Industry

Francis Egan on drilling in 2017, low gas prices, financing expansion and how many wells can you fit on a site

Francis Egan 2.jpg

The chief executive of shale gas company, Cuadrilla, gave evidence last week to peers on his company’s operations, financing and plans for the future.

During an hour-long hearing before the House of Lords economic affairs select committee Francis Egan said:

  • Lancashire site construction was due to start in early 2017, drilling in the spring and testing later that year
  • In the four years it has taken Cuadrilla to drill one shale well in Lancashire, the US has drilled 120,000
  • Low oil and gas prices benefitted exploration by reducing service costs – but Cuadrilla hoped to time production with rising prices
  • Cuadrilla was likely to fund future expansion from the equity or debt markets
  • UK shale gas would be competitive with imported LNG
  • A 2ha shale gas site could host 40 wells
  • UK shale gas sites could get fugitive emission down to 1%

DrillOrDrop has picked out the key sections of his evidence so that you can read what he said, in his words. You can also watch the hearing here

Cuadrilla’s future funding for expansion

Baroness Wheatcroft (Conservative) asked whether the government had provided a regime in which the company was confident enough to invest in shale

francis-egan-8“Shale is quite an interesting investment proposition, quite different from, say a Hinckley Point, probably more akin to a power station. It’s an incremental investment so each shale production pad, as we call a site, is a self-contained investment, so it’s a bit like a cookie cutter approach, not like a North Sea where you’re putting in several hundred millions, or as we’ve just heard, $4bn. That’s a big gamble. if the oil price tumbles the day after that comes on everyone’s very sad. Whereas shale can be, for large companies (we’re not a large company), but it’s useful to have shale in the portfolio exactly for that reason because you can balance the $4bn investment with ten $100m investments.

“So yes, people are comfortable to invest in four wells. The next test is whether they’re comfortable to invest in a production site of 10 wells or 15 wells or 20 wells.

“We don’t get any government money. As a company, we’re private equity backed and in due course we’ll probably have to go to the equity markets or the debt markets to scale up.

“I think there’s still an appetite to invest in oil and gas, particularly gas, in the UK, but we’ll be testing that.”

(Starts on recording at about 16.43)

Low oil prices benefit Cuadrilla

Asked by Lord Layard (Labour) about the impact of low gas and oil prices, Mr Egan said:

“Perversely, as it might seem, it is rather good for our business at the moment, being an exploration company with the high-class problem of no revenue.

We are finding that the cost of services have declined dramatically so it’s costing us a lot less, or will cost hopefully a lot less once we get started to drill and test the wells than it might have done a few years ago. Another perhaps perverse, perhaps not, depending on where you sit, impact of Brexit has been that we are funded in dollars so we get more pounds for our dollar than we did three or four weeks ago. So again, that has helped from where we sit.

“Obviously as we move through into a production phase, hopefully, the opposite will come into play where we’ll be hopeful for somewhat higher prices. And I’m not even going to try and forecast what the gas will be because I’ll be wrong. But at least of late, US gas prices have been picking up and UK prices have been picking up as well. So we might hit the perfect point in the market if we’re lucky.

(Starts on recording at about 16.35)

Shale prices versus LNG

Former chancellor, Lord Darling (Labour), said:

“We’ve heard evidence that there’s some doubt about whether shale gas can ever be cheaper than imported gas given that imported gas prices are so low at the moment.”

Mr Egan replied:

francis-egan-6“It depends on where it’s imported from. I’m sure you’ve had evidence that it’s pretty widely accepted that by 2030 we’ll be importing virtually all our gas. That’s not all going to come from one place. So, Norway’s a pretty low cost supplier of gas sitting next door to us with developed infrastructure.

“We’re probably competing in shale gas with imported LNG [liquified natural gas]. And so if you look at US gas prices at about $3 a unit, add $1 or so to liquefy, another $1 or so to transport, another $1 or so to translate it back into a gas, you’re talking about $6 landed in the UK, ish. Which is what we have to compete with. And we’re comfortable we can compete at that level.”

(Starts on recording at about 16.48.46)

Does the energy market work for shale gas?

Mr Egan was asked by crossbencher Lord Burns for his general comments on whether market works for Cuadrilla and whether it was delivering the government’s objectives, Mr Egan said:

“For us, it is partially working, I would say. We have well-documented interests in exploring for shale gas. Irrespective of how we generate our electricity, there will be a requirement for gas in the UK, and I think everyone accepts that, all forecasters accept that.

“But for us it has been remarkably difficult to get to the point where we can drill some exploration wells.

“To put that in context, we started our application process in mid 2013, we submitted an application in ’14, it was heard in ’15, we got an appeal ’16, and we might drill a well in ’17. So that’s four years. We’re still subject to planning conditions, touch wood. So that’s four years to get to the point when you can drill a well.

“In the US they are drilling 30,000 a year. So in the time it takes us to drill one well, they will have drilled 120,000. That might give you a pointer as to why gas prices are $2 a unit in the US and they are $5 a unit in the UK. There’s no natural reason why that has to be the case.

“So I think the government has good intentions. We’re grateful for their support but frankly our investors are patient but taking four years to drill a well is beyond most people’s patience.

“More generally … security of supply and the desire to decarbonise, they’re not the same thing. You can get a secure supply without being low carbon and it’s quite easy to get a low carbon without it being secure, we’ve seen that already. Getting the two together is quite difficult. And ultimately – and this is my personal view – somebody has to say something is more important than something else because they are never all equal. And somebody has to make that call.

“If you want low carbon to be the most important, you probably have to put up with some [in]security and you have to put up with higher prices.”

(Starts on recording at about 16.20)

Plans to drill Lancashire wells in 2017

Lord Livermore (Labour) asked Mr Egan when he expected exploratory drilling for shale gas would take place and whether government policy was now clear enough to encourage development of the industry.

francis-egan-select-committee-161108“We’ll be the first to drill wells. We now have approval to drill four wells in Lancashire. We’re going through the planning conditions with the county council. We’d expect to have discharged those by the end of the year, start site construction probably the beginning of next year, drill the wells second quarter of next year and be testing them by the end of next year. That’s for the initial four.

“These will be the first exploration wells drilled in the UK shale, certainly not into shale or in the UK, obviously, but the first into UK shale, horizontal wells, tested, so they will be very closely watched.

“We’re obviously very technically excited about this but I’ve been long enough in the oil industry to know that the proof of the pudding is in the eating, so we have to drill them, test them, flow them.

“The government’s policy has been very supportive. I think the issue that we’ve found, as I’ve alluded to earlier, is translating that through the Town and County Planning Act has been a fantastic experience that I wouldn’t recommend for anything.

(Starts on recording at about 16.39)

Production time-frame

Lord Darling asked how long after preliminary drilling would Cuadrilla decide whether to go ahead with production. Mr Egan said:

“Typically shale wells decline over an 18-month period from initial flow-rate before they stabilise at the lower rate which can carry for 20 years or more. So a 12-18 month window would not be uncommon. But that said, these being the very first wells drilled and tested in the UK shale I’m sure we’ll some surprises along the way that will either accelerate or decelerate that but that’s the ballpark.

(Starts on recording at about 16.48)

Progress of the UK shale gas industry

Lord Darling said he was aware of four shale gas sites in the UK and asked Mr Egan about how far the country’s shale gas industry has progressed. Mr Egan said:

“IGas is looking at a site, I don’t know where the other two are. I know INEOS are looking at numbers. There are no production sites in the UK, if that’s what you mean.

“I don’t think anyone else has got an application in to drill a horizontal well but there is an application in Yorkshire to fracture a vertical well, which is subject to an appeal and there’s an application in Nottinghamshire to drill a vertical well, not even fracture. So I would say we are about a year-and-a-half, two years, ahead of everyone else.”

(Starts on recording at about 16.52)

Footprint of shale pads

Asked by crossbencher Lord Turnbull about the surface area that you have to take to drill a well, Mr Egan replied:

francis-egan-3“A well is very modest. You could drill a well in that area there. A typical site, so our sites in Lancashire where we’re drilling four wells, is 2ha, which is the size of two football pitches. But on 2ha you could fairly easily fit 40 wells on it. The surface area is probably the most modest of any energy development.

“The issue tends to be typical planning issues around traffic and noise. The land take for shale is an order of magnitude lower than wind or solar or nuclear or anything per unit of energy produced, because it’s all happening beneath the ground, 8,000ft beneath the ground. So the surface land impact is quite small.”

Climate change and emissions

Baroness Wheatcroft asked Mr Egan how he squared the production of shale gas with UK emissions targets. He replied:

“Well the climate change committee squared that and the government squared it.

“But in terms of how I square it is that we’re going to need gas and that’s going to have to fit into emissions targets or we’re going to have shut off the heating and the cooking in the country, and that’s not going to happen. So really, what we have to demonstrate is that we can produce gas at lower emissions that we can import it.

“You’ve got to remember that emissions for us is revenue. So we’re burning dollars or pounds so in terms of emissions, people say we have to be heavily regulated. We don’t have to be heavily regulated, that’s our profit. It’s like Tesco’s throwing away its food. So with best practice you can get down to less than 1% and there’s no reason in the UK why we can’t get down to less than 1% emissions.”

(Starts on recording at about 16.41)

Displacing imported gas

Lord Darling asked for Mr Egan’s reaction to evidence to the committee that shale gas was only ok if it displaced an equal amount of imported gas. Mr Egan said:

francis-egan-5“It’s like the Archimedes principle of shale gas. It’s an interesting accounting balance because you end up with a perverse situation where it’s actually better for the climate to develop your own gas. But on your books it’s worse because you don’t count the emissions of the production of the imported gas. The climate is not British. If you take a sensible view of the world, then if it’s lower emissions to develop it here than it is to import it from the US, you should be developing it here.

“The situation you find yourself in, for example, in Scotland, where we’re importing shale gas from the US and have a moratorium on exploring for it, never mind producing it, in a country that has led Europe for oil and gas development for 25 years is beyond belief.”

(Starts on recording about about 16.49.50)

Carbon capture and storage

Lord Darling asked whether cost was deterring development of CCS. Mr Egan said:

“Personally, I think, yes., The economics of it aren’t proven. But you’ve seen last week, some of the very large oil companies, BP, Statoil are there, Total, are putting some serious money into it again. The technology is there. Personally, I am quite optimistic about it. I think the technology is there but people haven’t been able to make it economic.”

(Starts on recording at about 16.51)

Future energy consumption

Baroness Wheatcroft asked him to forecast expected energy use in the UK

“Most people say gas will come down not least because we are looking to increase renewables in the electricity sector and that’s probably the case. Equally the population is going up and I don’t know whether energy usage per head is going down that much. So I would expect there will be a marginal decrease from our point of view for gas usage but I can’t see it falling off a cliff any time soon.”

(Starts on recording at about 16.45)

And why Statoil turned its back on UK

Another witness to the committee, Tor Martin Anfinnsen, Senior Vice President, Marketing & Trading, Statoil, said his company had interests in shale but only in the US. He explained why:

“We had a look at the UK sometime back as part of a global survey with Chesapeake, of the US, but we decided against going into the UK.

“We believed we were operating in a more prolific basin in US than what the UK could offer. But I think it was primarily it was what we call the above ground risk, not so much government policy but it’s a fairly densely populated country this and there have been obstacles, if you will, to our activities in the Marcellus field in the US as well and we thought they may be even tougher to overcome here.”

Asked by Lord Livermore if he expected a situation where he would reconsider that decision, Tor Martin Anfinnsen said:

“You can never say never but I don’t expect that. For us, it’s much more cost efficient, at least based on our own calculations, to develop offshore fields, our offshore Norway assets, and bring that gas into the UK by pipeline.”

(Starts on recording at about 16.40)

Video recording of the House of Lords Economic Affairs select committee hearing on 8 November 2016

128 replies »

  1. I would be very interested to see the source of Mr Egan’s claims that 30,000 shale wells are being drilled a year in the US. I have had a quick look and most articles refer to the rig count in the US being significantly down, though productivity maintained. Mr Egan may be correct but it would be good to see all the references he has used to justify all of his statements. It would be also useful to better understand some of the points and claims he makes.

    Unfortunately I am not convinced that accurate information is always provided to the public or government by industry.

    For example – I have frequently heard industry, politicians and supporters of the industry state that over 1 million wells have been safely fracked in the US. Having just had a cursory look now, it would seem that it isn’t clear what sort of wells these are or whether they have been fracked, done safely etc.

    When anyone gives evidence to government, the utmost scrutiny must take place. I wonder whether any independent scrutiny of sources takes place? And if not perhaps it should.

    An example of misleading information being provided – was the statistic given by industry to government of the water usage for fracking. The statistic was along the lines that a decade of fracking would use about the same amount of water as the irrigation of a golf course for a month. This was investigated with accurate figures obtained from the professional UK golf course body and further cross referenced against golf club data. It was found to be completely incorrect and misleading. The golf course irrigation was far less. The amount of water used in fracking would have been the equivalent of 144 golf courses, not one. This incorrect information found its way into the Royal Society Report of 2012 and was used by DECC. When brought to the attention of DECC – they did nothing to correct it but simply stated industry had provided the information.

    Perhaps the golf course in the example was very large and located in the Sahara Desert?

    https://www.fractracker.org/2015/08/1-7-million-wells/
    https://www.statista.com/statistics/280141/oil-and-gas-wells-drilled-annually-in-the-united-states/

      • Hi KT! If you’re worried about how many wells are currently being drilled in the US, just check out this site: http://www.eia.gov/petroleum/drilling/#tabs-summary-3 . There is plenty of great data for you on the site!

        You’ll be pleased to note that DUC wells are running at approximately 5,000 per month as recently as September according to the Energy Information Administration. If anything, Mr. Egan has underestimated the amount of drilling taking place in the US.

        I know what you mean about misinformation. It can be troublesome. But I don’t think the industry is guilty of providing 1/10th the amount of false information as the anti-fracking mafia! For instance, since I’ve been so kind as to confirm the drilling activity, perhaps you could confirm data which support the following claims that have been made by that anti-frack crowd:

        That the water tap set on fire in gasland was fueled by natural gas occuring due to fracking
        That there is proof of systemic water contamination from fracking
        That the EPA has retracted its finding that fracking has not caused systemic water contamination
        That fracking regularly causes powerful earthquakes
        That fracking kills people
        That fracking has only been going on for seven years and is still untested
        That fracking has been proven a public health hazard
        That fracking causes cancer
        That the fracking industry is a ponzi scheme
        That fugitive methane leakage rates average 9-10%

        i hope that I’m not asking too much. Hopefully this exercise helps you to keep things in perspective!

        • Those DUC wells are a running total of how many are just drilled and waiting to be completed – The companies are happy to drill the well but leave it unfracked until Oil/Gas becomes viable. 30K wells per year is perhaps top end of what is theoretically possible, but theory doesn’t easily fit with practice as the actual spreadsheeet you pointed me to shows 19263 wells drilled in 2014. 12,571 in 2015 and 4975 to date in 2016 or about 37K in last 3 years. I would say KT is right to be concerned about a 250% exaggeration. (thanks for the link though as those numbers are nice to have.. and yes I know its only in 7 main areas but they’re the shale areas in US where most of investment are and we do want to compare like with like ie shale wells with shale wells ).
          Egan also noted how they were funded in dollars and how this was an upside given current exchange rates. Then I guess this is news to Centrica who have a 25% stake and who seem according to this article to be covering the costs of the exploration in Bowland shale. http://www.telegraph.co.uk/finance/newsbysector/energy/10117818/Centrica-takes-stake-in-Cuadrilla-shale-licence-in-160m-deal.html
          Egan would do well to note a previous fracker’s demise after giving evidence to the UK parliament . Breitling boss Faulkner under investigation by SEC. https://www.sec.gov/news/pressrelease/2016-130.html

          • (edited by moderator)

            “30K wells per year is perhaps top end of what is theoretically possible”

            Drilled wells is what matters. Wells can sit behind pipe for awhile depending on the climate of commodity prices. Drill 5,000 DUCs this month but don’t turn them on until next year. Some months you’ll have a lot of DUCs come online and they’ll goose the numbers. Incidentally, I’ve heard that the number of wells drilled is more like 40k a year.

            Centrica is covering a portion of costs.

            But don’t worry, there are deep pockets all around the table my friend!!! ;o)

            • Edited by moderator again Peeny? Oh dear!

              “But don’t worry, there are deep pockets all around the table my friend!!! ;o)”

              I am sure Mr Egan will be hugely relieved to have your reassurances, but we’ve heard that one before. 🙂

              Another starter for 10 for you – you haven’t scored on the last 3 so I’ll make this one easier for you:

              Who said “We will finance whatever it takes. Equity finance, then debt and equity.” before jumping ship to join a Russian energy company, and in the process making something of a mockery of all the silly fracking versus Putin rhetoric.

            • Oh Peeny! – you don’t get it do you. You aren’t supposed to just repeat a silly phrase – you are supposed to guess who said that before jumping ship and taking his cash with him. Do you need a clue? Is that it?

            • Yes you are but I’ll give you another go. Try again!

              Who said “We will finance whatever it takes. Equity finance, then debt and equity.” before jumping ship to join a Russian energy company, and in the process making something of a mockery of all the silly fracking versus Putin rhetoric.

            • Peeny – for somebody who won’t (or is that can’t) answer the question “Who said “We will finance whatever it takes. Equity finance, then debt and equity.” before jumping ship to join a Russian energy company, and in the process making something of a mockery of all the silly fracking versus Putin rhetoric.” you have something of a cheek old chap.

              But here’s another one for you sport – 10 points again – you have scored 0/40 so far

              Who said today ““And if you allocate properly, again, the capital, and depreciate, economically, the wells over their economic life, you do not have return. And, in fact, what we would say is what they would call EBITDA minus what we would say is the real capex to keep your production constant is a negative number. This should terrify every commercial bank that’s lent money”

            • Who said this, John, ““The natural gas boom, in particular, has led to the displacement of high-carbon coal with low-carbon natural gas producing fewer [carbon dioxide] emissions.”???

            • Why that would have been US Energy Secretary Ernest Moniz in August this year.

              Nobody is arguing that burning gas emits less CO2 than coal though Peeny,

              So that’s 0/40 so far for you 20/20 for me. We can see who is denying, deflecting, and diverting can’t we? Or is it just that you don’t actually know the answers to my questions?

            • Goodness Peeny – You know it’s hard to believe that just a few days ago you were haranguing somebody else with “What a deluded and pompous sounding individual you are “.

              If I put you in touch with Mad Rev perhaps he can tell you the parable of the man with the beam in his eye.

              You know, it’s actually OK not to know all the answers to things Peeny – you don’t need to be so defensive about it, but if you are going to evade questions then maybe you really shouldn’t be accusing other people of denying, deflecting, and diverting, because it makes you look more than a smidgeon hypocritical.

              Just a thought old boy! Still 0/40 I see!

            • Speaking of deflecting, John, you have yet to tell us all whether you accept that the following statements from the anti-frack mafia are untruthful:

              That the water tap set on fire in gasland was fueled by natural gas occuring due to fracking
              That there is proof of systemic water contamination from fracking
              That the EPA has retracted its finding that fracking has not caused systemic water contamination
              That fracking regularly causes powerful earthquakes
              That fracking kills people
              That fracking has only been going on for seven years and is still untested
              That fracking has been proven a public health hazard
              That fracking causes cancer
              That the fracking industry is a ponzi scheme
              That fugitive methane leakage rates average 9-10%

              It’s a pretty direct question. What do you say Johnny boy?

            • Peeny old thing – we’ve discussed your straw man collection before. It’s your own time that you are wasting here you know. LOL

            • I urge you to read the statistics. That DUC count is a running total – look at the spreadsheet links on the RHS to see how it was derived. The DUC Data (aggregated by region). Haynesville starts out with 118 DUC wells, next month 29 are drilled but 35 are completed and DUC total for Haynesville drops by 6 to 112. The columns of all 7 regions are added (I’m assuming you can read simple spreadsheet formulae) at far right.. summation of various columns give totals.. There is a peak of 1723 wells drilled in a month – sept 14. Even if wells were drilled continuously at that rate its only 20676 wells per annum.
              You may ‘hear’ differently – but the reporting suggests it to be just that – hearsay

            • You don’t decide what matters Peeny – didn’t anyone tell you? 🙂

              Humour me and tell me how many were conventional – but you can’t can you because you don’t know.

              Hilariously the paper you link to uses that picture of the Wyoming field that you and your pals get so upset about. You couldn’t make it up.

            • Don’t much care, John. [Edited by moderator] You still haven’t gotten back to me as to whether you agree with the below [edited by moderator]

              That the water tap set on fire in gasland was fueled by natural gas occuring due to fracking
              That there is proof of systemic water contamination from fracking
              That the EPA has retracted its finding that fracking has not caused systemic water contamination
              That fracking regularly causes powerful earthquakes
              That fracking kills people
              That fracking has only been going on for seven years and is still untested
              That fracking has been proven a public health hazard
              That fracking causes cancer
              That the fracking industry is a ponzi scheme
              That fugitive methane leakage rates average 9-10%

              Let me know, will you? ;o)

            • Moderator – Would you please have a little word with our American friend about his crass and very impolite insistence that anybody who is anti-fracking is a liar and belongs to some sort of mafia. I am sure that that contravenes the standards expected for comment here. Also can you find a way to discourage him from repeatedly spamming the comments here with his puerile list of straw man points. It’s getting very tedious to see it several times a day now.

            • There is no confusion. That is again hearsay – there is no reference in that document for that statement. The author most likely in the same boat as everyone else who heard that the Oil and Gas industry were drilling 30-40K wells a year, and has had to take it as truth but could not find a reference to justify it. The figures from EIA certainly show this not to be the case. Further research on the EIA archived figures (going back to 2007) show 30K about a theoretical limit. Take max rigs ever available from each play (this will most likely reflect double counted rigs as each play maxed at a different time).. but I come up with 1539 rigs –lets make it 1600 for ease. Lets make 3 weeks (1 week assembly/disassembly (and 2 weeks drilling – and we get each rig can drill 17 holes / year. This rounds out to 27,200 wells. I’ve been generous and its clear that 30K would be a theoretical maximum with perfect conditions, no break downs, no bad weather, no hitches , no waiting for 3D seismic report no waiting for the crew that’s stuck on another job or just stuck behind all the traffic. So I repeat once again between Jan1 2014 and Oct 2016, 37K wells were drilled in Shale in that period, of which about 5K have yet to be completed.

            • I see, so when you disagree with the author’s data, you just dismiss it as hearsay?

              Here’s what wikipedia says “Each year, tens of thousands of wells are drilled in search of oil and gas in the U.S. In 2009, 36,243 wells were drilled.”

              You can also visit the page which shows data as high as 80,000+ wells drilled annually during the ’80s. You will also see that the amount of wells drilled in a given year is fairly volatile as it will be correlated with commodity prices. So much for your “theoretical limit” of 30k wells!!!! ;o)

              Regardless, based on this data, the 30k figure that Mr. Egan gave looks reasonable/conservative.

              Have a great day!
              https://en.wikipedia.org/wiki/Petroleum_in_the_United_States

            • Egan said that the rate of drilling was 30K a year AND in the 4 years since Cuadrilla last drilled a well, there have been 120K wells drilled in the US. That is simply false… unless of course the companies are hiding something. See the big problem for the industry is that if there’s been 120K wells drilled in the last 4 years or 30K being drilled annually, then the IRS and the SEC have big questions to ask with regards to where the profits/losses of those wells are hidden .. because the oil and gas one would expect them to have produced isn’t in the inventory either. The industry can’t have it both ways. If you’re adamant 30K wells are being drilled then a good portion of them are strippers and uneconomical. Maybe that is the reasoning and you’ve just highlighted a huge issue for the industry – ie despite all the 3D seismic and wonderful technology that is touted they’re drilling lots of duds… And here’s me thinking the industry was touting how efficient they have become and how they were getting more volume from each well, but on Egan’s figures they’re actually becoming less efficient and drilling duds all over the shop.
              The other inventory that’s missing is the waste water. Or maybe this is deliberate to attempt to say that X amount of waste is produced from 30K wells when in fact it only takes 20K wells to produce the same. And just to stop confusion we must compare like with like, shale wells with shale wells.

            • What are you rambling on about? It doesn’t even make sense in the least.

              “then the IRS and the SEC have big questions to ask with regards to where the profits/losses of those wells are hidden ”

              You do realize that o&g companies don’t report results by well, right? You haven’t a clue about the industry, do you?

              You were wrong about the wells drilled. I’ve shown you exactly how you were wrong. I’ve backed it up with data from the EIA. Now you just try to redirect – a three card monty. LOL

    • Let’s take a peep at those numbers shall we. LNG.

      $6 landed in the UK, ish says Mr Egan.

      Quick look at landed UK price (all taxes and all charges paid)

      $4.68 (October update)

      That’s a very big ‘ish’

      https://www.ferc.gov/market-oversight/mkt-gas/overview/ngas-ovr-lng-wld-pr-est.pdf

      Last time at the House of Lords the Shale gas industry spokesperson (the guy who is obviously giving it the best shot) said that if they could bring it up at $8 then it could work but at $15 it would not.

      http://www.parliamentlive.tv/Event/Index/b05e83ee-5d8a-4f48-bc34-8d4b75f6a0db starts about 16-50

      (but watch the whole thing to see why the North sea is a much better bet and how it is the tax regime that is strangling it)

      Now they say they have to compete against $6 LNG. But we know that is actually $4.68.

      Their lowest figure was $8 a few years ago now they have to explain how they could do it for $4.68?

      With the addition of expensive ‘Gold Standards’, and endless delays that would be an impossible task

      Also Statoil have stated they will lower their prices of LNG to way below the $4.68 if any suppliers including the US try to take market share away from them.

      Chesapeake have told Statoil it is much more cost efficient to develop offshore fields.

      Big players do not want it

      As already stated by many, UK onshore shale is simply not viable and could never supply our energy needs.

      • Well, John, you’ve certainly embarrassed yourself once again! Yes, I’m quite sure that your understanding of the cost economics for uk shale gas extraction are superior to those of industry CEO’s. More rational thinking from the anti-frack mafia!

        Why would you show ferc landed costs and compare that to Mr. Egan’s total cost estimate? C’mon man. Get with the program. Landed costs don’t even include the extra $1/unit to regas the LNG – so that takes your 4.68 to 5.68. But this gas isn’t purchased on the spot market. It’s purchased under contract on a forward curve and there is certainly no backwardation in that market at the moment. So, you lose again. The landed price is likely over 6/unit under contract.

        You and your friend Refracktion have been beating this “not viable” drum for so long and you just keep floundering. It’s amusing to watch. I told you guys that service costs had come down dramatically in the last two years and you guys just denied it. Lo and behold, here’s the CEO of Cuadrilla saying the exact same thing. Not that we really needed him, because all you had to do is read the 10Qs from any shale firm in the US and you would know the story. But these facts are so inconvenient, you wouldn’t want to trouble yourself with them would you??

        It’s just simple logic, John (not sure you can handle that but I’ll keep trying! ;o)) As Mr. Egan says, $3 in US translates to around $6 in UK after all the extra costs are added. If they can produce at 3/unit in the US, there isn’t any reason to believe that they can’t eventually do so in the UK – after giving the service industry time to ramp. But the 100 percent price umbrella afforded by all the extra lng and transport costs means that even if the UK costs are a whopping 50 percent higher in the long-term vs the US, it will be a very healthy and profitable venture.

        But we don’t need to even worry about the logic, Egan has told us that they are quite happy with current prospects. All my best!

        • Anti-fracking mafia: “WE want answer!”

          Hbpeeny: ” YOU WANT ANSWER??”

          Anti fracking mafia:” We Want The TRUTHH!!”

          Hbpeeny: ” YOU CAIN’T HANDLE THE TRUTH!”.

          • Peeny $4.68? $6.00- makes no odds – your friends will still struggle to get it out of the ground for less than that.

            We are not just talking about a whopping 50 percent higher old thing!

            Here’s another starter for 10 for you – which Pro-Fracking organisation says:

            “There are varying reports on how the UK shale extraction cost will compare to the US, with some commentators predicting the difference as high as three times more expensive in the UK.”

            Pip pip!

            • Says you, John? What level of experience do you have with the cost economics of shale drilling and gas extraction within Cuadrilla that you have become such an expert?

              And you do realize that there’s a pundit for any viewpoint you want to express, right John? There were many oil and gas experts who said that fracking and horizontal drilling would never go anywhere in the US. They said that it was just not viable. That it was too costly. That it wouldn’t work. Thank god for entrepreneurs who have cajones, and also have the brains to ignore weak kneed armchair quarterbacks such as yourself who forever tell them how it can’t be done. They won, and you lost.

              So pip, pip to you too my weak and timid friend!

            • Oh bless – that’s your funniest reply ever Peeny!

              Says me Peeny???? Nooooo – It was UKOOG. One would imagine that they have a passing familiarity with the cost economics of shale drilling and gas extraction – but maybe they do know less than they pretend eh Peeney? Is that what you are saying?

              I think you’ll find that the relevant word is “cojones” and the battle I’m fighting has only just started. If you really are the calibre of what we face then maybe it’ll be a short war.

              Pip pip!

            • And do you assert that UKOOG has a better handle on Cuadrilla’s cost economics today from a statement three years ago, than Francis Egan does today? Is that your point, John? If so, please justify this. Thanks and pip pip Cheerio!

            • Peeny old thing – I am quoting from UKOOG’s website as available at 18:29 pm on Monday 14th November. Didn’t you realise?

            • Well your friend John Powney certainly seemed to think that 4.68 to 6.00 made a big difference. Then I had to educate him a little bit. Just like you have often needed some education, John (and a moral compass!!)

              pip, pip

            • Oh it IS a big difference – just not as big as the difference between the expected cost and selling prices.

              Do you seriously think you are fit to provide moral guidance to anybody Peeny? After trying to use the plight of those in genuine fuel poverty to push fracking?

              Oh very dear.

            • Oh very dear indeed! Whose expected cost? Not the expected cost according to the CEO of the company that would be best positioned to understand their own cost structure, right John? Just some tired old pundits who expressed their views several years ago. Can you please explain to me and everyone else why it is that this expert would have a better sense of Cuadrilla’s cost economics than the CEO of the company? Do you have any proof to support that assertion? And why did you try to convince people that these pundits’ cost estimates imply an untenable economic environment for shale gas extraction in the UK because prices have fallen in the intervening years, but you failed to adjust the cost side of the equation when that has clearly changed as well? And when I pointed this out to you, you just denied it. Oh dear!

            • The CEO of the company that would be best positioned to understand their own cost structure declined to offer any forecast on prices and made some inconclusive and unconvincing comment about being happy to compete with LNG at $6 (but then he has to say that or he may as well pick up his coat and go to the job centre).

              But even if he could extract it more cheaply than a variety of experts say is likely, LNG isn’t his only competition is it petal? How much is piped natural gas these days – ah yes – $4.29 per MMBTU in October – that’s about 34p a therm.

              Good luck!

            • That certainly shouldn’t be a problem for industry. As we’ve already proven in the US, shale gas can be extracted very inexpensively. Obviously gas piped over great distances will be at a competitive cost disadvantage versus homegrown gas. Just logic my good man, I know you have a tough time with it, but try to keep up!

            • And you still refuse to answer the question about the various claims made by the anti-frack movement, right John? [edited by moderator] can you provide any proof to back your assertions? What’s it going to be, John? More deny, deflect, or divert?

            • “Obviously gas piped over great distances will be at a competitive cost disadvantage versus homegrown gas.”

              Perhaps you can explain what that cost disadvantage is and how it is calculated over here in the UK – I mean if it’s so obvious you should find that easy right? Just logic my good man !

              I’ll say it one more time – your straw man games are of no interest to me. I know it must have taken you ages to think them up but it was a waste of your time old sport.

            • You won’t answer the question, huh John. Just run away and hide instead. I answer questions, and I answer them with solid facts and reasoning. You cannot handle this. Deny, deflect, divert. That’s Refracktion’s motto! pip pip and Cheerio to you sir!

            • Calm down Peeny – just because I don’t answer your needy posts within 15 minutes doesn’t mean I’m running away. It just means you aren’t that important in my life old son. Get a grip poppet and read my reply above.
              Tootle pip!

        • Chesapeake openly admitted in its SEC filings they couldn’t make money on Shale gas @13 dollars /mcf. back in 2009. Their business model was all about flipping acreage. A new SEC ruling in 2009 opened the door to allow Shale gas companies to book assets with no independent verification as PUD (Proved Undeveloped Assets) provided they be developed within 5 years. The SEC is currently investigating 11 companies with regard to this ruling. Is Cuadrilla et al going to be subject to an independent verification of results of exploration or given the city of London’s reputation for self regulation will they be allowed make unverified claims ? The debt overhang for shale in the US is now almost 1Tn dollars. A recent impairment by BHP Biliton for its assets of 7.2bn comes on top of 3 other impairments totalling 6bn.. BHPB spent big on shale assets 20bn in 2011/2012. Egan might have laughed off the ‘funding’ as being in dollars etc.. but need to look beyond the headlines – eg Billionaire Paul Fudge in Aus is loaning money to shale companies – but at 20% interest (see Tamboran financial statements ) . He’s got some interest in Cuadrilla via a 9% or so interest in AJ Lucas, but I haven’t as yet fully investigated whether there are any deals around that. It should be noted that in the US, Shale bankers and bondholders have managed to shift much of the debt off their books and onto unsuspecting funds such as teacher retirement funds and personal 401K retirement plans. Middle class US is going to pay the price as the bubble deflates. As an aside Egan was working for BHP Biliton in Houston around the time they got into shale gas in a big way and was then ‘poached’ for the Cuadrilla job in 2012. Would be interesting to know what exactly was his role in BHPBs great shale rush.

          • Look at thegasmancommeth with typical anti-frack trash talk! LOL. You do understand, son, that Cuadrilla is not public, right? OMG. LOL. As such they have no motivation to game investors by inflating PUD reserves. Holy cow, if you weren’t so darn funny, you’d be dangerous!!!

            I genuinely got a great laugh out of that. So, thank you.

            Let us know when you have completed your in depth investigation of Paul Fudge, Okay? I’ll be waiting with baited breath.

            Who do you think manages teacher retirement and 401k funds? That’s right, professional money managers. You are so wet behind the ears I have thoroughly enjoyed this!

            Middle class has certainly paid the price in America. Not only have they had to deal with literally over a trillion dollars in added GDP, 15 million extra jobs, and dramatically cleaner air.

            The bubble deflates? You realize the energy peakers have been using that language since 2007, right? LOL

            • Trash talk Peeny? Well you are an expert there.

              So these shale gas exploration companies “have no motivation to game investors by inflating PUD reserves”? eh? So they wouldn’t be looking for investment at all then? Not hoping to cash out? You really think they are here for the long term and are not just exploration companies? Holy cow, if you weren’t so darn funny, you’d be dangerous!!!

              I genuinely got a great laugh out of that. So, thank you.

              Let us know when you have completed your economics 101 course, Okay? I’ll be waiting with bated breath. (you can bait yours with whatever you wish).

            • Back to school for you, John. They don’t have any reserves booked as everything is exploratory now. So even if they wanted to deceive they couldn’t.

              Luckily, the world is not as cynical and negative as John Hobson. There are lots of honest people out there who just want to make a living. That includes people at oil and gas companies. You conspiracy theorists see evil in everyone. It must get to be a very dark life, John. Better double up on your Zoloft today! ;o)

            • Peeny – read what I actually said – I wasn’t restricting my comments to UK firms as you seem to be implying, or do you believe there are no PUD reserves booked anywhere? Back to school for you eh? Remedial comprehension class beckons.

              Life is bright thank you but I prefer “realist with critical faculties intact” to “cynical and negative” if that’s OK with you old thing.

            • No, you should keep up with the thread, John. The original comment suggested that Cuadrilla could manipulate their accounts and spark an investigation similar to that of the SEC. Ooops!

            • 15Million Jobs ? http://www.eia.gov/todayinenergy/detail.php?id=21772 Please behave. 2014 peak shows about half a million jobs (including offshore and onshore) in Oil and Gas extraction and supporting industries. As for added GDP that’s just a figure with no qualitative measure – eg In Ireland during the boom growth and GDP went through the roof – pity it was building houses that nobody ever lived in on borrowed money that’s now a shackle for generations to come. As an example the severance tax on all offshore/onshore oil and gas production in Texas in 2012 failed to cover the damage done to roads by the industry. http://www.resilience.org/stories/2013-04-04/externalities-of-shale-road-damage A health impact assessment of the industry in New Brunswick determined if you want to bring shale gas to an area – build hospitals.
              I’m glad of your trust in ‘professional money managers’ I seem to remember they have made a few wrong decisions lately for which we are all paying. The offloading of this debt through the use of financial instruments is designed to offload the burden onto ordinary Joe and Mary Soap. The fund may be managed by the banks but the ultimate owner is the small investor. Your post shows a naivety with regard to bondholders, creditors and who is secured, unsecured and who is first in line in a chapter11 / administration scenario. The industry has already approached the Fed looking for special status (ie bailout provision) in the event of continued pressure on oil prices. http://www.zerohedge.com/news/2016-01-16/exclusive-dallas-fed-quietly-suspends-energy-mark-market-tells-banks-not-force-shale The bubble has deflated, we’re now out of the election cycle and it will be very interesting to see what response of new administration is. This is a president elect who is used to stiffing his contractors and defaulting on loans.
              I’m not sure what difference public or private company structure makes, other than the latter requires less public scrutiny in some countries. My question is relevant and of public interest – namely who will verify any information with regard to prospectivity released by Cuadrilla and what are the rules and regulations around that reporting. If Cuadrilla can move from exploration to production without independent scrutiny then this point needs to be made public so the public can understand the process whereby granting of exploration permissions may in effect be granting of production permissions.
              With regards to P Fudge I was merely pointing out that Private investors and funds seek higher returns and more guarantees than your average small time share buyer. Unfortunately ASICs regulatory regime is neither as comprehensive, nor enforced in the same manner as companies house; I was merely pointing out how Mr Fudge viewed risk with regards to one loan of his I’ve come across.
              Mr Egan specifically said in his statement to parliament that Cuadrilla were funded in dollars, yet the Centrica statement would show that this exploration is funded by them – in GBP. Cuadrilla’s statement of Capital in Companies House is in Dollars, so if the agreement between Centrica and Cuadrilla is priced in dollars, then I believe Centrica’s shareholders need to understand whether they are on the hook for 20% more than what they thought they were on the hook for last June, and the knock on effect it will have on their investment. Similarly the AUD v USD has fallen by 25% since 2012. If AJ Lucas commitments were priced in USD, then those commitments are now 33 percent higher than four years ago. If those deals were not priced in USD then Cuadrilla has lost on exchange rate so has in effect become defunded. Therefore there needs to be clarification from Egan on what he actually meant – indeed to my mind why he actually felt the need to mention it at all.

            • Oh Peeny – we know all about the Chambers of Commerce over here. Ours all seem to be in league with the industry PR fronts like the North West Energy Task Farce. We take their output with a large pinch of salt. I’m sure yours must be similar.

            • Wow – that chamber of commerce model must make a heck of a lot of assumptions – look up input-output analysis and/or input-output economic models. Way back in 2011/2012 IHS produced the golden age of gas and other stories which used a proprietary (so confidential it wasn’t subject to external review) model to predict how many jobs would be available in Shale. Their figures were widely disputed and disparaged by many academics eg Barth and in the NY SGEIS. This came around the time many other ‘economic’ studies were predicting millions of jobs. Those predicted jobs have predictably not appeared. However that hasn’t stopped the Chamber of Commerce from predicting the demise of those phantom jobs should fracking be banned. You really couldn’t make this stuff up – but someone has.. I recommend it for the booker prize of fiction. One would be let to believe that there wasn’t about 2Tn in stimulus spending to create employment in the US since 2008 and that instead it was only the Oil and Gas industry creating jobs. The bottom line is energy can be sourced more cheaply via Wind and Solar and without the huge health and environmental issues caused by fracking. Of course what’s also not mentioned is the IMF report that stated that globally the Oil and Gas industry is subsidised to the tune of 5Tn dollars annually.

            • “The bottom line is energy can be sourced more cheaply via Wind and Solar” Can you please provide empirical evidence to back this absurd claim?

              And have you figured out the amount of subsidy of oil and gas that is designed to make sure they are there to provide backup power to your intermittents? Also, tell us how much the subsidy payment is per unit of energy produced. Spoiler: it’s a lot less than renewables!!! ;o)

    • Let us be VERY VERY clear on what has been said here.

      A Senior Vice President of Statoil, Norway’s biggest gas producers who are 67% owned by the Norweign Government and operate in 36 countries, have been in discussions with Chesapeake, the US second largest gas producer, to decide if they should invest in UK shale operations.

      This was ‘some time ago’ when prices will have been much higher.

      Their conclusions

      ‘We decided AGAINST going into the UK.’

      Let’s check that again. Statoil, advised by Chesapeake have stated ‘we decided AGAINST going into the UK’.

      The reasons why.

      “But I think it was primarily it was what we call the above ground risk, not so much government policy but it’s a fairly densely populated country this and there have been obstacles, if you will, to our activities in the Marcellus field in the US as well and we thought they may be even tougher to overcome here.”

      He is of course correct.

      • I agree. Too much political and local risk above the ground for big oils to invest in UK. US clearly has more favorable conditions and that’s why shale industry boom over there. Maybe too boom that they nearly when bust.

    • The Lords invited a Senior Vice President of Statoil to give evidence. This is what he said.

      “We had a look at the UK sometime back as part of a global survey with Chesapeake, of the US, but we decided against going into the
      UK”

      As Chesapeake are the second largest gas producers in the US I think we can assume they know a thing or two about the industry.

      Statoil are a huge multi national who know everything about the North Sea and the UK market.

      We can number crunch all day but the serious players have done their home work.

      They say NO on economics and above ground issues.

      Exactly who do you think will stand up to that and say ‘Chesapeake and Statoil have got it all wrong’ and invest against their advice.

    • Few articles on how well US shale is doing.

      http://www.egyptoil-gas.com/publications/400-billion-loss-for-american-shale-due-to-oil-price-deterioration/

      http://oilprice.com/Energy/Energy-General/More-Job-Losses-Coming-to-US-Shale.html

      http://newsbase.com/commentary/debt-burdens-straining-us-shale-industry

      The industry is fine tuning and absorbing some costs but these numbers show an industry in a dire position with mounting unrecoverable debt.

      No wonder Chesapeake and Statoil don’t want to touch UK shale.

        • hbal l-Just trying to prove you are scared to death about talking about Chesapeake and Statoil. No surprise there.

          In an article where the main person giving evidence is Vice President of Statoil, who states he has been working with your friends Chesapeake who have told them to steer well clear of the UK, you have no comments to make. Priceless.

          The same as when the Energy Select Committee last met and the energy analysts told the Lords that the North sea was where the real prize was and that it was cheaper and that shale could not meet our base fuel needs.

          Any comments on the subject at hand?

          • The subject at hand is how you avoid commenting on the fact that your hyperbole and mistakes run rampant all over this page, John. I have had to correct you due to your ignorance on multiple occasions.

            Statoil is entitled to their own opinion about where they can earn the best return on investment, John. That’s called capitalism, dontcha know? Obviously, Cuadrilla disagrees with them. Centrica disagrees with them. Ineos disagrees with them. Total, too has made investments in the UK and disagrees.

            The obstacles are greater above ground in the UK. But I think the obstacles stem mainly from the stream of [edited by moderator] hyperbole that come from people like you (as you have shown on this very page). The population density simply isn’t a serious obstacle as is plainly seen by the fracked wells that have been successful in much more densely populated areas in the States.

            So, while you try to deflect and redirect when I call you out [edited by moderator], I calmly answer any questions you may have with FACTS.

            Have a great day!

            • Not so calmly that your posts don’t have to be repeatedly “edited by moderator” though it seems Peeny? 🙂 Take a chill pill and learn how to debate not rant old thing.

              And you have a great day too. We have the greatest days here. Simply wonderful days, the best.

            • hball – Thanks for your opinion on Statoil.

              What is your opinion on Chesapeake in this. They are the horses mouth of shale. They know it all. When you get involved at this level what they suggest must not be ignored.

              They are very clear. There is no ‘ifs’ or ‘buts’ talked about. No reference of change of stance.

              Statoil know the UK gas market. They are part of it. They know the numbers.

              Chesapeake say ‘No’

              Statoil say ‘No’

              Your opinion that ‘ the population density simply isn’t a serious obstacle’

              is in direct conflict with what Chesapeake state.

              “but it’s a fairly densely populated country this and there have been obstacles”

              These are the Big Players making Big statements

              What FACTS can you present to prove that these two gas giants have got it wrong regarding UK onshore shale.
              What FACTS have been presented by Cuadrilla which prove Chesapeake and Statoil wrong.

              The Lords invited Statoil for a very good reason. They invited representatives from the offshore industry to the last energy select committee meeting for a very good reason.

              Statoil have confirmed what was said at the first meeting.

              The Lords have the evidence. They will decide.

            • But what Statoil said was that the risk in UK shale was above the ground i.e. disingenuous and disinformation campaign from the anti fracking movement and nimby. And they are right and I think hbpeeny also agree.

            • What the guy from Statoil actually said was that “It’s a fairly densely populated country this and there have been obstacles” . He didn’t say anything about disinformation TW – that appears to be your own little slice of “disinformation” doesn’t it?

              In fact all he is saying is that given the lack of any sort of social licence “it’s much more cost efficient, at least based on our own calculations, to develop offshore fields, our offshore Norway assets, and bring that gas into the UK by pipeline.”

              I think he is probably right – the population density of the Fylde is 466 people per Km2. In North Dakota it 4.2 people per Km2.

              Given that hundred-fold level of difference you’d have to be foolish to conclude that the issue of population density simply isn’t a serious obstacle for them to overcome.And it’s just one of many

    • Wow, KT. Silence. You were so interested to have the industry data backed by facts and I have done just that. Yet I am also interested in the supposed “facts” provided by your group. But when I ask you to back these facts with empirical data, you run away and hide. What gives? Why is it okay for anti-frackers to [edited by moderator], hype, and fearmonger, and then demand perfect honesty from industry? I am all for honesty, and I agree that industry should always be honest, but why shouldn’t we demand the same from your side?

      The answer is that without the lies, your side wouldn’t be able to attract the attention, the donations, and the people that it has to their cause. People like Phil, who are too gullible to understand the “peer reviewed” junk science that he puts all of his faith in, is just a bunch of propaganda masquerading as real science. This is unfortunate for everyone involved, but it is especially unfortunate for those who live in fuel poverty and who may die this winter because of the extra cost burden levied on them due to the fact that their country isn’t producing homegrown gas.

      • Peeny – most of the time we let you rant away on here and mainly ignore you (which is why you have to repeatedly post the same rants – 3 times in one page here must be a record even for you though – are we not taking you seriously enough for your own liking? 🙂 )

        Your contributions do so much to demonstrate the arrogance and patronising attitude of your industry, so we do hope you carry on. However, sometimes you must really be held to account and this is one of them. You should be truly ashamed to use the genuine issue of fuel poverty to bolster your fragile case.

        Your ridiculous claim that it is “especially unfortunate for those who live in fuel poverty and who may die this winter because of the extra cost burden levied on them due to the fact that their country isn’t producing homegrown gas.” is typical of the untruths and scare-mongering perpetrated by you on behalf of this increasingly desperate industry.

        If, as everybody except our ex-chancellor and prime minister accepts, a domestic shale industry will not have any significant impact on consumer energy pricing then clearly nobody is not going to die this Winter “because of the extra cost burden levied on them due to the fact that their country isn’t producing homegrown gas”.

        To suggest that people may die because we have not allowed fracking here in the UK is nothing but an irresponsible and cynical attempt to use people less fortunate than you are for your own ends. I am appalled. Fuel poverty is a serious issue. Don’t use it for your own puposes or you simply emphasise your own moral bankruptcy. The fact that you preface your lie with the claim “I am all for honesty, and I agree that industry should always be honest” simply shows how dishonest you really are.

        Thank you so much!

        • John, You are clearly in denial. Since when does adding to the supply of a commodity not result in a price decrease? The UK is interconnected with other gas markets, but proximity and other factors create differentials, thus adding local gas supply can and should result in lower prices in the UK. Unless you can disprove this core concept that underlies much of the science of economics, you stand to be corrected.

          The alternative which you and many others on this site have proposed, adding to investments in renewable sources, will cause (and have caused) prices that consumers pay to rise. This will, necessarily, cause more suffering and death due to fuel poverty. This is a matter of statistics and correlations, John. You can deny it all you want, but it is simply fact.

          I noticed that you didn’t attempt to prove the many anti-frack scare stories that I posed above. Do you admit that these are all lies, John?

          • Firstly Peeny, please see my response to one of the three almost identical attention-seeking rants you posted today. I’ll post it again to save you the effort of looking for it:

            “I really don’t have to provide empirical evidence for claims which have been put here by you to suit your own arguments”. If that’s not sufficiently clear I’ll repost it in language a child can understand on request.

            Secondly, I was wrong. It seems there are not two people who ignore the otherwise universally accepted proposition that UK shale gas will not have a significant enough supply side impact on the European gas market to affect consumer prices – There are three – George Osborne, David Cameron and Peeny.

            Oh very dear!

            • Peeny – It’s not me who is right or wrong. I am merely quoting a variety of well-informed sources.

              For your starter for 10 who said “”We are part of a well-connected European gas market and, unless it is a gigantic amount of gas, it is not going to have material impact on price,”

              When you have answered that we can do some more if you wish.

              LOL

            • So, you admit that it will have an impact on price. I am glad to see that you have come to show a little bit of sense, John.

              As to the level of materiality, this is highly subjective of course. Some might think that a 10-20 percent is not very material, given that we have seen differentials in excess of 100 percent at times. But for those who suffer from fuel poverty, a decline in price of 10-20 percent as greater supplies come on to the market could make the difference between life or death, John.

              So go ahead and deny, deflect, and divert attention from the fact that you advocate pushing heating bills up, while I am arguing for a policy that will lower bills at the risk of offending you and your “leftist political elite.”

              Have a great day!

            • Er no Peeny – I quoted somebody saying something. I didn’t admit anything. I see your straw man production line is operating at full steam again.

              You are not offending me as I am not part of any “leftist political elite” my friend. I am just a businessman with a brain 🙂

              I see you didn’t try to answer the starter for 10.

              Have a super day!

            • John, take a stance here for once. Do you agree that these statements made by various parties in your narrow interest group movement are, in fact, false? Or do you assert that they are true and that you can provide evidence to back them?

              That the water tap set on fire in Gasland was fueled by natural gas occuring due to fracking
              That there is proof of systemic water contamination from fracking
              That the EPA has retracted its finding that fracking has not caused systemic water contamination
              That fracking regularly causes powerful earthquakes
              That fracking kills people
              That fracking has only been going on for seven years and is still untested
              That fracking has been proven a public health hazard
              That fracking causes cancer
              That the fracking industry is a ponzi scheme
              That fugitive methane leakage rates average 9-10%

            • Peeny – you really are losing it now – you are starting be very undignified. May I kindly suggest that you take a little break and consider how you appear on here? It’s not pretty.

          • “Since when does adding to the supply of a commodity not result in a price decrease? ” in 2009 when Oil hit 150 dollars a barrel it was pure speculation. OPEC had just increased production and agreed further increased and demand was falling. The 150 dollars a barrel price surge was investigated by the SEC due to the trading patterns which suggest that traders were hoping to make more on the spread than on the asset itself. OPEC itself is a cartel. There are many other examples of commodity trading affecting commodity prices and totally skewing the actual market fluctuations with respect to supply / demand.
            The big problem for the UK shale market is ability to produce product at a price point that is competitive with LNG / Russian gas and/or other electric generation schemes. We see wholesale electricity prices turn negative when there’s good wind and solar available. We also have seen mothballing of gas generation schemes and recent grid auction showed storage now very competitive for peaking / load balancing solutions.
            If UK Shale Gas too expensive, no one will buy it. If too cheap, then the local councils, and local communities who are supposedly getting a share of the profits will not get those monies and it will become more difficult to operate. There will be pressure on service companies – so much for the good paying jobs – and pressures on regulators to deregulate as the argument will always be made that its the regulators fault for all the CEOs/board of directors not making the right decisions in the first place.

            • So? The OPEC argument proves zero. You forget the cateris paribus part of the equation. Sure, if production is increased just as geopolitical calamity hits the markets, the price will go up. Regardless, having more supply in a local market will, cateris paribus, result in lower prices expressed through the differential.

              UK onshore gas will be sold at market prices and of course it will be bought, because there is demand aplenty. Those market prices will adjust downward to reflect the new supply.

              C’mon folks! This is really basic stuff here!

            • Peeny – your arguments simply don’t reflect the reality of the European gas market – everyone except you can see, that so ceteris paribus you are just displaying your ignorance (including your ignorance of latin spelling it seems)

              UK onshore gas will be sold at market prices and of course it will be bought, because there is demand aplenty but those market prices will not adjust downward to reflect the new supply because to quote Cuadrilla’a PR company the impact of that supply will be “basically insignificant”.

              C’mon folks! This is really basic stuff here!

    • Hi KT and Refracktion, I am going to ask again politely. Are you able to provide facts and data that prove the following claims made by the anti-frack groups:

      That the water tap set on fire in gasland was fueled by natural gas occuring due to fracking
      That there is proof of systemic water contamination from fracking
      That the EPA has retracted its finding that fracking has not caused systemic water contamination
      That fracking regularly causes powerful earthquakes
      That fracking kills people
      That fracking has only been going on for seven years and is still untested
      That fracking has been proven a public health hazard
      That fracking causes cancer
      That the fracking industry is a ponzi scheme
      That fugitive methane leakage rates average 9-10%

      Thank you so much!

      • Peeny – you should set up a straw man factory – you’re so good at making them up – you’d make far more than you ever will from fracking. You could set up a sock puppet factory too with all of your experience! I mean “Mr M” – really? You have to change your style if you want people not to realise and it seems you only have one setting.

        As regards your request – opposition to fracking is made up of a variety of individuals from all walks of life with a variety of perspectives as you’d know if you actually lived in the UK and I really don’t have to provide empirical evidence for claims which have been put here by you to suit your own arguments. If you would like me to back up claims that I have actually made then please ask politely and I will be happy to do so (as I already have, as with the Ponzi thing)

        Thank you so much!

          • Peeny – You are not a child in a kindergarten class and you don’t have the right to ask people to explain things to you over and over again because you weren’t listening. We have discussed the Ponzi thing at length already along with your propensity to insert claims into other people’s mouths to allow you to then argue that those claims are wrong.

            I’m not biting Peeny. Go and play quietly with your friends near the plasticine. There’s a good boy.

            • Dodge, deflect, deny. That’s your mantra, John. You’ve never proven the ponzi thing. In fact, the last time I pressed you on it, you finally gave up and disowned the notion, claiming that you had never made the assertion but just supported it. What a wet noodle you are/were!

            • Peeny – I rather conclusively demonstrated that you were simply putting words into my mouth and provided you with the actual statements that I have in fact made on the subject. Clearly that irritated you but that is the truth I am afraid. You are making yourself look like a spoiled child on here today. I know Trump won in your country but that doesn’t mean you have to try to emulate him here.

            • Take a look at the video of the rally in Manchester peeny. The take a look at the coverage of the pro-fracking rally at BFC. Then you’ll learn the difference in popular support for anti and pro positions. Then look at the DECC wave polling – it’s national level research but it shows how opposition to fracking is becoming overwhelming for the industry. Enjoy!

            • The only reason for the negative sentiment around fracking is the [edited by moderator] fearmongering from your group, John. Luckily smart people can see through this. Your losing. Fracking will be taking place (as it has already) in the UK.

              Yes the massive rally of 1,000 people! What happened to the other 64 million, John? Where were they? LOL

            • Peeny – whatever! You are becoming tiresome now – go to your bedroom, shut the curtains and don’t come downstairs again until you are ready to behave like a grown up.

            • I have never even tried Peeny. Neither have I tried to prove that the earth isn’t flat. I’m not sure what point you are trying to make? Or are you just clutching at straw men again. Not waving but drowning?

  2. Egan claims a shale well can produce for 20 years or more? Based on what evidence? We know the shale industry use an arbitrary 30 year production projection for their investors, but in reality, each producing well would be lucky to make it past 84 months, let alone 20 years!

    • Information on improving productivity of shale wells in the US:

      http://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf

      20 years sounds too long but it depends on the geology. The best wells are not in pure shale; the Bowland Shale has a lot of sand intervals in it (look at the outcrops). This is probably why Cuadrilla persist with their program – the rates at Presses Hall were extremely high.

      Mr. Powney keeps telling us that the gas will be too expensive; Mr. Egan says it will be competitive. I would say that the one spending the money is more likely t be correct. But lets wait and see, we may have a better idea in 2017.

      • Paul – I’d say that the guy who has spent upwards of £100 million already doesn’t have much choice but to go on claiming that it wasn’t wasted money or he has to walk away as a failure and his backers have to write off that amount.

        There is still a hope for them that some major may want to hedge a bet or two by buying a tax loss company and having a foothold in UK shale just in case. I wouldn’t hold your breath for 2017 though – without that social licence the road ahead looks very bumpy indeed (like most of the roads in Frankie’s PEDL area already are)

  3. The true lesson of this report Ruth, and I commend you for it is that this is the only report of it. This isn’t Balcombe anymore. Quite frankly, no one gives a shit. A thousand people in Manchester in the National March? Out of 65 million. Give me a break. There’s a reason why the BBC or even the Guardian don’t care anymore. All those alleged Josh Fox problems? That is the fantasy of 2009, not the reality of the past five years. The only thing Fox has produced is Donald Trump for President thanks to the Green purism of losers like the Mars Parent Group.

    Perhaps this signifies the normalisation of the UK shale debate. No one really cares. I’ve been in the natural gas industry for over 25 years and the first 18 were really, really boring. Guess what? To most people it is really boring still.

    As long as people want light, heat, industry, mobility and connectivity how it comes to happen isn’t very important. Which is how it should be. I suggest that it should come from local sources, just like local food. That makes me a “greenwasher” apparently. The green Purism of Ashton et al? That’s given us Trump and Brexit, not saved the earth.

    What would be a nice to have, but not vital, is that energy should have as low a footprint as possible. The highest foot print of all is to buy it from Norway, or the US or Russia or those charming people in Angola, Equatorial Guinea or Nigeria.

    The selfish Brexiters of Lock the Gate (against modern life and most especially any one who isn’t white) in their bizarre alliance with Friends of the Earth simply aren’t important any more.

    • Oh Nick – surely you’re not still sore that they wouldn’t give you a PEDL licence are you? I know they were handing them out to anyone with a pulse but they seem to have had a lower threshold after all!

        • Refracktion : “I want answer!”

          Hbpeeny: ” YOU WANT ANSWER??”

          Refracktion :”I Want The TRUTHH!!”

          Hbpeeny: ” YOU CAIN’T HANDLE THE TRUTH!”.

          • Er surely you mean:

            Refracktion : “I want an answer!”

            Hbpeeny: ” YOU WANT AN ***ANSWER*** ?? I don’t do them!! ”

            Refracktion :”I Want The TRUTH!!”

            Hbpeeny: ” I WOULDN’T RECOGNISE THE TRUTH IF IT IT ME IN THE FACE WITH A WET HALIBUT. HERE HAVE ANOTHER RANT”.

            TW: “Why lemons fracking can’t suppose for a moment?”

            • Funny, John. But sad at the same time, because, of course, it is you have run away from questions in the past, and it is you who cannot provide facts to support contentions made by the anti-frack mafia.

              Are you able to provide empirical evidence to prove the following claims made by your interest group:

              That the water tap set on fire in gasland was fueled by natural gas occuring due to fracking
              That there is proof of systemic water contamination from fracking
              That the EPA has retracted its finding that fracking has not caused systemic water contamination
              That fracking regularly causes powerful earthquakes
              That fracking kills people
              That fracking has only been going on for seven years and is still untested
              That fracking has been proven a public health hazard
              That fracking causes cancer
              That the fracking industry is a ponzi scheme
              That fugitive methane leakage rates average 9-10%

              Thank you so much!

            • I was just trying to recapture the court scence between Tom Cruise and Jack Nicholson in the movie A Few Good Men. If you haven’t seen it then you should. One of the best ever line from Hollywood movie.

            • Peeny channelling Jack Nicholson?

              Saints preserve us!

              At least he doesn’t have any power or authority so he can’t order a code red LOL. I suppose he might be able to order a cherry cola or something though.

    • Nick – With your wealth of experience and understanding that no one really cares or gives a shit why are you bothering with this site?

      You are of course incorrect with your assumptions.The first applications for shale went in to Councils in 2010. In case you are not keeping up to speed no gas has yet to be produced. The reason for that is because people care and all those unimportant people you have mentioned have stopped it happening.

      You should be grateful we have exposed the industry and proven it is not viable otherwise if you had been granted your licence you would have lost a whole load of cash.

      ‘I’ve been in the natural gas industry for over 25 years’ blah blah blah.

      Your comments…….. ‘simply aren’t important any more’.

      • What a deluded and pompous sounding individual you are John Powney. “You should be grateful we have exposed the industry and proven it is not viable”

        You utter complete nonsense. You’ve proven nothing other than your massive ignorance. You don’t even understand the meaning of landed costs, nor the difference between spot and contract pricing.

        You’re just bitter because you know you’ve lost.

        • I doubt that you have won anything hbpeeny nor did Mr Powney have lost anything. Whatever are said here have no bearings whatsoever in the real world. Reality is very strange just look at Trump win and Clinton loss for examples. Sometimes you think you already win but you are actually facing a loss.

    • Peeny! What makes you think you have to be anti-capitalist to oppose fracking in the UK? Honestly – you just need to be able to add and subtract to see what a stupid idea it is. If you understand a bit about business it’s all very obvious really. Even Egan is sounding as though he realises just how sticky a wicket he is on now.

      • Agree refracktion. Francis is realistic. He is in the game as the former head of uk petroleum production for BHP for awhile. Shale investment is still risky both above the ground (local planning) and below (geology). Anyone who invest in UK shale must have good epitite for risk.

    • Nick , are you still working? surprised that anyone listens to your hot air.
      I remember when you spoke at Hassocks and threw your microphone down in a tantrum .

      • He threw a foul mouthed wobbler in Blackpool a while back too. It’s funny that the fracking industry has to rely on people like Grealy, Chris Faulkner and Peeny isn’t it – they really do their cause more harm than good .

  4. egan is probably happy for all the delays, it brings closer the day when he’ll be able to retire having made loads of money from the investors in the great fracking hoax

    • After listening to this I have decided to enter the investment market. I think hessian sacks and torches will be a good bet.

      There will be plenty of people taking great wads of investors cash and will need something to stuff it into. As this will be done at night when no one is watching, torches will be needed to get the bags out and into the waiting cars.

      A quick phone call to the investors with ‘everything’s fine’ and ‘won’t be long now’ should help the getaway.

      Shale stocks plummet while the hessian and torch market thrive. Now who would have thought of that!

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