The dreams peddled by the oil and gas industries turn out to be fantasies

The one thing Osborne loves to tell us, constantly, is that the future of energy production lies in fracking and that he will do everything in his power to maximise shale drilling in Britain, even to the extent of allowing drilling to be carried out on private land without permission.   However this oasis of future riches has received rather a knock from the latest information in the US.   It has now been reported that the top 15 players in US shale drilling have written off no less than $35bn since the boom started, and that investors are beginning to pull out.   It has also become clear from the big shale basins in the US that production rapidly peaks, but then equally rapidly falls away.   This has been the experience in all but one of the major shale-gas drilling regions in the US.   The boom shows ominous signs a bust before too long.   The energy industry’s narrative of plenty in long-term extractable unconventional gas has been proven wrong. Then there is another narrative of plenty, this time denying peak oil and insisting there are growing global supplies of affordable oil far into the future.   This is now turning out to be equally flawed.   The truth is that capital expenditure on finding new reserves has soared whilst at the same time discoveries by major oil companies has dropped, and is still dropping.  In fact crude oil production, which meets some three-quarters of global demand, peaked nearly a decade ago in 2005.   And third, there is a growing risk of carbon fuel asset stranding whereby policy-making on climate change, or the possibility of it, causes investors to abandon significant amounts of oil, gas and coal assets underground, unburned.  Already some major financial institutions are starting to pull out of carbon-fuel investments.   Other institutions are holding their investments in place for the moment, but are pressuring carbon-fuel corporations to rein back capital being expended on efforts to turn resources into reserves.   That is bad news for an energy industry needing ever more capital to keep its narratives of carbon fuel plenty on track. Thus the fossil fuel industry likes to speak of the US becoming the new ‘Saudi America’ – a nation self-sufficient in oil and gas that exports to help allies in trouble, like Ukraine.   This is a blatant myth: US oil consumption is 18.5m barrels a day, but its production is only 8.9m barrels a day.   One wonders what part of that equation they’re going to export any time soon to save Ukraine and others from the clutches of Kremlin-controlled pipelines?

3 thoughts on “The dreams peddled by the oil and gas industries turn out to be fantasies

  1. You make some interesting points, which if true, (and I see little reason to doubt most of them,) are extremely worrying.

    Unfortunately with a government this rotten and out of control and this much in the pockets of private investors sensible regulation and oversight are not the agenda.

    But even more worrying still is the fact that that all companies, (and all the technical expertise required to exploit this resource,) involved are either American or Australian and there doesn’t seem to be a penny of British capital invested in it.

    So once again and all other factors aside this look like straightforward asset stripping, from which this country will gain little or no benefit and for which we will be left with bill for the clean up or if as seems to have happened, (I have a completely open mind on just how badly,)in the US, things go wrong.

    I also agree that looked at from a certain perspective Fracking came out of nowhere and does look a lot like Tulip mania, (yet another commodity based bubble that went horribly wrong financially,) for example.

    But as always with these things it’s difficult to separate the facts from the noise, cant and the propaganda and to work out who is actually telling the truth, or not?

    But I agree that there are serious here concerns that are not being addressed and that this whole thing has moved forward far to quickly and without proper risk assessments, accountability or oversight.

    The other troubling factor is that once again these companies are being given what is effectively a complete carte blanch to operate in this country and to trample over the rights and interests on any individuals or community that dissent or object.

    That is probably, (or it certainly should be,) even more concern to both British politicians and the electorate alike than any possible environment impact and the potential for all go horribly wrong.

    After all the track record particularly of American companies operating outside the US is frankly frightening.

    Who can forget the Piper Alpha disaster, (An explosion and the resulting oil and gas fires destroyed it on 6 July 1988, killing 167 men,with only 61 survivors. The death toll includes two crewmen of a rescue vessel and was the worst offshore oil disaster in terms of lives lost and industry impact.)

    Or the Bhopal disaster, (for which no real compensation has ever been paid,) in India; the world’s worst industrial disaster, where Over 500,000 people were exposed to methyl isocyanate (MIC) gas and other chemicals. Estimates vary on the death toll. The official immediate death toll was 2,259. The government of Madhya Pradesh confirmed a total of 3,787 deaths related to the gas release. Others estimate 8,000 died within two weeks and another 8,000 or more have since died from gas-related diseases.

  2. Fracking seems to be yet another opportunity to shovel taxpayers money into the pockets of the government’s private business chums, just like the WCA, the Work Programme, the sale of Royal Mail, replacing state schools with so-called ‘free’ academies etc. etc. It’s early days with fracking so some might doubt what I’m saying but I suspect what I’m suggesting will become obvious to all when the greedy frackers have been and gone.

  3. but no mention of the senator whose land was being fracked and he was involved even went back to Washington asking for help to clean his polluted land up you get it from its tax payers not the companys fracking they just go bust and polute the water systems isn’t life strange when one cant even drink the well water or is this now being sweept under the carpet jeff3

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