Shell Shuns Uk Shale Industry

[zugzwang]

In the space of a single year energy too cheap to meter appears to have become energy too expensive to extract.

And with the French deciding not to build any more UK nuke plants, think of the savings we're all going to make with only 6hrs electricity a day!

http://www.telegraph...s-industry.html

Royal Dutch Shell has crushed any hopes it might kickstart a British shale gas boom, saying nobody knows whether shale will succeed in the UK and it has no desire to be the company that tries to find out.

By Emily Gosden

10:12PM BST 02 May 2013

In a blow to Government attempts to attract investment to the controversial industry, Simon Henry, Shell's chief financial officer, said it had already allocated more than $6bn (£3.8bn) to shale globally and was not going to exceed that sum.

"We have a successful and growing business in North America, we have great opportunities in China, Ukraine and Russia," he said. "The UK has to compete directly with them and right now nobody even knows whether the gas will flow."

"Do we want to be first in and be in the headlines every day in the UK? Well, your answer is: we are not," he said.

Ministers hope domestic shale gas could help lower energy prices, replicating a boom that has transformed the US energy landscape.

They are planning tax breaks to entice shale gas developers, as well as sweeteners such as discounted energy bills for communities affected by fracking, the controversial process used to extract shale gas.

A handful of small companies such as Cuadrilla and IGas have led the charge in the UK shale industry and reports have suggested supermajors such as Shell may swoop.

Just a year ago Mr Henry struck a more positive tone, saying unproven estimates of UK shale suggested there could be significant reserves in Shell's "backyard", in which it "ought to be interested".

But on Thursday he said Shell had "much higher priorities, and more attractive opportunities" elsewhere.

"We are not going to just throw more strategic capital allocation into the business because the UK, or any other country for that matter, feels it's a good thing," he said. "If and when the UK reaches the same level of potential attractiveness, we'll give it a thought."

There was "almost certainly a lot of shale gas in Europe including in the UK" but it was not yet known how much, how easily it would flow from the ground, or the societal and fiscal challenges of extracting it.

[inflating]

In the space of a single year energy too cheap to meter appears to have become energy too expensive to extract.

And with the French deciding not to build any more UK nuke plants, think of the savings we're all going to make with only 6hrs electricity a day!

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[TrevorS]

In the space of a single year energy too cheap to meter appears to have become energy too expensive to extract.

And with the French deciding not to build any more UK nuke plants, think of the savings we're all going to make with only 6hrs electricity a day!

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Shell have correctly judged that the pain (NIMBYs and their bribes, environmentalists, interminable planning and permitting processes) is not worth the unproven gain. Not to mention the reputational damage risk.

[RufflesTheGuineaPig]

Shell have correctly judged that the pain (NIMBYs and their bribes, environmentalists, interminable planning and permitting processes) is not worth the unproven gain. Not to mention the reputational damage risk.

Correct. Extracting it will cost X. Fighting the NIMBYs will cost X times 3.

It's just not worth the hassle.

[fluffy666]

Shell have correctly judged that the pain (NIMBYs and their bribes, environmentalists, interminable planning and permitting processes) is not worth the unproven gain. Not to mention the reputational damage risk.

Our local paper (we live in the Mendips) had a 'shale gas debate special'.. the people against shale gas were essentially making stuff up, but got the most page space. This week we also had people complaining about a large solar power project.

It goes without saying that every single issue of the paper seems to have a story on a the lines of 'local residents get together to oppose new housing development'. Or even primary school expansion FFS.

[swissy_fit]

Locals get together to oppose...........................

Fill in the blanks.

It's not only a British disease but it does seem to be particularly prevalent in the UK.

[Gigantic Purple Slug]

Small players take the risks. Big boys sit back, watch how much hoo ha is caused and how much reserves are discovered, then step in when the economics are proven.

Newly Formed Oil Co Ltd has no garages to boycott, no worldwide rep to suffer and can be wound up in a jiffy.

Non story.

[tomwatkins]

Locals get together to oppose...........................

Fill in the blanks.

It's not only a British disease but it does seem to be particularly prevalent in the UK.

It will happen, with or without Shell.

[RufflesTheGuineaPig]

It will happen, with or without Shell.

Let someone else spend all the money and move in once the public has accepted it.

[corevalue]

Typical decline rate of shale resource in the Bakken. It means you have to drill, then drill again, and again, and again. Often referred to as the Red Queen Syndrome, you have to run fast to keep in the same place.

(source: www.theoildrum.com)

[swissy_fit]

Typical decline rate of shale resource in the Bakken. It means you have to drill, then drill again, and again, and again. Often referred to as the Red Queen Syndrome, you have to run fast to keep in the same place.

(source: www.theoildrum.com)

Aren't they expecting better well longevity from the North-west shale deposits because of their high thickness?

[tomwatkins]

Let someone else spend all the money and move in once the public has accepted it.

Absolutely correct. Buy out the minnows once they have proved it up and fought with Greenpeace.

[newbonic]

Aren't they expecting better well longevity from the North-west shale deposits because of their high thickness?

That graph is for shale oil, not gas.

IGas were saying that they are going for commercial shale gas production in the UK within 3 years.

[lid]

So it's just a load of hot air then

[Kurt Barlow]

That graph is for shale oil, not gas.

IGas were saying that they are going for commercial shale gas production in the UK within 3 years.

The production profiles are similar though.

[newbonic]

Maybe so, but you can't tell that from a graph of shale oil well production. Fwiw I think we will see some useful shale gas output in the UK, but not nearly as much as most mail and telegraph readers seem to think. Mainly because of our high population density and allied nimbyism. See appendix J of www.withouthotair.com etc.

So it's keep on building the wind turbines boys...

[corevalue]

Maybe so, but you can't tell that from a graph of shale oil well production. Fwiw I think we will see some useful shale gas output in the UK, but not nearly as much as most mail and telegraph readers seem to think. Mainly because of our high population density and allied nimbyism. See appendix J of www.withouthotair.com etc.

So it's keep on building the wind turbines boys...

I searched hard for one showing gas depletion rates, and although I could find plenty of verbal assertions, I couldn't find a graph specifically for gas. As Kurt said, the depletion rates are similar for fracked oil and gas, and the implication to be drawn is that there has to be frenetic drilling activity to maintain output. Can we do that in heavily urbanised Britain?

from www.counterpunch.org

Hughes analyzed the industry’s production data for 65,000 wells from 31 shale basins nationwide utilizing the DI Desktop/HPDI database, widely used both by the industry and the U.S. government. He sums up the quagmire he discovered in doing so, writing,

Wells experience severe rates of depletion…This steep rate of depletion requires a frenetic pace of drilling…to offset declines. Roughly 7,200 new shale gas wells need to be drilled each year at a cost of over $42 billion simply to maintain current levels of production. And as the most productive well locations are drilled first, it’s likely that drilling rates and costs will only increase as time goes on.

The reality, he explains, is that five shale gas basins currently produce 80 percent of the U.S. shale gas bounty and those five are all in steep production rate decline.

from a very iinformative article at http://www.resilience.org/stories/2012-05-08/shale-gas-view-russia

First, what is shale gas? Ask this question, and you will be told: “Shut up, it's methane.” But is it really? The composition of shale gas is something of a state secret in the US, but information about the gas produced from the nine Polish shale gas test projects did leak out, and it's not pretty: Polish shale gas turned out to be so high in nitrogen that it does not even burn. Technology exists to clean up gas that is, say, 6% nitrogen, but Polish shale gas is closer to 50% nitrogen, and, given high production costs, low yields, rapid depletion and low wellhead pressure, cleaning it up to bring it up to spec (which is 1% nitrogen) would most likely result in a net waste of energy.

[Gigantic Purple Slug]

I searched hard for one showing gas depletion rates, and although I could find plenty of verbal assertions, I couldn't find a graph specifically for gas. As Kurt said, the depletion rates are similar for fracked oil and gas, and the implication to be drawn is that there has to be frenetic drilling activity to maintain output. Can we do that in heavily urbanised Britain?

from www.counterpunch.org

from a very iinformative article at http://www.resilience.org/stories/2012-05-08/shale-gas-view-russia

There's no reason why you can't drill a well and then branch off from it. The only reason they do it the way they do in the States is because it is cheaper. From a 100 m square patch of land you could drill wells in all directions to cover a huge area. This is how it works on platforms. You don't just have one well going down, but loads in all different directions. This would minimise the land surface used to appease the nimbys.

A lot of the shale gas reserves will have multiple production modes. It will be another couple of years or so before we start producing shale gas here, but it will happen and it will make a big difference.

[Kurt Barlow]

There's no reason why you can't drill a well and then branch off from it. The only reason they do it the way they do in the States is because it is cheaper. From a 100 m square patch of land you could drill wells in all directions to cover a huge area. This is how it works on platforms. You don't just have one well going down, but loads in all different directions. This would minimise the land surface used to appease the nimbys.

A lot of the shale gas reserves will have multiple production modes. It will be another couple of years or so before we start producing shale gas here, but it will happen and it will make a big difference.

You can do that but you need a huge rig with >2500bhp for the drill. The number of rigs like that in Europe can be counted on one hand and due to the need to keep on drilling elsewhere they are very hard to come by.

Of course you can order a brand new one but that will set you back £20-£25m along with a several month wait time.

[alexw]

I searched hard for one showing gas depletion rates, and although I could find plenty of verbal assertions, I couldn't find a graph specifically for gas. As Kurt said, the depletion rates are similar for fracked oil and gas, and the implication to be drawn is that there has to be frenetic drilling activity to maintain output. Can we do that in heavily urbanised Britain?

from www.counterpunch.org

from a very iinformative article at http://www.resilience.org/stories/2012-05-08/shale-gas-view-russia

Given the flow characteristics of oil and gas I would think shale gas would deplete a fair bit faster than shale oil.

[alexw]

You can do that but you need a huge rig with >2500bhp for the drill. The number of rigs like that in Europe can be counted on one hand and due to the need to keep on drilling elsewhere they are very hard to come by.

Of course you can order a brand new one but that will set you back £20-£25m along with a several month wait time.

By huge rig, you mean a stonking great big thing that will go way above the treeline and require a significant footprint? If so that won't appease the nimby's any better than would continual fracking pads being built.

All it would do would be to supersize the nimby criticism to a high degree at one specific locality.