INEOS has published an eight-page local newspaper pull-out about fracking to “set the record straight” about shale gas.
The advertising supplement, which is to be included with 10 Johnston Press titles, is headed A vision for shale gas and extraction in the East Midlands and what we believe it can deliver for local communities.
One of the first to appear in print was in the Mansfield Chad today. A digital version from INEOS here has a few important differences in the text.
In the supplement, INEOS said shale gas:
- Is a once-in-a-generation opportunity to change the country for the better
- Is a once in a life-time opportunity for the UK to become Europe’s leader in fracking
- Would reduce dependence on imported gas, create tens of thousands of jobs and generate significant tax revenue and growth
- Would power the nation and reduce greenhouse gas emissions
The supplement, one of the most extensive shale gas promotions by an individual company, said it was legitimate for the government to overrule local councils on fracking applications.
It also urged readers to be open-minded and see what it called “the huge potential” for the country.
INEOS has 10 petroleum exploration and development licences (PEDLs) in Nottinghamshire, Derbyshire and South Yorkshire and is already facing opposition.
Two petitions against fracking in Sherwood Forest have reached 275,000 signatures (see No fracking in Sherwood Forest). Last night the parish council for the site of what could be INEOS’s first shale gas application voted unanimously to oppose the proposals. (DrillOrDrop report)
“Time to set the record straight”
In an article in the supplement, INEOS director, Tom Pickering, said:
“At Ineos we really believe it’s time to set the record straight about shale gas.
“We know that shale gas presents the UK with a once-in-a-generation opportunity to change the lives of people up and down this country for the better: bringing energy security, new jobs, skills and investment.
“At INEOS, we believe shale gas could play an important part in providing us with the energy that could power the nation in the future and help to reduce CO2 emissions.”
He acknowledged that fracking had caused problems in the US but he said this happened in the early days of the industry and would not happen in the UK because “We have one of the most rigorous safety and regulatory regimes in the world”.
He said he understood people had concerns about fracking but said “there has been a lot of misinformation put out”.
“Essential to the modern world”
The supplement said shale gas would “invigorate and rebalance the economy for the East Midlands and country as a whole.”
The printed version claimed:
“Natural gas extracted from shale through fracking is essential for the modern world and many of the benefits it brings cannot be replaced by renewables.
“It is used for heating 22 million UK homes and without gas we would need to replace our gas-fired central heating systems at a cost of about £2,000 per household – which is £44 billion in total”.
The digital version, supplied this evening by INEOS, did not include the words “extracted from shale through fracking”.
The supplement confirmed the promise first made by INEOS last year to share 6% of revenue from shale gas wells between landowners and householders in immediate vicinity of shale gas wells and the wider local community.
It estimated that a shale gas development area measuring 10km by 10km would generate £375m for the locality over its lifetime.
INEOS quoted figures from the Institute of Directors and EY on the benefit of shale gas to jobs. In one section it said 64,000 jobs could be created but elsewhere it said shale could directly create 6,000 jobs and support between 64,500-74,000. It did not state that the estimate was based on peak production from 4,000 wells across the UK.
Social licence
INEOS said it wanted to win a social licence, a term no longer widely used by shale gas companies. The supplement said:
“It is essential to undertake proper public consultation to better understand what shale gas could mean in [sic] for the UK and demonstrate its safety in order to won a social licence.”
It promised to be “open and honest in our dealings with local people and want to explain our plans as they develop”
DrillOrDrop asked how much the company had spent on the newspaper supplements but a spokesperson said the information was commercially confidential and would not be released.
Safety and fracking
The company said shale gas could be produced safely:
“Studies by the Royal Society, Royal Academy of Engineering, Public Health England, Health and Safety Executive and Environment Agency conclude that safety risks can be effectively managed, provided the industry is properly regulated and monitored.”
It claimed “INEOS has one of the best safety records in the industry”, adding:
“INEOS has a very good safety record within the chemical industry and we now have some of the world’s leading fracking experts working for us”.
The supplement said INEOS had experience of “complicated chemical plants”, employing over 17,000 people in 16 countries. It added:
“We already produce gas from the North Sea which serves 1 in 10 homes in the UK.”
“Firm regulation needed”
INEOS said: “All shale gas activity must be firmly regulated – which did not happen in the US under the Bush administration.
“Inadequate regulation can also lead to higher greenhouse gas emissions if methane is allowed to leak out of wells. But this is not inevitable. Well-regulated, electricity from shale gas has greenhouse gas emissions which are not significantly higher than those from natural gas and much lower than those from coal.”
The print version included the sentence (missing from the digital version):
“Design and the EIA process serves to sever the source-pathway-receptor linkage, thereby removing and reducing potential risk.”
The company said the aim of the planning process was to remove potential hazards or control them. If this was not possible, the company said, “the regulatory regime controls and minimises emissions in order to achieve a high level of protection for the environment and human health (mitigation).”
“Overruling local councils is legitimate”
In an article in the supplement, Stephen Tindale, a consultant for INEOS, wrote that he welcomed the decision by the Secretary of State for Communities and Local Government to grant permission to Cuadrilla to frack in Lancashire.
[I] “accept that it is legitimate for national government sometimes to overturn decisions of local government in issues of national importance, which energy policy is.”
“No fracking in Sherwood Forest”
The supplement said INEOS would not frack in Sherwood Forest and its PEDLs did not include the legendary Major Oak.
The company said: “We have been clear in our publicly available materials that we excluded areas of urbanisation and environmental designations as surface drilling locations. Sherwood Forest nature Reserve, the county Park and other ancient woodland nearby clearly fall within the environmental designation description.”
The supplement did acknowledge that INEOS would be carrying out seismic testing in Sherwood Forest. This would be planned in consultation with Natural England and Nottinghamshire County Council, it said. If Sherwood Forest were to be fracked, this would be from a well drilled outside the designated area and at a depth of 3.5km.
Water contamination
INEOS dismissed scenes of gas coming out of water taps from the film Gasland as having “no basis in fact”. The company said:
“The rare examples of water contamination in the US were caused by issues such as poor well design, poor disposal of process water and poor capping of wells at the end of useful production; none of which will occur in the UK, because of the development of the technology; lessons learned from the US and the strict regulatory regime that will be in place control the shale gas industry.”
Impact on gas prices
INEOS said locally-sourced shale gas would improve security of supply and lessen the risk of high and volatile prices because of uncertainty about imports. But it also hinted that prices could fall:
“If the UK can help lead the development of shale gas in Europe then there is a real prospect of prices falling in the medium to long term.”
House prices
The supplement said fracking would not lower house prices “so much as the misinformation that exaggerates the risks of the technology and encourages people to talk down prices.”
Any risk of falling house prices should, the company said, reduce “if the technology is given the chance to go ahead and demonstrate its safety and minimal local impact”.
Categories: Industry
DRILL OR DROP? 
I reckon ASA had better start getting some extra staff in to deal with this one.
This is fascinating, it is always telling to analyse what is written, as this always portrays the unwritten agenda.
So INEOS claim that “Shale is a once in a lifetime opportunity” and that “At INEOS we really believe that its time to set the record straight on shale gas”
OK, lets just break that down
Firstly we see that “shale” is used, not fracking, this is obfuscation, since the word “fracking” has bad connotations, so “shale” is used to divert the subject. Shale is a gas and water bearing sub strata, it is not the activity of fracturing and fluid injection and extraction, therefore the very use of “shale” is avoidance of the question. The use of the word “shale” is passive, “fracking” is aggressive and is therefor avoided.
“Once in a lifetime opportunity” is very telling, since the word “once” indicates a non renewable “one off” event, and as such is not sustainable.
“Opportunity” is non specific, opportunity for what? For whome? One could infer this to mean opportunity for profit for INEOS and still remain in the context of the sentence.
“At INEOS we really believe” that is entirely an internal statement, what is believed is not fact specific, you can believe in fairies, it does not mean that fairies exist objectively. And why use the word “really”? isn’t reality a given? This brings the entire sentence into doubt.
“That it is time to set the record straight on shale gas” again the avoidance of the word fracking. Shale gas is still shale gas if it is left in the ground, what INEOS mean is fracking, but they wont say that because they don’t want to use the word in this context.
“set the record straight” why is “the record” not straight? Do INEOS even know or care what constitutes “straight”? The implication is that only they know what “straight” is and are somehow kindly leading the public in the right direction? The problem with that is, there is nothing in the least bit “straight” about any of their sentence structure, intention, meaning or integrity and that is only two tag lines.
Is that correct, Chris? Can you provide any FACTS that would demonstrate that INEOS has been less than honest in its literature? I can certainly provide facts that demonstrate the lies which you have told!
Thats an odd comment Chris as I am a have a bit of experience in dealing with the ASA as you well know, and in all cases the organisations (including yours, Frack Free Ryedale) have had to promise to withdraw. FoE of course have rejected this and they are going to be in serious trouble eventually as there is no scientific basis for their claims.
I have read this in detail and there is NOTHING there that is not supported by uncontestable proof, from eminent scientific bodies. Remember for instance that FoE were unable to provide any believable evidence for water pollution, public health issues, carcinogens etc etc.
I would like to take your website to task with the ASA but as you well know the ASA only look at paid for advertising. As such, the UK allows freedom for serial misleaders such as yourself to fill their websites with fairy stories, and scaremongering guff.
“I have read this in detail and there is NOTHING there that is not supported by uncontestable proof, from eminent scientific bodies. ”
Really Ken? Are you quite sure?
Hinting at it may even lower prices …. didn’t our own Prime Minister (at the time) get caught out for saying fracking would lower energy prices by Greenpeace and the ASA had to eat humble pie? I definitely think this should be looked at very closely and referred to the ASA.
This is really simple KatT. Pay attention. If you increase the supply of a commodity, the price will decrease all else equal.
Got it? It doesn’t matter who said what in what public forum. This is simply a basic economic principle.
According to peey “If you increase the supply of a commodity the price will decrease all else equal.”
As an economist I can tell you that is a banal oversimplification.
If the price falls below the extraction costs for a long period of time then the companies extracting oil or gas make a loss. In the long run therefore the price must remain over the break even cost of production or the companies will only be able to survive temporarily by borrowing and running up debts. If the situation conditions, these debts will be unrepayable.
Unfortunately for the oil and gas industry extraction costs are trending upwards because of depletion and having to tap more harder to get at oil and gas. That is why fracking is happening anyway. Tapping an impervious reservoir rock is expensive and gets more expensive still after the sweet spots have been tapped. So the long run condition for a solvent oil and gas industry is rising oil and gas prices.
However, there is a hitch with that too – once again the situation is complicated. Rising oil and gas prices have macro-economic consequences. ALL economic activity must have an energy input – so rising oil, gas, coal, electricity prices – drags down growth. If energy prices are too high they crash the economy – and thus drag down energy prices too.
There is a catch 22 here which in the next few years will affect us all. The oil and gas industry (and all other energy companies) need rising prices to cover their costs but the economy, already laden with debt, cannot pay higher prices.
The oil and gas sector is therefore trending towards insolvency as depletion takes place. Fracking shale was supposed to be the solution for depletion in the oil and gas sector but this is a sector that has made a loss consistently in the USA and elsewhere – and will make a loss in the UK too. Look at IGas it is teetering on the brink of bankruptcy. If the OGA did their job properly and enforced their own financial viability criteria it would have lost its PEDL licence.
That’s a sign of things to come..
So, we all agree that ceteris paribus, when you increase the supply of a commodity, the price will fall. Great! That was my point.
Gas companies must earn a return on capital to support the business. This shouldn’t be a problem in the UK, as the wholesale prices of gas are around double what they are in the US. There’s no reason that extraction costs in the UK should be any more expensive in the US once the industry is established in the UK, so costs shouldn’t pose a significant obstacle to price declines.
Your contention that extraction costs are trending upward simply doesn’t comport with facts.
http://fuelfix.com/blog/2016/05/10/shale-gas-production-rising-as-drillers-become-more-efficient/
The stunning gains in efficiency in the sector are making more and more resources economically available, as they undermine the hegemony of OPEC, and lower energy prices around the world.
Peak oil theorists have been spouting the same arguments you’ve made for decades, but they’ve been wrong again and again. They’ve been wrong because of American ingenuity and the application of technology has made them wrong. Economically viable resources have risen dramatically over the last twenty-five years, and they will continue to rise as technology is applied to new geographies in the future.
Oil and gas is a finite resource, and at some point we will hit peak resource. But I certainly don’t know when that will be, and you obviously don’t either (given that you think extraction costs are rising when they are, in fact, falling, you are by definition incorrect already). Regardless, this discussion has no real bearing on UK shale gas, because there is obviously plenty of it which has yet to be extracted.
Whether or not that gas can be extracted economically is still an open question. Many companies are betting that it can, but we won’t know for years, until we get a good handle on flow rates and costs.
You have made up “alternative facts” to support your views, Brian. The sector has not consistently made a loss as you claim. The sector has made gobs and gobs of money when the commodity prices were higher. The reason that commodity prices have fallen, is the massive success in driving greater extraction and the lowering of costs. The sector is a victim of its own success. This is all about creative destruction and cycles and it has happened throughout the sector’s history. This time is not really much different.
If you think that because iGas is failing that this is somehow an indicator that UK shale cannot succeed, it only reveals the weakness of your ability to reason.
Thanks!
I did not say that you were wrong on falling prices – I said that you were making banal oversimplifications. That’s because if prices fall below extraction costs the situation is non sustainable over time.
This is an argument about whether the low prices would represent a SUSTAINABLE success or one side of a Catch 22 for the industry – unable to make a profit and therefore eventually going bust.
You write
“This shouldn’t be a problem in the UK, as the wholesale prices of gas are around double what they are in the US. There’s no reason that extraction costs in the UK should be any more expensive in the US once the industry is established in the UK, so costs shouldn’t pose a significant obstacle to price declines.”
Well, we don’t know anything about the future for sure. What you ought to know however is that there are now a number of estimates of what the break even price for gas in the UK would have to be to cover costs of production (lifting costs, admin and overheads etc). These are the studies of the Oxford Institute of Energy Studies which estimated a break even of $7.5 to 15.5 mmbtu. Another study by Rice University arrives at $6 to 7 mmbtu. Eon about $6 – 10 mmbtu and Centrica $7 to 10 mmbtu. Yet the current natural gas price is about $5 mmbtu. So no profit here….
There is also reason to believe that gas prices in Europe will not rise much above this level sustainably because demand for gas has been falling while an infrastructure to import cheap liquified natural gas is being opened up. Further to this – with home insulation and the installation of heat pumps as gas fired heating needs to be renovated or replaced the demand is likely to continue to fall which, to help avert the climate crisis is what is wanted (though central government seems intent on sabotaging this.)
As for the United States – your linked article, which is dated from May of last year, claims that producers are more efficient but it gives no figures at all to demonstrate falling costs of production. It is simply a claim. It’s hype – the sort that you expect from companies that are making a loss that desperately need to reassure actual or potential creditors.
Actually at the time your article was published all the main operators were making wopping losses. In practice they were not covering their costs, nowhere near. In the first quarter of last year the the main rig operators in the Permian, Bakken and Eagle Ford plays spent an average of 4 times as much as they earned – as they have been for years. This explains why the debt picture in the US is so grim for these companies.
It would take the top tight oil rig operators an average of 10 years to pay off debt if all cash earned from oil and gas sales were exclusively for that purpose based on first quarter 2016 financial data–in other words, no drilling, no salaries, no nothing except debt payments.
http://www.artberman.com/the-price-rally-is-over-capital-drives-the-oil-market-to-low-prices/
You clearly believe peak oil is a long way off – in this you seem to disagree with the HSBC and appear a little behind developments…
https://drive.google.com/file/d/0B9wSgViWVAfzUEgzMlBfR3UxNDg/view
I simply stated a fundamental principle of economics, there was nothing oversimplifying in it.
You took my statement and have attempted to make an argument that the hypothetical cost structure to extract gas in the UK will not support production, and therefore there will be no supply impact on the market.
So, just so we are clear, I made a statement that is well supported in fact and that assumes that production will occur in the UK. You are arguing that economic production will not occur in the UK, but that is a speculative point. We can all have different viewpoints on the matter, but none of them are going to amount to much until the industry matures and we see the end result.
Wholesale prices in the US are currently 3.25 /mmbtu. In the UK they are $5.50 to $6.90 depending on what source you’re using. http://www.ercequipoise.com/graph/uk-natural-gas-nbp-spot-price/
If the US industry can produce profits at $3.50/mmbtu there’s no doubt in my mind that the UK can produce profits with commodity prices 50% higher once the industry has become established. This is my opinion, but the enthusiasm shown by Cuadrilla, Centrica, Total, and Ineos demonstrates that they have similar feelings.
Interesting that you should argue about a top put on natural gas prices due to increasing LNG infrastructure, and as you claim the “cheap” LNG resource. Of course that infrastructure is monumentally expensive and the process of liquification and gasification and transportation expensive as well. These costs are said to add 2-3/mmbtu to the cost of the gas. So, again, as long as gas can be extracted in the UK at costs that are not too different from costs in the US, the logic of importing LNG falls apart. This explains INEOS’s stance.
You note that I linked to an article about costs in the US that was all based on hype and was stale. Can I make a request that you provide some data that back your contention that unit costs are in fact rising? It is hard to believe that our natural gas prices would have fallen from around $12/mcf to around $3/mcf due to the success of fracking, if that fracking technology was in fact burdened with ever-increasing unit costs of production.
FYI, if you are desirous of data to support the claim that costs are falling in the industry, you can reference this government study: https://www.eia.gov/analysis/studies/drilling/pdf/upstream.pdf which is from March of 2016. It details a long history of declining unit economics due to improvements in technology and technique in the shale gas industry. Again, can you support your claims (notice that I have not said “hype” though I certainly would have the right to do so) that costs have been increasing across the industry during the period which the EIA claims costs have been falling?
You do realize that Art Berman is a laughingstock on Wall Street and across the industry, right? He has been wrong so often, and for so long, that people joke about making a “Berman” mistake – as one that is especially obvious and embarrassing. And throwing out a reference to a report from HSBC means nothing at all. They’ve been wrong just like Berman.
Sure, O&G companies lose money when commodity prices decline. Talk about a banal claim! They also make money when prices rise. The cyclical boom and bust has been occurring since the beginning of the industry. To suggest that this cyclical nature forecasts impending doom is naive in the extreme.
Best of luck!
Brian, You haven’t responded with empirical data backing your claim for rising unit costs in the sector. I am wondering why this is so. You were so quick to accuse the other side of “hype” when that side actually has produced plenty of data to support its contention. It looks like you are guilty of exactly the charge you have made against the other side, does it not? [Edited by moderator].
Yes I did reply. Try scrolling down the page. In my response I acknowledged that you have a study that shows that cost PER WELL is falling but how that translates into cost per barrel or cost per mmbtu depends on how much is coming out of the wells. I acknowledge too that my data just posted is rather old but the depletion trend will not go away and in shale plays depletion is likely to be fast and steep once it begins.
What is also pertinent is the data I presented that shows that the shale sector has been running at a loss. It has not been covering its costs up to the time of the article you cited and certainly not since. In this regard there are differences in the way that different studies calculated costs – as this study bu Euarn Means shows. http://euanmearns.com/what-is-the-real-cost-of-shale-gas/
The Mearns article too is rather old but the issue here is how you do the calculations. http://euanmearns.com/what-is-the-real-cost-of-shale-gas/ – see the references to figure 8
On this you responded to with an ad hominem against Arthur Berman. Ad hominems and insults don’t give any information except about the person who makes them.
Since you have not answered them here are some more accounting figures from another source. These are of free cash flow figures between 2009 and 2014 for the main large cap E and P companies – it does not include figures for depreciation, amortisation and depletion and gives a good picture of earning power of the companies, namely of Anadarko, Apache, Cabot, Chesapeake, Conoco Philips, Devon, EOG Resources, Hess, Marathon, Murphy, Noble Energy, Occident, Pioneer, Range Resources and Southwestern Energy. The total free cash flow of these companies together was a DEFICIT in each year as follows. 2009 $6,074 million; 2010 $7,980million; 2011 $ 17,003 million; 2012 $33,830 million; 2013 $18,476 million; 2014 $24,610 million.
I will stop at 2014 because this is when oil prices started to come down. These were the good times! http://www.valuewalk.com/2015/07/oil-industry-trouble/
So, Peeny, contrary to your claim, in fact the companies were actually NOT making money when prices rose, as you claimed. Which underpins my point that the oil and gas industry is currently having difficulty getting high enough prices to cover its costs – even when prices were higher it runs at a loss.
As for what happens if and when interest rates rise well…that is another horror story for you….That would get very difficult but at least it might help save us from an even more catastrophic climate crisis,
Brian, you can slice it and dice it any way you wish to try and avoid the appearance of being wrong, but the fact remains that unit costs are declining. The amount of resource per well is increasing because longer laterals are being used. Your point has been utterly destroyed here, Brian.
Where is your proof that unit costs have increased, Brian? I am still waiting for that empirical data. Simply making the case for steep decline curves proves nothing. The decline curves haven’t been as steep as many “peakers” hyped for a long time, and a steep decline curve is helpful to industry (you and many others don’t realize this) because it provides quicker returns on capital, allows for faster reinvestment and recycling of cash. As long as the EURs are appropriate, gas companies would be fortunate to have their wells produce all of their gas on day one.
Why do you use free cash flow figures to benchmark an industry that is right in the middle of a massive investment cycle, Brian? Is it because you want to paint a doom and gloom picture? eh? Every industry that is in this phase isn’t going to produce FCF, the O&G industry is no different. When there’s a massive opportunity, they would be foolish to throttle back and produce free cash, their investors would crucify them for doing so.
Take a look at the profitability of the sector in 2014, Brian. Gobs and gobs of after-tax profits created for shareholders. Somehow, I think that the market is a more efficient discounter of risk and reward than Brian Davey, and the market has given the sector one of the largest capitalizations of any sector in the world. So, despite the fact that Brian Davey thinks that the sky is falling, it seems that thousands of portfolio managers and analysts have a slightly different opinion.
I don’t dispute the idea that when gas is at $3/mcf, a number of companies struggle to make returns. So what? That’s the cycle, Brian. It wipes out the weak, high cost, high leverage players while the low cost producers take advantage and consolidate. There’s nothing new in that. But it certainly doesn’t spell the end for O&G industry as you suggest.
I don’t think that rising interest rates is a horror story at all. Pay attention here, Brian. If rates are increasing it is because the economy is becoming healthier and growing faster. That’s going to invariably create more demand (even after considering gains in usage efficiency). So, again, your argument that this is going to result in a disaster is all hype and bluster.
A friendly reminder to produce the data that supports your contention about rising unit costs for the industry.
Thanks!
Here’s another person does not believe your narrative https://www.youtube.com/watch?v=FWNZUGKTzlM
And your point is? There are a lot of people who don’t believe my narrative, but there are many more who do, as evidenced by the market capitalization of the sector.
You still have not been able to produce that evidence of increasing unit costs have you? You’re perfectly willing to accuse the other side of “hype” when in reality, it is you who cannot back up your claims with fact and data.
Brian, I am still waiting for your definitive “proof” that unit costs are rising in the O&G sector. Fairly hypocritical of you to imply that others are hyping falling costs when they actually had facts and data on their side, is it not? Thank you!
I did give data and replied in dept several times.
Don’t waste your time Brian, the tactic is well known on this forum from this particular source and is practiced as a matter of course by others of this persuation also. It is pretty much your average industry agent trash, it follows the same MO, the method is to deny deny, deny, personal insult, personal abuse and obfuscation, copy vast tracts of paid for captive interest reports, demand empirical facts and refuse to provide similar for their own outragious and weak claims, more denial, claims you are wrong when all their arguments are defeated and insert as many hateful derogatory person abuse hooks and barbs as possible to trap the unwary into endless isolated wording and avoid mention of all the relevant issues. Polarisation and division is the intent.
In the end, its only worth the effort, its that it shows up the PFO’s for what they are, paid for t…s, and curiously enough, all though it is not their intention it does help one to focus ones own views and position.
There is an old saying that conflict polarised opinions that may have not been so strongly felt before, co-operation and exchange of opinions however will raise both protagonists to a higher level of thought. So its either go for the gutter, or reach for the stars. The PFO’s choose lower, its better to go higher and avoid polarisation all together, not that lower cant be amusing some times, but only for a brief visit.
Thanks Phil. As it happens I did learn stuff from the exchange – not from ball peen hammer but from research I did to reply to him. One was that as the US industry contracted its unit production costs shrank too – partly because the service industry cut costs to maintain business – I realised that before but not by how much, which has been considerable. A lot of that would go back up in an expansion. The other thing was that well productivity has expanded as the sector shrank. Part of that was because it contracted back to the best (sweet) spots.So these are partly cyclical.
However there are “trend well productivity increases” because of what they call “improved technology” – like for example in Delaware where there has been a massively scaled up use of water and sand. We in the anti fracking movement have got used to talking about 4 to 5 Olympic swimming pools but in order to increase well productivity in the Delaware Basin they are now sometimes using frack jobs exceeding 30 million gallons of water – which is 40 Olympic swimming pools.
The answer of the engineers always seems to be to up the scale with ever more massive expansions of energy usage in gargantuan interventions to extract energy – this is then pictured as progress by most engineers and economists – not seeing the destruction spreading all around.
Incidentally it has taken me until now to notice that your pseudonym is the name of the type of a hammer used in metal working.
You’re a quick study, Brian! Where is that data that shows rising unit costs? The report you referenced showed no such thing!
You should have learned from Friends of the Earth [edited by moderator] ;o)
See what I mean Brian, all hooks and barbs.
Reminds me of a quote
“It is a tale told by idiots, all sound and fury, signifying nothing”. William Shakespeare, Macbeth.
Actually that befits the Ineos pull out supplement too, getting back to the original topic.
You are right. The issue is not really about the cost of oil – ball peens style of communication involves taking every opportunity for a wind up, landing another insult or hooking me in so he can a follow up…https://pairedlife.com/etiquette/how-to-communicate-with-a-sociopath
You can’t come up with that data either can you, Phil? I shot Brian down and he’s smarting a bit. Maybe you’d like some of that?
“A ball-peen (also spelled ball-pein) hammer, also known as a machinist’s hammer, is a type of peening hammer used in metalworking.” (Wikipedia)
“I call it the law of the instrument, and it may be formulated as follows: Give a small boy a hammer, and he will find that everything he encounters needs pounding.”
Abraham Kaplan, The Conduct of Inquiry, Methodology for Behavioural Science, 1964.
Or shooting down….
Yes Brian, that’s similar to a phrase I read somewhere or other,
“if the only tool you have is a hammer, everything begins to look like a nail”
I liked the link about how to communicate with a sociopath by the way, but I really don’t think it has any relevance here do you think?
[Comment edited by moderator]
A few weeks ago the Church of England produced a paper on fracking. Towards the end of the briefing paper there is a section on “conflict” – about how we can all arrive at decisions for “the common good” which involves “defusing inflamed situations”. There is a passage in this paper that is usefully quoted here. It calls for “reconciliation – not in the sense of crude compromises but by enabling, where possible, different interest groups to hear what each other are saying when the differences of style and vocabulary are allowed for.”
There is minimal chance of that with a ball pean hammer whose style and vocabulary takes the form of the fantasy of shooting people down.
Forgive me Brian I wasn’t disagreeing with you, I had my tongue rather firmly in my cheek when I replied. Just one last TIC observation, wasn’t there a song by The Beatles called Maxwells Silver Hammer?
As you say the name is a clue to the level of behaviour.
Oh well, I promise I will be back on topic next post!
Awesome, Brian! Now, about the facts that you were supposed to produce to support your key contention that the unit costs of production are rising…..whatever happened to those? [Edited by moderator]
In responding let me start with an apology. It certainly did not help the tone of this discussion that I started it by describing your point of view as “banal oversimplification”. I could have said what I wanted without using words like that.
Secondly, and in seeking at least a bit of common ground, I want to suggest that it is possible for you to be right that the unit private internal costs of production of US shale oil and gas are currently falling because of technological change while, at the same time, it is possible for my original statement about the costs of oil and gas production to be right. If you go back to my very first statement, to which you reacted, I did not refer specifically to US shale oil and gas production costs I was referring to the profile of oil and gas industry costs in general. In several postings, including the posting of Gundi Royle’s YouTube presentation, I presented figures and graphs for the supply curve of the global oil industry showing ALL the supply sources in such a way as to contrast their differing break even points. For example at the beginning of Gundi Royle’s presentation there is a graph which uses data from Rystad Energy consultants. The graph contains figures which summarise in one number the break even costs for different kinds of oil sources. Let me repeat these here
Average breakeven for different oil sources per barrel in USD. Onshore Middle Eastern 25; Offshore shelf 40; Extra heavy oil 48; Deepwater 53; Onshore Russia 54; Onshore Rest of World 55; Ultra deepwater 57; North American shale 62; and tar sands 88.
Now the point that I was making was that the price of oil (or gas) may come down but (using these figures) if the price remains lower than $62 this is not sustainable and you can see the results of that in negative cash flows, a growing amount of debt and finally in a growing wave of bankruptcies.
Your main point in response has been that because of technological change the break even (private internal) costs of production are falling. Now that I have looked into that it seems to be true. As such when reviewing the data from time to time it will require a redrawing of the supply curve and re-specification of the break even points for north american shale but whether this fall in private internal money costs is or will be sufficient to making the sector a paying proposition – in the USA, and even more in the UK, is an open question. You obviously have great faith in American technology.
But to focus for a moment on our disagreement again. I was referring to a process that involved moving ALONG the oil or gas supply curve to the right – with the price of oil and gas rising so that the marginal producers with the highest costs – shale – come into production on the speculative notion that prices will remain high enough, for long enough, and that they would be able to break even. However, the high prices for oil (and gas) have macro-economic consequences. Because these are fundamental commodities a high oil (and natural gas) price takes money out of peoples pockets, encourages individuals and companies (and governments) to borrow to cover their deficits. Eventually however the high prices are unsustainable and come down – so that the marginal producers (the shale sector) then finds itself in an even bigger negative. Also of course middle eastern conventional producers did not see why they should throttle back production.
None of this is to deny your point that the shale sector is not standing still in this. It learns how to do things cheaper. It resorts to economies of scale.
Going forward people with capital in these companies might want to argue that having put the past behind them, and written off their losses after the latest cycle the new technologies going forward will so reduce costs that they will survive and thrive in any future low price environment. This is a point of view but it looks to me to be excessively optimistic. It depends on a number of things and on confidence in those things: (1) Continued demand from the global economy – with the large amount of debt and the growing political turmoil and threats of trade wars I think the more likely scenario is recessionary. (2) Continued low interest rates and the confidence to keep making capital available. I don’t think this is likely. (3) Continued falls in the cost of production in an interplay between learning, greater economies of scale versus eventually moving into less favourable geological conditions. (4) The politics of shale in regard to its so called “external costs” and resistance from people not prepared to suffer those externalities as passive victims – something that particularly applies in the UK and may apply more in a rapidly polarising US political landscape too.
The latter point is important. In this piece I have referred a number of times to internal private costs. However the chief feature of shale to which I think we can trace back many of the externalities, is its required scale of intervention to extract the oil and gas. While decreasing costs are partly the results of learning, and learning may include how to do things more safely, decreasing private costs are also likely to be connected to rising social and environmental costs when they are achieved by increasing economies of scale. Thus I just read of “more efficient” fracking technologies that use longer laterals and more water and sand. I read how, in the Delaware basin, some fracks now use not the equivalence of 4 Olympic swimming pools of water, but the equivalent of 40. If the scale of fracking technologies increases by an order of magnitude – the number of trucks, the produced water for disposal, the energy used – then there is little doubt too that the scale and/or number of spills, number of cases of silicosis, the number of frack pumps and noise – and the living hell for communities living near by will increase in scale too.
You can call that decreasing costs if you like – I call it the limits to economic growth, where social and environmental costs exceed any possible benefits.
Brian,
Thank you for the considerate and thoughtful response. I think we can have a much more productive discussion if the tone is less adversarial, and I truly appreciate your apology.
I also appreciate that you are not an absolutist, but are willing to consider another point of view. I try to refrain from absolutism also – I freely acknowledge that fracking has costs that must be recognized. This page, however, is full of absolutists who cannot see the benefits of fracking and cast it as an unmitigated evil, even if in doing so they must ignore highly significant facts, and distort the truth.
Back to the subject at hand – producer costs. My original contention was only that as supply was added to the UK market, all else equal, prices would move lower. By how much, we don’t know. A lot will depend on how much supply is brought to market. I would expect differentials to move in favor of the UK as more gas is injected from domestic sources. I don’t believe this should be a contentious statement as it relies on fundamental economic principals.
Regardless, your point is more macro in nature, and I understand where you are coming from. I would caution you, however, that as Art Berman, OPEC, and the Saudis have learned, shale productivity and efficiency gains have been fantastic, and they continue to improve. This is not all about economies of scale, in fact it is mostly about using technology and trial and error to improve methods of production.
Break even levels are very, very slippery. Not only are they changing every day, but they vary immensely from well to well, even if the wells are close to each other. Every energy analyst out there has an estimate of shale oil break even economics in the US, and guess what? Yes, they are all different. Even if $60 is THE definitive answer, there is a productivity distribution curve that is somewhat of a normal variety, so half of producers would extract at below $60 – and some below $40.
As the article below notes, US shale oil has become the “lowest cost oil prospect.” https://www.ft.com/content/0a7a817a-4863-11e6-8d68-72e9211e86ab
It notes that the Eagle Ford and Permian are producing in the mid 40’s to $39 average cost per barrel. I read somewhere recently that one play was yielding costs of approximately $25/barrel – but you will have to take my word for it because I cannot find the article.
This analyst believes that oil shale will produce at somewhere between $5-$20/barrel before long. http://www.gurufocus.com/news/364811/will-shale-20-lower-oil-prices-to-20-per-barrel
Regardless, the US has become the largest energy producer in the world today thanks to fracking (I believe that I have that statistic correct). It has gotten there thanks to enormous gains in efficiency. It is difficult for me to imagine that world energy extraction costs are on the rise when the largest supplier is making such strides in the opposite direction. I would imagine that other large producers are taking cues from the US and improving their productivity as well.
I agree that producers can’t survive for the long-term when their unit costs are greater than unit revenue, but you need to understand that the US industry is not monolithic. Some companies go bankrupt every time we have a down cycle because they are high cost or overly levered, but that doesn’t cause the entire industry to throw up its hands in desperation and give up. There are low cost producers that do fine. There are companies that run high cost and lower cost operations, and they prune. Some fields are shut in, new low cost fields are found, new technologies are used, service costs decrease, land costs decrease – a million different factors come into play, and there is consolidation, but the industry has emerged from down cycles intact every time in the past, and I’m not sure why that wouldn’t be the case in this instance.
I disagree with you regarding the external costs of shale extraction as well. First of all the externalities of shale development decline as the operations increase in scale. Rather than draining an area with 3-5 well pads, technology allows operators to extract as much or more energy while using a single well pad. True, they use more water and proppant per well in this case, but they get more energy per unit of water or proppant. Rather than move all those supplies to 4 different well pads, they go to a single pad. (BTW, while you characterize living near a fracking operation as “living hell” we have a place close to a number of well pads and we call it, ironically enough, “a slice of heaven” because we believe it is beautiful and peaceful.)
I also believe that many of the “social” costs as you term them are decreasing. This is chiefly because the anti-fracking movement has done itself a disservice in letting extremists take over, and has made up wild and speculative claims that are not backed by rational science. As a result, anti-fracking claims are now looked at with a healthy degree of skepticism here in the US, and the mainstream population has become somewhat inured to them. This is helping from a social perspective because people understand that they don’t have to worry about getting cancer or having deformed offspring just because a well pad is opened down the street. It also helps that every independent body that reviews the evidence has opined that fracking can be done safely.
People get tired of the fracking scare stories when they realize that we’ve been fracking for 50+ years and that armageddon is nowhere in sight.
I also take exception to your Malthusian view that we have approached a limit to growth where the costs (internal and external) of production outweigh the benefits. Frankly, I think that this view is bonkers. Fracking provides around 70 percent of our gas here and a growing proportion of our oil. Do away with fracking and what would we get? We would get far higher GHG emissions immediately as old coal plants were brought online. We would get far higher energy prices (due to a large supply shock) which would increase mortality rates around the world. We would get a lower standard of living. Our economy would slow, jobs would be lost, tax revenue would be lost, benefits would be cut, and our country would lose a certain amount of sovereignty as we again became dependent on some pretty nasty places to supply our energy requirements.
So, I think you underestimate the very sizable benefits associated with the American energy renaissance that was born out of this technology.
Again, I appreciate you being the bigger person and upping the level of our discourse. I mean that.
One last item. This is a good piece that lays out some of the ramifications of what a ban on fracking would mean here in the US….. http://www.energyxxi.org/sites/default/themes/bricktheme/pdfs/CoC_BannedFracking_FULL_v3.pdf
Dear hballpeen
It is my belief that most fundamental conflicts can ultimately be traced back to what I call a clash of faiths. I do not use the term “faith” here in any sense pejoratively. Every thinking person lives with faiths in the sense that I mean this word. People’s faiths reflect their life purposes and life experiences. They are usually shared by the people that they are closest too both in their emotional relationships and in their work and other practical dealings. Typically such faiths are taken for granted ideas about “how the world is” that people do not give a second thought to. Why should they? Nearly everyone they know thinks the same thing, has the same kind of emotional reactions to them and shares more or less the same kind of purposes as them. They have the same “faith” too. If either of us were to abandon our beliefs on this issue fundamentally we would probably lose many friends and part of our social networks.
I am aware of course that the idea of faith here is often used to describe religious beliefs. Indeed my use of the term “faith” does have similarities to religious belief.
Belief in growth economics connected to technological change which is seem as fundamental to human progress is an example of what I mean by a “faith”. It is an idea shared by almost everyone in the USA and the “developed world”. Indeed one can say that the very idea of “progress” as economic growth is a faith. In this sense mainstream economics has, for me, some similarities with a religion. In this “quasi religion” the root problem, so to speak original sin, is “scarcity” and salvation therefore lies in technological change to bring about abundance. You measure this as economic growth and with economic growth and technological change it will be possible to end hunger, want, disease and all other problems. Because the creation of abundance through technological arises out of people taking risks with their money (and other people risking lending to them) the heroes of this belief system are the risk taking entrepreneurs at the cutting edge of technological change. In the end, in this faith, there are no limits that these entrepreneurs and their scientific and technological advisers cannot cope with. Sure there will be losses along the way but they will triumph.
The idea that there are limits to economic growth is another and a contrary faith. It is the starting point for my belief system and helps me make sense of a lot of what I see in the world.
For me fracking is so interesting and important because it is one of the areas in which I see evidence for the limits to growth. The original authors of the 1972 study commissioned by the Club of Rome saw the limits as being of two kinds. One would be a dynamic of depletion where costs for extracting energy and materials would rise dramatically. The other would be the damage done by pollution – which has turned out, most dramatically to be a dynamic driving climate change. You see evidence of the contrary. For you technology is and will solve both problems.
It is sometimes said by agnostics and atheists that the Bible is so diverse in its messages that one can read into it anything one wants. I think that is true however this is just one example of a more general phenomena. On large and complex questions a huge number of studies get generated, newspaper articles get written, opinions expressed and evidence collected. There are now huge numbers of studies and the complexity of the world is such that each of us is able to can extract a narrative about reality that fits our faiths. It is also difficult, not to say impossible, for most people to find the time to delve into the immense number of sources of information that exist and sift through the evidence in them. A faith is a quick way of triaging the choice of what information sources and information that one is prepared to find the time to look at. The time for looking at evidence is scarce too. Looking at contrary evidence is a dangerous thing to do not only because of cognitive dissonance because it has a huge potential to destroy one’s time management intentions. We lock the door in our minds shut also because we realise that “if I really explored the evidence for that idea properly it would take me a huge amount of time that I do not have”. It is also difficult to explore contrary evidence because it often comes from a subject disciplinary perspective that is not our own – much earlier literature on the safety of fracking in the UK was written by geologists and engineers. Later scientific material was from public health and environmental professionals. There are fundamental differences of perspective here.
That does not mean that I am agnostic on the issues. I do believe that my faith on these matters better fits the facts, the peer reviewed science and is more consistent with the way that I think the world “is”. Part of the problem in this regard is that “the truth” about fracking – how dangerous it is or is not – as well as the bigger picture on the growth economy and society – will only be revealed in the future. Thus for example, many of the illnesses that people like myself fear may arise out of fracking pollution have a medical latency period of many years while climate change is also something that is evolving with a time lag. Thus our differences cannot be totally resolved by the evidence of current facts as it is future facts, almost certainly after our deaths, that will settle the matter. I would have liked to end this posting by saying “we shall see”. However I am 68. I do not know how old you are but neither of us may not see the outcome of this disagreement. However, as the issues are so vital and so fundamental we are fated to continue it. In this respect I am reminded by the Hindu religious classic, the Bhavagad Gita in which Arjuna discusses with his charioteer the God Krishna – Arjuna has no real wish to fight a battle because it is a battle against relatives and friends but it is explained to him that he must, that he has a duty to continue. It is part of his destiny in the current moment.
I cover some of these issues in this piece – but I quite understand if you don’t have the time to read it!
http://www.feasta.org/2016/11/24/prejudice-ignorance-and-granfalloons-society-in-the-trump-era/
May I say Brian, your post is very impressive and extremely apposite in this day and age of division and conflict uncertainty and confusion. I like to think we as a race are growing up in these times where the earth is no longer able to sustain our child like rampaging and ransacking of its perceived resources.
Like you I try to keep an open mind but perhaps stray into a polarised territorial stance when views expressed are subject to vehement contradiction. Your move to build bridges rather than burn them is greatly appreciated too.
Originally I was a “don’t know” regarding fracking and said so, and over the years of this forum I have examined a vast amount of information provided by both sides and find myself more pro life than pro fracking, I don’t subscribe to being anti anything, but rather pro sustainable future, not just for my children, but everyone’s children and their futures. I appreciated the Bhagavad Gita reference, The Gita remains one of those seminal texts that has deeper significance whenever I return to it.
I shall read you link with interest.
Brian, just as a follow up, you might want to check out this story: http://linkis.com/www.cnbc.com/2017/02/84QxD
US shale oil production is increasing at a rapid clip, sustained by $50 oil. The US is now exporting 1 million barrels a day and is the largest energy producer on the planet. Obviously if shale economics were non-competitive, none of this would be happening.
Dear hballpeen
You write “Obviously….” To me nothing is obvious when one tries to look at the big picture.
Here is an attempt by Gail Tvberg to look at the very big picture as one should. I don’t necessarily agree with her last two paras by the way…
https://ourfiniteworld.com/2017/01/10/2017-the-year-when-the-world-economy-starts-coming-apart/#more-41544
Even the oil futures market – and hence future bets on the oil price is not “obvious”
http://oilprice.com/Energy/Energy-General/Why-Smart-Money-So-Long-In-Oil.html
As I said before separating fact from issues of faith is difficult…
Brian
“A ball-peen (also spelled ball-pein) hammer, also known as a machinist’s hammer, is a type of peening hammer used in metalworking.” (Wikipedia)
“I call it the law of the instrument, and it may be formulated as follows: Give a small boy a hammer, and he will find that everything he encounters needs pounding.”
Abraham Kaplan, The Conduct of Inquiry, Methodology for Behavioural Science, 1964.
There’s loads to pick to bits, definitely needs to be reported to ASA
The only part of Ineos’s statement that doesn’t ring true to me is the “social license” section. After all [edited by moderator] that have been spun by the anti-fracking extremists, the public will never grant a social license. [Edited by moderator]
Agreed – it should read “It is essential to hoodwink the public in order to won a social silence.”
It certainly worked for the anti-frackers!
Nope, thats the trouble, its filled with FACTS! See my post above.
FACTS? See my posts below.
To be fair to Peeny I didn’t give any figures actually about costs trending upwards either. So here’s some in graph form from a recent Feasta article:
And another
“Sure, O&G companies lose money when commodity prices decline. Talk about a banal claim! They also make money when prices rise.”
Well that’s interesting because when prices were high up to the end of 2014 the shale sector in the USA was losing money too. If they are losing money during the peaks in prices it does not bode well for long run profitability.
Yes, it is true that technology and a learning curve has reduced the cost of sinking wells. However every well yields a different amount of gas and/or oil so the cost of a barrel of oil or the cost per mmbtu in each well drilled will be different and while initially the average cost across each play might fall due to locating sweet spots and learning to drill them better, nevertheless that will turn around over time when the sweet spots are drilled out and cheap drilling can no longer prevent rising costs because of the depletion dynamic of moving onto inferior wells.
For the industry as a whole therefore there are a number of dynamics going on – a learning process and a depletion process. The depletion process involves having to move from conventional to unconventional (which would only happen because of the depletion of the conventional and rising costs which over time makes unconventional relatively cheaper to work compared to conventional ), the movement from sweet spots to inferior spots, the increasing resort to resources that are more expensive to refine or more out of the way and therefore costlier to bring to market.
These trends can be seen on these graphs and images from a Feasta colleague
As I explain in my book Credo
The total spend on upstream oil and gas exploration and production from 2005 to 2013 was $4 trillion. Of that amount, $3.5 trillion was spent on the “legacy” oil and gas system. This is a sum of money equal to the GDP of Germany. Despite all that investment in conventional oil production, it fell by 1 million barrels a day. By way of comparison, investment of $1.5 trillion between 1998 and 2005 yielded an increase in oil production of 8.6 million barrels a day.
If that is not a clear indication that the cost of production are rising then what is?
Because of that the oil and gas industry is resorting increasingly to harder to get and unconventional resources. The options are shown right at the beginning of Gundi Royle’s presentation where there is a graphical representation of different costs. That shows that moving from conventional onshore to conventional offshore shelf, to deepwater, to shale, to tar sands involves greater cost of production at each stage. So resorting more to unconventional resources means resorting to more expensive to extract resources. Look at Gundi Royle’s graph.
As conventional oil depletes there is a general movement along this curve to the right – hence the rise of unconventional and shale….whose lifting costs are higher. However, as Gundi Royle explains middle east conventional producers asked – why should we be the swing producers when the US shale production is higher cost?
So there are two senses in which I mean production costs rise. One is in a switch from conventional to higher cost unconventional over time – because the capital costs of getting adding conventional resources has become prohibitive – that is because of depletion. Oil and gas fields are smaller, harder to tap, more expensive refine, more out of the way for transport to refinery and to point of use. The other sense of rising costs is that in each category of oil or gas production – depletion eventually means that higher cost resources has to be resorted to if production is to be made to rise. In regard to shale as a category this is when attempts to increase production occur when the sweet spots are exhausted and so little is coming out of the wells. In these cases it does not matter that the cost of sinking wells is lower – or that the laterals are longer and so on.
And I repeat again – whether onshore conventional, offshore shale – whatever the source, each individual well will have a different EUR so you will have a different cost of production. For the nth time you have shown falling cost of drilling a well but that does not necessarily translate into cost per barrel or oil or mmbtu of natural gas when the recovery from new wells do not match earlier sweet spots.
The other point that I wish to raise is this…
You also asked “Why do you use free cash flow figures to benchmark an industry that is right in the middle of a massive investment cycle, Brian? Is it because you want to paint a doom and gloom picture? eh? Every industry that is in this phase isn’t going to produce FCF, the O&G industry is no different. When there’s a massive opportunity, they would be foolish to throttle back and produce free cash, their investors would crucify them for doing so.”
In Gundi Royle’s presentation (of 4 large E and P company accounts) she does not describe the capital expenditure as additional capex “arising out of massive opportunities” – as growth capital – she describes the capex in this period as “sustaining capital expenditure”. The difference matters.
If there is a very high depletion rate over one or two years then a lot of capital expenditure is being sunk into wells that are no longer producing much not very long after they have been drilled. They have to be replaced on a drilling treadmill of new capex to keep up production. Indeed the high production costs are evidenced by the high level of level of sustaining capital expenditure whose capacity to generate production and therefore revenue falls away quickly. In conventional fields, like perhaps the North Sea, growth capital expenditures might allow for some slowing of production decline or even an increase over a few subsequent years…a temporary halt to the slide in the bigger fields. However longer term returns to capex are much more problematic in small shale fields which deplete rapidly.
Is it because I want to paint a doom and gloom picture you ask – no, I “paint” it this way because it IS a doom a gloom picture. Your “massive opportunity” was investment that produced overproduction, was followed by a price crash and a wave of bankruptcies. After 2009 your “massive opportunities” have NEVER materialised as a positive cash flow over 8 years. I can understand the theoretical idea of a bust and boom cycle over part of which there were losses and over part of which there were profits. Such a cycle with a profitable phase might justify an earlier investment outlay and thus capex. However when the cash flow remains in deficit over the ENTIRE cycle for 8 years then to keep on taking investors money is, as Gundi Royle argues, evidence of a Ponzi situation…
https://srsroccoreport.com/u-s-shale-gas-industry-countdown-to-disaster/
I dare say you will respond however this is becoming repetitive and I have other things to do..
Ineos. What everyone should know.
http://www.feasta.org/2016/06/11/jim-ratcliffe-ineos-and-the-empire-of-trash/
Thanks for drawing attention to my article John. People may also find this interesting – a few months ago I spent a few days researching and critiquing another Ineos puff piece for shale – my piece can be found here .
Click to access Critique-of-Ineos-Case-for-ShaleWithreworkedExeSummaryV2.pdf
BP Energy Report 2017 published today:
http://www.bp.com/en/global/corporate/energy-economics/energy-outlook.html
https://www.theguardian.com/business/2017/jan/25/oil-demand-rising-2035-electric-cars-bp
Company predicts 100-fold rise in number of electric cars, but says fossil fuels will still account for 75% of energy mix in 2035
And global gas use is on the increase, as are renewables, coal going down. Good for the Planet. By 2019 the US becomes a net exporter of natural gas and by 2027 a net exporter of liquids. Due to shale production.
Lots of interesting information in the various downloads, relevant to the various discussions on this BB.
Paul. People think using electric cars will stop us from the requirements of oil/gas because in their brain the view is that electric dont burn fossils and electric motor dont spill out exhaust. They forget either by ignorance or naivety where the electricity come from to charge the battery in their electric cars. Yes some of it or increasingly more of it will come from renewables but much of it will be from oil and gas generator.
Lets deal with the rest of the headlines one at a time:
Well for a start as Ruth (thanks Ruth) has so clearly revealed that what is written in print is not repeated in the digital version, one has to ask why?
“Essential to the modern world” That is simply not true, onshore shale gas extraction is not essential to anyone but profiteers, and never has been. The true essential would be cheap renewable and sustainable energy production methods including wind, tide, solar, water turbine, Tesla Energy generators and as yet ignored and sidelined advances in energy transmission and storage, and local, not vast monopolistic centralized oligarchies. Only truly sustainable renewables will give real energy security Onshore shale gas extraction does not promise anything but big profits for the present fossil fuel monopolies and environmental disaster for the entire country.
The supplement said shale gas would “invigorate and rebalance the economy for the East Midlands and country as a whole.”
The printed version claimed:
“Natural gas extracted from shale through fracking is essential for the modern world and many of the benefits it brings cannot be replaced by renewables.” That is again an outright untruth, the modern world looks forward to true renewable sustainable sources of energy, its the backward world which wants onshore shale gas extraction, and that is only to feed the fossil fuel monopolistic oligarchies with big profits.
The digital version, supplied this evening by INEOS, did not include the words “extracted from shale through fracking”.
They are plainly so scared of this phrase, they deleted it in the digital version.
Get it straight? This already shows that the INEOS supplement illustrates little more than a corkscrew methodology and avoidance of any controversial terminology and we haven’t even got to the interesting parts yet.
So much for President Trumps claims to stand up for free speech and to protect the environment, something he claims to have “awards” for, a claim disputed by many.
In addition to the media blackout at the EPA, some other federal agencies, including the Department of Health and Human Services and the Department of Agriculture, were also told to suspend external communications, although the latter department’s gag order was subsequently lifted.
The EPA is the Environmental Protection Agency, clearly an obstacle to a died in the wolfs clothing climate change denier.
http://www.independent.co.uk/news/world/americas/donald-trump-gag-us-government-scientists-environment-stop-speaking-public-tweeting-twitter-climate-a7544971.html
The American Association for the Advancement of Science (AAAS), the largest scientific society in the world, said many federal agencies had policies that “prohibit political interference” in how they relay information to the public.
And the World Resources Institute think tank said the move to stop the “free flow of information” would have a “chilling effect on staff”.
Perhaps Teresa May is going to see President Trump for some pointers? I just hope he doesn’t get an urge to grab Teresa by the Prime Ministerial Privilege.
“Onshore shale gas extraction does not promise anything but big profits for the present fossil fuel monopolies”???
PhilC-do you have a clue as to who Ineos are???
You really do seem to have some strange gaps in your knowledge of the situation and geography within the UK.
Same old isolate one single sentence and ignore the rest, the old obscure and divide ploy eh?
I refer you to John Powne’ys link above, if that is too difficult for you, its reproduced here:
http://www.feasta.org/2016/06/11/jim-ratcliffe-ineos-and-the-empire-of-trash/
if you dont like that, see here:
http://powerbase.info/index.php/Ineos
if that doesn’t please, try this:
https://www.desmog.uk/2017/01/26/mapped-how-fracking-lobbyists-uk-and-america-infiltrate-parliament
Love these little exchanges.
Martyn – you are probably right about geography – Switzerland where Ineos is based is miles away isn’t it?
Headquarters are still stated as being in Switzerland on Ineos’ website.
As the promises imply gold standard regulation with no impact on health and house prices then why don’t they simply guarantee house prices for anyone in the vicinity and offer health insurance as well. I’d take them to task on the 6% revenue offering. Make sure that is 6% of gross revenue (rather than net) and make sure it is not the same thing as ‘community investment’ that will have to get spent on road strengthening and widening necessary to facilitate all the trucking.
And where are the 100s of millions of gallons of water coming from? and the millions of gallons of hazardous flowback waste going to go?
PS… the story is always the same when fracking goes to a new area in the States – “it’s going to be different here” we’ve learn’t from the past” “you’re better regulated” “different shale type” etc etc. Why do the complaints, the illnesses, the pollution and the accidents end up looking pretty much the same? If all problems had been addressed why are the public increasingly seeking bans and moratoriums. If there was nothing in it all that would have been abandoned as an exceedingly boring pass-time by now.
The likelihood would be that prices would increase. After all, the economic benefits would stimulate growth, the payments would lead to more spending. In the US that has been the case. The shale gas extraction has been blown out of all proportion by people deliberately exaggerating the impacts.
Where are all the trucks going to come from? 20 or so a day, so thats about 1/5th of the number of buses on many roads. The bulk of the trucking in the US has been water. Not necessary here.
In that case the companies involved should be more than happy to underwrite house prices. What would they stand to lose? The only cases of increased property values I’ve herd of is where title holders have mineral rights and have an ongoing profit sharing or stipend agreements. In many US states mineral rights come with the property titles. Not so here. The truth of your word against mine can easily be tested.
Likewise your underplaying the trucking scenario – referring only to the test drilling phase are you?
Ken Wilkinson said:
Really? NOTHING?
Ineos say:
Royal Society said:
Climate Change Committee said:
I haven’t even started yet!
Here’s another misleading statement:
No. It’s not the same.
Shale gas has a lower calorific value than North Sea gas.
John Baldwin (Shale Gas Environmental Summit, 2012) said:
Shale gas has 15x higher radon content than North Sea gas