Fracking a step closer as Britain, Germany approve new laws.

Posted: February 13, 2015 by tallbloke in fracking, Shale gas

Via GWPF H/T Benny Peiser.

Europe Moves Closer To Shale Gas Development 
Take That, Vladimir: German Government Approves Fracking
Yesterday, two major events took place, bringing Europe a step closer towards developing a domestic shale gas industry. In the UK the Infrastructure Bill has been given Royal Assent and in Germany the Federal Government held a public hearing on the planned hydraulic fracturing draft law. Shale Gas Europe, 13 February 2015

U.S. natural gas production is poised to reach a record for a fifth year as shale drillers boost efficiency, driving prices toward a low of more than a decade. Output will rise 3.2 percent in 2015, led by gains at the Marcellus formation, the nation’s biggest shale deposit, according to the Energy Information Administration. Marcellus production will increase 2.8 percent through February after a 21 percent gain in 2014, a year when prices tumbled 32 percent. Producers in Pennsylvania and West Virginia have cut break-even costs by half since 2008, according to Oppenheimer & Co. –Naureen Malik,Bloomberg, 7 February 2015

1) Europe Moves Closer To Shale Gas Development – Shale Gas Europe, 13 February 2015

2) Take That, Vladimir: German Government Approves Fracking – EurActiv, 13 February 2015

3) Unstoppable Shale Revolution Poised For New Record Gas Production – Bloomberg, 7 February 2015

4) Matt Ridley: Giving Up On Shale Would Be A Big Mistake – The Times, 9 February 2015

5) Hail Shale: New American Shale Record – The American Interest, 11 February 2015

The German government has issued a draft law allowing fracking in shale and coal bed rock starting at a depth of 3,000 metres, permitting test fracking above 3,000 metres. After a long debate over the use of fracking technology in Germany, the federal government issued a draft law allowing the controversial gas extraction method under certain conditions and in isolated cases. —EurActiv, 13 February 2015

Environmental impact assessments do not have to be mandatory for shale gas exploration, the EU court has ruled.—ENDS Europe, 13 February 2015

Gas really is rather special: it provides us in this country with 84 per cent of our domestic heat, 27 per cent of our electricity, much of the feedstock for our synthetic consumer products, and pretty well all of the nitrogen fertiliser that has fed the world and largely banished famine. All this from a surprisingly small number of surprisingly small holes in the ground and the seabed, drilled with fewer accidents and spills than most other energy sources. That is one reason why I will be arguing and voting to help the government improve its Infrastructure Bill today when it comes before the House of Lords, so as to make a shale gas industry in this country possible. –Matt Ridley, The Times, 9 February 2015

Shale gas extraction is a process that has proved very safe and clean in the United States. It has had virtually no impact on groundwater, earthquakes or surface pollution anywhere. These are exaggerated myths constantly repeated by the wealthy multinational pressure groups such as Greenpeace and Friends of the Earth, by wealthy fashion designers and their nimby friends in gin-and-jag country, and by Vladimir Putin and other Russians with an interest in expensive gas. –Matt Ridley, The Times, 9 February 2015

American power plants burned more natural gas last month than ever before. Power generators used an average 23.1 billion cubic feet per day of gas in January 2015, up 13 percent from the 20.5 bcfd average in January 2014, according to Thomson Reuters Analytics. That was the most gas consumed by the power sector during the month of January on record, according to federal data going back to 1973. —The American Interest, 11 February 2015

1) Europe Moves Closer To Shale Gas Development
Shale Gas Europe, 13 February 2015

Yesterday, two major events took place, bringing Europe a step closer towards developing a domestic shale gas industry. In the UK the Infrastructure Bill has been given Royal Assent and in Germany the Federal Government held a public hearing on the planned hydraulic fracturing draft law.

The UK Infrastructure Bill is designed to simplify procedures for the onshore oil, gas and deep geothermal industries to access reserves 300 metres or more underground.  According to the Government further legislation will follow in July to provide more clarity on some of the specific amendments introduced  covering hydraulic fracturing, specifically exploration in National Parks and water protection zones.

In Germany, the Federal Environment and Economy Ministries hosted a public hearing in Berlin yesterday into its proposed draft law which seeks to regulate the exploration of unconventional resources in the country. A broad range of consultees gave evidence supporting the need to ensure that any exploration is conducted within an environmentally sustainable framework.  Equally clear was the need for a pragmatic approach to the Government’s energy policy to help provide security of supply and drive competitiveness. The Government is expected to finalise the draft outline in the coming weeks before submitting it to the Bundestag to be debated by Members.

Both the UK and Germany face critical energy challenges, becoming increasingly dependent on foreign imports. If this is going to be addressed effectively then both governments need to find alternative sources of domestic production. Renewables can only provide part of the solution.

In the UK production from the North Sea continues to decline. Total energy production was 6.6% lower in 2013 than in the previous year, resulting in an increase in imports of 2.3% and rising UK’s import dependency to 47%.

Germany is also seeing a significant rise in imports. In 2013 it imported 63% of its energy from abroad, an increase of 2% in 2012.  Its energy dependency is at its highest in 20 years and is currently 10% higher than the EU average. Germans however seem aware of the need for a pragmatic approach. According to a public survey conducted last October by Forsa, the leading market research and opinion polling institution, 70% of German citizens support the idea of exploring and assessing unconventional resources. 79% are also aware of the fact that natural gas and oil will be required to ensure a safe and affordable energy supply for the foreseeable future.

Full story

2) Take That, Vladimir: German Government Approves Fracking
EurActiv, 13 February 2015

The German government has issued a draft law allowing fracking in shale and coal bed rock starting at a depth of 3,000 metres, permitting test fracking above 3,000 metres.

The German government has tabled a draft law permitting fracking in the country, with environmental associations criticising the draft as fragmented and risky, calling on the government to concentrate on implementing the Energiewende, instead. EurActiv Germany reports.

After a long debate over the use of fracking technology in Germany, the federal government issued a draft law allowing the controversial gas extraction method under certain conditions and in isolated cases.

German Environment Minister Barbara Hendricks made every effort to dispel concerns over the controversial gas extraction technology. “In this way, we are applying the strictest rules that have ever existed in the fracking industry,” the Social Democratic Party (SPD) politician assured.

It will only be permitted under the strictest conditions and with the highest regard for the environment and drinking water, she said. The earliest possible date for initiation would be in 2019, because sample drillings must first be conducted to gather the necessary knowledge on the technology, Hendricks explained.

Full story

3) Unstoppable Shale Revolution Poised For New Record Gas Production
Bloomberg, 7 February 2015

Naureen Malik

U.S. natural gas production is poised to reach a record for a fifth year as shale drillers boost efficiency, driving prices toward a low of more than a decade.
Output will rise 3.2 percent in 2015, led by gains at the Marcellus formation, the nation’s biggest shale deposit, according to the Energy Information Administration.

Marcellus production will increase 2.8 percent through February after a 21 percent gain in 2014, a year when prices tumbled 32 percent. Producers in Pennsylvania and West Virginia have cut break-even costs by half since 2008, according to Oppenheimer & Co.

Drilling more wells at one site and extending the length of horizontal wells are among the efficiencies that have helped gas companies cope with falling prices. The EIA expects Marcellus to climb to about 20 percent of production in the lower 48 states from about 2 percent in 2007. Cabot Oil & Gas Corp., the biggest Marcellus producer, plans to increase output by at least 20 percent this year.

“The Marcellus has been a game changer in terms of production, reserve potential, everything,” said Fadel Gheit, a senior energy analyst for Oppenheimer & Co. in New York. “They are not waiting for higher gas prices to bail them out.”

Gas Prices

Natural gas futures fell 2.1 cents to $2.579 per million British thermal units Friday on the New York Mercantile Exchange, the lowest settlement since June 2012. Gas has declined 81 percent from a high in 2008 as production from shale formations increased, touching $1.907 in April 2012, the lowest since 2002.

Break-even prices for Marcellus producers have dropped below $2 per thousand cubic feet ($1.95 per million Btu) from around $4 in 2008, Gheit said in a Feb. 3 interview.

U.S. gas production growth was projected to slow to 1.4 percent last year, the least since a decline in 2005, the EIA said in December 2013. Instead, output jumped 5.6 percent. Efficiency gains at Marcellus producer Range Resources Inc. include plans to increase the length of underground horizontal wells by 36 percent to 6,200 feet (1,890 meters), with a third of the total topping 7,000 feet, according to a Jan. 15 company presentation. Range used drilling efficiencies to cut costs to $2.64 per thousand cubic feet in 2014 from $3.01 in 2012.

Shale Deposits
The company said it’s targeting 20 percent to 25 percent production growth “for many years.”

Southwestern Energy Corp.’s output may rise 28 percent this year as it drills longer wells, increases pipeline capacity and after spending $5.4 billion to acquire shale fields, according to a Dec. 30 company conference call.

Full story

4) Matt Ridley: Giving Up On Shale Would Be A Big Mistake
The Times, 9 February 2015

With oil prices so cheap and scaremongers in full cry, it might be tempting to forget shale. That would be a big mistake

I don’t know about you, but I have been especially glad of my gas-fired central heating and hot water in the past few frigid weeks. Gas really is rather special: it provides us in this country with 84 per cent of our domestic heat, 27 per cent of our electricity, much of the feedstock for our synthetic consumer products, and pretty well all of the nitrogen fertiliser that has fed the world and largely banished famine. All this from a surprisingly small number of surprisingly small holes in the ground and the seabed, drilled with fewer accidents and spills than most other energy sources.

That is one reason why I will be arguing and voting to help the government improve its Infrastructure Bill today when it comes before the House of Lords, so as to make a shale gas industry in this country possible. When the bill was debated in the Commons, shale’s increasingly irrational opponents failed to impose an effective moratorium in England, though they have managed it in Wales and Scotland. But they still altered the Infrastructure Bill enough to tie the industry in strangling knots of new and unnecessary red tape that must be reversed if we are to see domestic shale gas heating British homes, paying British wages, feeding British factories, generating British electricity and not delivering us into dependence on a dangerous Russia.

As a source of energy, gas is more reliable than wind, cleaner than coal, more flexible than solar, cheaper than nuclear, safer than biofuel, less land-hungry than hydro. We will be burning it for decades to come under any policy. The National Grid’s extreme “gone green” scenario for future energy policy, under which we would have cut our carbon dioxide emissions by 60 per cent by the year 2035 still sees us burning almost as much gas in that year as we burn today.

So we will still need gas, whatever happens. Domestic production, mainly from the North Sea, has fallen by 66 per cent in the past decade and we now import half our gas. Beneath Lancashire and Yorkshire, in the Bowland shale, lies one of the richest gas resources ever discovered, just 10 per cent of which would be enough to provide nearly 50 years of British needs.

The technology to get it out involves using water and sand to make cracks that are a millimetre wide in rocks that are a mile and a half down. A month’s work leads to 25 years of gas flow from a quiet box of tricks that can be hidden behind a hedge. No need to festoon the hills with permanent concrete bases for 400ft towers of steel trying to suck a sparse trickle of energy out of the wind on a cold, calm day.

Shale gas extraction is a process that has proved very safe and clean in the United States. It has had virtually no impact on groundwater, earthquakes or surface pollution anywhere. These are exaggerated myths constantly repeated by the wealthy multinational pressure groups such as Greenpeace and Friends of the Earth, by wealthy fashion designers and their nimby friends in gin-and-jag country, and by Vladimir Putin and other Russians with an interest in expensive gas. In places such as Pennsylvania the effect of shale gas has been job creation, wealth creation and environmental benefits. Blackpool could do with more well-paying jobs.

Some are now arguing that falling oil prices have rendered the argument over British shale gas academic. Prices have fallen so low as to make the cost of drilling wells and fracturing rocks uneconomic. Certainly if oil stays at $50 a barrel, the rig count in the shale-oil fields of Texas and North Dakota will continue to drop fast, and oil production (currently still rising) will tail off. But shale gas production has been rising fast in recent years despite persistently low gas prices in America, partly because of rapid improvement in the productivity and cost of gas wells as the practice of horizontal drilling and fracking is perfected. […]

We have a huge chemical industry in this country, employing hundreds of thousands of people directly and indirectly, and it needs methane and ethane, derived from natural gas wells, as feedstock. That industry will disappear rapidly if we do not exploit domestic shale. It has repeatedly warned us of this.

Full post

5) Hail Shale: New American Shale Record
The American Interest, 11 February 2015

American power plants burned more natural gas last month than ever before. Reuters reports:

Power generators used an average 23.1 billion cubic feet per day of gas in January 2015, up 13 percent from the 20.5 bcfd average in January 2014, according to Thomson Reuters Analytics.

That was the most gas consumed by the power sector during the month of January on record, according to federal data going back to 1973.

The shale boom has unleashed a torrent of new sources of natural gas, and that abundant supply has depressed prices to the point that its squeezing out other potential power sources. American coal consumption is being hit by this, which is notable for two reasons: first, coal is often thought of as the cheapest fossil fuel around, which makes the fact that natural gas is displacing it all the more impressive. Second, coal is a dirty energy source, in terms of both local air pollution and greenhouse gas emissions. Burning natural gas as opposed to coal can cut those emissions in half.

So this winter, know that not only has the shale boom keep heating bills down across America, but that it’s been a boon for the environment as well.

Comments
  1. oldbrew says:

    Watch out, nutters about🙂

    Professor: ‘when I happened to publish an academic paper which demonstrated that the UK government’s hastily-introduced rules on fracking-induced seismicity are 40,000 times stricter than the rules for quarry blasting, I ended up with a death threat.’

    http://www.shetnews.co.uk/letters/10116-demonising-fracking

  2. Doug Proctor says:

    Drilling vertically to >3000m, horizontally for probably 1500m, fracking perhaps 40 stages …. we’re looking here at $6 million Cdn. Excluding tie-in, infrastructure, surface acquisition. One pad for 4 – 6 wells (covers two square miles). Each pad cost, $30 million, maybe.

    Without liquids, that’s a lot of gas to pay for. Say net-back is $4/mcf, charge to the British public is $6/mcf. That’s 10.0 bcf, or 5.0 bcf recoverable gas per section of land. At >3000m, okay.

    Let’s look at CHEAP gas, though: $2.00 netback, $3.00 to consumers. Now we need 20.0 bcf just to pay for the upfront operation. Pay for it in 6 years, six wells 1.5 mmcfd average for six years. Exponential decline. Wow. Great gas field!

    And there is no field like this on-shore yet …

    These are tough economics being set forth. Without a substantial liquid aspect – “wet” gas – or high gas prices (very high to consumers), this is a non-go without subsidization.

    I forget the details, but the UK Geological Survey report indicated that very little is known about gas potential at the +3000m depth. The proposal will not be met with much activity. The real deal here is the allowance for testing above 3000m depth.

    You have been handed a bait-and-switch: these measures are all about allowing testing of sub-3000m zones. The public, not the gas industry, has been hoodwinked technically, but aided socially.

    By baby steps, natural gas development is coming to the UK.

    Remember where the devil is.

  3. Graeme No.3 says:

    Slovakia, Hungary, Romania, Poland, Latvia, Lithuania, Estonia, Portugal and Spain are all keen on the idea of cheap, local sourced natural gas. The scandinavian countries are interested.

    Scotland has banned frakking. So have Luxembourg and Bulgaria.
    With the full green agenda in haggis-land I can guess which of these 2 Scotland will wind up looking like.

  4. oldbrew says:

    Doug P: the new UK rules say fracking has to be at least ONE thousand metres below ground (not three hundred as in the post above). The 3000 metre rule must be just for Germany.

    ‘Two conditions stand out. The first is a requirement that fracking activity must be limited to below ground depths that exceed 1,000 metres. The original bill proposed that fracking might take place below 300 metres depth.’

    http://www.remarkable-engagement.co.uk/mps-reject-fracking-moratorium

  5. Zeke says:

    One possible interpretation: The newly elected Greek PM was meeting with Putin in Moscow. He ran as a Europskeptic and in rejection of German Austerity….

    ref: http://redpilltimes.com/money-talks-putin-plans-invite-greek-pm-tsipras-moscow-10-billion-lifeline-russia-greece-may-works/

    The lift of a ban on fracking can be viewed as German Chancellor Merkel’s swift response to punish possible Russian deals with bailed out countries in the EU. These countries are under German austerity plans, stuck in the Euro, and ruled by German-appointed troikas.

    Summary: This is an immediate about-face economic response to punish possible Russian takings of German-EU possessions. It proves the rule that Germany is now in control of Europe.

    And German domination of Europe was thwarted previously by two wars, WWI and WWII.
    ref: “Germany is Dominating Europe” by ukipwebmaster, youtube
    WWI ref:

    German sympathizers such as John Maynard Keynes blamed WWI on the existence of the “nation-state,” and blamed WWII on the Versailles Treaty.

  6. Zeke says:

    “We now have a German dominated Europe, the very thing that we were told the European project would stop…”

  7. Doug Proctor says:

    Math is wrong (supposed to be $30 – 40 million per pad). Not material.

  8. I just read a Parliamentary report online which stated 300 metres, not 3,000 metres. But I also read that the Government had accepted an amendment that mentions 1,000 metres.

    Would Doug Proctor care to comment?

  9. oldbrew says:

    @ Frederick C: see here.

    https://tallbloke.wordpress.com/2015/02/13/fracking-a-step-closer-as-britain-germany-approve-new-laws/comment-page-1/#comment-97730

    The switch from 300 to 1000 metres in the UK was a late amendment to the final Act.

  10. Doug Proctor says:

    The 300m I saw also, looked like a typo. I thought the 3000m was the correct number.

    The 1000m depth looks much more reasonable. In Canada we have to be below the potable water table, and that is of the 200m maximum depth. The work I was involved in for coal-bed methane, we/I used 300m as a minimum depth, just to avoid any sort of discussion. Was not pertinent to CBM production anyway, because the pressures were (generally) too low to justify completion efforts.

    I’ve been involved in horizontal drilling for gas in clastics (sandstones, siltstones). The “shales” are not really shales but siltstones and shales with multiple very thin silstone laminae: fracking does NOT create primary permeability but connects it. Despite what you read about fracking creating permeability in non-permeable rocks, you need a basis of natural permeability to get gas out. The same goes for coal: the natural “cleat” system has to have cross-bed and through-bed basic open spaces to get the gas out.

    The American deposits are in areas of tension, pulling apart the rock, which opens up natural fractures and cleats. They get huge rates. In Canada – and I think much of the British basins – there is a general compression. The basins are squished, closing the natural fractures and cleats.

    Pressure gradients are very important. The American system has a water-filled column, >23 kPa/m (>10 psia/ft). Much of the Canadian system is shallow and at <6 kPa/m. The coal was only in the 3 kPa/m zone in the shallow areas. In our deep basin area, I saw 11 kPa/m as a strong number. The Duvernay shale gas targets at 3500m were up to 22 kPa in places.

    At the 3000m depth, pressures are going to be reasonably high regardless of the gradient. Above the 1000m depth, you can imagine not so much. At the 300m depth, very little. Horizontal drilling at those depths doesn't even work for anything but the lightest of oil – why? because the primary drive mechanism is solution gas under pressure.

    Drilling between 1000m and 3000m is the Canadian experience. Dry gas doesn't do it much and hasn't for years. We need liquids to make economics – even a year ago. The current prices for liquids have brought our business to a near standstill, not just heavy oil, but conventional oil. Dry gas has been dead for several years.

    Europe and Britain are still at the concept stage. You don't hear much about Cuadrilla these days, do you? Dry gas is a no-go at market prices. If you want to be upset about subsidization, look to Cuadrilla getting in bed with the government to produce dry gas for the Nation.

    Testing is all you need at this time. If the new legislation allows for that, you're okay. There is no widespread infrastructure of pipes, gas plants, CO2 collection anyway. None of that will happen until there is an apparent test pool found, developed and proven both economic and useful.

  11. Scott M says:

    Germany did not approve fracing, the lobby group supported by the Saudi’s are too strong.
    http://www.ctrmcenter.com/ctrm-community/german-government-did-not-just-approve-fracking/

  12. oldbrew says:

    German energy policy: burn more coal – especially dirty lignite, buy more Russian gas, build more wind turbines in the windy north to replace nuclear plants in the south, and keep subsidising solar power.

    What could possibly go wrong? Keep a straight face now😉