GWPF: Fracking Update

Posted: September 10, 2015 by tallbloke in Energy
Tags: , ,

Roundup of fresh finds on the fracking front from the GWPF

A high-profile Scottish environmental campaigner has given his backing to fracking as long as safeguards are in place and key conditions are met. In a significant intervention that will help to undermine opposition to the energy source, Robin Harper, the first Green MSP and now the chairman of a major environmental trust, said that he would be prepared to give his cautious backing if it could be proved that it was an improvement on the burning of coal and oil. His comments will be a major setback for anti-fracking campaigners, who have argued that anything other than a complete ban would damage the environment. Mr Harper’s powerful green credentials mean that they will not be able to dismiss his views easily. –Hamish Macdonell, The Times, 10 September 2015

Environmentalists should keep cool heads over fracking, says Friends of the Earth’s former climate campaigner. Bryony Worthington – now Labour shadow energy minister – says fracking will create less CO2 than compressing gas in Qatar and shipping it to Britain. Baroness Worthington’s intervention may prove significant. She is a professional climate and energy analyst, and one of the architects of the UK’s radical Climate Change Act. “We have to be realistic,” she told BBC News. “We are going to be using gas for a long time because of the huge role it plays for heating homes and for industry. –Roger Harrabin, BBC News, 10 September 2015

Can the green lobby win the shale argument over environmental objections? I don’t think it can. 10 or 20 years ago it could have won, when governments were willing to burn billions, but the economic climate has changed, we’re facing the biggest crisis in decades. No government in the world would give up this shale opportunity, not even the British government, which is very green indeed. I don’t think they have a leg to stand on when it comes to shale. People will realize that this energy is far less impacting on environments than most other forms of energy. –Benny Peiser, Natural Gas Europe, 25 October 2011

1) Greens’ First Scottish MP Backs Fracking ‘If It Proves Safe’ – The Times, 10 September 2015

2) Fracking: Think Again, Green Campaigner Urges Environmentalists – BBC News, 10 September 2015

3) Anti-Fracking Protesters To Be Labelled ‘Extremists’ Under New Counter-Terrorism Strategy – Daily Mail, 5 September 2015

4) UK Government Continues The Fight For Shale – Bracewell & Giuliani LLP, 8 September 2015

5) Aguilera & Radetzki: Climate Policy With Low Oil Prices – Global Warming Policy Forum, 10 September 2015

Anti-fracking protesters could be viewed as potential extremists under the government’s new counter-terrorism strategy, police have told teachers. The bizarre advice was offered during a training session as part of the Prevent strategy, which aims to stop youngsters being brainwashed by Islamic extremists. The group of 100 teachers were told that people campaigning against fracking in their local area could be regarded as having extreme views. They were also warned that environmental activists and anti-capitalists could be deemed a threat, with the Green MP Caroline Lucas given as an example. –Eleanor Hardin, Daily Mail, 5 September 2015

Despite facing opposition on numerous fronts, the development of a regulatory regime to promote the exploration of shale gas in the UK has continued apace following David Cameron’s comments earlier this year that the UK was “going all out for shale”. The UK government has reiterated the national need to develop the UK’s shale gas resources to improve the country’s energy security and transition to a low-carbon economy. The passing of the Act and introduction of measures to fast-track shale gas planning applications confirm the UK government’s commitment to the development of the UK’s indigenous shale gas resources.  Industry will certainly welcome these initiatives as developers remain keen to accelerate the rate of progress of exploratory fracking in the UK. —Bracewell & Giuliani LLP, Enery Legal Blog, 8 September 2015

In our forthcoming book, The Price of Oil, we argue that although oil has experienced an extraordinary price increase over the past few decades, a turning point has now been reached where scarcity, uncertain supply and high prices will be replaced by abundance, undisturbed availability and suppressed price levels in the decades to come. We note that practically all energy forecasting organizations are predicting an expanding fossil fuel future for decades to come, with oil continuing to play a key part in satisfying the world’s energy needs. Moreover, the oil industry’s investment behavior exhibits unbelief in deep climate policy within the foreseeable future. The stranded asset phenomenon may come to apply in the main to expensive, subsidized renewables if these attitudes prevail and become instrumental in policy evolution. Despite the difficulties in predicting what might transpire, history and current behavior point to no more than a superficial climate policy in the foreseeable future, with our projected revolutions proceeding by and large unhampered. We deem that the great ambitions of the Paris climate meeting in December 2015 are very unlikely to be fulfilled. –Roberto F. Aguilera and Marian Radetzki, Global Warming Policy Forum, 10 September 2015

1) Greens’ First Scottish MP Backs Fracking ‘If It Proves Safe’
The Times, 10 September 2015

Hamish Macdonell

Greens’ first MSP backs fracking ‘if it proves safe’ – Robin Harper is prepared to give fracking his support as long as environmental conditions are satisfied

A high-profile Scottish environmental campaigner has given his backing to fracking as long as safeguards are in place and key conditions are met.

In a significant intervention that will help to undermine opposition to the energy source, Robin Harper, the first Green MSP and now the chairman of a major environmental trust, said that he would be prepared to give his cautious backing if it could be proved that it was an improvement on the burning of coal and oil.

Mr Harper said that he was speaking in his role as chairman of the Scottish Wildlife Trust, but he made it clear that he supported its position.

Speaking to The Times, Mr Harper said: “If it’s safe and if it doesn’t damage the environment, if it’s an improvement on burning coal or oil, then, yes, there would be cautious backing for it.”

His comments will be a major setback for anti-fracking campaigners, who have argued that anything other than a complete ban would damage the environment.
Mr Harper’s powerful green credentials mean that they will not be able to dismiss his views easily.

Mr Harper’s decision not to support a complete ban will also give a much needed fillip to pro-fracking groups, who have argued that the process is safe and could provide Scotland with huge amounts of cheap energy. […]

Murdo Fraser, a Conservative MSP and the convener of Holyrood’s energy committee, said: “Robin Harper is a well respected figure in Green politics. His cautious welcome for fracking in Scotland represents a significant intervention. It is very encouraging to see such a credible voice backing this analysis. I hope that the Scottish government will pay heed and allow properly controlled fracking to proceed.”

Full story

2) Fracking: Think Again, Green Campaigner Urges Environmentalists
BBC News, 10 September 2015

Roger Harrabin

Environmentalists should keep cool heads over fracking, says Friends of the Earth’s former climate campaigner.

Bryony Worthington – now Labour shadow energy minister – says fracking will create less CO2 than compressing gas in Qatar and shipping it to Britain.

But she insists shale gas should only be developed if its emissions are captured and stored underground.

The current FoE position is that more fossil fuel exploitation will further destabilise the climate.

Nonetheless, Baroness Worthington’s intervention may prove significant. She is a professional climate and energy analyst, and one of the architects of the UK’s radical Climate Change Act.

“We have to be realistic,” she told BBC News. “We are going to be using gas for a long time because of the huge role it plays for heating homes and for industry.

“The important thing is to minimize the carbon emissions from gas. That means if we can get our own fracked gas, it’s better to use that than importing gas that’s been compressed at great energy cost somewhere else.”

Assigning responsibility

She believes NGOs (green groups) have been opportunistic in gathering support for green causes by taking an absolute position on shale gas.

“We have the mother of all challenges getting emissions of greenhouse gases out of our energy system – environmentalists should not be adopting a priori objections to technologies but appraising them with a cool head,” she argued.

Her former colleague, Friends of the Earth’s director Craig Bennett, replied:

“Fracking won’t help us tackle climate change. Even people in the industry agree that shale gas wouldn’t make any big difference to our energy sector until the mid-to-late 2020s, which is exactly when the UK needs to start getting out of gas, wherever it comes from.

“Building a whole new gas infrastructure will keep us addicted to expensive fossil fuels for decades to come, just when other European countries will be benefiting from much cheaper renewables.”

Both Baroness Worthington and Mr Bennett agreed on the need to speed the development of carbon capture and storage (CCS), the process in which CO2 emissions are stripped out of power station exhausts and forced into rocks underground.

Full story

3) Anti-Fracking Protesters To Be Labelled ‘Extremists’ Under New Counter-Terrorism Strategy
Daily Mail, 5 September 2015

Eleanor Hardin

Anti-fracking protesters could be viewed as potential extremists under the government’s new counter-terrorism strategy, police have told teachers.

The bizarre advice was offered during a training session as part of the Prevent strategy, which aims to stop youngsters being brainwashed by Islamic extremists.

The group of 100 teachers were told that people campaigning against fracking in their local area could be regarded as having extreme views.

They were also warned that environmental activists and anti-capitalists could be deemed a threat, with the Green MP Caroline Lucas given as an example.

Dylan Murphy, a history teacher present at the training day, said: ‘The thing that set alarm bells ringing in my head was when he started talking about environmental activists. ‘I thought, “Are you equating anti-fracking protests and environmental protesters with neo-Nazis and terrorists?”’

Yesterday, critics voiced concerns that officers appeared to be widening the remit of counter-terrorism strategies in schools to include protest groups.

Full story

4) UK Government Continues The Fight For Shale 
Bracewell & Giuliani LLP, 8 September 2015

Introduction

Despite facing opposition on numerous fronts, the development of a regulatory regime to promote the exploration of shale gas in the UK has continued apace following David Cameron’s comments earlier this year that the UK was “going all out for shale”. The UK government has reiterated the national need to develop the UK’s shale gas resources to improve the country’s energy security and transition to a low-carbon economy.

For over a decade, the UK has been a net importer of gas following declining levels of production from the UK’s North Sea’s gasfields.  Imports of gas accounted for 45% of the UK’s supply last year. The Department of Energy and Climate Change predicts that, without any contribution from shale gas, net imports of gas could increase to 75% by 2030. Amber Rudd, Secretary of State for Energy and Climate Change, considers the development of the UK’s shale resources as an essential component of the UK’s energy mix going forward and has pledged to “deliver shale”.

The passing of the Infrastructure Act 2015 and new measures introduced by the UK government in August 2015 to enable shale gas planning applications to be fast-tracked continue to foster the development of the industry. This article gives an overview of the latest legislative reforms and measures affecting the shale gas industry in the UK.

Underground access rights and the Infrastructure Act 2015

In the UK, rights to petroleum belong to the Crown and the UK government issues licences to operators to search for, bore for and extract petroleum (which includes shale gas and oil). Ownership of freehold land in the UK generally entitles the landowner to rights at the surface and down to the centre of the earth.  As a result, prior to the introduction of the Infrastructure Act 2015, onshore extraction companies were required to obtain the consent of potentially numerous landowners to gain underground access following receipt of a licence from the UK government.  Failure to do so would constitute a trespass. […]

Fast-track planning for shale gas applications

The UK government and industry participants have been frustrated at the slow rate of progress of exploratory fracking for shale gas and oil.  One of the factors which has stymied growth to date has been the protracted planning process. This was recently demonstrated following applications from Cuadrilla Resources to Lancashire county council in May 2014 to drill and frack a number of wells in two sites (Preston New Road and Roseacre Wood).  The county council repeatedly delayed proceedings and then finally rejected the bids in June 2015.  The county council’s decisions and, in particular, the length of time taken to reach them were met with dismay by the oil and gas industry.

On 13 August 2015, the UK government announced new measures for shale gas planning applications to be fast-tracked through a new, dedicated planning process and which could deny councils the right to decide fracking applications, unless they approve them quickly.  The Secretary of State for Energy and Climate Change commented that “to ensure we get this industry up and running we can’t have a planning system that sees applications dragged out for months, or even years on end”.

As part of the new measures, appeals against any refusals of planning permission for exploring and developing shale gas must be treated as a priority for urgent resolution. […]

Establishment of a sovereign wealth fund

Last year the UK government proposed that, to ensure that local communities continue to benefit from the development of shale gas extraction in the long term, an amount of shale gas extraction revenues may be held in a new sovereign wealth fund.  As fracking continues to polarise public opinion, the establishment of a sovereign wealth fund by the UK government is viewed in some quarters as an attempt to “win over” communities by advocating the long term benefits the development of the shale gas industry. The UK government confirmed in August 2015 that it plans to present its proposals for a new sovereign wealth fund towards the end of 2015.

Conclusion
The impetus to increase shale production in the UK is linked with the government’s goal to bolster energy security by decreasing the nation’s dependency on imported energy sources, as demonstrated to great success in the US. The passing of the Act and introduction of measures to fast-track shale gas planning applications confirm the UK government’s commitment to the development of the UK’s indigenous shale gas resources. Industry will certainly welcome these initiatives as developers remain keen to accelerate the rate of progress of exploratory fracking in the UK.

Full post

5) Aguilera & Radetzki: Climate Policy With Low Oil Prices
Global Warming Policy Forum, 10 September 2015

From Roberto F. Aguilera and Marian Radetzki’s new book The Price of Oil, Forthcoming, Cambridge University Press, November 2015

In our forthcoming book, The Price of Oil, we argue that although oil has experienced an extraordinary price increase over the past few decades, a turning point has now been reached where scarcity, uncertain supply and high prices will be replaced by abundance, undisturbed availability and suppressed price levels in the decades to come. We also examine the implications of this turnaround for the world economy, as well as for politics, diplomacy, military interventions and the efforts to stabilize climate.

Using simplistic methodologies, we conclude that the shale revolution will yield an increased output of oil in the world (outside the US) totaling 19.5 mbd in the 20 years between 2015 and 2035. We also assert that the conventional oil revolution – the application of horizontal drilling and fracking to conventional oil formations in the world outside the US – will yield a further addition of 19.7 mbd in the same period, summing up to a spectacular total rise of over 39 mbd by 2035. This is nearly twice as much as the global increase in all oil production in the 20-year period 1994–2014.

As the revolutions develop and expand internationally, they are bound to have a strong price-depressing impact, either by preventing price rises from the levels observed in 2015 or by pushing them back to these levels if an early upward reaction takes place. Our conclusion on prices envisages a level of about $60/bl in 2035, while a more optimistic scenario which appears increasingly likely, sees a price of $40 by then. The price implications of the revolutions will in turn influence many other conditions that shape human life, be they economic, political, diplomatic or military.

Though concerns about global warming are not the main focus of our book, we take a look in one of the chapters, and in this Guest Editorial, at the relationship between climate policies and the projected greater availability and lower long-term oil prices due to the two revolutions. Without policy reactions, the use of oil will grow and extend its life expectancy in the global energy system.

An inherent conflict

A deep climate policy was defined as one assuring that CO2 concentrations in the atmosphere did not exceed a doubling throughout the twenty-first century – believed to involve a warming of some 2 degrees Celsius. Such a policy is seen to require global emission cuts of some 30 percent already by 2035 (and no less than 50 percent by 2050) compared with 2011 levels (IEA, 2013). There is little doubt that implementation of a climate policy at this level of ambition would imply the end of most of the oil revolutions. There have also been widespread claims that such policy would result in massive stranded assets in unconventional oil sources in general, far from just shale oil.

Would sizable proved reserves remaining in the ground due to a deep climate policy constitute a serious problem? We do not think so, and present the content of Table 1 in support of our view. The table is based on IEA’s New Policies Scenario, which assumes that current and planned climate policies will be implemented, but that no new and more severe ones will be introduced – so that the climate policy burden on the economy will remain quite light. The output growth anticipated by the IEA in this scenario permits us to calculate the aggregate 2014-2040 output as a multiple of output in 2013, and so to assess the remaining proved reserves in 2041 (also expressed in years of 2013 output). It emerges that colossal proved reserves will remain in 2041 even in the absence of deep climate policy. But unused reserves apparently do not cause any serious problem to the fossil fuel industries, or else, they would never have been created on the prevalent scale. The reason may be that investment in reserve creation is relatively small in relation to total production cost, and worth the companies’ while to assure reasonable peace of mind about future production potential. Of course, reserves remaining in 2041 would be even larger if a deep climate policy were implemented.

The stranded asset problem could raise far more serious problems if climate policy resulted in unused production installations, whose development has involved heavy investments. Applying the rough and simplified assumption that oil output would be reduced in line with the overall emission cuts referred to earlier of 30 percent in coming decades, we see oil production reduced from 87 mbd in 2013 to around 60 mbd in 2035. This would be a remarkable change, but even here we believe that serious stranded asset problems are unlikely to occur. Producing wells worldwide experience, on average, decline rates of 7 percent per annum, so stable production requires investments either in enhanced recovery, or in the development of completely new fields. No more than five years of absent investments would then be required to reduce current production capacity to the maximum 2035 level imposed by climate action. In the absence of dramatic and sudden measures imposed without warning, there is little likelihood that installations capable of continued production would be left idle in consequence of interventions to arrest climate change.

These considerations raise the question about the realism of the stranded asset fears. Some studies warn about the risks to the oil industry of launching expensive, marginal projects – a “carbon bubble”. However, it would appear that the industry and its investors are generally assuming that climate agreements will not be pursued with sufficient seriousness to jeopardize their future investments. We are inclined to share this view.

Another point to consider in this context is that a vast majority of the world’s oil reserves are in the hands of state owned enterprises in developing countries. These organizations have goals like social and economic development, which are likely to be higher priorities than cutting emissions. Moreover, the oil consumers in most oil producing developing countries receive significant public subsidies. These subsidies are politically hard to discontinue. They also encourage domestic usage, and, by implication, the level of production.

Climate policy: costs

The cost of a rational, deep policy, using the most efficient instruments and assuming that economic adjustment to the policy effects will be ideally flexible, has been assessed to amount to perhaps 1–2 percent of annual global GDP. Political dilemmas will obviously arise, as these costs will ultimately have to be borne by unwilling tax payers or energy users.

These dilemmas will become much more profound since the less developed countries are now the largest emitters, and virtually all of the energy demand growth in the future will come from these countries. Yet it is reasonable for them to express an unwillingness to go along with a global emissions deal, where everybody is equally charged for each emission unit. Given the developed world’s history of intensive oil, coal and gas use, it is clearly a politically and morally sensitive issue to deny the less developed countries the use of fossil fuels to achieve reduced emissions at the expense of similar prosperity. Income transfers from the rich countries would be of essence to get the poorer countries aboard a global scheme.

Against this background, it may be appropriate to present some results showing the order of magnitude of the required dollar flows if the world is to attain the emissions goal referred to earlier, with the non-OECD world’s participation paid for in full by financial transfers (Jacoby et al., 2009). By 2020, the net annual transfers are assessed at $500 billion, of which $200 billion are from the US. By 2050, the required annual transfers would exceed $3 trillion, with the US contribution rising to $1 trillion. To put these sums in perspective, the rich countries have to date pledged around $10 billion in compensation to the rest of the world – but even these meager commitments are not definitive as they are facing political resistance in several of the countries making them. Given the relative size of these numbers, it is easy to understand the failure to come to an agreement at the 2009 climate change conference in Copenhagen, Denmark – a failure that clearly perseveres in the preparations for the Paris meeting in December 2015. The gulf between the climate rhetoric and the political preparedness to incur costs appears difficult to bridge.

Climate policy: prospects in a 20-year perspective, and implications

We note that practically all energy forecasting organizations are predicting an expanding fossil fuel future for decades to come, with oil continuing to play a key part in satisfying the world’s energy needs. Moreover, as stated earlier, the oil industry’s investment behavior exhibits unbelief in deep climate policy within the foreseeable future. The stranded asset phenomenon may come to apply in the main to expensive, subsidized renewables if these attitudes prevail and become instrumental in policy evolution.

Despite the difficulties in predicting what might transpire, history and current behavior point to no more than a superficial climate policy in the foreseeable future, with our projected revolutions proceeding by and large unhampered. We deem that the great ambitions of the Paris climate meeting in December 2015 are very unlikely to be fulfilled.

References

BP (annual), BP Statistical Review of World Energy, British Petroleum, London.
IEA (2013), Redrawing the Energy-climate Map, International Energy Agency, Paris.
IEA (2014), World Energy Outlook, International Energy Agency, Paris.
Jacoby HD et.al. (2009), “Sharing the Burden of GHG Reductions”, in Aldy J and R Stavins, editors, Post-Kyoto International Climate Policy, Cambridge University Press, Cambridge, UK.

* Roberto F. Aguilera, Adjunct Research Fellow, Curtin University, Australia
* Marian Radetzki, Professor of Economics, Luleå University of Technology, Sweden

Comments
  1. Fanakapan says:

    First one out the hatch of a sinking ship ?

    Its an economic certainty that fracking will proceed at full speed now. There simply is no other option given that dear old Blighty has failed to replace the productive capacity that Thatcher’s pushing up the £ to $2,60 destroyed😦

    The pity of it is, that the wealth will be simply piddled away in masking the ineptitude of our own politicians.

  2. Kevin Lohse says:

    Can’t think of a stronger confirmation that the NH at least is about to enter a cold period than the few scientifically aware environmental mullahs calling for more hydrocarbon energy resources as a national priority.

  3. tallbloke says:

    Quite so Kevin. A few years ago, Bryony Worthington would have crawled across broken glass to stick hot needles in her eyes before she’d have given assent to fracking natural gas. Funny how the prospect of an angry mob concentrates the mind.

  4. Fracking ‘may’ be as detrimental to the planet as wind farms! When have governments gotten anything correct? Both black and brown coal are only trees that have not caught fire yet! To get at it for fuel, requires not the deliberate ‘fracturing’ of this lovely planet Earth! We earthlings now have the knowledge and skill to usefully and carefully exploit the God given energy in low level thorium. Of course to screw up is human. ‘Tis still pidilly compared to governments. -will-

  5. oldbrew says:

    ‘We deem that the great ambitions of the Paris climate meeting in December 2015 are very unlikely to be fulfilled.’

    If so, the modern maximum of climate hype should soon be over.