What does ‘fracking’ mean?
The other day I read a Guardian article on line in which a fracking protagonist stated that fracking has been used for years in UK land-based oil wells when water is pumped into the well to force oil out. It’s true that that practice has been common in the oil industry for many years, particularly in wells which have passed their peak production. But that has never been called ‘fracking’ before, that I am aware of.
I listened to another protagonist on the Today programme, who said that fracking was an integral part of drilling for geothermal energy, although geothermal drilling is an entirely different process, which recycles the water. In all the time since I first assisted in a geothermal test drill in the Rosemanowes Quarry in Cornwall in the early ‘80s, I have never heard the word ‘fracking’ in this context.
I have a sense that the ‘fracking’ enthusiasts are subtly widening the meaning of the word, to include processes which are, or have been, in common use without controversy, thereby gaining a kind of 'borrowed respectability'. It’s a neat trick!
So when I read the Telegraph article by David Cameron, I admit to looking at it with an analytical eye, because, like Tony Blair, he is good with words!
It has to be said that although the protests at Balcombe have turned into a national event, many of those protesters are there because they perceive a potential effect on their own lives from copious heavy road transport and the likely effect on the water supply, both through over use and through pollution, both of which have been experienced in the USA. These are entirely reasonable and valid motives for the protests, but in global terms they are probably amongst the less important reasons for objecting.
There are many lessons to be learned from the American experience, but it seems that our political leaders are surrounded by people who tell them what they want to hear, rather than the facts. On the other hand it has been suggested to me that the present Government attitude is simply designed to fend off UKIP and keep the Tory Right in check, and that after the next election many obstacles to planning permission may be discovered! But they are politicians – how can we possibly know what they really think!
In his article, Mr Cameron said, ‘If we don’t back this technology, we will miss a massive opportunity to help families with their bills and make our country more competitive. Without it, we could lose ground in the tough global race.’
It is difficult to understand exactly what he means, aside from the bit about bills. How will it make us more competitive? How will it affect our position in the ‘tough global race’? As for that bit about bills, that probably won't happen, because fracking is a very expensive process, and importing gas from Norway and Qatar is actually likely to be cheaper, even with George Osborne's generous tax concessions.
As Mr Cameron says, ’Just look at the United States: they’ve got more than 10,000 fracking wells opening up each year and their gas prices are three-and-a-half times lower than here’.
10,000 wells a year! Imagine that!
Well, exactly! Mr Cameron, this is how it works:
The banks, always on the lookout for an opportunity, have smothered the industry in the US with loans, secured against the assets of the companies, who are making hay while the sun shines. But a shale gas well produces about 80% of its capacity in the first two years. So in order to maintain the flow (and it is the flow rate which is important) they have to keep drilling new wells as the old ones die (hence Mr Cameron’s 10,000). And as we have said, drilling wells is expensive. So why are gas prices in the US so low? Because they have been over producing, running fast to try to keep up with themselves! Then they have been exporting gas to countries like ours where gas prices are higher than at home, to try and recoup some of that money. In 2012, the expenditure on shale gas drilling in the United States was $42 billion. But receipts from sales of that gas were less than that by about $10 billion. As our American cousins would say, ‘Do the math!’ To me (but I am no expert) it has the smell of subprime about it!
Meanwhile, in the US the green-washers have been triumphantly extolling their reduction in CO2 emissions, forgetting that the coal which they haven’t been using has been exported to someone else, whose emissions have gone up.
Mr Cameron is undoubtedly right in claiming that a thriving shale-gas industry in this country would support plenty of jobs (although not for a while yet), but not nearly as many as would be supported by a thriving renewable and energy conservation industry.
Mr Cameron claims that a well-regulated shale-gas industry would be safe, by which I presume he means no water pollution, no loss of domestic water supplies and no leakage of methane into the atmosphere. Good luck with that! But I can afford to take an objective view because there will be no fracking where I live (unless it is for geothermal energy).
My objections to this industry are twofold. The first is that it merely prolongs our dependency on fossil fuel, with all that that implies for the decarbonisation of our energy supply. The second is that for a relatively short term benefit it is far, far too expensive (and will do nothing to reduce our energy bills).
I do have a third objection, which is more general and relates to the whole approach to Government by this coalition. In his article, Mr Cameron once more suggests that we are all in this together. He wants us all to share the benefits. He says, ‘Local people will not be cut out and ignored’.
But that is just what is happening at Balcombe.
Showing posts with label fracking. Show all posts
Showing posts with label fracking. Show all posts
Saturday 17 August 2013
Thursday 8 August 2013
An Open Letter to David Cameron
Dear Mr Cameron
I believe that some Conservative politicians simply do not understand why the old ‘We’re all in this together’ routine is regarded with a degree of scepticism by so many of us voters. Perhaps I can help with that understanding by suggesting to you that politicians should give a little more thought than they do to those they are supposed to represent.
I can’t speak for everyone of course, but I can compare my experiences now with those of a few years ago. In those days, my MP was a Liberal Democrat. I went to him with a problem, and to my surprise and delight he obtained a worthwhile solution by putting in some work and communicating. And that was before communicating became as easy as it is today.
Recently I wanted to raise some concerns with my elected representatives in both the British and the European Parliaments. For context, I should say that my concerns were aggravated by a speech made by Mr Owen Paterson, (whose record on understanding and believing science has recently lost some credibility). I have grave concerns about the use of genetic engineering in food production and I wanted my representatives to hear them, and respond constructively.
I certainly don’t expect that my views will be shared universally. I do expect them to be treated with respect, particularly because my views are widely held across national and European boundaries. I spent some time composing what I thought was a comprehensive summary of my doubts and fears in the letter I sent to my MP, asking her to pass them on to Mr Paterson.
I posted my letter to my MP, Mrs Sarah Newton, by Royal Mail on 21st June. I also emailed a copy of the letter, with covering messages, to all my MEPs. As yet, after six weeks I have not had the courtesy of an acknowledgement from Mrs Newton, let alone a comment.
The most constructive and helpful response (in relative terms) came from Mr Ashley Fox MEP. I followed up with another email to him, giving further evidence to substantiate my concerns.
I received a letter from Mr Giles Chichester. It was polite, but dismissive, stating that he had ‘seen studies and heard presentations from respectable research organisations in the UK which give a more positive interpretation’. I replied inviting him to give me the opportunity to read those positive interpretations, as I wished to keep an open mind. As yet I have had no further communication from Mr Chichester.
I received an acknowledgement from the PA to Ms Girling, promising a reply in due course, but nothing further.
I have exchanged communications with Mrs Newton on other occasions, and have found her helpful where we have common ground, but otherwise she seems to prefer not to communicate. From this and the experiences detailed above, I am forced to conclude that Conservative politicians are only prepared to engage constructively with those who clearly agree with them (whereas an opposite approach might win you more converts!). Mr Fox evidently found some points of agreement between us, responding courteously and helpfully. Mr Chichester appears uninterested in explaining his position to someone with whom he disagrees. Ms Girling is as yet an unknown quantity – I can only assume she is too busy to respond (although not to tweet!).
Most newly elected politicians (including you, Mr Cameron, I venture to suggest!) are inclined to claim that they represent all their electorate, not just those who voted for them. Would that this was true! In general, MEPs seem to have no contact or engagement with their constituents. I doubt that anyone in my community would be able to name their European representatives. And while I would never suggest that communicating at that level in such a large constituency is easy, I would certainly claim that here lies one reason for so much disillusionment with the European project.
I must tell you that with the exception of Mr Fox, I found the lack of helpful response from Conservative politicians offensive. There seems to be an arrogance not only in the lack of response from some but particularly by the dismissive attitude taken by Mr Chichester. MEPs are well enough paid (although not excessively). However the expenses they are able to claim can be very high. Those expenses should at least enable them to communicate constructively with their constituents, even if through a well qualified assistant.
And by the way, on the subject of my original concerns regarding GM crops, I would like to say this; new evidence, much of it peer reviewed and most of it credible, is emerging almost daily, which militates against the use of GM techniques in food. To hitch your party and its policies to this particular science before all the evidence is in may turn out to have been a grave mistake, not just for politicians, but for all of us. There is a widely accepted opinion that the Government’s association with the pro-GM lobby is manifested for two reasons. The first reason is that it is pivotal to trade negotiations with the USA, and the second is that big international corporations have more influence on Government policy (on this matter, via Rothamsted Research) than the population at large. Whether or not that opinion is justified, it should be a matter of concern for you. The widely held views amongst most European countries are contrary to that of your Government, and those views are not held on the basis of a whim!
As for Europe, I think we would all be more enthusiastic about the project if our elected representatives could be seen to offer a two-way channel for significant and sensible communication. On the one hand, their lack of engagement seems like a good reason for Britain to make an exit from the project. On the other, the European Union seems to be all that stands between us and your Government's negative policies on the environment (including GM crops), climate change and a somewhat overbearing relationship with the USA.
I live in hope that the General and European elections, when they arrive, will bring us representatives who are able to engage fully with their constituents, and who will help us to feel that we are, genuinely, represented. Those are the criteria which will influence my votes.
Yours sincerely
Tim Thomson
I believe that some Conservative politicians simply do not understand why the old ‘We’re all in this together’ routine is regarded with a degree of scepticism by so many of us voters. Perhaps I can help with that understanding by suggesting to you that politicians should give a little more thought than they do to those they are supposed to represent.
I can’t speak for everyone of course, but I can compare my experiences now with those of a few years ago. In those days, my MP was a Liberal Democrat. I went to him with a problem, and to my surprise and delight he obtained a worthwhile solution by putting in some work and communicating. And that was before communicating became as easy as it is today.
Recently I wanted to raise some concerns with my elected representatives in both the British and the European Parliaments. For context, I should say that my concerns were aggravated by a speech made by Mr Owen Paterson, (whose record on understanding and believing science has recently lost some credibility). I have grave concerns about the use of genetic engineering in food production and I wanted my representatives to hear them, and respond constructively.
I certainly don’t expect that my views will be shared universally. I do expect them to be treated with respect, particularly because my views are widely held across national and European boundaries. I spent some time composing what I thought was a comprehensive summary of my doubts and fears in the letter I sent to my MP, asking her to pass them on to Mr Paterson.
I posted my letter to my MP, Mrs Sarah Newton, by Royal Mail on 21st June. I also emailed a copy of the letter, with covering messages, to all my MEPs. As yet, after six weeks I have not had the courtesy of an acknowledgement from Mrs Newton, let alone a comment.
The most constructive and helpful response (in relative terms) came from Mr Ashley Fox MEP. I followed up with another email to him, giving further evidence to substantiate my concerns.
I received a letter from Mr Giles Chichester. It was polite, but dismissive, stating that he had ‘seen studies and heard presentations from respectable research organisations in the UK which give a more positive interpretation’. I replied inviting him to give me the opportunity to read those positive interpretations, as I wished to keep an open mind. As yet I have had no further communication from Mr Chichester.
I received an acknowledgement from the PA to Ms Girling, promising a reply in due course, but nothing further.
I have exchanged communications with Mrs Newton on other occasions, and have found her helpful where we have common ground, but otherwise she seems to prefer not to communicate. From this and the experiences detailed above, I am forced to conclude that Conservative politicians are only prepared to engage constructively with those who clearly agree with them (whereas an opposite approach might win you more converts!). Mr Fox evidently found some points of agreement between us, responding courteously and helpfully. Mr Chichester appears uninterested in explaining his position to someone with whom he disagrees. Ms Girling is as yet an unknown quantity – I can only assume she is too busy to respond (although not to tweet!).
Most newly elected politicians (including you, Mr Cameron, I venture to suggest!) are inclined to claim that they represent all their electorate, not just those who voted for them. Would that this was true! In general, MEPs seem to have no contact or engagement with their constituents. I doubt that anyone in my community would be able to name their European representatives. And while I would never suggest that communicating at that level in such a large constituency is easy, I would certainly claim that here lies one reason for so much disillusionment with the European project.
I must tell you that with the exception of Mr Fox, I found the lack of helpful response from Conservative politicians offensive. There seems to be an arrogance not only in the lack of response from some but particularly by the dismissive attitude taken by Mr Chichester. MEPs are well enough paid (although not excessively). However the expenses they are able to claim can be very high. Those expenses should at least enable them to communicate constructively with their constituents, even if through a well qualified assistant.
And by the way, on the subject of my original concerns regarding GM crops, I would like to say this; new evidence, much of it peer reviewed and most of it credible, is emerging almost daily, which militates against the use of GM techniques in food. To hitch your party and its policies to this particular science before all the evidence is in may turn out to have been a grave mistake, not just for politicians, but for all of us. There is a widely accepted opinion that the Government’s association with the pro-GM lobby is manifested for two reasons. The first reason is that it is pivotal to trade negotiations with the USA, and the second is that big international corporations have more influence on Government policy (on this matter, via Rothamsted Research) than the population at large. Whether or not that opinion is justified, it should be a matter of concern for you. The widely held views amongst most European countries are contrary to that of your Government, and those views are not held on the basis of a whim!
As for Europe, I think we would all be more enthusiastic about the project if our elected representatives could be seen to offer a two-way channel for significant and sensible communication. On the one hand, their lack of engagement seems like a good reason for Britain to make an exit from the project. On the other, the European Union seems to be all that stands between us and your Government's negative policies on the environment (including GM crops), climate change and a somewhat overbearing relationship with the USA.
I live in hope that the General and European elections, when they arrive, will bring us representatives who are able to engage fully with their constituents, and who will help us to feel that we are, genuinely, represented. Those are the criteria which will influence my votes.
Yours sincerely
Tim Thomson
Sunday 4 August 2013
An Open Letter to Ed Milliband
Dear Mr Milliband
Old Labour, New Labour, One Nation Labour…What does it all mean exactly?
I am old enough to remember when the political parties put forward their principles, ideals and aims, together with the policies they believed would achieve those aims. The electorate would then have the opportunity to choose the party which most conformed to their own beliefs. And I think that the last party leader to do that was Margaret Thatcher. (She wasn’t my choice, but it worked for her!)
Since then there has been a not too subtle change in approach, so that at best, the parties try to dress up (or dilute) their policies in a way which will appeal to as many different sectors of the voting public as possible; or at worst, try to discover what policies would most appeal, and then shoe those policies in to their own manifestos regardless of principle. (The immigration debate is a case in point.)
For some reason the policy makers believe that the general public don’t sense this; and tragically, these days, they are often right, not because voters are not intelligent, but because we have become bored with the institutional cynicism thus displayed.
What happens in other countries?
It is fascinating to compare our situation with that in other Western countries. For example, take infant mortality. The highest level (per thousand live births) is USA, and the lowest is Sweden. Child poverty: highest in USA (by a long way) and lowest in Denmark. Gender inequality: worst in USA, best in Sweden. Environmental sustainability: worst in USA, best in Nordic countries (and Switzerland). Income share of the top 1%: USA over 18%, Denmark 4%. And the point of all this? Where these figures are represented on a graph, UK come up roughly in the middle of the countries represented. But there is one more graph, which, significantly, shows that in all respects, the best performing countries are those where tax is highest as a percentage of GDP.
In the UK it appears that the two main parties are competing to achieve the lowest taxes per capita, and the result is the present misery and inequality. But the labour party have a very strong advantage in their ‘battle for hearts and minds’. It would not be against party dogma to increase taxes, and it would lose almost none of their core votes. Imagine how popular it would be, for example, if all those earning, say, half a million or more were to pay 90% on anything above that threshold. And how many of those will ever vote Labour?
The current tax regime in this country is one which favours the very rich. Thus the very rich have an enhanced influence on the direction of Government, which in turn has an adverse effect on democracy. It can be shown (in addition to the statistics shown above) that the greater the gap between rich and poor, the less notice Government takes of the opinions of the general population. This is evident at the moment, for example, in the ‘fracking’ debate, the GM food debate, the HS2 debate and many other areas. MPs, and MEPs, seem increasingly reluctant to engage with their constituents (although that is only my own experience rather than a statistical fact, and particular to some Conservatives and UKIP!)
Something to recognise is that people earning a very high income are generally uninterested in their pay packet, except as a measure of their success when compared to their colleagues or competitors. The level of tax is irrelevant to them when applied across the board. After all, they certainly have adequate spending money!
History shows that a regime which taxes high earners heavily does not drive a significant number of them to move away. They are generally motivated by love of their job and a competitive spirit, not a desire for another Ferrari! And when a few footballers or pop stars or even the occasional banker do depart, there are plenty more good people waiting in the wings. But the additional tax revenue can fund improved services, and very importantly, many new council houses (not available for sale to tenants). Employment would rise. Families would afford child-care, and mothers could go back to work. Benefit budgets would reduce. A cycle of increased prosperity could begin. SMEs would begin to prosper, and they are much more important to the average man or woman than the huge transnationals, who are only trying to please international shareholders, not British customers.
An enlightened approach, along the lines adopted by the prosperous and high taxed economies in the Nordic countries, could begin a steady climb to the sort of living standards which we all crave.
Our collective minds have been deadened by the oft-repeated mantra from both main parties that low tax is good for business and the economy – but the facts indicate this to be totally false. Back in the last century, when my father, a confirmed Tory voter, was paying ‘supertax’ at a rate of 19s 6d in the pound, the country was arguably in a worse state than we are now, but the welfare state and the NHS had been put into place after the war and the gap between the rich and the poor was at a completely reasonable level. Democracy was working.
Now look across the Atlantic, at the richest economy in the world, where infant mortality is the highest in the developed world, as is obesity, and the rich/poor divide; and tax revenue as a percentage of GDP is amongst the very lowest. This is not a situation we should wish to emulate.
My point is this, Mr Milliband. Go back to first principles. Stop trying to compete with the Conservatives, whose dogma-driven agenda will undoubtedly continue to fail. Austerity didn’t work in the great depression in the USA, and it was not what saved us after the Second World War. It is doing us untold damage now. Please, let us hear something new and challenging, not just more of the same! As things stand, I wouldn’t vote for any of the three mainstream parties (and UKIP are a joke!) and I am begging you to give us all a credible alternative!
Yours sincerely
A disillusioned voter
Tim Thomson
PS Much of the information I have referred to above has been stolen from a brilliant book by the Canadian journalist Linda McQuaig, with Neil Brooks, called ‘The Trouble With Billionaires’.
Old Labour, New Labour, One Nation Labour…What does it all mean exactly?
I am old enough to remember when the political parties put forward their principles, ideals and aims, together with the policies they believed would achieve those aims. The electorate would then have the opportunity to choose the party which most conformed to their own beliefs. And I think that the last party leader to do that was Margaret Thatcher. (She wasn’t my choice, but it worked for her!)
Since then there has been a not too subtle change in approach, so that at best, the parties try to dress up (or dilute) their policies in a way which will appeal to as many different sectors of the voting public as possible; or at worst, try to discover what policies would most appeal, and then shoe those policies in to their own manifestos regardless of principle. (The immigration debate is a case in point.)
For some reason the policy makers believe that the general public don’t sense this; and tragically, these days, they are often right, not because voters are not intelligent, but because we have become bored with the institutional cynicism thus displayed.
What happens in other countries?
It is fascinating to compare our situation with that in other Western countries. For example, take infant mortality. The highest level (per thousand live births) is USA, and the lowest is Sweden. Child poverty: highest in USA (by a long way) and lowest in Denmark. Gender inequality: worst in USA, best in Sweden. Environmental sustainability: worst in USA, best in Nordic countries (and Switzerland). Income share of the top 1%: USA over 18%, Denmark 4%. And the point of all this? Where these figures are represented on a graph, UK come up roughly in the middle of the countries represented. But there is one more graph, which, significantly, shows that in all respects, the best performing countries are those where tax is highest as a percentage of GDP.
In the UK it appears that the two main parties are competing to achieve the lowest taxes per capita, and the result is the present misery and inequality. But the labour party have a very strong advantage in their ‘battle for hearts and minds’. It would not be against party dogma to increase taxes, and it would lose almost none of their core votes. Imagine how popular it would be, for example, if all those earning, say, half a million or more were to pay 90% on anything above that threshold. And how many of those will ever vote Labour?
The current tax regime in this country is one which favours the very rich. Thus the very rich have an enhanced influence on the direction of Government, which in turn has an adverse effect on democracy. It can be shown (in addition to the statistics shown above) that the greater the gap between rich and poor, the less notice Government takes of the opinions of the general population. This is evident at the moment, for example, in the ‘fracking’ debate, the GM food debate, the HS2 debate and many other areas. MPs, and MEPs, seem increasingly reluctant to engage with their constituents (although that is only my own experience rather than a statistical fact, and particular to some Conservatives and UKIP!)
Something to recognise is that people earning a very high income are generally uninterested in their pay packet, except as a measure of their success when compared to their colleagues or competitors. The level of tax is irrelevant to them when applied across the board. After all, they certainly have adequate spending money!
History shows that a regime which taxes high earners heavily does not drive a significant number of them to move away. They are generally motivated by love of their job and a competitive spirit, not a desire for another Ferrari! And when a few footballers or pop stars or even the occasional banker do depart, there are plenty more good people waiting in the wings. But the additional tax revenue can fund improved services, and very importantly, many new council houses (not available for sale to tenants). Employment would rise. Families would afford child-care, and mothers could go back to work. Benefit budgets would reduce. A cycle of increased prosperity could begin. SMEs would begin to prosper, and they are much more important to the average man or woman than the huge transnationals, who are only trying to please international shareholders, not British customers.
An enlightened approach, along the lines adopted by the prosperous and high taxed economies in the Nordic countries, could begin a steady climb to the sort of living standards which we all crave.
Our collective minds have been deadened by the oft-repeated mantra from both main parties that low tax is good for business and the economy – but the facts indicate this to be totally false. Back in the last century, when my father, a confirmed Tory voter, was paying ‘supertax’ at a rate of 19s 6d in the pound, the country was arguably in a worse state than we are now, but the welfare state and the NHS had been put into place after the war and the gap between the rich and the poor was at a completely reasonable level. Democracy was working.
Now look across the Atlantic, at the richest economy in the world, where infant mortality is the highest in the developed world, as is obesity, and the rich/poor divide; and tax revenue as a percentage of GDP is amongst the very lowest. This is not a situation we should wish to emulate.
My point is this, Mr Milliband. Go back to first principles. Stop trying to compete with the Conservatives, whose dogma-driven agenda will undoubtedly continue to fail. Austerity didn’t work in the great depression in the USA, and it was not what saved us after the Second World War. It is doing us untold damage now. Please, let us hear something new and challenging, not just more of the same! As things stand, I wouldn’t vote for any of the three mainstream parties (and UKIP are a joke!) and I am begging you to give us all a credible alternative!
Yours sincerely
A disillusioned voter
Tim Thomson
PS Much of the information I have referred to above has been stolen from a brilliant book by the Canadian journalist Linda McQuaig, with Neil Brooks, called ‘The Trouble With Billionaires’.
Friday 22 February 2013
The Grand US Energy Bubble
How did the human race progress from cave dwelling to space station in such a relatively short time? Is it through our ability to learn, to build on what we have learned and then to learn from what we have built? But in this modern world, many of us have allowed that ability to become dormant, in favour of a desire for power, wealth and acquisition. And so we perhaps should not be surprised that many wealthy bankers seem to have lost the ability to learn from previous experience. Back to this later!
There has been some publicity over the last couple of years on the immense gas and oil reserves discovered in the USA, to be accessed by miraculous modern technology such as ‘fracking’ and horizontal drilling. It is proposed that the tar sands being mined in Canada will further supplement the USA’s insatiable need for fuel via the Keystone XL pipeline. We are told (by bankers?) that the USA has become self sufficient in fossil fuel for the foreseeable future. Yeah right!
The Americans (by which, of course, I mean the North Americans!) are desperate. They do not want to remain dependent on external supplies of fossil fuel. So they (including President Obama) are pulling out all the stops to avoid that dependency, with the willing help of the banks, naturally.
Let us consider the tar sands in Canada; this is actually a fascinating subject on its own. The Canadians say to the Americans, ‘if you want the crude from tar sands you have to build a pipeline (the Keystone XL pipeline) to take the crude to your refineries, otherwise we can find plenty of other customers for the crude!’ The pipeline is going to cost around $7 billion, which in the scheme of things is small change.
But to process the tar sands to produce the crude, they need copious quantities of natural gas (about a fifth of Canada’s entire production). They also need a lot of water, and a lot of diluent. Diluent? OK – to allow the stuff to flow through a pipeline it has to be diluted with some kind of light oil, which at present they are importing at a rate of up to 200,000 barrels a day. They could produce it themselves, from the bitumen they are digging up, but that is very expensive too. And by the way, there is a limit to the amount of gas they can use, because they have domestic users, as well as a binding agreement to export a proportion of the gas they produce to America! So we can deduce that production of crude from these tar sands is incredibly expensive, hardly cost effective, and about as efficient as you can get at producing greenhouse gases! Unsurprising therefore, that Canada pulled out of the Kyoto protocol!
The President long ago expressed his support for the pipeline – the only reason for a delay has been the choice of route. But the Americans are grasping at straws – the product will barely supply 10% of their daily needs, and at a massive production cost and a very small net energy gain. Globally Canadian tar sands are a drop in the ocean at massive environmental costs, and because of the restrictions on production in terms of energy, water and transport, it is hard to see a long term future for the process.
But don’t worry, the USA has its own stock of tar sands (not much), shale oil and shale gas.
It seems that this ‘revitalisation’ of the American energy industry attracted the attention of the investment bankers. I don’t pretend to have the slightest idea how investment finance works; but evidently money was poured in to the extent that production amounted to four times demand – resulting in a catastrophic drop in price, and a desperate drive to export to where prices were higher. The result has been that production costs have exceeded prices by a significant amount, resulting in a phenomenal amount of business in the mergers and acquisitions market, and thus huge profits for the banks.
Let us switch for a moment to considering the traditional and diminishing oil industry. You may remember that a gentleman called M King Hubbert produced the famous Hubberts curve in 1956, a graph which he used to predict that American oil production would peak somewhere about the late sixties or early seventies. There was much criticism and disbelief, but he was proven correct in his thinking as American oil production peaked in 1970. Hubbert was able to apply his mathematics to individual oil fields, oil producing countries and by extension to the planet, predicting that world oil production would peak in the early 21st century. Nothing yet, not even this latest alleged US bonanza, has shown him to be wrong.
You can apply Hubbert’s curve to almost any non-renewable resource; but it seems that the curve, which indicates a rise, a peak and then a decline in a roughly symmetrical format, doesn’t readily lend itself to these modern production methods. And the reason is this: the depletion rate of these wells is extremely fast, so instead of a gentle decline after the peak we have a cliff. To maintain production levels new wells need to be brought on stream all the time, at a cost of many billions of dollars. Required input annually to maintain current shale gas production in the States is around $42 billion. (Lucky we have those bankers!) Value of shale gas produced in 2012 was $32.5 billion! Shale oil is also horrendously expensive to produce and a well’s production rate will decline by in excess of 80% in the first 24 months. Tar sands produce oil at a cost of about $100 dollars per barrel, which leaves little room for profit! Many of the production sites of all these fossil fuel elements are already in decline. It seems unlikely that this 'foreseeable future' could last more than another five years or so!
The reason that Hubbert’s prognosis has proven so accurate time and time again is because, self evidently, the oil companies go for the easiest first. Thus the oil becomes progressively more difficult and more expensive to access, until you get to a point where it is no longer viable. Tar sands are not that far from that point of diminishing returns, and the great oil and gas bonanza so enthusiastically promoted by the bankers cannot possibly be other than a great big bubble!
The good news? Although carbon emissions from the USA continue to cause immense damage to our atmosphere in the short term, in the longer term that cannot continue because the bubble has to burst, and carbon emissions from the USA is certain to decrease!
And the bad news? Well… remember all that sub-prime nonsense when the house mortgage market collapsed? It is going to happen all over again with American oil reserves! I said we would come back to the bankers!
So what about our own UK shale gas reserves? I would steer clear of investment there if I were you! It will be better for us all if we just reduce our energy needs.
Data has been lifted from reports by Deborah Rogers of the Energy Policy Forum and J David Hughes of the Post Carbon Institute
There has been some publicity over the last couple of years on the immense gas and oil reserves discovered in the USA, to be accessed by miraculous modern technology such as ‘fracking’ and horizontal drilling. It is proposed that the tar sands being mined in Canada will further supplement the USA’s insatiable need for fuel via the Keystone XL pipeline. We are told (by bankers?) that the USA has become self sufficient in fossil fuel for the foreseeable future. Yeah right!
The Americans (by which, of course, I mean the North Americans!) are desperate. They do not want to remain dependent on external supplies of fossil fuel. So they (including President Obama) are pulling out all the stops to avoid that dependency, with the willing help of the banks, naturally.
Let us consider the tar sands in Canada; this is actually a fascinating subject on its own. The Canadians say to the Americans, ‘if you want the crude from tar sands you have to build a pipeline (the Keystone XL pipeline) to take the crude to your refineries, otherwise we can find plenty of other customers for the crude!’ The pipeline is going to cost around $7 billion, which in the scheme of things is small change.
But to process the tar sands to produce the crude, they need copious quantities of natural gas (about a fifth of Canada’s entire production). They also need a lot of water, and a lot of diluent. Diluent? OK – to allow the stuff to flow through a pipeline it has to be diluted with some kind of light oil, which at present they are importing at a rate of up to 200,000 barrels a day. They could produce it themselves, from the bitumen they are digging up, but that is very expensive too. And by the way, there is a limit to the amount of gas they can use, because they have domestic users, as well as a binding agreement to export a proportion of the gas they produce to America! So we can deduce that production of crude from these tar sands is incredibly expensive, hardly cost effective, and about as efficient as you can get at producing greenhouse gases! Unsurprising therefore, that Canada pulled out of the Kyoto protocol!
The President long ago expressed his support for the pipeline – the only reason for a delay has been the choice of route. But the Americans are grasping at straws – the product will barely supply 10% of their daily needs, and at a massive production cost and a very small net energy gain. Globally Canadian tar sands are a drop in the ocean at massive environmental costs, and because of the restrictions on production in terms of energy, water and transport, it is hard to see a long term future for the process.
But don’t worry, the USA has its own stock of tar sands (not much), shale oil and shale gas.
It seems that this ‘revitalisation’ of the American energy industry attracted the attention of the investment bankers. I don’t pretend to have the slightest idea how investment finance works; but evidently money was poured in to the extent that production amounted to four times demand – resulting in a catastrophic drop in price, and a desperate drive to export to where prices were higher. The result has been that production costs have exceeded prices by a significant amount, resulting in a phenomenal amount of business in the mergers and acquisitions market, and thus huge profits for the banks.
Let us switch for a moment to considering the traditional and diminishing oil industry. You may remember that a gentleman called M King Hubbert produced the famous Hubberts curve in 1956, a graph which he used to predict that American oil production would peak somewhere about the late sixties or early seventies. There was much criticism and disbelief, but he was proven correct in his thinking as American oil production peaked in 1970. Hubbert was able to apply his mathematics to individual oil fields, oil producing countries and by extension to the planet, predicting that world oil production would peak in the early 21st century. Nothing yet, not even this latest alleged US bonanza, has shown him to be wrong.
You can apply Hubbert’s curve to almost any non-renewable resource; but it seems that the curve, which indicates a rise, a peak and then a decline in a roughly symmetrical format, doesn’t readily lend itself to these modern production methods. And the reason is this: the depletion rate of these wells is extremely fast, so instead of a gentle decline after the peak we have a cliff. To maintain production levels new wells need to be brought on stream all the time, at a cost of many billions of dollars. Required input annually to maintain current shale gas production in the States is around $42 billion. (Lucky we have those bankers!) Value of shale gas produced in 2012 was $32.5 billion! Shale oil is also horrendously expensive to produce and a well’s production rate will decline by in excess of 80% in the first 24 months. Tar sands produce oil at a cost of about $100 dollars per barrel, which leaves little room for profit! Many of the production sites of all these fossil fuel elements are already in decline. It seems unlikely that this 'foreseeable future' could last more than another five years or so!
The reason that Hubbert’s prognosis has proven so accurate time and time again is because, self evidently, the oil companies go for the easiest first. Thus the oil becomes progressively more difficult and more expensive to access, until you get to a point where it is no longer viable. Tar sands are not that far from that point of diminishing returns, and the great oil and gas bonanza so enthusiastically promoted by the bankers cannot possibly be other than a great big bubble!
The good news? Although carbon emissions from the USA continue to cause immense damage to our atmosphere in the short term, in the longer term that cannot continue because the bubble has to burst, and carbon emissions from the USA is certain to decrease!
And the bad news? Well… remember all that sub-prime nonsense when the house mortgage market collapsed? It is going to happen all over again with American oil reserves! I said we would come back to the bankers!
So what about our own UK shale gas reserves? I would steer clear of investment there if I were you! It will be better for us all if we just reduce our energy needs.
Data has been lifted from reports by Deborah Rogers of the Energy Policy Forum and J David Hughes of the Post Carbon Institute
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