To Frack or not to Frack that is the question

Back in January of this year I wrote an article on the above subject. My basic complaint was that I struggled to find a forum where an adult conversation was taking place on the merits or disadvantages of Fracking. I come from the camp advocating that the opportunity to receive nature`s gift of all this locked up energy must simply not be ignored and therefore should be exploited and the problems resolved as they come along. The Americans have completely resolved their energy and manufacturing costs by going down this route so why should we not do the same.
Well after the article I was on the receiving end of a considerable amount of flack from the Green and Environmentalist lobby which did include some of my closest relatives. Their objections were three fold. Firstly, the fracking itself would generate earthquakes. Secondly the chemicals and water injected to release the gas and oil ends up on the surface in the form of toxic waste lakes. These in turn will decimate the local and migrating bird populations and of course pollute our own water supplies. Finally, a countryside covered in “Nodding Donkeys” was not a country in which they would wish to live.frackinguk

Taking these objections in turn.

-There would not seem to be any hard evidence that the fracking will cause earthquakes, especially as the North American fracking has by and large taken place at a shallow depth and in the U.K. it will apparently take place at around 12000feet deep, so there is no previous history that can be relied upon.

-There is however very hard evidence that as a direct result of fracking, North America has acquired many large chemically polluted lakes of toxic waste water. This for me should be the killer argument for not proceeding with the fracking process. However this is not the end of this story, it appears that clever scientists are well on the way to treating these lakes using processes well beyond my understanding. The end result is that there occurs a high level of algae growth which consumes and converts the toxic waste into useable energy. A second bite at the energy cherry so to speak. I am of course assuming that the waste water is contained away from the countryside and bird population. So this is a possible solution to this particular problem.

-Nodding Donkeys or Wind farms, it`s all the same to me. They are both eye-sores on the landscape but it must be easier to hide the drill heads as opposed to the windmills remaining in full view. There has been a drilling rig down in Poole Harbour for very many years and few people know of its presence. I guess it would only be fair that local people were given a share of the financial gain to offset the inconvenience caused by establishing the drilling facilities.
In conclusion I would still like to be able to listen to an unbiased discussion from informed debaters on the merits or otherwise of fracking. But for now I am still firmly on the side of getting on with fracking whilst resolving the problems as they come along. The financial benefits are just too large to ignore. It is the chance for the U.K. to follow the example of Norway and create our own Wealth Fund for future generations and not fritter the benefits away.

To Frack or not to Frack that is the question

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Why can this country not be allowed a serious debate on the subject of oil and gas recovered by the process of hydraulic fracturing known as Fracking. In the U.K. it would seem that our media is no longer capable of conducting an unbiased discussion. The dictionary defines the word “majority” as the “greater part or number”. So why does the B.B.C constantly uses the word “majority” when it should perhaps be saying “minority”? This they do whenever there is a dispute involving the government, racial unrest or environmental questions. Far from assisting the understanding of an argument, much of the media and the BBC actually restrict the ability to have an adult discussion. This I feel is frequently to the detriment of the MAJORITY of the British people. They are not reporting the news, they are influencing and making the news. The BBC seems to be allowing an equal amount of time for a “minority “of ill- informed people demonstrating against the Fracking process as it does for the informed views of the Energy Industry. This cannot be right when we are discussing a source of energy that could possibly revolutionize the economy of Great Britain.frackinguk

I recently read a very informative article in the Fleet Street Letter written by Bengt Saelensminde. I am now going to cherry pick a few of the points and facts which were made in the article.

The British Geological Society confirmed that one of the largest shale fields on the planet lies beneath British soil in the Bowland shale. A mid estimation of the volume of gas recoverable is 1300 trillion cubic feet. This is equivalent to 247 billion barrels of oil- more than Qatar, Kuwait, Iran or the United Arab Emirates.

Some of the public’s concerns relate to the potential of polluting the water tables with the chemicals involved in the fracking process. This fear comes from reports from the USA where this is said to have happened. There is however a big difference between the situation in the USA and Britain. In the USA they are fracking near the surface. Here it is radically different, down as far as 12000 feet- a very different scenario as there is no water down there at that depth.

The decision to frack should be made alongside a long term energy strategy or plan. The benefits should not be frittered away but must be made available long term for the British public and economy. In America, gas prices have fallen by more than half and many haulage companies and private vehicles have now switched their vehicles over to using this gas instead of oil. Norway used the revenues from its North Sea Oil to create the largest Sovereign Wealth fund in the world which is now available for the Norwegians to use when the oil runs out. I cannot see the equivalent benefit in Britain.  The decision on how to use the massive financial benefits from fracking oil and gas must be made for the future of the British economy and not for short term political gain.

This new source of energy has the potential to supply the entire needs of the country for the next twenty years or more. So provided there is due emphasis on public health and safety this should be a no-brainer. The fact that it is not, and that the apparent negative aspects are being given so much air time and media space raises another question. Perhaps these minority environmental groups are being financed by powerful vested interests who would like this gas to stay beneath the ground. Just a thought.

The importance of continuous savings combined with compound growth

I have just been reading about the success of the Norwegian Sovereign Fund. Back in the seventies when North Sea Oil started to be developed the Norwegians put the revenues from the oil into the hands of an organisation made up of a bank and business men. They were tasked with building a fund that would benefit the future prosperity of all Norwegians. The British however put the oil revenues into the hands of politicians. The Norwegian Sovereign Fund now has a value of $760 billion and makes the Norwegians the wealthiest people on earth. It pays for their pensions, health and old age needs whilst lowering their taxes. The British on the other hand have none of these benefits. In contrast we have huge debts and make massive payments in benefits to anybody who holds out their hand.

frking-graphFracking has now come onto the scene and guess which nation is grabbing this latest gift from nature with both hands. Well, it is not the British. Even with all the nation`s financial problems we would rather spend £80 billion on a high speed train system than seize and concentrate our efforts on a God gifted chance to address some of our debt. Not so the Norwegians who see yet another chance to secure the financial future of their people. They have seen the effect that the benefits of fracking have had on the American economy and they want more of the same. What is it about the British thought process that makes saving and self- reliance so low on our list of priorities?

Surely we should be teaching the importance of these things in school but how will this go down with the Teaching Unions? Which of our politicians has the knowledge and understanding of compound interest to realise that it really is true “That great oaks from little acorns grow.”? The simple example of a saving plan should be compulsory learning. A person saving £1000 a year at 8% growth is worth £15600 at ten years, £49400 at twenty years, £122300 at thirty years and £279700 at forty years. This would be their retirement fund and it has been self- generated. You can be sure that the Norwegians understand this principle but what a shame that the British do not. It is the prime moving principle of the Saltydog Investor.

Shale Gas

Natural Gas is the Earth`s greenest fossil fuel. In the U.S.A. it now costs 20% less than oil to produce the same amount of useable energy. It has the ability to replace oil, be it for engines, heating houses or simply producing electricity. Shale gas can be found in all the continents, but is particularly prolific in America and Great Britain. As the means of extraction improves and technology advances, it is quite feasible that these countries’ energy needs may be satisfied for the 150 years.

So what`s not to like? Well the new method for extracting this gas from deep below the earth`s surface is called “The Fracking Process”. It involves pumping water, steam and fluids at very high pressure into the layers of shale and this releases the trapped gas. (A bit like taking Epsom Salts.) The concern with this process is that it could release “nasties” into the water table and could also cause minor earth movements. The Extraction Industry is well aware of the problems and undoubtedly will come up with the solutions. The financial gains are so huge that this must be a certainty.

If this all comes to pass, then it does beg some interesting questions of the future. If the demand for oil drops and the price collapses as the West converts to gas where will the Middle Eastern Arab states sell their oil? Will a falling income see these States return to the conditions of a century ago? If they do, what happens to the West`s Armament Industry? Perhaps they will have to fall back on manufacturing peaceful products like washing machines and desalination plants.

These are questions for the future. Today we are interested in how we might take advantage of this changing energy scenario. The price of natural gas has already tumbled in the USA and is likely to harmonise across all users. It is after all a simple commodity. You recover it, transport it and then use it. However for this to happen vast sums of money will have to be spent in a number of industries – the gas recovery industry, the engine conversion and electrical generation industries and finally the means of getting it to the customer. All of this expenditure will have to be recovered through the pricing structure. So just maybe the price of gas will not fall further and may in fact have to rise to allow these industries to make a profit.

At Saltydog we must locate the Fund Managers that are investing into those companies which are on the supply side of these new Industries.  Coal had its day and now it looks as if Oil maybe going to hit the buffers. Perhaps we are now about to enter the Age of Gas.