Tim Worstalls' paperfn examining various arguments for and against fracking for natural gas in British shales. All the more pertinent as the Johnson government is hell bent on compromising the UK energy mix and supply for its citizens. My only point of disagreement is linking fracking production to CO2.
Britain is not going to be fully powered by renewables by 2030 or any decade soon. There are problems using an intermittent energy supply by adding more intermittent energy production. More wind turbines will not make a difference when the wind doesn’t blow. Solar, does not work at night.
Nuclear power stations take over a decade to build. Worstall recommends the need for a bridge energy supply.
“...one that can be brought swiftly into action; one for which we already have the necessary infrastructure. Fracking... for natural gas is the one option that makes sense.”
Debunking "The Price Case" Against Fracking
One argument made against shale gas is even if Britain did start to develop a domestic industry, it would make little difference to the global price.
It’s an argument that goes against the same concerns about food miles – local production for local consumption. Given the recent experience of forced restrictions on shipping and imports, it shows how important the UK government wants to provide food and energy security for its citizens.
Transport costs of natural gas are high (but lower than wind and solar). There is a significant cost associated with production of liquefied natural gas. The result is drilling for gas leads to significantly cheaper prices near the place of production, rising the further one goes from the wellhead.
At the moment of writing, the Henry Hub price (US reference) is $5.84 per million British thermal units (MMBtu); the UK price is $26 per MMBtufn. In simpler terms, if gas were cheaply transportable, then the US price would not be so divergent from that in the UK or the rest of Europe.
The same factors apply when considering domestic UK production: the costs of exporting mean that domestic prices would be lower, than prices further afield. Meanwhile, competing foreign supplies will come at a price equal to the global price plus the transport costs into the UK. The result will be that the domestic price for all gas supplies declines to be the net of the two effects.
Add back in logistical chokepoints – any significant domestic production would certainly lower domestic gas prices. The fact that UK prices are currently five times higher than US ones shows that domestic production changes do not feed through, entirely or exclusively, into global price changes.
Domestic gas production would substitute for imports, which are higher priced because they carry the cost of transportation. So UK consumers would undoubtedly see a big benefit, as would the Treasury, which would receive a huge injection of royalty income at a time when it badly needs it.”
Net Zero Watchfn Director, Dr Benny Peiser
It is also possible to note that natural gas is, as a result of the Petroleum Actfn the property of The Crown. Meaning fossil fuel extraction (as well as operating offshore windfarms) leads to revenue flows into government coffers. This being the case, even if it were true that fracking produced no reduction in domestic prices because sufficient exports were made to pull them up to global values, the result would be a flood of cash into the Treasury. That resource rent, the money arising from the mere existence of the gas itself, would be flowing into British government coffers rather than, say, Norwegian or Russian ones.
In summary, the net effect will be that some shale gas would be exported, producing revenue for the Treasury. It is also true that much fracked gas would not be exported, meaning that the local UK price would become lower than the international one. Partly because the increased supply and more importantly – domestic production would remove costs of international shipping and supply.
Debunking "The Fracturing Create Earthquakes" Myth
Consider the chaos and destruction at Arnisdale on 24 September 2021. Or at Morvren on 16 September, Windermere on 8 September, and Arnisdale again on 3 September. These were locations of tremors of magnitude 1.3, 1.0, 1.0 and 1.2 respectively.fn
This list represents only quakes at or above 1.0 in the month of September 2021. Note that these figures are on a logarithmic scale, so magnitude 2.0 is ten times the energy of 1.0, not merely twice.
Setting a limit upon fracking of 0.5 on this same scale is therefore erring much too far on the side of caution. It’s possible to believe the limit was set on political grounds rather than safety. Or to go further, to think that it is a limit set so that trivial tremors will lead to the effective banning of fracking. There were, according to the British Geological Survey, 3 more natural tremors above magnitude 0.5 in that one month alone.
Fortunately, a better estimate of reasonable safety limits is available and based upon actual science.fn This research agreed fracking might cause some tremors. But it found the correct ‘amber light’ warning level – at which drilling activity should be temporarily suspended should be two magnitude units below the level of a risky or dangerous earthquake.
For the UK that’s somewhere in the 4.0–5.0 range. That means the requirement to stop fracking and check should be between 2.0 and 3.0, not the 0.5 currently in place.
It’s worth noting that the American experience of some 100,000 fracking wells has led to only one instance of a tremor larger than a ‘microquake’fn defined as 2.0 or less, the one incident being at 3.6.
The level of concern should be tempered by the knowledge that other human activities cause tremors too. The Three Gorges in China was known to be causing a swarm of them in 2018, significantly larger than merely ‘microquakes’.fn
Lithium mining causes them too (needed for solar and batteries). Tremors form with any deep injectionfn notably green plans for geothermal energy extraction and long-term carbon sequestration.
Britain will not be 100% reliant on renewables in the next 30 years. Already it cannot cope with wind deficits like the one experienced during 2021. No matter many turbines we have, we’re still not going to get any electricity from them if the wind isn’t blowing.
It is necessary to have either storage capability (which suitable technologies don’t exist) or a way of immediately generating the power to dispatch. Ideas like pumped storage – Dinorwig Power Station, for example, fail at grid scale because there just aren’t that many places we can put such facilities. They are useful, but not actually the solution to a days or week long winter of high pressure.
Of the alternatives, natural gas is the best available; this is why Britain has to import it.
Debunking "The Limited Supply" Myth
One interesting attempt to denigrate the idea of fracking is an insistence that there isn’t much of it. The claim – made several times that the UK’s Bowland Shale, for example, is entirely different from the Marcellus in the US. It is said that it has been folded and shattered by geological processes so much that it is, effectively already fracked. Therefore, there’s not much gas down there.
When announcements of reserves by given companies. The definition of ‘reserve’ is misunderstood as being ‘the amount of x that’s there’. Not true. A reserve is a company or organisation, state they can extract x amount, using current technology at current prices and make a profit doing so. The reserve is – the amount that can be economically extracted at the present time as defined in law.
To say reserves aren’t there because the geology is different; the geology has already been incorporated into the amount being declared as a reserve.
Declaring a reserve when there isn’t one is fraud. The only numbers Worstall is certain of are those for the reserves as the people announcing them are the only ones with that legal obligation to tell the truth. No one else involved incentivised to be honest.
If there were really no gas 'down there', there would be no need to ban fracking. A few test wells might be drilled, each using an area half the size of a football field for a year or two. The lack of gas extracted would become clear. At which point people would stop spending money to find the non-existent gas. The lack of gas to be fracked is a self-solving problem.
Debunking "The Contamination of Water" Myth
It is feasible that pumping chemicals into the ground will contaminate water supplies that are gained from the same ground. But as a practical matter this is not a worry as far as shale gas extration in the UK is concerned.
The water table aquifers we draw drinking water from in the UK is fairly shallow.
An aquifer’s primary functions are to store and transmit water. Most groundwater in an aquifer is slowly circulating in the upper 100 to 200 metres of the saturated zone. But fresh water can penetrate to depths of more than 2 kilometres although at such depths groundwater is generally mineralised with solutes, particularly sodium and chloride, and is too saline for potable use.
The UK doesn’t use deep water. Gas shales in the UK are mostly quite deep, several thousand metres below the ground – several zones below water supplies. The law already bans fracking anywhere near water sources where ‘source protection zones’ are set up, nor allowed at depths of less than a kilometre.
Debunking "The Unknown Chemicals in Fracking" Myth
Stories from America of fracking mixtures being unregulated. In the UK anything used in a fracking application must be listed and approved by the Environment Agency. There is a list of materials that can be used and all have been passed for their neutral effects upon water supplies.
For example, the mixture that Cuadrilla used near Blackpool is known and has been examined.fn A part of that mixture was hydrochloric acid in a 10% solution. This might concern some, but hydrochloric acid is used in water purification systems themselves, especially those that use reverse osmosis.fn Something already used to purify water is no concern when used a kilometre deeper than the usual water supplies.
The Case for Fracking
Modern societies rely upon its energy supply. There are several levels. One is the frequency of supply, the grid in the UK must work at close to 50 Hz. Variances from this figure will cause cascading failure, such failures being built into the structure of the grid to protect it from frequency variation. The blackouts following a connector failure in Texas August 2019 were an example of this.
The sudden loss of part of supply meant that the frequency varied ‘too much’, parts of the grid were closed down to protect them. Part of the solution is to have some measure of quick startup dispatchable power. In the absence so far of gridscale batteries, natural gas is the only real solution.
The second security level is highlighted by our experience in recent weeks. Solar in the absence of absurd subsidy levels, as happened in Spain, where shining grid-powered spotlights onto solar cells at night proved profitable don’t work at night.
Wind power depends there being wind. The UK is not a large enough area to be able to say that it will always be blowing at an electricity generating speed somewhere.
Nuclear is much less variable in output. The UK does not have the geology for much more pumped storage, batteries of sufficient capacity and price do not exist.
During the recent wind lull, the UK turned on at least one coal fired station again. Currently, as Russian supplies are disrupted as a result of arguments over Nord Stream 2 and that the European gas market is imperfectly connected, this currently resolves into extreme price changes doubling or tripling. But Britain is at the end of that system. Having a domestic supply provides insurance.
UK Citizens & Businesses Pay Less for Their Energy
Part of the market price represents the effort expended in getting it to the consumer. Those who extract, transport and process gas should be able to make a profit due from their labour, capital and technology. However another part is the result of the existence of the resource under some particular piece of land or sea. No-one created that value, and no-one will be dissuaded from creating more if it is taxed. Therefore, the taxing away of such resource rents is considered to be a good way for the state to obtain revenue without distorting incentives.
Given that we have a shortage of such revenue at present, another source would undoubtedly be useful, although fracking would not produce a bonanza to match North Sea Oil.
Currently Britain imports much of the gas being used. Given that everybody else does indeed tax the existence of fossil fuel resources, British homes are effectively heated, meals are cooked. By sending money to the Norwegian, Dutch and (to a small extent) Russian governments, the domestic production of shale gas would therefore represent a straight transfer from those foreign governments to our own.
Assuming no reduction in domestic gas prices as a result of the greater production, there would still be a substantial reduction in the demands British citizens.
Quick Start Fracking
If we start to frack then we are not locking ourselves into a specific technology for decades. Conventional hydrocarbons lock us in for those decades. It can take 10-15 years to bring a conventional field online. It might then produce for 20-40 years.
The general infrastructure needed for fracking is the country be piped for gas, which it already is. Additional work to connect is simple enough: whatever few miles are required to get from the drilling site onto the gas network. There isn’t anywhere, in England at least, where that distance is more than 10 miles.
Then the actual well needs to be drilled. This is where the comparison with manufacturing applies. A fracked well takes some few millions to complete, not the billions of a conventional reservoir. It produces almost immediately and production falls off steeply fairly quickly; a period of a few years at most. At which point the well can be refracked, drilled deeper through another layer of shale, or plugged and abandoned. It only requires reasonably continuous work to keep it going for the long term.
Fracking does not lead to a technological lock-in. It can be used as long as needed, for as long as it is convenient and profitable. Then dropped. This means that it is near perfect as a bridge technology.
Given that there are no large infrastructure issues, fracking would be swift to bring online. All the technology has been invented. The required pipeline network is already existing. Rigs can be deployed, ownership of varied shales is already known, capital is available in large quantities.
New Interim Technology Opportunities for UK Startups
Opportunities lay with those who design machinery that withstands decades in seawater, making tidal energy economic. The only speedy form of energy supply we’ve got to fill the gap until gridscale storage technologies are properly developed and deployed is natural gas. Given the tight global market, the reasonable source of that gas is Britain's domestic shales.
Little needs to be done in order for fracking to take place. The country is piped for gas. Companies to bill consumers exist. We already have the technology to frack, both globally and within the country. Ownership rights are sorted; it is clear who may prospect and drill.
All that is required is the legal management regime to allow for beneficial activity. Given that we have four parliaments in the UK, that should be enough politicians to be able to work on the point. Adopt a sensible earthquake warning limit.
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