Shale Gas.....

DaveTheMus

What are everyone's thoughts on it and the companies involved as a long term investment?


I have read in some articles that America are on their way on 'energy independence' and there is even talk of the energy export ban being lifted......

Could the UK be in line for a similar windfall?

I have put money into Igas(IGAS), Independant Oil and Gas(IOG) and Clean Air Power(CAP) who are all in one way or another banking on shale gas and oil being a profitable endeavor....

I understand that these AIM investments are very volatile, but, I am invested for the long haul.

I think the company with the most potential is Clean Air Power, especially with the EU green targets and levies and tax rebates and credits already available in the US for 'going green'.

I'm eager to get everyones views about the investment potential or lack of...

Wilkins

I am a bit sceptical about it in the UK and would be more likely to invest indirectly via equipment and service companies, but I'll admit that I have not studied the matter in any depth.


For those wishing an alternative there is also underground coal gasification, as undertaken by Cluff Natural Resources (CLNR). Not sure of its viability but probably less objectionable, environmentally.

bigadaj

Wilkins wrote: »

I am a bit sceptical about it in the UK and would be more likely to invest indirectly via equipment and service companies, but I'll admit that I have not studied the matter in any depth.


For those wishing an alternative there is also underground coal gasification, as undertaken by Cluff Natural Resources (CLNR). Not sure of its viability but probably less objectionable, environmentally.

If your talking about fracking then this is a technique that is used in all types of hydrocarbon extraction by drilling, and has been used in thousands of onshore oil wells over the years.

The interesting thing is that all of the us problems have been overhyped and are due to teh fact that it generally occurs in extremely rural areas over there and also the regulation is low, combined with the fact that the landowner gets the revenue, rather than the government here.

Teh environmental protection in the uk will knock a big chunk from profits, though the extreme paranoia and lack of understanding of the process in the uk, with consequent protests and disruption, policing costs and delays means that it may prove too risky for the potential returns for many companies.

Jegersmart

bigadaj wrote: »

If your talking about fracking then this is a technique that is used in all types of hydrocarbon extraction by drilling, and has been used in thousands of onshore oil wells over the years.

The interesting thing is that all of the us problems have been overhyped and are due to teh fact that it generally occurs in extremely rural areas over there and also the regulation is low, combined with the fact that the landowner gets the revenue, rather than the government here.

Teh environmental protection in the uk will knock a big chunk from profits, though the extreme paranoia and lack of understanding of the process in the uk, with consequent protests and disruption, policing costs and delays means that it may prove too risky for the potential returns for many companies.

Yes, fracking has been around for decades - however wide-scale use has not really been in operation until the 1990's. The problem with your statement about environmental impacts being "overhyped" is that I cannot see how anyone can know for sure the long-term consequences of fracking, especially closer to residential areas. What is your "overhyped" comment based on?

In a wider sense we know that in a lot of places in the world, cancer and other forms of gene-mutative conditions are on the increase over the past several decades, but the change is imperceptibly slow which humans are not good at placing importance on. Many argue that it is our environment in terms of what we eat, drink and breathe that are causing the increase in these conditions, and I certainly do not want to have any traces of fracking fluids in any drinking water that I may ingest. BUT, it is as already mentioned very difficult for humans in general to place importance on low-probability, very slow-advancing conditions that may have a disastrous effect over a longer period of time - and thus it makes it easy to state that these things are "overhyped" and move on.

Either way, I think we would both agree that we would not want to drink fracking fluids even in diluted form right? If that is the case, the slow accumulation of such fluids in the ground cannot be good for us right? It would be nigh on impossible to judge (and certainly agree) whether an increase in global mortality rates of say 0.5% are outweighed by the economic and employment potential benefits of fracking (or whether a person can make 300% on a 10k investment over 2 years). If 1 person dies as a result of fracking that would be OK? What about 10, 100000, or maybe 5 million out of 7 billion? Is that acceptable? I don't have the answers, but something to think about even though from a trading/investing point of view these should not concern anyone, clearly.

J

JohnRo

http://www.smartplanet.com/blog/the-take/trouble-in-fracking-paradise/

Jegersmart

JohnRo wrote: »

http://www.smartplanet.com/blog/the-take/trouble-in-fracking-paradise/

Thanks for this John RO, hadn't seen it.

I am however in the oil/gas industry and my own view is somewhere between the hype and this report. I do think that oil prices will go lower in the medium term, however in the long-run we are kicking the hc dependency can down the road as we tend to do with all the other stuff such as debt...:D

From an investment point of view I think there are some interesting plays in the next 2-4 years but be selective! And there will be risk of course. Rather than trying to pick the stocks of small tight energy companies that may turn out to be profitable or takeover targets for others, I prefer to find the guys who make equipment and technology for this market as they will tend to benefit in a wider sense and potentially on a wider scale.....

imho
J

JohnRo

This is what concerns me about fracking.

http://climatecrocks.com/2014/01/04/fracking-wells-abandoned-in-boombust-cycle-who-will-pay-to-cap-them/

This isn't hype or hysteria, it's what is happening.

bigadaj

This seems to be the problem in that wide scale fracking in the us seems to be of teh Wild West type, little planning or regulation.

The restrictions the environemntal agency and other bodies would place in the uk would be fairly onerous even to the extent of putting many operators off exploiting this resource, which probably isn't a bad thing.

Groundwater contamination in the uk appears to have come from two primary sources, at least from a 'my tap is burning' perspective. This is either methane already present or poor sealing and casing of wells over their upper part, that's certainly the evidence I've seen from presentations. Also many in teh rural us will have their own borehole which could be contaminated whereas this is rare in the uk, particulalrly in fracking areas.

Ensuring that boreholes are cased properly and extraction doesn't occur at shallow levels should address most of the issues though there will be a need for groundwater modelling and ongoing monitoring and analysis.

I'm not an expert on teh fracking process but my understanding is that it's mainly inert sand type material with a. Very small content of other materials.

I think it would be stupid not to look ate xploiting this resource but there need to be stringent limits in place fro monitoring and checking.

Also teh problem is that the resource, and furthermore the availability of that for extraction, could vary widely, look at the bags projections and how they have varied.

JohnRo

I'm not against people drilling holes in the ground, just want to make that clear. It's the damage and clean up costs that concern me and who ultimately will be left to pay the price once the company has syphoned their profit and vanished into the bankruptcy ether.

The fracking hysteria very much reminds me of, and seems to be playing out like a rerun of the bio-fuel disaster.

Jegersmart

bigadaj wrote: »

Groundwater contamination in the uk appears to have come from two primary sources, at least from a 'my tap is burning' perspective. This is either methane already present or poor sealing and casing of wells over their upper part, that's certainly the evidence I've seen from presentations. d.

It would seem incredible that water from taps in certain parts of Texas have always been flammable and it has now been picked up by the "green media" and that is why we only hear about it now. If you read independent reports, (not presentations by potentailly the perpetrators themselves?) the most common fracking chemical used in the US for a number of years up until a couple of years ago was methanol..............so...........yeah........what can I say...?

You are right, iirc around 0.4-0.6% of the total fluid used is chemicals - and these are a mix of salts, anti-coagulents, acids and glycols/propanols. Would you drink it?

Lastly, I feel it would be extremely naive to think that groundwater can be protected by legislation when dealing with a process that operates up to 12000 to 16000 PSI with tons of fluid injected per minute. I am not having a go at you personally, I am just saying that if we are going to do this that we are honest and open about it and potential effects so that we know what the reality is, rather than depending on propaganda from the company in question or other economic or governmental sources that have an economic interest. After all, in a monetary system no corporation can afford to be ethical.

J

bigadaj

Jegersmart wrote: »

It would seem incredible that water from taps in certain parts of Texas have always been flammable and it has now been picked up by the "green media" and that is why we only hear about it now. If you read independent reports, (not presentations by potentailly the perpetrators themselves?) the most common fracking chemical used in the US for a number of years up until a couple of years ago was methanol..............so...........yeah........what can I say...?

You are right, iirc around 0.4-0.6% of the total fluid used is chemicals - and these are a mix of salts, anti-coagulents, acids and glycols/propanols. Would you drink it?

Lastly, I feel it would be extremely naive to think that groundwater can be protected by legislation when dealing with a process that operates up to 12000 to 16000 PSI with tons of fluid injected per minute. I am not having a go at you personally, I am just saying that if we are going to do this that we are honest and open about it and potential effects so that we know what the reality is, rather than depending on propaganda from the company in question or other economic or governmental sources that have an economic interest. After all, in a monetary system no corporation can afford to be ethical.

J

Nothing personal and I'm not particularly on the 'perpetrators' side but am an environmental consultant and a geologist with extensive drilling experience, I'd be interested to hear your specific job.

One of the problems with the uk, is that environemntal protection is very strong, from a Development perspective. Any potential contamination process requires extensive planning and permitting approval in the uk now, with significant environmental bonds or provision by means of escrow accounts etc so I would expect this to be put in place at a very early stage.

I've read both sides of the argument and my feeling is that the problems in the us are primarily down to poor operational practice. Cases of leaks are normally experienced when fracking is occurring at significant depths, so any influence on shallow groundwater is likely to be a result of poor installation practice, potentially not dissimilar to macondo.

Don't get me wrong, I make my money from producing a realistic interpretation of environmental legislation, but objectively the knee jerk reaction in the uk is to condemn anything. We need suitable safeguards in place which may preclude fracking commercially in some Circumstances and it's that balance that we need to achieve.

In terms of lighting taps then this has been the case where no fracking has occurred, I'd heard west Pennsylvania more than Texas but both may well be the case. The issue with methane emissions may also be natural, I've seen both sides so one showing an overlay from analysis of borehole locations but also also from topography meaning that valleys cut into relevant strata allowing natural gassing by means of the easiest pathway. This is from a relatively independent academic presentation at bgs, sourcing information from both sides of the argument.

This is of course off topic in terms of investment potential and it's interesting to see the larger oil companies now taking an interest. From that perspective I don't think it is great as it is moderate risk in terms of development and permissions, and the margins taking into account limitations on the operations could be relatively low.