Numbers are pesky things ….
Sometimes politicians seem to be unable to forget figures which make them feel comfortable, even when more recent numbers contradict them, so yesterday we saw Mr Cameron trotting out his favourite 74,000 jobs from fracking rubbish? “Rubbish?” I hear you ask … Well, we demolished this figure on this blog when it was published in the IoD report on fracking, and that was before the report’s author went to work as a PR for Centrica. Those of you who keep up to speed will know that the more recent and credible estimates from AMEC suggest less than a third of that number, but that figure doesn’t suit Mr Cameron’s desperate attempts to sell his “dash for gas” to the country, so it is conveniently forgotten. Mind you Mr Cameron isn’t exaggerating nearly as much as John Blaymires, COO of IGas who, in an interview with the Salford Star claimed that those 74,000 would all be in the North West! Nice one John. He also claimed that “This area has an industrial heritage, it’s got skills. If we can do this right then we can establish literally the shale centre for Europe in this region.” Hang on a moment – Mr Cameron has already promised us that Blackpool was going to be the shale centre of Europe, now Mr Blaymire is saying it’s going to be Salford. Who can we trust eh?
[Hilariously the industry shill who calls himself Aunty Fracker has taken exception to my criticism of Mr Blaymires’ statement, claiming that he didn’t mean Salford would be the shale centre of Europe. He believes that Blaymires meant the whole of the North West – He writes “Both Blackpool and Salford are in the North West, and therefore in the region. And so Mr Blaymires was perfectly correct in saying that the region could be the shale gas centre for Europe“. The trouble is Aunty is being as slippery and slimy as he usually is here – he’s trying to pretend that he doesn’t know that Mr Cameron has already promised us that the centre would be very specifically in Blackpool, and I’m sure that even someone with Aunty’s limited grasp of reality must know that Blackpool is not the same as the North West. Maybe Aunty is suggesting that Mr Cameron is a liar? Perish the thought. It’s nice to see you read our blog though Aunty , and it’s noted that you weren’t able to take issue with anything else in this post :-)]
But it’s not just the jobs figure we should be questioning. Michael “not waving but drowning” Fallon, our out of his depth Energy Minister was quoted again as saying “councils could benefit by up to “£10m per wellhead” if shale gas was successfully extracted in their communities, through the 1% levy on revenues.”
Let’s just look at that the number behind that promise shall we?
If 1% is £10 million then 100% is £1 billion
How much gas is that?
Well yesterday the British prompt natural gas price was £0.66 per therm
A therm is the energy in approx 100 cubic feet of gas.
This would value 1 billion cubic feet (bcf) of gas at approximately £6,590,000
£1 billion worth of gas would therefore equate to 151 bcf.
Now, if the US Geological Survey figure of 1.1 bcf for the average Estimated Ultimate Recovery (EUR) of gas from a US shale well is used, then Mr Fallon’s figure is out by a staggering 138 times. – time to call in that nice Mr Gove for an overhaul of the national curriculum for Maths perhaps? Or is it English? I suppose it is conceivable that the Energy minister doesn’t know the difference between the meaning of the words “well head” (the component at the surface of an oil or gas well that provides the structural and pressure-containing interface for the drilling and production equipment) and “well pad”, and that he actually means the latter. (Of course if that’s the case he’d better have a word with Mr Cameron, who clearly stated yesterday on camera that “They should get 1% of revenues over the life of that well, That could be up to 10 million pounds per well”, as he obviously doesn’t have a clue what he is talking about)
Assuming that these two senior politicians are so spectacularly badly informed that they say wells when they mean well pads, that would mean they would have to drill 138 wells on each pad. If we are still more generous and allow them the average figures supplied by the industry themselves (who of course have an interest in talking the EUR figures to encourage investment) and used in that old IoD report, then we get an EUR of 3.2 and we’d still need to drill an average of 47 wells per pad.
This is real bleeding edge stuff. Encana at one site in Colorado are reported to have drilled 51 wells off one pad but this is not the norm – in the USA the average number of wells per pad is around 2! As we have seen Cuadrilla have yet to frack a single well without causing themselves problems.
Put it another way, even if if Mr Cameron and Mr Fallon are promising us £10 million per pad and not per well head then they are being, how can I put it politely, rather optimistic.
It’s one thing to offer bribes to communities because you know you are losing the argument and can’t persuade people any other way. It’s quite another thing to cynically offer bribes that you don’t have a cat in Hell’s chance of delivering and misrepresent them even more by confusing wells and well pads.
This post was prompted by an article on http://thegasmancometh.wordpress.com/