Alphen, Netherlands, 26
November. Energy is the stuff of
power. Long dead British Socialist
Aneurin Bevan once remarked, “This Island is almost made of coal and surrounded
by fish. Only an organising genius could
produce a shortage of coal AND fish at the same time”. Aneurin (he was Welsh and they inflict such
appellations on their young) lived in those long-distant days before the EU concentrated such
organising genii in Brussels. Today,
Bevan would have to add shale oil and gas to his irony. As Britain contemplates a new energy policy
to stop the lights going out (and the UN starts yet another doomed to fail climate change conference) the British Geological Survey suggests that
Britain’s shale oil and gas reserves are enough to make the Island again
energy self-sufficient for many years to come with up to 1,000 trillion cubic
feet of gas alone.
Britain is not on its
own. Significant reserves have been
found in France, northern Germany and Poland.
Indeed, current estimates are that the top five producers could be the
US, Canada, China, Brazil and the UK, with the International Energy Agency suggesting this month that the Americans could be energy self-sufficient by 2035. It is not often that a genuine geopolitical
game changer comes along but all the signs are that shale oil and gas is
precisely that.
At present it is still
too expensive to extract such oil and gas in volume compared with conventional
hydrocarbons. Indeed, current extraction
costs in the North Sea could be up to $200 per barrel, compared with between
today's marginal costs of between $50-60bn for the extraction of conventional hydrocarbons. However, US technology is driving down the cost
of both onshore and offshore extraction, and the British are among world
leaders in extracting energy from tough environments.
There are also concerns
about just how much of the suggested reserves can be exploited. This may explain the reticence of governments
to make forecasts that prove over time to have been too optimistic. It could also be that governments are
concerned about possible environmental damage and must in any case continue the search for
balanced energy policies in which renewables remain an important contribution to
the national energy mix. There are also some possible and unfortunate side-effects. Last year
concerns were expressed in Lancashire that the use of high pressure water
(fracking) to drive oil and gas reserves up and out of the shale had caused small
earthquakes (a Beatles song?).
What about the
geopolitics? If for once the major
producers of oil and gas also become the major consumers then one of the main causes of
systemic friction will have been removed.
Hyper-competition over resources between the consumptive democracies and
the consumptive oligarchies such as China, in which power is legitimised by
economic growth rather than the vote, looks at present to become the signature
threat of this century. Moreover, a
shift in the balance of energy power away from the Middle East could (just could) make the region more stable as it will certainly concentrate the minds of leaders therein, although I fully accept it could have precisely the opposite effect. As for Russia, Moscow would become one
producer amongst many and would have to compete for exports on price…and behaviour.
The implications for Europe's security and defence would also be profound. Absent the need to look
beyond its borders for energy would the US be quite so prepared to pay the
price it currently pays to stabilise Europe's extended region? It will of course pay close attention
to oil-rich Iran’s nuclear ambitions and Egypt's political turmoil because the US guarantees Israel's security. However, absent the comforting presence
of an America focussing much (not all) of its grand strategic
effort on Asia-Pacific and Europeans will surely once and for all have to get serious
about security and defence. At the very least shale would change the terms and conditions of the transatlantic security contract which at present threat from the great European defence depression.
There is a also delicious
irony to this story. On 21st
October, 1912 the British began work on HMS Queen Elizabeth, a super-Dreadnought battleship which joined the
Fleet in 1915. The Royal Navy’s first
all oil-fired ship paved the way for the conversion of the entire British Grand
Fleet from coal to oil and in effect started the West’s dependence on the Middle
East. Ironically, the new HMS Queen Elizabeth, a 65,000 ton super
aircraft-carrier will be launched in 2015, just at the moment when such oil
dependence may begin to come to an end.
Shale will also change
th balance of power within states. The UK’s massive shale
reserves are under England and the English North Sea. Energy is indeed the stuff of power. Good luck Scotland! As for Lancashire, I have never had any
problem with giving Lancastrians a good fracking! I am a Yorkshireman.
Julian Lindley-French
