Monthly Archives: January 2013

Drilling barge the Kulluck Getty Images

Shell's drilling barge the Kulluk. Getty Images

There are two important lessons from the mounting problems facing Shell as a result of the series of accidents that have afflicted its drilling programme in the Arctic.

The first is that major companies must have the capacity to call a halt and to break the inexorable internal momentum that so often makes it impossible to stop projects once they have started. The ability to reconsider is a great sign of strength not weakness.

The second is that a company such as Shell which prides itself (rightly) on its environmental performance is only as good as its weakest contractor. Read more

In the real world, disputes over natural gas production often pit billion-dollar companies against individual landowners. In films, it is the industry’s opponents that command the big battalions.

Promised Land , a fictional account of a gas company’s nefarious tactics, stars and is co-written by Hollywood A-lister Matt Damon, and the supporting cast includes the reliably excellent Frances McDormand and John Krasinski. Read more

By Julio Friedman and Armond Cohen

If you believe the hype, shale gas will solve many of America’s problems, from high petrol prices to wars in the Middle East. There is no doubt that it will bring huge benefits to the US. However, its role in climate change is misunderstood – and must be dealt with urgently.

There is some cause for optimism, at least from a US perspective. The International Energy Agency concluded recently that America will be the world’s largest gas producer by 2015, surpassing Russia. The US is also leading Europe on climate change. If it had ratified the 1997 Kyoto protocol, America would by now have met its obligations.

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A large proportion of oil is now exported to China. Getty Images

The International Energy Agency is one of the more successful of all the international institutions. It has avoided the rocks of ideology – unlike the IMF – and the sands of overweening bureaucracy – unlike the World Bank.

The Agency produces some excellent studies and first class data. But it badly needs to keep up with the times. No international agency working on energy should be excluding China and India from full membership.

The IEA was established in 1974 as a grouping of energy – particularly oil – importing countries to combat the market dominance of Opec. The crucial agreement behind its establishment was acceptance of the need to share the burden of adjustment in the event of any major supply disruption. “Rationing” – though the word was never used – was clearly preferable to a free-for-all bidding war in which countries sought to secure supplies for themselves. Read more

Shale gas drilling rig near Blackpool, in north-west England . Getty Images

I spent the holidays in Wales, dodging the odd shower, and contemplating the potential if someone could invent a technology that, short of massive hydro-power schemes, could convert rainfall into power. Wales would undoubtedly be the Saudi Arabia of rain power.

But Wales may not have to wait for new technology to become an energy producer again. The country looks set to be one of the main centres in the UK for the rapidly expanding shale gas business.

One of the most significant events of 2013 for the energy sector in the UK will be the publication of the next report on shale gas prospects across the country from the British Geological Survey. Well timed leaks of part of the report, which appeared just before the chancellor’s statement in December, have already suggested a significant increase in the resource base available near Blackpool. Read more