Shale gas is coming . . . message from our seminar last night

January 21st, 2011

We had an incredible event last night “Shale Gas in Europe”. Huge thanks to;

  • our three expert speakers, Leigh Bolton of Holmwood Consulting, Nick Grealy of NoHotAir and Dr John Buggenhagen of San Leon Energy plc
  • Allen & Overy for their generous sponsorship and last but not least
  • a most engaging and intelligent audience

Telegraph TV turned up as well. I’ll post a link up when they go live.

The UK’s import of LNG is accelerating faster than anticipated . . .

December 30th, 2010

According to a report covered by Rigzone, the UK has just set a new monthly record for the import of LNG of 73 Bcf for November 2010. Can’t wait to see December which I suspect will be a new record again. It was 378 Bcf for the whole of 2009 and is expected to be close to 700 Bcf for 2010, so roughly double.

What”s interesting as well is the source of the LNG – predominantly Quatar, followed by Algeria and Nigeria.

I can’t see these trends not driving EU governments to push harder on shale gas exploration in the years to come.

The shale gas story – is Europe next?

December 22nd, 2010

A concise and fascinating piece – with a useful graphic on unconventional gas risk factors – just published  in Petroleum Economist (behind a paywall but free for 48 hours, post-registration) by three Schlumberger business consultants – Herve Wilczynski, Muqsit Ashraf and Mohammed Saadat, the opening paragraph of which I’ve appended below;

Shale gas: a risk worth taking

“UNCONVENTIONAL gas accounts for half of North American production, with investment exceeding $25bn a year. Although this has changed the continent’s energy outlook, there may be a bigger prize: nearly 75% of the world’s shale-gas resources lie outside the region.”

Not least I might add, in Europe – to find out more about Europe’s shale gas prospects, attend our event in London on the 20th January, Shale Gas in Europe.

My gut feeling is that Shale gas in Europe is going to move a lot faster than anticipated. And not just because the extreme winter is driving up gas prices to 2 year record highs prompting gas balancing alerts.

Do not underestimate the technical progress that could be made in just a few years in lowering the cost and increasing the quantity of  shale gas extraction.

For electric/hybrid cars the tangible advantage is cleaner air

October 12th, 2010

A very disappointingly CO2-sided couple of articles in this week’s Economist – Highly charged motoring. It trots out all the usual stuff about the shortcoming of electric cars – range, load demand on the grid and much lower reduction in CO2 emissions. But what about the non-CO2 emissions like carbon monoxide, NOxs and above all, particulates?

Unfortunately, in the rush to reduce CO2, diesel has been the preferred choice and this has led to an increase in asthma suffering and many, many premature deaths. This is why Swiss transport scientists are just flat wrong to argue that diesel is cleaner than battery electric cars. So it’s good news that Volvo have launced an app that gives some proper weighting to this.  I for one, when I look at the grey/black mucus on a handkerchief after blowing my nose in Central London, always resolve never to own a diesel.

So that’s one very good reason to switch to electric or petrol/natural gas hybrid transport.

Quite another is to understand is that vehicle mileage in the UK is so low – just look at table 9.17 in this Department for Transport pdf. In 2008, the annual mileage of all 4-wheeled cars was 8,690 or a grand total of 23.81 miles per day with many people doing a lot less than that. Now you could do this with some margin to spare with an electric car. But I think it’s probably correct that most would rather not suffer the fear of running out of juice so the plug-in hybrid beckons. Fine, you say, but what about the electricity demand?

Nothing like as high as is made out. There are real advantages of cost and cleaner electricity to charging off-peak at weekends or at night. If you doubt me, just look at these charts. Our low carbon electricity generators (principally nuclear) actually peaks as a percentage of the whole at night (when demand drops in half) and at the weekends when it is also cheaper. It only really becomes an issue if you want to fast charge your vehicle with much higher voltages so that it takes minutes rather than hours as with the Lightning. But unless you can afford a £120,000 Lightning, it seems highly likely most people would opt for a mix of off-peak electricity and the occasional petrol station.

This last point fascinates me. Petrol stations have been closing at quite a rate for some years, not least because of the increase in vehicle efficiency as well as onerous EU regulations and intense competition for the Independent Operators. The plug-in hybrid will accelerate that trend massively.

So, if a trip to the local petrol station becomes as rare as a trip to a quaint village shop, has government realised what that is going to do to their tax revenue?

Fuel duties already raise £26 billion and are forecast to raise £34.7 billion in 2015/16 (see table C11, page 109). I wouldn’t want to bet on that. And there then just might be scope for plugging in spare electric vehicle capacity to be used on the sub-distribution network, definitely not the grid, but in your own home or business, a bit like the electronics – the most interesting part – of the late Windsave, which produced electricity for you own home only, from your personal plug in micro wind turbine.

July 2010: Utility Strategy Group joins with Future Energy Strategies

July 30th, 2010


The Utility Strategy Group and FES are to join forces and look forward to holding a series of events in 2010/2011.

Dan Lewis, Chief Executive of FES says;

“FES is very excited to be working together with USG. A highly-respected independent group of industry professionals, over the years, USG have brought together leading thinkers in the energy and utilities sphere and have produced many sterling top quality, thought-provoking events”.

Edward Hyams, Chair of USG says;

“We are delighted that Dan Lewis who has done so much interesting work on energy and organised many high profile think tank events over the last few years has agreed to take on the name of USG together with Future Energy Strategies. FES also brings new capabilities to our evening events. Not least an extensive mailing list, an excellent Advisory Board and a scaleable, integrated IT system.”

Path dependence and the Vertical Axis Wind Turbine

July 26th, 2010

Today I saw a piece in the Guardian by John Vidal – Engineers race to design the world’s biggest offshore wind turbines, with some nice graphics of a Horizontal Axis Wind Turbine, reproduced below here;

This looks awfully similar to another company I came across 5 years ago in 2005, Theodore Bird’s Aerogenerator from Windpower Ltd. – also published in the Guardian in 2008 and reproduced here;

And that’s because it’s the same company but the first image suggests a much simpler design with fewer components which makes sense in these straitened times.

Offshore wind really has a lot of problems like;

  1. double the installed cost per megawatt to onshore (£3m v. £1.5m)
  2. higher maintenance costs – try getting out to that non-performing turbine in choppy sea conditions
  3. the total lack of jack-up barges to install them in the first place
  4. there’s no race to finance it – don’t believe the hype

Now back to the theme of the post. I’ve just been reading an excellent book, False Economy by Alan Beattie.  The phrase that sticks in my mind is path dependence. Path dependence, you should understand, is a series of choices made by a species or a company or a person, that can ultimately leads to a dead end. That argues Beattie is what happened to that poster image of the WWF, the Giant Panda. A bear that is incompetent at consuming and reproducing unless in a very narrow environment where it chews bamboo, a low nutrient plant for up to 16 hours a day. Pandas says Beattie, are useless. No wonder they need protection.

Arguably, worldwide, wind turbine manufacturers are stuck on their own Panda-like, subsidy-rich path dependence, the Horizontal Axis wind turbine, classically understood as this;

There’s actually been no serious attempt to build them any bigger than 5 MW in scale since 2005 and  most investors plump for 3 MW turbines. They have reached an evolutionary dead-end. So what’s the alternative?

The case for horizontal axis wind turbines is that they potentially offer;

i) Longer lifespans – up to 40 years rather than 15-25

ii) Higher load factor

iii) Quite low cut-in speeds and much higher cut-out speeds

iv) And much lower financing costs

The proof though is in the pudding – I want to see a big one in action delivering the goods. Let’s not forget that the learning curves of offshore wind 7 years ago were meant to be costs coming down, not doubling as they have done.

And whatever the industry, always be suspicious and ask many questions of someone confidently forecasting falling costs over time thanks to an increase in production – but for the computer and auto industry, it usually doesn’t happen.