turn would require a massive change in exchange rates or a big increase in UK gas prices to be a major source of supply. I can see it being used in the winter peaks, not more than that. So I can’t see UK gas prices coming down from current levels, whatever government do.

          There are many more alternatives to domestic shale when it comes to looking at options for electricity generation, but if anything the outlook for consumers looks worse there. We’re in a fool’s paradise at the moment. Notwithstanding today’s life extensions to Hinkley Point B and Hunterston B our power stations are getting old but it’s just not economic to build any kind of new power station.
          Just look at Centrica’s gas power stations – they have closed several that were built as baseload generation in the 90s even though the capital costs have long been paid off, they’re not economic even on opex alone. In fact in 2012H1 Centrica’s CCGT fleet operated at a lower load factor than their windfarms, just 28%.

          The brutal fact is that electricity prices need to go up, and go up considerably, probably by 30-40% if we are to build the next generation of power stations – whether they are gas, nuclear or renewable. That in turn has political implications, and I’m not sure any of the WeVils have really cottoned on to them.

          • itdoesntaddup

            We’re already paying $10/MMBTU.

            Do you know why CCGT was operating at low load factors? Simply because coal stations were being maximised before the silly carbon floor price closes them in April. We can shoot ourselves in the foot, or not.

            Do you know what CCGT costs to install?

            There is no need whatever for electricity prices to go up. They have been falling in the US, and should fall here if we had any sensible kind of policy.

            Check this out:

            https://www.ferc.gov/market-oversight/reports-analyses/mkt-views/2012/11-15-12.pdf

            • El_Sid

              That was my point – if it costs you $10 to get US shale-LNG to the UK, and you can only sell it for $10 once it’s here (62p/therm at current exchange rates), then your profit is zero – so you don’t do it.

              It’s a bit more complicated than just blaming the carbon floor thing – coal has been relatively cheap as the market has been correctly sending the price signal that gas is more valuable than coal for other purposes, such as domestic heating. And those load factors have been in decline for some years now, it’s not just related to April 2013.

              As for US prices, as your link states
              “The decline in power prices closely resembles the decline in natural gas prices because natural gas is typically the marginal, or the price setting fuel in these regions. The decline in power prices closely resembles the decline in natural gas prices because natural gas is typically the marginal, or the price setting fuel in these regions.”
              It’s not surprising that power prices went down in 2012 when the price of the marginal fuel was at a freakish low thanks to the mild winter. The EIA are now forecasting that the generators will be paying 22% more for their gas in 2013 compared to 2012 – I leave it as an exercise for the reader what that might do to the price of the marginal MWh.

  • MichtyMe

    If all the shale gas hype is true, then why is Osborne keen to include tax breaks to promote the industry.

    • Hexhamgeezer

      Probably to get the business moving as quick as possible. There aren’t many easy wins available so fracking might just fit the bill – some tax being better than no tax for no fracking. Every little helps.

    • itdoesntaddup

      Let’s see the detail, but Osborne did a major tax raid on the Oil &Gas industry, only to find it resulted in many closed fields, and lower production and tax revenues, unlike the forecast from the OBR who said it would have no effect. So the concessions may be little more than unwinding the impositions he foolishly made before.

  • JonJon

    Why do I get the feeling that money and ‘investment’ will win this one…..again, it always seems that the people who urge caution are portrayed as the bad guys! Where is the long term stratagy?

    • the viceroy’s gin

      Long term strategy, you ask?

      How about we strategize to have local industry pull energy out of the local ground, using local labor and resources, sell it locally, providing additional wealth and prosperity for the local economy?

      • Daniel Maris

        Stategize with a z …. labor without the u – more N. American evidence.

        Don’t you feel some compulsion on this UK site to preface your remarks with “speaking as a Canadian/American”?

        • the viceroy’s gin

          Don’t you feel some compulsion to actually educate yourself, and not blather aimlessly on topics about which you’re clueless?

        • the viceroy’s gin

          Don’t you feel some compulsion to educate yourself, so you’re not blathering on ignorantly?

          • Daniel Maris

            I’ve got a good record on this site. I said Osborne economic plans would go belly up. I said the Eurozone was not going to break up when everyone here was claiming it was on the point of cracking asunder.

            I am happy to stand by my predictions – eg that Germany and Denmark will continue with and succeed with their green energy plans.

            I am also happy to stand by my prediction that fracking in the UK will for a variety of reasons prove a far more difficult project than in the USA.

            • the viceroy’s gin

              Predict away. No harm there.

              Unfortunately, you also seem to like to play engineer, and make foolish declarative statements about matters which you’re completely ignorant of.

  • http://owsblog.blogspot.com Span Ows

    Excellent news. With the estimated reserves available via fracking England will get a long way to being energy self sufficient. Incredibly the US will be getting more of it’s energy from ‘fracked gas’ than from petroleum (see how THAT changes the world order and the need to appease the Middle East) see http://blogs.reuters.com/thinking-global/2012/11/26/americas-geopolitical-gusher/

    England can be the same. Or even the UK if Scotland remains a aprt.

    • MichtyMe

      At one time in tne 19th century Scotland was the world’s largest oil producer. The oil was extracted from shale. Visitors to the Lothians can still see an remnant of the shale oil industry, the bings which dot the landscape.

      • ronwagn

        Fascinating. Will have to research this.

  • Daniel Maris

    I wouldn’t disagree with building more gas powered stations – if we were winding down nuclear.

    We seem to have ended up with just about the worst possible energy policy: a blank cheque for nuclear, a commitment to unproven fracking, and an incoherent, disjointed policy on green energy.

    Compare and contrast with Denmark and Germany, two very successful countries.

    • an ex-tory voter

      If by “incoherent, disjointed policy” you mean the greenies are losing the argument, so much the better.

      As for “compare and contrast” two successful countries, as a major manufacturing nation the Germans are now realising the cost of their insane energy policy as their manufacturing industry faces ever greater competition form nations outside the EU. They are only able to remain competitive in manufacturing while their currency is held artificially low by the failure of the associated

      • Russell

        The pleasure watching Germany beg the UK to sell them energy once we have some new Nuclear power stations and a plentiful supply of cheaper gas from fracking will be immense.

        • TomTom

          Don’t be daft. The Silesian Coal Field will be the site of huge new coal-fired power stations. Germany is burning more coal than before and will be burning coal for decades to come. France will supply nuclear while the British will enjoy Chinese and Russian safety standards and the country that built the world’s first civilian nuclear reactor can watch another technological lead evaporate

          • TomTom

            Really ? I merely stated Germany had gas storage capacity of 122 days and Britain had 15 days. Germany is burning coal and Britain proposed to burn more gas without having storage capacity. German energy costs are rising rapidly because of stupid policies by Merkel and British energy costs are rising because of stupid energy policies from Cameron. So I do not understand your comment Vulture

        • Daniel Maris

          Pure fantasy Russell. Unlike us Germany have a very well worked-out plan and they will succeed. They won’t need to come begging to us. But we might if one of our nuclear power stations goes critical – maybe as a result of internal sabotage for instance.

          • Fergus Pickering

            Are the muslims going to sabotage our power stations. Or is it the Irish. Or maybe Greenpeace. Do tell us. My bet is on Greenpeace.

            • Daniel Maris

              There are many Jihadis around the world who would love to sabotage one of our nuclear power stations. Stopping them is one of the many hidden costs of nuclear power.

      • Daniel Maris

        You and others keep saying Germany “are now realising” the folly of their energy ways. Absolute poppycock. They are installing green energy infrastructure in huge amounts – they aren’t letting up. They have a credible plan to reach 100% green energy by 2050. There is no reason to suppose they won’t reach that target.

    • http://mrfrostblog.wordpress.com/ Mr Frost

      Fracking is entirely proven c.f. USA.

      • Daniel Maris

        Mr Frost,

        The USA is not Europe – different geology and much lower population density. The issue is can shale gas be recovered at a reasonable cost and at an acceptable level of harm to the environment (accepting ALL energy technologies harm the environment).

        Fracking is unproven as an economic and environmentally acceptable technology.

        • the viceroy’s gin

          You’re wrong, of course, not that you have the technical skills and knowledge to understand that.

          • Daniel Maris

            I love the of course, when not so much as a cubic metre of shale gas has been commercially extracted through fracking in this country. All we’ve had is test drillings.

            In the USA generally speaking the land owner owns the resources in the land underneath. In the UK, I think we are talking about crown resources for which licences will have to be bought. There is no incentive for landowners to welcome fracking under their land.

            The geology is also different. I am not a geologist, but if you are saying the geology is the same, then say it.

            • the viceroy’s gin

              There’s really no reason to engage with you, son. You’re completely ignorant of the topic, even as you blather on constantly. You don’t know, and you don’t even know what you don’t know. It’s that bad.

    • TomTom

      Gas-fired power stations are expensive to operate cheap to build the exact opoosite of coal-fired stations. Gas stations are not designed for base-load but for peak demand so it is yet more loopiness in the UK. BTW Germany is facing electricity prices 45% above EU average and three times the USA because of dropping nuclear power. Expect very very expensive electricity

      • andagain

        Gas-fired power stations are expensive to operate only if the gas price is high. Because the US has just had a revolutionary improvement to its gas supply its gas prices are low and are going to stay that way. And as the US develops the ability to export gas, and as the rest of the world imports their new supply technology, the gas price in the rest of the world will fall too.

        Followed by the oil price, as the same technology is applied to oil.

        Note that this is still a new technique, so further improvements are to be expected.

        • TomTom

          Gas Prices in the US are regulated through the ICC and are often cheaper in Boston than in Dallas. Gas prices are 300% higher in Europe than in the USA because of US incompetence in exporting gas which would bring their domestic prices to world levels

          • andagain

            They were not expecting the shale revolution, so they built no export facilities. When the export terminals are ready they will start exporting gas – and their gas producers will be able to ramp up production even further.

            So their price may not go up, but ours will certainly fall.

          • itdoesntaddup

            No, they would not. Consider the deal that BG did for LNG from Sabine Pass: Henry Hub + 15% + $2.25 FOB. Add on shipping and regasification cost to get somewhere close to UK NBP.

          • dalai guevara

            Hahaha, perhaps they could avoid the fiscal cliff by selling their assets?

    • johnfaganwilliams

      Nonsense! German energy policy – knee jerk abandoning of nuclear post Japan disaster – is even worse than ours. They cam close last year – but this year if there is a long cold winter the lights will go out over the Fatherland.

      • TomTom

        True

        • Vulture

          Hang on TT – you seem to have changed your mind in the space of n hour! One moment you are assuring us that your beloved Fatherland is once more leading the world on energy policyt, 30 minutes later you are agreeing with johnfaganwilliams that the lights may be going out across Germany in a harsh winter. You can’t have it both ways. Either Frau Frumpel’s panic abandonment of Nukes was a far-seeing move, or it was a….panic abandonment of Nukes. Which is it to be?

          • TomTom

            Frau Merkel was wrong

            • dalai guevara

              Frau Frumpel will be the only re-elected leader in the Western World since Lehman. Read my lips.

      • Daniel Maris

        Yeah, we’re all convinced by your painting of Germany as a nation of incompetent techno retards…aren’t we?

    • Hexhamgeezer

      You would have to have a heart of stone not to laugh at the game changing possibilities that fracked gas has given the US and potentially the UK, Poland, Israel (yes!!) etc and watching the squirming of the greens as a result. Increased domestic security, (which greens hate), improving GDP (which greens hate) reduced carbon emissions (which greens….hold on!). One would think that any proven method reducing carbon emissions would be celebrated by the ecoloons but they aren’t. Weirdly they are still gung-ho for bird scramblers which reduce carbon output by……not a lot at all.

      ‘Unproven fracking’ and that’s just just the way the greens want it to stay as far as the UK is concerned.

      • Vulture

        Let’s get fracking!

      • Daniel Maris

        See above. Europe is not the USA in case you haven’t noticed. Different geology and population density.

        • the viceroy’s gin

          Explain the “geology” differential you’re claiming exists.

          Be specific and detailed, as at a university level geotechnical engineering discussion, if you please.

          • Daniel Maris

            I have never claimed to be a trained geologist. But I do claim to be able to read.

            From Oil Price.com:

            “Many of the shale deposits in Europe are much deeper, and more expensive, to exploit than those in the United States.”

            Are you saying that is incorrect?

            • the viceroy’s gin

              Yes, you are making declarative statements as both a trained geologist and a trained engineer, even though you’re completely ignorant and uneducated re the subject.

              And slapping up links and making another ignorant declarative statement doesn’t change any of that.

              • Daniel Maris

                To say a statement is ignorant is not the same as saying it is wrong. I might no know nothing about horse racing but still predict the winner of the 3.30 at Kempton.

                If you are saying Oilprice.com are WRONG then presumably you can tell us WHY they are wrong. If not, you are the one puffing out nonsense.

                • the viceroy’s gin

                  Again, you don’t know whether it’s right or wrong, because you’re completely ignorant and uneducated on the matter, and wouldn’t know the difference either way.

                  So, no need to discuss the matter with you, because it’s not a discussion you’re at all familiar with or can understand. It’s a waste of time.

                • Daniel Maris

                  Unlike you I am very happy to listen to opposing arguments. I am telling you one of the sources of my information. You are free to give reasons showing the source is incorrect.

                  As for the expertise issue: It doesn’t take a genius to understand that rocks can be more or less porous and gas can be found at shallow or deep levels. Those are the essential parameters.

                  Answer the question: are you saying the story is WRONG. Or are you accepting it is true.

                • the viceroy’s gin

                  Son, you’re not making arguments, you’re making ignorant declarative statements, meaning discussion with you is a waste of time. You have not the education, expertise or experience to have the slightest clue of what you’re blathering about.

  • TomTom

    Gas will be imported from where exactly ? What gas storage facilities exist ? How much will prices for heating increase as gas becomes more used for electricity generation ? Why is gas considered cheap to burn or plentiful in supply ?

    • Russell

      You are obviously unaware of the vast underground gas storage facilities created from former salt excavation and the shipping of LNG (liquified natural gas) from around the world (primarily Asia) and the UK facilities which accept and process LNG.

      • TomTom

        Clearly I am unaware, but i note that Mike Major in Oil & Gas Engineer states: “in terms of both current and planned facilities. France, Germany, Spain
        and Italy all have higher current capacity than the UK’s total projected
        capacity.” So I am not comforted by your response and note that Germany has 122 days storage capacity and Britain 15 days – before any more gas-fired power stations are built

        • the viceroy’s gin

          My understanding is that the UK has historically hewed to pulling directly off the LNG supply ships, and eschewed a massive storage infrastructure. That’s certainly economical and efficient, although it involves a potential for supply disruption. I wouldn’t see fracking as being precluded by any lack of storage.

          • Daniel Maris

            What is your “understanding” worth unless you are an expert on LNG shipping and storage? Are you sure you didn’t just read this somewhere?

            • the viceroy’s gin

              Well, I have understanding of the issue. You have ignorance and absolutely no education on any of it.

          • El_Sid

            The storage issue isn’t really about shale, it’s mostly about catching up with our new status as a gas importer – 60 days’ storage is a good target, compared to our current 15 (obviously it’s complicated by issues such as deliverability, but most people agree we need 4x what we have now). But if we are to increase our dependence on gas for electricity generation, then that in turn increases the need for storage – and is one of the hidden costs of a second “dash for gas”.
            It’s all part of the energy security mix.

            • the viceroy’s gin

              Although it’s been a net exporter, the UK has been importing gas for a looooooooong while, so it’s not a “new status” for them.

              If you’re importing LNG, it’s coming in at 1/600th of its gaseous volume. You can get “storage” right on the transport ship. So as you add import capacity, you’re adding storage capacity at the same time.

              • El_Sid

                It was obvious I meant net importer – a bit of balancing across the Interconnector doesn’t make much odds.

                I’m not clear what you’re trying to say about LNG volumes – are you suggesting having LNG ships sitting offshore as additional storage?

                But best of all is to ramp up domestic shale gas production
                Who didn’t like declarative statements? That’s what we’re trying to debate, isn’t it? Personally I’m sceptical of any suggestion to put all our energy eggs in one “best of all” basket – energy security is all about having a mix, we need a bit of all of them (within reasonable economic constraints).

                • the viceroy’s gin

                  Yes, having fully loaded LNG ships sitting at the dock is storage, which would be commonly defined as product ready for distribution. So one quick-and-dirty route would be to buy multiple futures contracts on both the LNG and the ships, and thus increase storage capacity on-the-hoof.

                  I doubt anybody would recommend “putting eggs in one basket”, no matter what is being discussed. Ramping up domestic shale gas production adds another egg into the basket, one that is currently absent from the basket, and that’s the best course of action right now.

                  Oh, and declarative statements are bad when they come from those incapable of understanding what they’re declaring.

      • El_Sid

        ” vast underground gas storage facilities created from former salt excavation “
        They’re not very vast in the global scheme of things – even the biggest of the salt cavern storage only contains about enough gas for one day in winter.

        Traditionally we have been exempt from the EU rules on gas storage, because of our indigenous production but since we became an importer in 2005 we have failed to build the storage we now need. As TomTom says, our storage amounts to about 2 weeks of average consumption – or less than a week of peak winter consumption. We desperately need more gas storage even without building new gas plants.

        Asia is a massive importer of LNG not an exporter – our LNG mostly comes from Africa and Qatar. Up to 40% of winter consumption comes through the Straits of Hormuz from a couple of platforms just outside Iran’s territorial waters, I leave you to decide whether that’s a good long-term plan.

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