Nick Grealy, energy consultant and proponent of shale gas, reflects on the battle for public perception of shale gas. A key problem, he says, is the speed of the change that has taken place. It has surprised many people. In fact, many people still fool themselves into thinking it can’t happen in Europe” . But according to Grealy, a European shale gas revolution is inevitable.
Photo: drilling rig in Marcellus play in US (by wcn247)
Is shale energy a miracle or a mirage? That’s the title of one section of the French parliamentary report published on June 5. The report issue a strong plea for France to investigate its shale gas potential. In the meantime, the British Geological Survey has come out with new estimates of British shale gas reserves that show they are anything but inconsequential. Both reports, to the casual observer of energy, are of growing interest, while being either hopeful or incredibly disruptive, according to one’s perspective, to the experts.
A key reason many people find the idea of shale gas and oil so unbelievable, is that it seemed to literally come out of nowhere. Rick Smead of Navigant Resources introduces himself by saying “For 35 years, I worked in a very boring industry”. Navigant published the first report aimed at non-geologists on shale in July 2008, called “The New North American Ocean of Natural Gas”. That report, was, at the time, incredibly disruptive. It took me until August 2008 to first report on shale here in Europe, to meet an even more heated pushback than Navigant received in the US. Back then, as Rick said the other day at the UGOS conference in London, “No one believed us. People made fun of us. The next year Exxon Mobil bought XTO for $31 billion dollars”.
Natural gas is tarred with the same brush as coal and oil. It’s like denouncing cucumbers as being just another contributor to the obesity crisis.
I’ve had enough people move away at dinner parties when told I was in the natural gas business, to sympathize. These days, complete strangers in my neighbourhood tell me how they saw me on TV, but as we see from recent studies, many of us don’t even know about shale gas. That is about to change, but a key problem in the battle for public perception is the speed of the change.
Energy has been a backwater in the stream of public consciousness for several decades. Large numbers of people act as if electricity comes out of the wall. Others think we are just around the corner from endless low carbon energy, only prevented from doing so by a cabal of right wing Texans and big business allies. Almost everyone is unable to distinguish between carbon fuels: they just don’t get that in order of carbon content and air pollution potential we have coal, oil at thirty percent less CO2 and natural gas at 50% less. So natural gas is tarred with the same brush. It’s like denouncing cucumbers as being just another contributor to the obesity crisis.
Another cultural meme of the moment is the continuing belief in peak energy, despite being a ludicrous construct to most energy professionals. Peak oil is the simple narrative: population is rising, especially in emerging economies, and there is only so much oil and gas left. Anyone can understand it, but everyone is wrong. The issue is complicated by the reality that prices skyrocketed from 2005 onwards, to fall back to more manageable levels in North America, as they remain elevated or rising in Europe.
In the UK especially, a market dominated by oligopolies under no requirement to disclose costs by a spectacularly disinterested price regulator, prices serve multiple narratives. Greens insist it is proof gas is running out, the right over-estimate the cost of green incentives, the Big Six suppliers laugh all the way to the bank. On top of them all, is a government only starting to see how analogous utility prices are to taxation.
The EU is ahead of many states, in seeing the role of high consumer prices in demand suppression for the rest of the economy. The second part of the whammy is how North American industry suddenly has the structural advantage of low energy prices. Don’t even go there, except at the highest diplomatic and military levels, to discuss the truly scary strategic implications for Europe of US energy independence.
Back to only five years ago, from Navigant, in a report released as a big birthday present on July 4 2008:
“NCI [i.e. Navigant] found that, not only have federal forecasts for “unconventional” natural gas production been sharply lower than actual production since 1998, but also that producer reports of recoverable gas from shale significantly increase the nation’s reserves and could provide enough natural gas to last the nation 118 years at 2007 production levels.”
So much for expert opinion, and as Navigant pointed out, they were met in 2008, and as recently as 2011, with disbelief and derision. Over time however, as another presentation, by Sally Kornfeld of the US Department of Energy showed, the proof became compelling. Navigant were wrong. They had severely underestimated what was happening on, or under, the ground: figures from the Energy Information Administration (EIA) and LCI Energy Insight show that domestic US production of shale gas virtually exploded from 2008 onwards, from around 5 billion cubic feet per day to 28 bcf per day.
Most of Europe today is at the level the US was ten years ago.That gives us an indication of not where we may be in 2023. We can be where the US was six year ago in as little as two or three. US analogues don’t provide a road-map for the European roll out of shale gas because the US has made considerable process improvements – and yes, mistakes too – over time. We can learn from mistakes – not repeat them. We can learn to produce natural gas onshore in Europe much more efficiently using the technological advances that the US makes every month.
We can be where the US was six year ago in as little as two or three.
The future can’t be looked at through a rear-view mirror. We are more likely to see our European future arrive faster, cheaper and cleaner in light of US advances.
One part where experience plays a role, is in being able to rebuff the questions we see in Europe today. I’m constantly bombarded with objections by opponents of shale, be they environmentalists, financiers, journalists or simply concerned neighbours of development, that to be brutally frank are absolutely nothing new. The objection pertinent here is that shale isn’t really happening: it’s not miracle, but mirage. Many people, some for honest reasons and others desperate to convince others – or themselves – say that shale will be an ultimate disappointment. They try to rationalise that thanks to decline rates or economics or water or public acceptance or a myriad of reasons, shale will never happen. The figures show that the opposite is true – European shale is inevitable.
Back in 2008 through 2011, many in the US said the same: that shale was an illusion. Yet, between 2008 and 2013, production has increased over fourfold. One billion cubic feet per day of production is the same as producing 10.337 BCM (billion cubic metres) a year. Current US production of 30.3 BCFD (in the first four months of 2013) – the same production we were told by US peak oilers in 2009, 2010, 2011 and amazingly even today by doubters in Europe, would never be sustainable or economic – is equal to an annual volume of 313 Billion cubic metres.
How much is that? We shouldn’t look at the production of Europe, but now that we mention it, the entire North Sea production in 2011 was 101 BCM from Norway, 64 from the Netherlands (including onshore) 10 from Denmark and 45 from the UK – or 220 BCM total. Looking at it from the consumption side, the US went from producing the consumption of Spain in 2006 to replacing the total gas use of the UK, Germany, France, Spain, Italy, Belgium,Netherlands, Swizerland and Austria by 2013.
Francis Egan, of Cuadrilla has said, “It’s not how much gas do we have. It’s how much do you want?”
Nick Grealy is director of the energy consultancy No Hot Air, specialising in public perception and acceptance issues of shale energy worldwide. Describing himself as a “recovering energy consultant” who thinks the worst energy risk is getting talked into thinking you have one, he started following the shale energy revolution in 2008. First studying what he called at the time shale’s sudden emergence and future permanence he now studies shale’s impact worldwide across the energy spectrum. He has worked for private and public clients across Europe and is a frequent contributor to media while continuing to publish analysis of energy acceptance issues at www.nohotair.co.uk This article was first published on his website here.