A Fracking Great Shift of Power

It has been some time since I last looked at energy and security, time for a refresh.

A Step Back in Time

The Conservative party, to their credit, highlighted the issue of energy security a number of times pre-election even though they indulged in a spot of scaremongering.

Ladies and Gentlemen. If we had another term of Labour, we’d have to get used to sitting in the dark. Because for the first time since the 1970s, the Government is expecting to resort to power cuts during the years ahead.

In October 2009 the Shadow Energy Minister, Greg Clark MP, delivered a speech on the issue titled Keeping Britain’s Lights on. For maximum showbiz effect, it started with the lights off and raised the spectre of rolling blackouts. There was also a strong inference that we were at the mercy of the Kremlin, all they had to do was turn off the taps and old ladies in bobble hats would be dropping like flies.

In 2009, in the grip of an extremely cold winter, several large industrial users faced restrictions in supply as domestic users were prioritised. These large users had signed up for interruptible tariffs in return for discount pricing so could not really complain, you pays your money and you take your chances.

This however, did not stop the bandwagon jumpers (i.e. press and opposition politicians) seizing upon the issue, evoking the famous phrase ‘keeping the lights on’ yet again.

The Conservative Party’s pre election strategy paper, A Resilient Nation, devoted a paragraph to the issue of energy security, stating

The danger that the country now faces of a real risk of the lights going out – inadequate power to keep the economy going – was entirely predictable even before Tony Blair spoke and yet his government did virtually nothing.  Taken together, the lack of resilience in the UK’s stretched power generation, strained energy transmission, insecurity of energy supply and lack of emergency storage is nothing short of alarming. Forming a coherent energy policy, joining domestic with overseas factors, security with long term climate change goals and private sector investment with government policies on resilience of systems will be an urgent Conservative priority on entering office and is an example of an approach that can be applied to other essential sectors

In a supporting Annexe, the paper makes it clear that the armed forces will play a part in addressing the issue of energy security

Reflect energy security concerns in the tasking of the Armed Forces. The MoD should have regard to energy security in the tasking of our Armed Forces, for example the Royal Navy in the security of the sea lanes and the safety of maritime traffic

The 2010 Strategic Defence and Security Review (SDSR) mentioned energy fifty five times and had a whole sub section devoted to it in the Wider Security section.

We all criticise the SDSR as being an incoherent short term hack job beset with last minute shabby horse trading, woeful analysis and littered with wishful thinking but at least in referencing energy security it recognised one of the key risks the UK faces in the next several decades.

It said

The UK faces a range of risks related to our ability to access secure, diverse and affordable supplies of energy, which are essential to economic stability and growth. These include political instability in key energy countries, insufficient investment in states that supply energy, and imperfections in the functioning of global and UK markets

As the UK’s own production falls these risks, it said, are likely to increase.

The SDSR then went on to describe what the Government would do to address the issues;

  • Give energy a higher priority in foreign policy
  • Help others reduce their demand
  • Work with international institutions to promote price stability
  • Improve early warning
  • Improve the functioning of domestic markets
  • Promote low carbon technologies and energy efficiency
  • Establish measures to improve the resilience of energy infrastructure
  • Strengthen cross government approaches
  • Improve reporting

Now if that leaves you particularly underwhelmed you would not be alone, especially if one considers the scale of the problem.

Without sounding alarmist and resorting to the dramatics of Greg Clark MP I think energy security is of a greater significance than global terrorism or cyber attack.

The problem with looking at the SDSR in the context of the National Security Strategy is that the SDSR is predicated on a 5 year window, the next one being 2015.

The NSS looked at a 20 year period and mentioned the word ‘energy’ precisely eight times.

The security of our energy supplies increasingly depends on fossil fuels located in some of the most unstable parts of the planet.

The NSS assessed likelihood and impact and prioritised risks into three tiers.

Tier 1; hostile cyber attacks against the UK, international military crisis between states that draws in the UK, international terrorism affecting the UK and a major accident or natural hazard

Tier 2; CBRN attack on the UK or overseas territories, instability or insurgencies that creates an environment that can be exploited to threaten the UK, increased organised crime, disruption to satellites

Only in Tier 3 do we find disruption to oil or gas, alongside a large scale conventional military attack against the UK.

No, really, check for yourself.

The Cabinet Office maintains overall responsibility for National Security issues but hasn’t published anything online since November 2011

In March 2012 the Joint Committee on the National Security Strategy issued its First Review of the NSS.

Two things happened with this review.

Number 1;The Joint Committee ripped the Government to pieces

Number 2;No one noticed and normal jogging continued

Just for completeness by the way, this review mentioned energy zero times!

One of my favourite documents is the Future Character of Conflict published by the Ministry of Defence’s Development, Concepts and Doctrine Centre (DCDC).

It looked at the drivers for future conflict and recognised energy would be of some significance.

In particular gas will be of increasing importance as states struggle to maintain energy supplies.  The majority of this gas will probably come from a few regions, namely the Arctic, Central Asia, the Persian Gulf (especially Qatar and potentially Iran), Russia and Africa.  Many boundary disputes, such as those in the Arctic, Gulf of Guinea and the South Atlantic will become inextricably linked to the securing of energy supplies.  The UK will be critically dependent upon energy imports

So whilst these key publications recognise, to varying degrees, the importance of energy security and risk to the UK of not having it they don’t go into much practical details of what the risks are beyond vague concepts and measures to ensure supply continuity are even more vague.

It could be argued that defence actually has very little to do with energy security, hence the lack of attention to it in the SDSR.

There is of course the supply chain route protection role, especially in the maritime domain, but how much practical support the MoD can provide to the UK energy market in comparison with the protection offered by a functioning market is open to debate.

Is the problem real or imagined?

The Problem, Or Not

The UK demand for energy is only ever going to go one way, up.

Even if a collection of overly restrictive ‘green’ policies succeeds in driving heavy industry offshore, which it seems is increasingly the case, population growth and other factors will drive demand for gas and electricity up.

Whatever your feelings on nuclear, global warming, the oil industry or renewable energy, the fact is, today, the UK is a net energy importer and baring some surprise technological development is likely to remain so.

Currently, gas for power generation contributes to both base load and peak loads. Gas is currently sourced from dwindling North Sea fields, pipeline delivered gas from continental Europe (mostly Norway) and ship delivered Liquefied Natural Gas (LNG) from the Middle East (mostly Qatar)

In 2006 Qatar overtook Indonesia as the world’s largest exporter of LNG and its North Field reserve is the largest in the world with an equivalent capacity of 150 years UK peak demand. The Qatargas II supply chain is a quite staggering project, the South Hook LNG terminal in Milford Haven, 14 new LNG tankers, 30 wells, 2 onshore processing facilities and the supporting infrastructure.

It is the largest LNG terminal in Europe and can satisfy 20% of the UK’s demand alone.

The agreement with Qatargas is for a 20 year, non divertable supply. Within the terms of the agreement, supply cannot be diverted elsewhere if they pay more.

"Mozah”, the world’s largest LNG vessel, arrived on its maiden visit to the South Hook LNG Terminal in Milford Haven, Wales, heralding a new era in the history of liquefied natural gas (LNG) transportation.
“Mozah”, the world’s largest LNG vessel, arrived on its maiden visit to the South Hook LNG Terminal in Milford Haven, Wales, heralding a new era in the history of liquefied natural gas (LNG) transportation.

Nearby is the Dragon LNG terminal, similar to South Hook although smaller, there are other large terminals on Teesside and the Isle of Grain.

David Cameron visits the National Grid LNG
David Cameron visits the National Grid LNG

In addition to Qatar, the UK imports LNG from, Kuwait, Algeria and Trinidad.

Major gas pipelines include the Langeled and Vesterled routes from Norway, the IUK pipeline to Belgium and BBL pipeline to the Netherlands. These pipelines link the UK to the wider European gas infrastructure and at the height of the Russian supply crisis even allowed the UK to export gas into Europe.

Langeled Pipeline
Langeled Pipeline

Europe is not oblivious to its dependence on Russian gas and has been doing much to ensure alternatives, or at least routes that allow it to avoid the Ukraine Russia problem.  The South Stream pipeline will take a southerly route from Russia to Austria and beyond with a capacity of 63 billion cubic metres, construction has recently started

South Stream Pipeline
South Stream Pipeline

This will still leave Europe dependant on Russian gas, even if it avoids the route though Ukraine.

The North Stream is the other primary route to Europe for Russian gas.

By January 31, 2013 it is planned to sign a memorandum on creating new gas transmission facilities across the Baltic Sea to Europe. One of the strings might be intended for delivering Russian gas to the United Kingdom.

Another route will be provided by the Nabucco Pipeline

Nabucco pipeline map
Nabucco pipeline map

The Nabucco will connect the Caspian and Middle East regions with Europe and is intended to provide a route for gas suppliers other than Russia. As much as Russia is a major player in the gas market its behaviour with Ukraine several years ago clearly showed that Europe could not afford to be in a situation where it could be coerced by even the merest hint of a threat from Russia.

The problem with the Nabucco project though is one of simple economics, as sensible as the idea is. Its estimated cost of in excess of 10 billion Euros, in the current financial environment and potential alternative sources of supply, primarily LNG, there is some doubt whether it will ever be built. There is also the route to consider, it passing through the Kurdish areas of Sothern Turkey with its obvious threats.

Agreements between Russia and other local producing countries combined with the likely construction of a China – Central Asia gas pipeline make the full Nabucco route even less likely. A recent restructuring has seen it develop into a shorter route for Azeri gas from Turkey to southern and central Europe.

The economics of pipeline construction are very complex and I am far from an expert but it seems that because of the huge costs involved the numerous partners have to be fully engaged, economic viability is king and everyone has to have welded open wallets, this is why more get announced than built.

Although there is some measure of uncertainty surrounding many of the gas pipeline projects it is obvious that there is significant activity, the market and governments throughout Europe are responding to an obvious requirement for both supply diversity and resilience.

As UK gas production declines the UK finds itself in a reasonably good place, non divertable supplies from Qatar, a robust pipeline infrastructure in the North Sea and to Norway and a range of options for interconnect into mainland Europe for other sources, AND, to export into Europe from our LNG import infrastructure.

So maybe, from a gas perspective, those risk assessments and security strategies weren’t that badly understated after all.

However there is a home and away threat.

Although it would take an extremely sophisticated terrorist group or even state sponsored group to mount a credible attack although that is not to say it is beyond the possible.

No doubt the security of LNG terminals, pipelines and other elements of the critical national infrastructure is closely monitored and has an adaptive security posture based on national intelligence.

Beyond the occasional threat of a WWII mine, one would imagine threat levels are quite low and because of the physical size and geographic spread of the infrastructure the UK has a good level of resilience for them.

Evidently, the main threat is that of disruption closer to the point of origin.

Namely, Hormuz, Bab el-Mandab, Suez and Gibraltar

The first important thing to recognise is that the world trading system is hugely resilient; it has to be to be commercially viable.

Importers and exporters have a vested interest in making sure they can trade, it is this point that is often completely misunderstood by those seeking to scaremonger and generate a reason for continuing investment in security or military solutions.

Commercial organisations invest in resilience, supply diversity and recovery capabilities because it makes economic sense to do so, in many ways, corporates have a more mature view of strategy issues than governments, which are largely based on the immediate political horizon.

The non divertable 20 year contracts with Qatar are a great example, the private sector investing $13billion (including £1billion for South Hook at Milford Haven)

However, there are limits to what business can do and these limits are often exceeded at points of concentration; a port, a distribution point or choke point. The physical movement of gas, oil or food relies on port facilities, ships, airports, aircraft and pipelines.

Looking at the nature of UK trade it is clear that the scaremongering about maritime security if often overstated.

Although the vast majority (95%) of imports and exports by volume travel by ship it is much less by value, also, 65-70% of both imports and exports by volume are between the UK and Europe where it might be argued the greatest threat is accident, bad weather and the odd WWII sea mine. The security threats to shipping in the North Sea are self evidently different than those in the Gulf of Aden. If we consider the amount of shipping movements between the UK and North America those percentages rise even higher, again, minimal security threats exist against this traffic. Food imports are also overwhelmingly from Europe, excepting certain types of produce although as noted above, food production relies on imported products including oil and gas powered electricity production. The threat to the UK therefore, is to a small percentage of shipping that originates outside Europe and North America, about 20% by volume.

It is a fallacy to think that all the UK’s import of gas comes through the Suez Canal and Straits of Hormuz, this is simply not the case, despite that argument or inference constantly popping up. It is equally untrue to suggest that the UK is any more vulnerable to disruption to the global trading system than France, Germany, Norway or Spain. We are linked to the rest of Europe by a network of sea routes, diverse shipping providers and of course the Channel Tunnel which carried about 15 million tonnes of freight cargo last year, in an emergency, all routes could be significantly increased.

However, those LNG supplies from Qatar are a particular concern as noted above and this will increase. In May last year the UK imported more gas in the form of ship delivered LNG than it did via the pipeline(s) from Norway.

LNG ships have to transit the Straits of Hormuz, Bab el-Mandab, and the Suez Canal, all potentially hazardous locations. Because of the volatile nature of LNG extended transits via the Cape would result in higher losses and increased cost so these should concern us all.

LNG requires timely distribution because of evaporation, the natural gas is compressed to form a liquid and although modern LNG carriers have onboard boil off regasification plants, a significant volume is still lost (although some of this is used to power the ship, a neat trick)

Straits of Hormuz; About 15 million barrels of oil per day flow through the Straits of Hormuz, and its 2 mile wide shipping channel, between Iran and Oman. Volume through the Straits has declined in recent years as pipeline build outs continue but it is still the world’s most vital chokepoint. On average 13 tankers per day pass through the straits on their Eastbound route, with a corresponding empty traffic going the other way. It should be noted that more than 75% of export traffic through the Straits is destined for Asian markets. If the Straits were closed the existing pipeline routes would have to cope but these already carry a significant volume. The East West Pipeline pair from the East of Saudi Arabia to Yanbu on the Red Sea is rated at just under 5 million barrels of oil per day and 0.3 million barrels per day of liquid gas. The Habshan-Fujairah pipeline is about to commission and this will transport oil from Abu Dhabi to another of the seven emirates of the UAE, Fujairah, on the East shores of the Strait. At about 1.5 million barrels per day capacity this will provide a greater level of security for the oil trading nations on the South coast of the Persian Gulf. With Iraq returning to some semblance of normality it is quite possible that existing and new pipelines would see greater utilisation, especially through Turkey. As can be seen from the map below a network of gas pipelines also exist in the area although there would need to be significant investment in compression and storage facilities if Qatar LNG were to be transported in this manner.

Oil and Gas Pipelines in the Middle East
Oil and Gas Pipelines and other Infrastructure in the Middle East

Bab el-Mandab; The Bab el-Mandab is a chokepoint between the horn of Africa and the Middle East, and a strategic link between the Mediterranean Sea and Indian Ocean. It is located between Yemen, Djibouti, and Eritrea, and connects the Red Sea with the Gulf of Aden and the Arabian Sea. Most exports from the Persian Gulf that transit the Suez Canal and SUMED pipeline also pass through the Bab el-Mandab. About 1.8 million barrels per day of oil is moved through the area on its way to Suez and the SUMED pipeline, most destined for the USA and Europe. If it were effectively closed it would place greater pressure on the Saudi East West pipeline.

Bab al Mandab
Bab al Mandab

Suez Canal; The Suez Canal is accompanied by the SUMED pipeline which runs parallel to it. It connects the Red Sea and Gulf of Suez in the Eastern Mediterranean with a length of nearly 120 miles. LNG represents about 11% of tonnage and 5% of ships but this is growing especially for Belgian, Italian and UK bound traffic. Because the canal cannot handle the very largest tankers they unload their liquid cargo which is then transited by the 2.3 million barrel per day SUMED pipeline and loaded again at the other end. Closure of the Suez canal and/or SUMED pipeline would require a 6,000 mile, 15 day diversion. This extra journey time would reduce throughput by tying up a finite number of tanks and ultimately drive up costs.

Royal Navy Suez Canal
Royal Navy Suez Canal

When looking at realistic threats to these three vital chokepoints it is important to consider that the UK is not alone in having a strategic interest. Traffic is two way and concerns not only the consumer countries but also those producing the oil, gas or other products. If there were a disruption to any one or all three, the UK would not stand alone in efforts to resolve the situation.

The Straits of Hormuz are under an obvious threat from Iran, this is clearly why the UK and other nations have such an interest in the area and maintain a range of forces there.

As Yemen increasingly descends into ‘potential failed state’ and the continued lawlessness in north east Africa continues this is another source of concern.

The Red Sea is less of a security concern but continuing insecurity in Egypt and surrounding areas combined with an obviously Islamist Egyptian government puts the final chokepoint (barring Gibraltar) into a category of ‘concerning’

There is a difference between vulnerability to disruption and likelihood of it happening.

If Suez were closed, commercial shipping would simply go around the long way, yes this would add time and cost but in what circumstances would this happen anyway. Who is going to block the canal and who is going to keep it blocked?

About 1,500 vessels per month pass through the Suez and provide Egypt with in excess of $5 billion foreign currency revenue per year. Along with energy and tourism it is the largest source of income for the country so any political party that decides to deny itself the two largest revenue sources, for tourism would surely follow any disruption to the Suez, plus the likely suspension of foreign inward development investment is not likely to last long as it finds itself unable to pay its own people. A more credible scenario is that of terrorism, either attacking the fabric of the canal or ships in transit.

As mentioned above, it is not in Egypt’s interests to allow canal traffic to be reduced and if shipping owners thought there a realistic threats they would carry the additional risk until it became more economic to re-route, at which point Egypt would have to do something. A scuttled or sunk ship at certain points would be a serious impediment to traffic but due to the vast size of the canal it is actually not that vulnerable to sustained denial with such pin prick attacks. Unless multiple attacks succeeded it is not likely that any damage would be enduring. That said, the threat of maritime terrorism remains credible and an attack would cause oil price fluctuations if not the closure of the canal.

The Bab el-Mandab is a different prospect, Yemen remains a fragile state and unlike Egypt, has no skin in the game when it comes to revenues from the area. Although it is a much larger geographic area and therefore harder to deny it would be feasible to create the conditions where commercial shipping owners decide the long way around is the preferred option, although I am sure Egypt, having just lost all its SUMED and Suez Canal revenue might have something to say about the matter. Disruption would not be allowed to continue indefinitely.

The Straits of Hormuz is an intriguing prospect because the most likely suspect, Iran that is, getting up to mischief by making threats or actually carrying out real interdiction of shipping would be playing a dangerous game of brinkmanship.

Iraq, Kuwait, Bahrain, the UAE and Saudi Arabia would all be drawn into any conflict, as would the Western nations in support, China might even get its sleeves rolled up because 75% of traffic through the straits is Eastbound and given that much of Iran’s foreign income generation activity also relies on the Straits any action would necessarily have to be short term.

Because of their economic mismanagement Iran has to import food and even petroleum products, they rely on a small number of refineries and in reality, if they attempted to shut the Straits they would suffer a very serious reprisal and any disruption would be over in 2 weeks, move along here, nothing to see, oh, except the Iranian economy in tatters.

It would not be sensible for Iran to carry out its sabre rattling threats because in reality the sabre rattling occurs in front of a mirror.

Logic does not always come into it though so we should never discount the actions of Iran, they remain a threat (hence pipeline building)

A much more likely threat is that to individual Gulf nations and facilities but again, this risks a wider conflagration and ignores the continuing efforts of everyone in the region to negate the strategic importance of the Straits by busily building pipelines. In fact, with sufficient investment in pipelines it is possible that the most vulnerable nation to blocking the Straits of Hormuz would be Iran itself.

Perhaps we should threaten them with closing the Straits!

So do we have a problem or not?

In the ‘doom and gloom’ corner we have an increasing dependence on gas, reducing domestic extraction capacity and two of our three principal suppliers, Russia and Qatar, have a range of complicated geopolitical and security baggage.

In the ‘oh I dunno, it’s not that bad’ corner is the fact that there is a diverse global market, the UK has some storage capacity, the security threats may well be overblown and in any case, we have a diverse supply base backed off to a resilient infrastructure.

It’s difficult to have a definitive position because the issue is continually changing.

Whether you or I think we have a problem or not or whether the threats are exaggerated or not the simple fact is energy from the Middle East has been at the core of UK (and Western) foreign policy for several decades.

With a Christmas image from the MoD, the defence rests

RFA Cardigan Bay Leading Royal Navy Ships in the Middle East
RFA Cardigan Bay Leading Royal Navy Ships in the Middle East

OK, it was taken in August, but the point remains!

Shale and Hydraulic Fracturing

Since I started Think Defence I have been itching to get the words paradigm shift into a post, it is after all, worth 10 points on the Bullshit Bingo Scorecard.

But that is exactly what the shale/fracking revolution is going to cause, if not already.

Shale gas is not new; it was first captured in 1821 in Fredonia the USA and in 1875 the UK even had a shale gas explosion in Sussex.

Shale gas is often seen as a by-product of shale oil and into the mix is also coal bed methane.

Without getting into the technical details, because I am not a mining engineer or geologist, it should be obvious that the shale revolution is going to turn many of our assumptions about energy security on their heads and produce a global power shift the likes of which have not been seen since the end of the Cold War.

There are two issues to consider with shale gas, what happens if the UK can develop its own shale gas resources and what will happen if and when everyone else does.

Rest of the World

The US is currently experiencing an energy revolution as it increasingly exploits onshore resources.

The International Energy Agency (IEA) produces an annual report, the World Energy Outlook. The summary and presentation are shown below.

The report summarises all manner of issues but says of US shale gas;

Energy developments in the United States are profound and their effect will be felt well beyond North America

By 2020, the period in which the fruits of the 2010 SDSR will be borne, the US will likely become the largest oil producer in the world, larger than Saudi Arabia and will become a net exporter in 2030, the time period in which the NSS is framed.

The simple reality of this is that the US will no longer have to worry about its energy coming from the unstable Middle East but in the same period China and Asia will. The IEA predicts that by 2035, 90% of Middle East energy exports will be going to Asia, yes, 90%.

Instead of the Great/Little Satan having troops, aircraft and ships in the region to secure energy supplies, China will have to pick up the slack.

If that isn’t a massive geopolitical change I don’t know what is.

Of course the USA will still be impacted by global energy markets, no matter how self-sufficient they are, but to a much lesser extent. Many also think that this self-sufficiency will not last long and the US will go back to importing but I think it should be at a much lower level and if electric vehicle and renewable energy technology continues its rapid advances this may also influence the end state of US energy independence.

China is also reported to have significant shale gas reserves and this would consign the Middle East to even greater irrelevance but the areas in which China has its reserves are also the same areas that have significant water scarcity and this water scarcity will reduce China’s ability to exploit those reserves.

Biofuels and renewables will also have a huge impact on the European energy picture but Russian gas will continue to be an issue.

The report also points out that energy efficiency has the largest potential for reductions in energy consumption.


The Department of Energy and Climate Change have recently released the UK Gas Generation Strategy which has effectively signalled a ‘dash for gas’ with approximately 40 new gas fired power stations coming online between now and 2030 to replace coal and nuclear so that we can both keep the lights on and meet our emission targets. It even announced a new ‘Office for Unconventional Gas’

i.e. Shale Gas

Some have suggested that we have enough for hundreds of years and some have said the exact opposite.

The environmental movement are all over shale gas because of the perceived damage to the environment, subsistence and the temptation to indulge in an orgy of fossil fuels just when they thought they had weaned us all off it.

Many think that the economically extractable figure is much less than being reported but there are so differing views from so many experts it is hard to separate fact from hype when it comes to UK shale gas.

The geology is different in Europe than it is in the US with a reportedly greater concentration of clay which makes hydraulic fracturing much less effective so technical barriers do exist.

UK shale seems far from assured but if there is one thing that seems certain, at least to me, is that if there is an economic case, obstacles, whatever they are, will be overcome.

Whether UK shale gas can compete with cheap US LNG, Russian, Norwegian or Qatari LNG is yet to be seen but I think we should be pushing hard to find out.

Read more at a couple of excellent reports;



So What Does it All Mean

First, the predictions about shale into the 2020’s and beyond might not come to pass, they are predictions after all so there has to be some hedging, balancing risks and keeping ones options open.

But if they are true the current role of India and China is securing their own energy route security, that is, little or nothing, will have to change.

Their free ride is over.

Because the US in unlikely to completely pull away from the Middle East there might even be a situation where the US, India and China join forces.

Russia stands to lose the most. we need to manage that carefully.

Through an orgy of corruption and excess it has squandered its good fortune in the global energy market and failed to transfer the benefits to its economy and population. If shale gas and oil reduces its dominance in the European market it will have to try and reform its corrupt economy and political infrastructure in the absence of the lakes of cash to do so.

If US gas gets compressed to LNG in any of the 15 LNG terminals in the planning stage, sent over the Atlantic and distributed using the pan European pipeline infrastructure at a cost lower than Russia can supply times will indeed be interesting.

And that is before we even factor in the potential for European shale gas production and the increasing impact of renewables in Europe.

West Africa is set to become a significant gas exporter which could be an even more convenient source of supply for Europe.

If the UK wants to have its own shale revolution it needs to do much more that open a new government office and actually invest in the science.

From a defence and security perspective, the SDSR 2015, the National Security Strategy and even the Future Character of Conflict are going to have to be either re written or take into consideration the significant impacts of shale gas on the global geopolitical landscape and the role which the Uk armed forces will play in this new reality.

If SDSR 2015 and supporting processes do not pay heed to shale it will be yet another failed document.

The work on SDSR 2015 should have already started.

My question to the readers of this post is this, what do you think the SDSR 2015 should include as it recognises the two most important words in the next few years

Shale gas

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December 31, 2012 2:50 am

“The UK demand for energy is only ever going to go one way, up.”

What’s this about, a parallel universe?

ACTUAL history and trends may cause a lot of cognitive dissonance when one has already settled on fancy-sounding one-liners, but there’s still a case for taking notice of both:



John Hartley
John Hartley
December 31, 2012 9:08 am

If you want a day to day breakdown of how Britain generates its electricity go to bmreports.com Last time I looked , wind turbines were 3.7% More interesting was that coal was 47% , yet the EU wants to close UK coal power stations within a few years. How do we fill the gap? The only licensed new nuclear plant is the EPR. The ones being built in Finland & France are hopelessly late bogged down with red tape, yet the 2 in China are on time & budget. China can build an EPR in under 4 years.
If British industry is to survive , energy prices need to come down. This needs a complete change in mindset from our Hampstead/Islington/Camden/Notting Hill elites.
Shale gas is great, but to make it last, just develop one field at a time. Do not forget renewable gas from cattle farms/sewage works/landfill & composting schemes. Could supply 15% of UK gas needs.

Peter Elliott
December 31, 2012 11:03 am

@TD and SO

Although demand for consumable energy may rise, the effect of improved efficiencies might mean that the input of energy resources stays flat or declines.

Input and output could go in opposite directions. Consider railway locomotives. When we shifted from Steam to Diesel the efficiency of the burn was greatly increased. So more energy could be delivered to the train for less fossil fuel burned in aboslute terms.

At the same time we cut back the rail network and built roads. Resulting in a shift from steam train to car/lorry. Not sure if this had the same effect as the unit efficency of car/lorry is much less than a train.

If I had to guess I would say it probably all evens out in a flat line – but with lots of contributry ups and downs.

If it works like a labour market it will tend to regress to the mean – with shortages choking off demand and surplus capacity used to enable new ventures.

December 31, 2012 11:15 am

Great piece, TD… almost a book!

RE ” affordable supplies of energy, which are essential to economic stability and growth. These include political instability in key energy countries”
– if you think in waves following coal, we have: oil,gas, shale gas
… and the next one will be shale oil (sort of includes tar sand)

Unfortunately the strategic effect will not be as beneficial as with shale gas
– the best areas for exploitation are in places like Morocco, Israel, Jordan… anyone wondered why Jordan is starting to get separate mentions in the UK defence strategy? (You can check in e.g. the Gen. Richards RUSI speech we have just been commenting)

BTW, as hinted in TD’s text, the main driver (USA’s strategic interest) behind Nabucco is now dead. It was meant to relieve the southern ex-Soviet states from the bear hug. Now, instead, it would be competition to the emerging star export product (which will save the balance of payments, the dollar and the US military might, among other things)

December 31, 2012 11:25 am

Sven’s jpg statistic happens to coincide with UK’s de-industrialisation (shift to services), just look at the period following Mrs. Thatcher letting the pound to freely float: a big pothole on the road
– 16 % of the industrial base disappeared as a result
– sure, what remained was more efficient

Other than following the OECD-wide trend (prevails over a much longer period than in the jpg), I don’t think there is much left of this restraining impact on the energy demand
– says nothing, though, about energy efficiency impact(which is always a good thing)

ALL Politicians are the Same
ALL Politicians are the Same
December 31, 2012 12:44 pm

Surely as part of energy security we should be increasing our storage ability. France and Germany can store 100 days worth of gas we can store 16.

December 31, 2012 12:45 pm

Germany’s energy consumption did not grow either for three decades, the consumption was even essentially flat after reunification despite the catch-up of East Germany.

The key is really the increasing energy efficiency. It has been the most important single input variable for a while now (I know of the exponential growth predictions of the 70’s) and there’s little reason to expect energy consumption to grow substantially in the future.

We already drove up material wealth to an extreme level, whatever economic growth (not just growth in valuation) we will have in the future will mostly be about services and small, sophisticated devices.
iPhones don’t consume much energy, nor will the production of future effective anti-baldness pills.

The trends which drive up energy consumption per capita (such as fridge, car, TV set for every family, plastic goods replacing wood, more capital-intensive industrial production) are basically complete.

December 31, 2012 12:47 pm

Very interesting post TD, pulling a lot of different strands together, and helping to explain why we are “cosying up” to Qatar, UAE, Oman, etc.

Re shale gas and fracking: I live in Lancashire and am already removing all fragile items from my shelves :cool:

Edit @SO – will those anti-balding pills be retroactive?

December 31, 2012 12:57 pm

It’s all going to kick off up north, around the Arctic I reckon.

As the temperature goes up more and more of Northern Canada, Russia, Alaska and Scandinavia is going to become more exploitable and there will be increased prospecting for all sorts of minerals and fossil fuels. We’re quite lucky as we’re close to Scandinavia and Canada but I suspect Russia will not be so accommodating.

Long term however, we still currently have nothing on the horizon that can reliably replace fossil fuels. We can substitute small percentages of energy use with nuclear and renewables but nuclear will become harder to do as fuel runs low. This energy crunch is going to just be the warm up for the really big one in about 100-120 years.

December 31, 2012 1:01 pm

“The trends which drive up energy consumption per capita (such as fridge, car, TV set for every family, plastic goods replacing wood, more capital-intensive industrial production) are basically complete.”

Yes and no. We’re on the eve of going from enormous numbers of cars being ran on liquid fuel to something else, probably stored electricity in the medium term which will need generation, and perhaps hydrogen in the longer run which will still require power. So yes potentially the same or maybe even slightly less energy per capita but derived from a completely different source.

How many cars are there in the world? And they’re pretty much all going to need a different fuel by the middle of this century and there’s no way of producing it without using more nuclear or more fossil fuels – themselves only a medium term solution.

So I would argue the biggest transition is yet to come. From liquid fuel to electricity and then perhaps hydrogen.

ALL Politicians are the Same
ALL Politicians are the Same
December 31, 2012 1:06 pm

As Sven says The trends which drive up energy consumption per capita (such as fridge, car, TV set for every family, plastic goods replacing wood, more capital-intensive industrial production) are basically complete”

Now that may be true for the Western world but is most definitely not for many other areas so the overall world requirement for energy will continue to rise and we will be forced to pay more in a competitive market.

Also how will individual countries populations change. the Uk population is forecast to grow, overtaking France shortly and possibly a falling German population by 2060. Therefore the UK will have more people wanting consumer products which may see our Energy usage increase in stark contrast to other European Nations.

December 31, 2012 1:16 pm




Of course it doesn’t help the consumer if the energy is cheap but HMG increase taxes on it because of EU directives on carbon and green energy. Cheap UK gas could bring back some manufacturing, would be a boon to the haulage industry reducing our costs as the till, and encourage growth in diverse areas, say an example, marketing gardening. Then there is the considerable costs of running data centres / server farms. HMG would rather put Brussels first based on wonky science and only sees the £20billion or so the City supposedly brings to the Exchequer. Some figures suggest we would loose on £5billion and that money would be offset by no EU contributions etc. and I as said growth in lower energy prices.

What I would like to see if cheap gas comes on line is a return to a distributed network of generators. A system similar to that when we had local gas works burning coal. Gas turbines are small and cheap. Electronic boards and DC transmission would manage load. Emissions are easier to control from a small plant. I suppose such a network would have to sit on the gas medium pressure network. But as most industrial parks have access to medium pressure that shouldn’t be too much of a problem.

There are other things HMG could be doing. For example new housing should always be built with roofs orientated to the south for PVs. Bore holes should be drilled for ground source heat.

ALL Politicians are the Same
ALL Politicians are the Same
December 31, 2012 1:26 pm


No as it is not an MOD function. fund it from the relevant department and if extra money is required then every other departments budget should be looked at as well as the MOD for the extra funding.
That is a personal view.

From a military point of view, cutting our ability to secure current energy supplies before we actually have a new one that is fully viable is a Strategic error. If we were going to cut MOD budgets as a result of increased self reliance and energy security then the time to do so is when we have it working not whilst we are simply researching it.

December 31, 2012 1:28 pm

Great article but I am a great proponent of the Severn Tidal Barrage. There isn’t one proposal but many with the first one back in 1849.

Power output would be 8,640 MW during flow, or 2,000 MW average power. This would provide 17 TWh of power per year (about 6% of UK consumption), equivalent to about 18 million tons of coal or 3 nuclear reactors. The cost in 1989 was calculated to be about £8 billion (£12 billion in 2006 money – about the same as six nuclear reactors, but different lifespan), and running costs would be £70 million per year (about the same as 1.5 nuclear reactors). With none of the decommissioning costs or nuclear risks.

The challenges essentially have always been the same

1. Cost – the capital outlay is huge and the payback period equally daunting.
2. Building in water and surrounded by 14 meter tidal surges – essentially the technology to do this has moved forward so far over the last forty years that it is no longer such a challenge. The Dutch and British are top civil engineers.
3. Silting – With such a huge amount of power moving millions of tonnes of silt each and every day you have got to wonder what happens when you dam it ….. computer models are helpful, but you have always got to wonder

I’d go for it because it offers security, employment and a relatively secure dependable supply of energy working with our strengths. Sadly Labour should have spent their perceived ‘excess revenue’ on capital projects like this and not expensive housing benefit for all the unemployed to live in their own (taxpayer paid) flats.

I’d still make it a priority under ‘National security of energy need’.

December 31, 2012 1:58 pm

@Opinion3: the barrage would cost a shedload more than 10 billion if it’s going to be replacing 3 nuclear sites. More importantly, with the demise of coal and the withering away of nuclear, we are chronically short of base load suppliers. Tidal is at least predictable, unlike wind, but we don’t need another variable source, we need a base load source :-(

December 31, 2012 2:01 pm

The trouble with Shale Gas is that it is still an unknown, it is what is known as a manufactured risk.

The tremor thing I think is overblown: the tremors in Blackpool or wherever were actually no larger than the far more common tremors that used to be caused by coal mining.

But the issue of water is important, we simply cannot afford to poison our water. There is literally nothing more important that we humans have dominion over.

I’m not saying I don’t support some careful fracking in the UK (because increasingly the only way to know, is to do and learn) but I am saying that although it might be plentiful and relatively easily to mine, if the water table is indeed affected, it cannot be worth the price and it won’t be the panacea some think it might be. And even if it is, it is not a truly long term solution – at the moment there is no long term solution unless we make our lives enormously more energy efficient to the point where renewables can meet demand – which is frankly highly unlikely if we can help it (although ultimately we wouldn’t have a choice!).

December 31, 2012 2:09 pm

Coal isn’t necessarily dead, it can be burned and carbon targets met if the carbon is captured. But then you are left with the need to pump millions, even billions of tons of liquid carbon back into the Earth a year. And it had better not leak out!

The barge, I am agnostic I think. It represents a massive project for relatively little power percentage of total electricity consumed, which will go up when electric cars are normal.

From a security point of view, in the medium term we simply need to diversify as much as possible and try to get as much as we can from secure sources (ie sources within the UK and its waters and perhaps from Scandinavian countries).

One wonders if the future for Europe is a north south divide with a parched, water and energy starved south drawn toward solar farms in North Africa and a wet, energy abundant north drawn toward a naturally rich Arctic rim and all the water and hydrocarbons potentially there? Perhaps Scandinavia will once more become an important power and we’ll have forces stationed in Sweden, Finland, Norway and Denmark to guard against a Russia?

The world has always been more naturally divided on a north south basis than an east west basis.

Perhaps the future will see a world delineated more on a north – south basis rather than Atlantic versus Pacific?

December 31, 2012 2:31 pm

@TD: great amusement all round. The local thugs will appreciate China’s lack of interest into human rights issues, but they will really squirm under the way the Chinese will colonise the ME in the way they are doing in Africa now (importation of Chinese labour, demands for ownership of resources in return for development monies).

I predict in 10 years, even the Iranian mullahs will be letting up on the Yanks. Assuming the Chinese don’t nuke them first :-)

December 31, 2012 2:34 pm

@TD – a great imponderable thing the future of India/China relations. Co-operation or conflict? Then there’s Pakistan.

Perhaps the desire on the USA’s part to include India in the effort to “contain” China may mean the US does not withdraw from the Gulf and Indian Ocean areas to the extent you seem to be envisaging; politics and economics don’t always match each other stride for stride.

December 31, 2012 2:43 pm

“If British industry is to survive, energy prices need to come down.”

French prices today are significantly lower, but their industry is in a worse state. While Germany with fairly high prices is doing exceptionally well.

The reality is, energy is only one piece in the mix. Good educational and judiciary systems, as well as a entrepreunial and working-class ethos being equally important. And yes, the whole affair is only relative; it’s called competitiveness.

Another reality in Germany is: high energy prices are a good incentive to a wide application of energy savings schemes through private venture. Exactly this happens, currently. The German industry expects to save the equality of 10 nuclear plants till 2020, without reduction in output. The same number can be saved in private households, without a reduction in living standards. A house having better windows is hardly inferior to it’s badly equipped cousin, but it saves 30-40% heating energy.

The real question is: is the UK prepared for industry revolutions to come? Where are the british companies leading in development of LED or 3D-printing technology? The latter alone is predicted to be the single most radical innovation in the next 20 years, as it allows to built metal parts of equal strength a sixth the weight and with a tenth the energy input.

‘Ramping up’ is not really describing, what is happening.

There is a notable difference in the approach to fund the conversion to renewables. In Germany, there is a price-reallocation mechanism in state called ‘EEG-Umlage’. Wind and solar power are getting a positive price incentive, while prices for fossiles are being raised. Through this, investment in windpower becomes lucrative, with direct result through a market compatible scheme. The british system of direct payments has been a remarkably successless and expensive approach, while the german gov is actually not spending a single buck (in reality, they actually get more taxes).

It is also true, that it is constantly being tackled by counter-lobbyism. Most of the counter-arguments are true, mainly the simple fact, that it will cost €200b+ over the next 20 years.

€10b a year sounds much, but this is spent on what equals essentially re-building half the energy infrastructure of the country. For this money, Germany expects to reach the 30% mark in 2022, with 50% sometimes in the middle 2030s.

What is notable is the fact, that Germany up-to-date has paid less for renewables than for nuclear plants, and while the latter never achieved more than 17% of the energy mix, this mark is expected to be reached next year. All this with a poorer availability of windpower-locations than the UK possesses, and all this without supply of tidal power.

The second mainstay is – as I mentioned above – energy efficiency. With electric mobility, which would enable mobility through domestic energy supply, being the third.

In all this, LNG has a central place. It is securing the renewables pits, it still has a central role with heating and fuels. For this, North Stream and good relations to Russia are key. Exploition of Shale gas through fracking is being tried in various parts of the country, sometimes with good results. But, wide adoption would require to lower the legal barriers regarding water deposits. This will not happen.

Nuclear plays no role. Actually, the federal gov just got its first bill of the still unsolved question of nuclear-waste-storage, to be paid for through taxes. It happens, that the ‘safe storage’ in a salt deposit was not safe at all. Additional cost: €4b+, outlook uncertain.

So, renewables + electric mobility + energy savings + LNG, preferrably domestic = German strategy until 2030.

December 31, 2012 3:27 pm
December 31, 2012 3:51 pm

Since we’re talking about China (cough – tenuous link) has anyone seen any more on this? Chinese STOVL:


Jane’s (Dec newsletter) reckon it might just be at the remote controlled model stage, but didn’t they say that about J-31?

December 31, 2012 4:05 pm

@ Phil 12:57

Phil sorry to disappoint you, but the Arctic is not warming up. Please don’t believe the drivel about the lack of Summer Sea Ice, by the Green Lobby. The Sea Ice generally breaks up naturally in the summer by storms and the wind. And before anyone starts on the Satalite Photogragh evidence the Green Lobby like to go on about. One little fact that is never mentioned by the Green Lobby, is that Satalite Photos of the Arctic, have only been available since 1979. And secondly the satellites used cannot distinguish between the sea and the resulting massive broken Sea Ice field that it is left behind in the summer months. So they report that the Sea Ice Field has broken up.

How do I know that the Arctic Ice Sheet is thin at the best of times. Well thanks, really to RN and USN Nuclear Submarines that have been visiting the Arctic since the late fifties.

Google this site http://www.John-daly.com/polar/artic, it should come up under the heading Top of the World. It is a really good insite on why the Arctic Ice sheet is the way it is. it has some really good photos and information on visits by RN and US Navy Subs and on what they found.

Happy New Year to you all.

December 31, 2012 4:39 pm

– Can’t get your link to work. This one does work, however, part of your “Green Lobby,” i.e. climate scientists.

December 31, 2012 4:48 pm

TD, RE “Free Riders”
-European Command, which has had responsibility for most of the African continent will soon be USAF only
-the Central Command, which was created to secure oil supplies oversaw Egypt and the Horn of Africa region along with the Middle East and Central Asia will obey the command about “committing to land wars need the head to be examined”
-the Pacific Command, which administered military ties with Madagascar and other islands in the Indian Ocean before the
the creation of Africom will become prominent (as will Australia’s role as a partner)

I think the only substantial change we’ll see is that
– the 5th Fleet as a separate entity will disappear. It is here where not only China and India will have to step in, but also Europe (EU?)
– as the Indian Ocean will be administered as part of the Pacific, the anomaly of the Horn of Africa belonging to it will remain. This is already a joint op (on the spot), with the French, but will probably acquire much more international flavour going forward
– British presence will be shrouded in training areas, training missions, some port facilities more permanently than now… all good stuff as you create the ability to ramp up, without the fixed cost of presence (and becoming a diversionary target for all kinds of local passions that have nothing with us to do)

For India it is of course their own ocean, but for China it is remote, though critical, and as their port facilities are so austere, they have built a hotel ship where whole crews can take some “time out”. That will change: Burma, Sri Lanka, Pakistan, Tanzania (and as rumoured) Eritrea will all see some more substantial facilities

December 31, 2012 5:01 pm

“Phil sorry to disappoint you, but the Arctic is not warming up.”

It probably is though. Whatever the cause, it probably is.

December 31, 2012 5:55 pm

@ Wiseape

Sorry, full address should be http://www.John-daly.com/polar/arctic.htm. If not try and google Submarines at the North Pole. because that’s how I found it in the first place.

@ Phil

Have you ever heard of a Gentleman call Piers Corbyn? His brother is Labour MP, Jeremy Corbyn. Now Piers Corbyn is a Astrophyicist. He runs a private weather Forcasting company called WeatherAction. Now, he sells forecasts mainly to Company’s and Farmers in the States and in the UK. But the private individual can also purchase his forecasts.

Problem is when he turns round and says that 2012 will be a year without Summer, after mind you, the Met Office, announces we will have a Dry Summer and a drought until Christmas. At which point it, it then starts to rain for the next eight months solid. I have had 7 inches of Rain in the last 8 days! Who are you going to believe. Because he has called every season right for the last Seven Years.

Now I don’t believe in Global Warming. I do believe in Climate Change though. Their has been no warming of the Planet since 1997. But it has been cooling since then. And it’s going to get colder over the next few years. The reason behind it isn’t found on Earth, but on the Sun. We are currently in Solar Cycle 24. It is due to peak in the next couple of Months. But it’s not, the Sun is very quiet. This Solar Cycle should be a Solar Maxima, but it is acting like a Solar Minimum. The problem is the next cycle is going to be a Solar Minimum. So why are the worlds, Astrophysicists all saying that global temperatures are going to drop from now on, particularly from 2014 and we are heading for a little Ice Age. We move from warm periods to Cold periods to warm periods. it is an ongoing cycle. The Planet has been doing it for Millions of years. In During the time of the Roman Empire, climate was alot warmer. When they the Romans were in York, 2000 years ago, they were able to grow Grapes. Now, can you do that now?

Have a look at http://www.Iceagenow.info

The first Article up,as I write this is called at the moment is called – Astrophysicist – We are shifting towards a Little Ice Age. It brings up a video produced by Piers Corbyn’s. he will explain the Polar Icecap and what’s is really driving our weather.
Whilst your on that website, have a look at the Weather Stories that have come in from all over the world. In Siberia they have been recording temperatures as low as minus -50. There are record amounts of cold temperatures and Snowfall reports from all over the Northern Hemisphere. The problem it’s only going to get worse.

Best Wishes

December 31, 2012 5:59 pm

Tidal technology has the capability to provide base load and peak load generation. One suggestion proposed was tanks/pools within the estury which could be used for peak height differentials. Not disimilar to hydro dams really.

Your point is a valid one, but we need a comprehensive energy policy including more use of micro-generation, CHP, and energy efficiency.

December 31, 2012 6:37 pm

Simon, as x would say let’s not go down that rabbit hole neither of us stands a chance of changing the others mind! So if it’s fine by you I propose we agree to disagree on this? Such debates generate even more heat and less light than a gun control debate with a redneck. :)

December 31, 2012 6:40 pm

That x says so many wise things. :)

December 31, 2012 7:07 pm

@Opinion3: and how much are these tidal pools going to add to the cost? There’s a reason the Barrage has never been built. The fact is, we need something that works, right now. Nuclear would have been nice if we had started 10 years ago, but it’s too late now unless we extend all our coal plants…which leaves gas.

Frack baby, frack :-)

December 31, 2012 7:47 pm

Great piece TD.

I think the US and the Middle East is a bit more complex. 2 factors,

1. The China-India option for defence of their oil supplies could be very different, potentially creating a China-Iran-Gulf bloc. Very powerful and not very dependent upon the US or West. China anyhow, I think India want to cosy with US, for that very reason.

2. The oil industry is US dominated, but already under pressure from China. US (and European, including UK)companies still dominate the technology and make very significant overseas earning from oil and gas. There will be no desire to hand over that in the ME to China.

3. Grand strategy. Over the long road the Middle East still has the greatest reserves. gulf is a globally significant pivot. Whoever controls them… well you know what I’m saying. Want to keep China dependent.

4. Vast amount of cash is generated by Gulf States. The US and West want to spend it too – linked to industrial dominance in the sector, but also to making sure it is circulated in the western economy more generally. Trading centers such as Dubai are key to more than the oil economy.

5. Al Qaeda, Islamism and all that… don’t want to hand over that side of the national defense to India, let alone China.

So even if US can make itself less dependent, I suggest they will still buy gulf oil and gas and export their own first, jealously guard military hegemony in the region and rack up strategic reserves.

John Hartley
John Hartley
December 31, 2012 7:47 pm

The latest estimates for the Severn barrage were in the £ 20-30 billion range. Lifespan is estimated at 120 years+. If Britain started thinking long term, this would be a good project, followed by a barrage for The Wash.
The elephant in the room is the Climate Change Act 2008 that reduces UK carbon emissions by 80% by 2050. 60% is doable, 80% risks shutting UK industry & bankrupting the nation.
This idea that we will run out of nuclear fuel, is only true if we only have PWRs without reprocessing. A PWR burns 5% fuel meaning 95% waste. An HTGR burns 65% fuel leaving only 35% waste. HTGRs can run on a Uranium/Thorium mix adding even more fuel supplies. HTGRs can make Hydrogen as a byproduct, so could provide for fuel cell vehicles. Britain has a mothballed HTGR. Japan & Areva have more modern HTGRs. The UK needs 3 of the most modern PWRs (EPRs) as a stopgap, then move to HTGR.
German solar. Monbiott (Guardian 11 Mar 2010) said German solar PV 2000 to 2008 cost 35 billion Euro yet produced only 0.6% of Germanys electricity. Saving one tonne of CO2 using solar PV costs 716 Euro. The subsidy cost of every German solar PV job is 175,000 Euro.
Solar makes more sense in Saudi Arabia where they plan to spend $109 billion to provide a third of that nations electricity by 2032 (Bloomberg, 11 May 2012).
Low energy housing. There are 24 million homes in the UK, of which 22 million will still be here in 2050. There is a need to cut energy by 60% in old homes (Anne Power, energy policy 36, 2008). The Nottingham eco house demonstration involved a Victorian semi that achieved an 85% reduction after renovation.
The German Zunkunft haus pilot programme upgraded 915 homes built before 1978 & reduced their energy consumption by 80%. All pre 1984 German property will be brought up to this standard by 2020 through a mix of loans,grants & tax incentives.
The worlds first clean coal plant came online Sept 2008 in Spremberg Germany. Owned by the Swedish company Vattenfall.

December 31, 2012 7:50 pm

that was 5 factors … ;)

December 31, 2012 8:03 pm

px said “Al Qaeda, Islamism and all that… don’t want to hand over that side of the national defense to India, let alone China.”

Why? Both have been fighting Islamism for a long time. You can bet their ROE are a bit more, well, open ended than ours….

December 31, 2012 8:08 pm

yes maybe if it is aimed at themselves, but they will not give a damn if the US goes bang

December 31, 2012 9:24 pm

You do realise I am not disagreeing with anything you say! well in this thread anyway ;-)

But the tidal barrier, indeed wave power, wind power and solar power can all play the part in the UKs energy needs. The one source I am not specifically convinced we build more of is Nuclear, I remain to be convinced of the costs and risks and most specifically decommissioning.

Gas, fracking, oil sands, shale gas, deep sea drilling all seem to make a lot more sense than ‘growing’ oil or ‘burying’ CO2 IMHO

December 31, 2012 9:48 pm

Re: Price of solar pholtovoltaics.
Introducing “Swanson’s Law”, which is like Moore’s Law for silicon crystals.


However we still need a similar revolution in battery capacity.

Who said: “The stone age didn’t end from lack of stones, and the oil age will end for much the same reason”?

December 31, 2012 10:10 pm

Part of the problem for us has been the decline in industry in the UK which has pushed down our perceived demands. If that trend reverses, as the government desires, then energy demands will go up. The question is whether we can use efficiency to stabilise that demand, which we probably could if we invested properly in it.

The middle of a massive economic downturn is also not really the best place to be judging predicted future energy demand based on current figures.

December 31, 2012 10:16 pm

CSP is an interesting tech if you Google it. Concentrated Solar Power – basically big mirrors in a desert focused on water which it boils to turn a turbine! Clever. Not practical over here but out in the Sahara and Middle East might work better. Quite a few are being built and it doesn’t require the space simple solar panel farms need – not that that is a massive problem in itself in the middle of a bast empty desert.

January 1, 2013 8:41 am

@Opinion3: I know :-)

I’ve just heard this sort of thing before, and they usually cannot be persuaded that their increasingly daft idea might be incorrect. I have a cousin who was a policy making civil servant, and the crap he spouted about smart grids truly boggled the mind: apparently, we would all have electric cars which would provide the backup to all the renewables. He’d even forgotten that we would need inverters in every house….

January 1, 2013 11:04 am

Well we need plug sockets in every house too, and fuse boxes. No house had those 120 years ago. And with investment and work other solutions may be possible.

January 1, 2013 11:56 am

Great post td. In 1897 the electron was discovered which had no practical application what so ever today where would we be without it! Money changes attitude when there’s a lack of it innovation takes over new idea start recycling and energy conservation less use of private cars ect this is exactly the right time for energy R&D most high tech industry boom in down turns then go the the other way when the economy booms as this is when they sell the products. Tidal power in the uk maybe an area of interest we are an island nation you know.

Happy new year all.

January 1, 2013 12:34 pm

It has to be said that just as we are

‘An island built on coal and with oil beneath the sea’

WE are up to our arse in wind and water for Hydro and tidal,and wave power.

Im not particualry ‘Green’ but lets face it we do have the geography for ‘renewables’ (not that I’m a big fan of wind power hugely unrelaible, the tides and hydro are far more reliable)but not necessarily that green.

It is ‘doable’ if we want true energy independance.

January 1, 2013 1:48 pm

“a big fan of wind power”


January 1, 2013 1:49 pm

It is and it isn’t. Unless we become FAR, FAR more energy efficient renewables alone can’t cut it – there is literally not the space in this country to do it. And I don’t mean suitable space, I mean literally there is not enough space. Which is why investment is needed now to squeeze every last bit of efficiency out of renewables. Long term once the fossil fuels are used up or considered unacceptable because of a proven link to climate change, at the moment there is literally nothing else ready to take over which we know works except nuclear (one catastrophe away from decommissioning and with limited fuel still) and renewables.

January 1, 2013 2:14 pm

Energy is a defence issue. The only topic I would avoid is immigration in case it gets a bit “political”.

January 1, 2013 2:17 pm

Our entire urban, mega city, mobile and industrial farming civilisation depends on energy access. If power was run down the cities would wither and die and we’d be in for it then. Other than the old food, water, shelter triangle I can’t think of anything else that deserves the same level of security consideration as energy. We’re back to 1600 without it. I don’t think we’ll ever fight a war over it in an open way but our armed forces will be deeply involved in the myriad of ways to indirectly ensure supply.

January 1, 2013 2:57 pm

TD, a great piece (won’t need the CIA yearbook for much longer, if you keep adding topics?)

Dead as a disco [nuclear that is] for 50 years [?]; some people think further out, and skills & technology can’t be lost just because there is a windfall that let’s us bridge… to the next crisis
– back to shale oil; prospecting rights currently go for a US cent/ barrel and technology is coming along strong to take the barrel from there to the distribution point @ abt $40/ barrel for the richest deposits

Someone should be interested (guess what I am working at?)

January 1, 2013 3:34 pm

ACC said “(guess what I am working at?”

Argentina are going to invade the Fylde?

The “octopus” extraction technology for shale has been working for over 2 decades, how much more proven does it need to be? (That is a general question come statement, not a specific question to you.)

It is the EU carbon tax that is the problem. Until we have somebody in No10 willing to put the UK first we are stuck.

Has coal extraction using liquification been mention yet?

And we mustn’t forget that oil means plastics too.

I still hold a little hope for fusion. But who knows?

John Hartley
John Hartley
January 1, 2013 4:21 pm

Maintaining the nuclear triad(nuclear weapons, nuclear powered submarines & civil nuclear power stations). It is hard to keep them going if you let one branch wither. If you want to attract the bright kids to study nuclear engineering , then they need to think there is a good job waiting for them.

January 1, 2013 4:31 pm

Re: Do you Enjoy this sort of post
Yes it is the cause of strategy which is what Defence is about.

Re: Nuclear Dead as Disco
That depends on whether your strategic aim over the next 50 years is to reduce dependency on Oil (in favour of Gas), or to reduce Carbon Emissions in total, and thus moderate Global Warming.
Most (but as we see not all) agree man-made carbon dioxide emissions from burning fossil fuels are leading inexorably to catastrophic warming, which will in turn precipitate security crises through the mechanisms of droughts, floods and rising sea levels. Eventually coastal populations (especially) will be drowned or starve, but either way there will be great dislocation.

It will be hard to reduce carbon emissions locally without unpopular decisions, that is until people really are face to face with obvious disaster. It will be hard to reduce them globally in the face of an industrialising Asia. All those new fridges and cars mentioned above.

Therefore we must really hope technology will come good. But in the time frame we need, Nuclear may yet be seen as necessary. : Thorium cycle. And yes to CSP.
Perhaps in 50 years, globally, we will have nuclear (Thorium)/solar (CSP)/solar (pv)/wave/tidal/wind/fossil fuel in that order.

For the UK the strategic relevance of middle eastern oil will decline. There won’t be a fight for uranium reserves.
The drivers of strategy will be keeping energy cost down, maintaining security of supply, and supporting the UN’s order and global markets in the face of collapsing coastal states or recalcitrant Carbon polluters.

January 1, 2013 7:30 pm

I wouldn’t give up on nuclear power just yet. I can see the green lobby drawing concessions in exchange for fracking, such as higher carbon taxes that would continue to skew the energy industry, this time actually helping Nuclear. I also think Nuclear is a better and more stable long term investment.

Part of the trouble with Shale gas is that only about 20% of the gas in the “fields” we’re finding here in the UK is extractable at a realistic price, and it’s very much one of those resources where the first year or two is the most productive, and from then on it becomes increasingly expensive and difficult to access. It could be a short term answer, it’s not the long term one though.

One area that might help a little, though not a huge amount, is co-generation on offshore turbines. They’re due to start a new project down here soon on Gunfleet Sands off the Essex coast, where a series of wave driven pistons will be set up around the base (water line) of each turbine. Might get us a few more watts per square metre.

January 1, 2013 7:49 pm

@ TD – I do enjoy this kind of post as an alternative. I think it important to understand why we have a military before deciding on what types of planes, boats or vehicles we need.

In terms of the US withdrawl from the middle east I think the increasing dependence of asia of the ME is the main reason why the US will stay. in many ways its the knife held to china’s throat.

One major issue missed by the green lobby is that emission from the EU and to some extent the USA are increasingly irrelevant in the global picture. The only way to rapidly reduce Chinese and Indian emission’s is to dash for gas as fast as possible. Gas plants are cheaper and quicker to build than anything. Hopefully we can rapidly exploit alternative gas supplys to give the world cheaper energy and rapidly reduce CO2 emissions. At the same time we can continue to improve our renewable capacity. eventually much of the gas generating capacity could be used to supplement intermitant renewables. An alliance between the green renewable industry and the oil and gas industry aimed at removing coal would be a powerful force and could make a substantial difference. I dare say even US republicans would have to bow to it’s pressure. Unfortunatly the green lobby is so far up it’s own backside it will never happen.

January 1, 2013 8:04 pm


There is strangford lough and another is planned for somewhere of Scotland


January 1, 2013 8:32 pm

Interestingly we export (or bunker) 29% of our energy which is almost the same figure as the amount we import which means we use almost exactly the same as what we produce.

A great pic at http://www.decc.gov.uk/en/content/cms/statistics/publications/flow/flow.aspx

January 2, 2013 9:49 pm

Green lobby? Really, we have a foreign policy designed by BPs interests, which has a larger marketing budget than the whole renewable industry is earning, but the greens are the bad guys? You must be kidding.
Fact is, there is not something like cheap energy. The cheapest energy short term is the most expensive long term and vice versa.

The industry will do, what is written into their DNA, they will adapt. Would not be the first innovation wave the UK would miss because we always try to take the easy route. We need to save energy and resources, to stay competitive

January 2, 2013 10:20 pm

We would be using more of BP et al’s products if it wasn’t for taxes which will grow because of the EU’s crusade against carbon production which is due to pressure from green lobbying.

January 2, 2013 10:35 pm

It’s a pity we don’t follow Canada’s lead and resign from the Kyoto Agreement.


January 2, 2013 10:45 pm


You can be green and not be a nutcase…. :)

January 3, 2013 6:40 am


An interesting paper that involves some of the topics mentioned by TD.

John Hartley
John Hartley
January 3, 2013 11:27 am

How is there no green lobby when they have pushed through the 2008 climate change act that will reduce UK CO2 emissions by 2050 by killing UK industry & 25,000 pensioners will freeze to death per year as they will not afford the green taxes?

January 3, 2013 12:37 pm

CO2 is pointless. The two extrema are either cheap energy and abundant resources, or the exact opposite.

Still, in both scenarios and hence in anything between, the most efficient industry wins. That’s why the German industry is converting en masse.

Green is sexy, because it will enable a mindset, setting the nation on top of current trends. But hey, we can also try to compete with cheap Asian steel. Only needs a reduction in living standard by 60%.

3D printing alone will revolutionize the way we make things. We should be the spearhead of its development.

January 3, 2013 12:45 pm

Btw, when labour was scarce, the west imported people. Meanwhile, the industry innovated and we were left with abundant labour, the result was unemployment. Countries that were not eager to follow lost a good part of manufacturing. That includes the UK. Never again, I say.

January 3, 2013 1:34 pm
January 3, 2013 4:42 pm

It’s fun to discuss black’n’white, but – please – accept that the truth is gray, hidden behind a fog and mixed with a grain of salt.

Lets assume, this Galileo group is 100% right. Climate change is a hoax, and we can keep producing as we do. Still, the more efficient industry wins, as prices due to ever scarcer resources will continue to go up.

Lets assume, that there is only a 50% possibility, that they are completely or partially wrong. In that case, we may be completely fucked. May not be your problem, but if you start a family, you should consider your stance responsibly in face of your children. And still, the more efficient industry wins.

So, I seriously challenge your view, that there is a choice at all.

This special group is concentrating on the carbon cycle. Well, historic data on this cycle is assuming 50% more forrest and as such absorption capacity than is currently available, and 80% more than will be available in 2030. Of course, forrestration is a means of defeating climate change, but that’s not on their agenda, isn’t it?

Instead, they want to ‘enjoy life’ and ‘be free of guilt’. Guilt and joy are hardly scientific measures, they are used to provoke resistance of the casual westerner, very clever use of psychology. They fail to give scientific evidence, in what way CO2-reduction is hampering liberty and economy. But – as these are their central points – they have to. FUD and nominating every green as a socialist is not enough.

I think, we can stop the discussion here, as it will lead to nothing. Energy supply and security, plz.

El Sid
El Sid
January 3, 2013 8:25 pm

Trouble with the Severn Barrages is that they’re not so cheap compared with the alternatives. From memory the 2010 study came out with electricity in the £120-150/MWh range – compared with a wholesale price of about £55/MWh at the moment. Sure, like wind and (sort of) nuclear, you’re comparing apples with oranges when comparing the high-capex, low-opex power plants to the low-capex fossil fuel plants that need you to take a view on future fuel costs, but even then there’s a whole lot of options that look cheaper than the barrages.

Not sure where you’re getting your idea of UK “direct payments” – our main green subsidy, the ROC system ends up being paid by consumers as part of their bills, although we also have some direct feed-in tariffs like Germany. ROCs are more complicated because Gordon Brown was involved in designing them, but on the other hand it works out at a lot less than the €52.77/MWh of subsidy they’re paying in Germany in 2013. We also don’t have the grid instability of Germany.

“The Stone Age did not end for lack of stone” quote was essentially a bit of propaganda from Sheikh Yamani, a former Saudi oil minister, who was trying to discourage investment in unconventional hydrocarbons like shale gas, in order to retain Saudi’s importance…. The fact is that there’s just nothing available in large volumes at low cost that has oil’s energy density, just look at the struggles we’ve had against the fundamental physics of batteries despite $10bn’s of investment.

Talking of which, the geopolitics of rare earth are fun – they’re a major reason why we’re not all driving hybrid cars already, a Prius has about 5kg of lanthanum although Toyota claim to have found an alternative that they will launch in 2 years time. In fact the light rare earths aren’t the problem, it tends to be the heavy ones like dysprosium that are hard to replace.

Gas storage – bang on, it’s the single most important thing we need for energy security given that we are in the middle of a decade-long transition from exporting gas to importing around 70%. Not many countries have seen such a massive change in their energy needs in such a short space of time. The only trouble is that decent gas storage makes T45’s look cheap…. (well, they’re capital intensive at least, but you do get revenue from the summer-winter spread)

El Sid
El Sid
January 3, 2013 8:27 pm

@X Sadly it doesn’t look like we’ll get “cheap” gas. The real cost of shale gas is the subject of a lot of debate, the less informed like to make a big deal out of current US gas prices whilst ignoring some of the other factors going on there. Last year they had a mild winter and their storage was full, but there were lots of ridiculous articles in the Telegraph claiming that shale gas alone had driven US prices down to about $2.50, a quarter of UK prices. Now there’s been more shale gas developed in the US since last winter and the price has gone up to $3.50, strangely the Telegraph isn’t claiming that more shale gas development has made gas prices go up by 40%.

There’s a lot of smoke and mirrors but it looks like the “real” cost of pure methane from shale is much higher than current prices – the boss of one of the major shale companies has suggested it’s around $6-7/MMBtu and some outsiders suggest it’s more like $8. The breakeven goes down if it can be subsidised by oil from the same well and at the moment that’s what’s happening, shale “gas” is almost a waste product from wells that are relying on oil to pay the bills.

Takehome message is that shale gas does not represent some cornucopia of “cheap” energy – but it could be a valuable source of domestic energy that will help with energy security. We don’t know until we test some wells – and that’s something we should definitely be doing, but beware the hype – even after drilling thousands of wells, the US found that their reserve estimates were vastly over-optimistic. Last year they cut their official estimate for their reserves by 42% compared to the previous year. Poland was meant to be the great European hope but has disappointed, it’s looking like they will be OK domestically, but won’t have a vast surplus to export as was once hoped. We’ll see.

Incidentally @x, I’m not quite sure what your point is about that octopus thing – multi-well pads are old hat and indeed are expected to be the norm in the UK. OK, it looked a bit more complicated than some but that piece sounded like a hick who had just beamed aboard the starship Enterprise. It’s not transformational in any particular way, it’s just business as usual in areas where drilling pads are harder to permit than in the deserts which account for much of US tight gas. You save money by having fewer pads, but drilling costs are largely fixed per metre drilled, so you spend a lot of money going sideways.

El Sid
El Sid
January 3, 2013 8:32 pm

@TD, a few things.
UK gas will have to get more expensive for US shale LNG to become important – it takes about $6 to do the LNG cycle so even at current prices it would be barely economic, and certainly not at that $6-7 base cost price. It’s more aimed at the Asian market, where LNG is a lot more expensive – current Japan price is about $17. Russia needn’t get too worried yet. And just in general LNG is your last-gasp option because almost anything else will be cheaper.

I’d disagree that nuclear is “dead as disco for the next 50 years” – electricity is a slightly different kettle of fish to gas, although the two often get conflated. It’s worth noting that recently Centrica have been busy closing down gas power plants from the late 1990s because it’s not economic to run them at current gas/electricity prices. If new nuclear can deliver electricity at £60-70/MWh as its proponents claim, then it’s got a good future ahead of it – and just generally I’m a big fan of diversifying the generation base, no one technology should have more than 40% of the mix.

As for tidal versus wind, the big difference is cost and technology maturity. Even now that many of the good locations for onshore wind have been built on, newbuild onshore wind comes in at £60-70/MWh whereas there’s only a few places you can build Severn-style barrages (and as noted above, you’re looking at over £100/MWh. As for Salmond’s dream of filling the Pentland Firth with underwater windmills – they’re not even at the prototype stage yet and probably won’t come in at under £200/MWh. This report by Arup is not definitive, but it gives you a feel for the relative costs of different technologies :

As I’ve said before, I think you seriously overestimate Middle East pipelines as a solution to energy security – in the real world their capacity is limited and building more is constrained by fraternal rivalries. That’s not to say none will ever get built, but anything transnational round there is very hard to do. They also make tasty targets for low-tech insurgency – one pipeline in Colombia used to get attacked every other day at the peak of the FARC insurgency, then they learnt that going after the electricity pylons was even more effective as it completely stopped production, whereas the wellhead just switched its output to local storage when the export pipeline was out. You also ignore the vulnerability of the production facilities themselves to attack, either by ninjas or Scuds/cruise/tacair.

The big picture stuff is fun to think about. Perhaps the biggest effect will be on calming things in the Arctic, as most of the hydrocarbons there seem to be gas, and all of it is expensive to extract so Arctic gas could be one of the main casualties of the global shale revolution. As an aside – look out for more interest in East Africa as more hydrocarbons are found there, particularly off Tanzania/Mozambique, it’s worth noting that the cloggies got a lot more violent with the pirates once Shell took an interest in Mozambique… And France’s interest in Somalia has increased with Total buying into Uganda oil last year.

Finally I don’t buy the argument that the US will lose interest in the Middle East as a result of shale oil. Partly because they import minimal amounts of Gulf oil as it is, but it’s still important to them a) because their prices are still linked to world prices, and if Hormuz is blocked then they would still be paying $200/barrel for Canadian and Mexican oil. b) because the Gulf countries are an essential part of the dollar bloc, and ones that will become ever greater importers of US goods and services.

And most importantly, that dependence on Gulf oil represents one of the best ways to contain China. If the US is going to hurt China in future, they will do it by economics not carrier battle groups. Look how they have fought Gulf War 3 – it’s been all about building coalitions of shipping groups and insurance companies rather than tanks and troops. Expect World War 3 to be similar – which makes the Gulf a crucial element of future US strategy.

PS Meant to say on the UK shale thing – groundwater is not such an issue in the rainy bits of the country north of Manchester, it’s much more of a problem in the Southeast. The earthquake thing is trivial – it’s little different to that from normal coalmining, not that many of the NIMBYs have recent experience of that. The water thing is more of a concern, and just like the US have walled off the shales near New York’s water supply, there’s a good argument for being cautious about fraccing in the Weald. It’s not such an issue up in the Fylde.

January 4, 2013 12:17 am

Only one side, has deliberately hidden, behind Grey Fog. Thats the side that brought us ClimateGate and the BBC 28Gate.

Mind you most people have never heard of 28Gate, due to the other scandals that have engulfed the BBC, in the last six months. Now for six years a Welsh Pensioner, a Mr Newbery. Led a one-man six year battle to find out what Specialist Scientists attended a BBC Climate Conference in 2006 attended by according to the BBC, the BEST SCIENTIFIC EXPERTS. This conference decided BBC policy since that time, on how it would report the Climate, It also decided that anyone who had a different viewpoint in which didnt subscribe to the Green Lobby Established view of the world, would be DENIED ACCESS to put their viewpoint across! So hows that for Fair and Balanced reporting. Now the BBC threw everything including the Kitchen sink, to try and stop this man from finding out who was there. Even going as far as the High Court to stop his Freedom of Information Act Request. They won that.

Now why go to all that trouble in trying to hide who was at that Conference. May be because their wasn’t any Scientists or anyone infact there, that could have give an Impartial and Balanced view?

Fortunately, an Itlian Blogger looking at a internet Archive Website, found out who was there. And that only it was attended by only 3 Scientists, the rest were lobbyists from various Green Organisations, Alarmists, Companies and even someone from the US Embassy? Now the list is here: http://thefrogsalittlehot.blogspot.co.uk/2012/11/28-gate.html?m=1

Then you get the reaction like these:

Like Immigration, we cannot have a realistic debate in this country, without it descending into a mudslinging contest. Just because I don’t believe in Global warming, doesn’t make me a deluded Denier or a Heretic either. We are seeing Climate Change, that is Undeniable. But have a look at these two:


If we continue to have Very Wet Summers and Cold and Wet Winters, which is reducing our ability to produce enough Food, for ourselves, the energy issue may be the least of our problems. This week Sky News ran a story highlighting that British Farmers are having major problems with water logged fields. How will the country react, if this time next year people are paying twice or three times as much for Bread, Milk and Potatoes, the very basics of our food needs?

We have to get this right, because the last time the Climate went Cold on an suspecting Northern Hemisphere, in the 14th Century and which lasted until the middle of the 19th Century. What is now called the Little Ice Age. It led to Famine, Pestilence, Revolution and War: http://www.vlib.us/medieval/lectures/black_death.html

If you can look at this History Channel Video from Youtube. in the last 10 minutes even the Pentagon, has view on it:

January 4, 2013 12:20 am

@ El Sid,

“Partly because they import minimal amounts of Gulf oil as it is,”
— Saudi Arabia is the second largest source of US oil, behind Canada but ahead of Mexico. They still import reasonable amounts from the Iraq and Kuwait as well.

January 4, 2013 1:27 am

@El Sid
Thank you some v. interesting insights.
Whilst the good sheik may have been more subtle than is widely perceived, I still find the headline message taken from his quote, that disruption of normal business is normal, to be quite optimistic.

In the same vein, (and I don’t know if this article covers all varieties of rare earths), it made me smile after China has expended such effort gaining a monopoly. :)

Just hoover ’em up…

January 4, 2013 10:05 am

@ El Sid

Multiple head wells remove the need for fracking.

Any extra supply especially a domestic source will put downwards pressure on prices.

I actually worked in gas transportation for a number of years.

January 4, 2013 10:34 am

It’s hard to be realistic, if the discussion is all about forecast. We more or less talk about statistical risk.

It’s hard to find good information on the web, including current deforestation trends and their effect on the natural carbon cycle.

Climate change is more than cow farts and coal plants.

We have indeed a need for more realism. But, please stop pretending that a ominous green lobby is magically pushing us to expensive renewables. Medium term, it’s simply the most efficient use of resources. And, btw, renewable includes wood, which could be a good heating source.

El Sid
El Sid
January 4, 2013 2:59 pm

It’s still minimal in context – their biggest source is overwhelmingly the US itself. In round terms, the US “uses” about 20 million barrels of oil a day, split 50:50 between domestic production and imports. It exports about 3 million barrels, mostly of refined products. (see here)

Of those imports, about 1.3 million barrels comes from Saudi, Iraq and Kuwait add another 0.8 million barrels per day. So their total imports from the Gulf amount to about 10% of their total oil demand, and is still less than the amount they export. Typically you might make $5-10/barrel gross profit on refining (it’s been more recently, but it’s brutally cyclical) so that’s a nice turn on 2 million barrels per day – but it’s not worth going to war over. However if the cost of your entire 20 million barrels per day goes from $100 to $200 per barrel, then that _is_ a problem. That’s why the US is worried about Hormuz, well one reason anyway.

– I wouldn’t be so optimistic, just because you’re running into limitations of physics and chemistry. Even if you put economics to one side, there just ain’t that many things that look as attractive as petrol for vehicle propulsion, where energy density and ease of “refuelling” are so important – and the alternatives tend to fall down on cost or technological maturity. Liquid hydrocarbons will still be the gold standard for that application, particularly in Western countries where the infrastructure is so well developed, although you will see developing countries choosing things like compressed natural gas when it comes to rolling out infrastructure of their own.

@x No they don’t – fraccing is normal on multiwell pads, particularly if you’re only doing one pad per square mile. You might get away with it on the more permeable formations but typically the fractures only penetrate 100-250m from the wellbore. With traditional vertical, fracced wells you might drill 32 wells per square mile in the old days, but depending on the rocks you might now go to 64 or 128 wells per square mile. Given that drilling is expensive – £~10m for a vanilla vertical well 6000 feet deep in the UK, although in the US they can do it for half that – I don’t really see extra drilling as an economic replacement for fraccing. My personal feeling is that you can do some of it with novel fraccing chemicals, but that some areas will always be off-limits (or at least the costs of getting permission will make it an sub-economic proposition, you might get the odd well just to prove a point). I just can’t see it happening in the Weald for instance, but northern England looks realistic – and we should definitely be giving it a go as you just don’t know whether a particular rock is economic until you’ve got 2-3 years of data from a real-world well.

January 4, 2013 4:05 pm

@ El Sid,

“It’s still minimal in context – their biggest source is overwhelmingly the US itself. In round terms, the US “uses” about 20 million barrels of oil a day, split 50:50 between domestic production and imports. It exports about 3 million barrels, mostly of refined products”

— Except that US crude oil production is actually below its import levels, not the other way around. And that Saudi oil makes up one sixth of all US crude oil imports, and is equivalent to one fifth of domestic US production. But I’m sure they don’t need it.

El Sid
El Sid
January 4, 2013 4:56 pm

Except that US crude oil production is actually below its import levels, not the other way around

It depends if you include domestic ethanol production or not (which is not unreasonable, it all ends up in your petrol tank), as per the link – and US production is rising thanks to shale oil. But regardless, the difference is a rounding error, it’s still roughly 50:50.

Saudi oil makes up one sixth of all US crude oil imports, and is equivalent to one fifth of domestic US production

So what – a cracking tower can’t tell the difference between imported and domestic oil, percentages are only meaningful when you look at total oil going through the system. At the moment that’s about 20 million barrels per day, of which 17 is needed by the US economy and 3 gets exported. If all imports from the Gulf were blocked they would be down to 18 million barrels per day, so enough for domestic needs plus exporting 1 million barrels per day, enough to supply all the oil needs of Taiwan or Australia (the UK uses about 1.6 million).

I’m sure they don’t need it.

Regardless of what you think, I invite others to consider the figures above and make their own minds up.

[as an aside, the figures for both Saudi imports and US exports are inflated a bit at the moment thanks to the effect of the Iran blockade. The Saudis are pumping like mad at the moment, partly to replace the 1 million bpd lost from Iran, but also to fill up as much storage as possible that’s out of reach of Iran. Plus less sophisticated refineries are designed around a particular type of crude. So some of Iran’s usual customers are buying product in effect made from Saudi crude that’s gone though the more flexible US refineries whilst they are adapting their own refineries to take alternative inputs.]

January 4, 2013 9:26 pm

@ El Sid,

The reason you don’t bother with Ethanol is because we’re talking about crude imports from Saudi. If you start pulling in all other products then we might as well start debating about how much timber the US can produce without needing the Saudis.

A cracking tower may not be able to tell the difference between one countries crude and another. What it can do is tell the difference between being empty and being in use. Let’s put it this way, if the yanks didn’t need the Saudi oil then they wouldn’t be importing it. And yes, that much oil makes a big difference.

“Regardless of what you think, I invite others to consider the figures above and make their own minds up”

– Yes, lets. The figures – that you posted – show US domestic crude oil production as 6.8 million barrels equiv. per day, plus just over 8 million barrels being imported. Of that combined lot, 14.8 million (almost the whole amount) went into refinery. Take away the Saudi oil, and indeed all other sources, and all of a sudden you’re very, very short, over 50% down.

As for the Iran deal, if you look at the long term figures on the site you linked to, it shows the complete opposite of what you’re saying. Saudi crude production has been slowly going down a bit, and US production is being pushed up.

January 8, 2013 12:36 am

1) A reason why the choke point of Suez may become less strategically important for European trade from the Far East: go the other way round.
And why the Chinese may appear in the Arctic:
“Half of China’s foreign trade relies on shipping, and if both the Russian government and melting sea ice permit the Northern Sea Route to be opened to foreign shipping, the distance from Shanghai to Hamburg would be shortened by 6,400 km.”

2) @El Sid Re: Liquid Hydrocarbons, energy density, convenience for vehicle propulsion and the limits of physics at a reasonable cost.
I agree completely, and this is a much harder nut to crack than transistors were by Moore’s Law. Battery and super-capacitor technologies are not showing the real breakthrough.
But genetic engineering is likely to blow some socks off over the next three decades, so whilst oil may still be used as a fuel, it could be grown locally by algae or produced by bacteria from wood pulp in vast and economic quantity. Watch out for Craig Ventner and the like.
The strategic point would be to both remove the dependence on dodgy suppliers whilst also being more carbon neutral.
Current technology doesn’t make it economical, yet, (and a recent report said so http://www.reuters.com/article/2012/10/24/us-usa-biofuels-algae-idUSBRE89N1Q820121024 )

…but I’m still an optimist!

April 5, 2013 3:31 pm

On energy density and new battery technology:- reasons to be cheerful:


More detail, if a bit breathless:

Company’s Webpage: