In this week’s big political debate over Europe between deputy prime minister and leader of the Liberal Democrats Nick Clegg MP, and the leader of the UK independence Party (UKIP), Nigel Farage MEP, commentators have treated it like a political beauty context, exploring the runes and feeling the mood music.
But what about the content?
Asked about one of the big political issues of the week, energy prices and security, Farage said he favoured getting on with fracking like the United States and building new nuclear power plants, and opposed what he called useless wind power.
The fault in this argument is the shale gas revolution in America has peaked, and costs are rising rapidly to extract remaining reserves.
On 27 February the authoritative Bloomberg business news service reported independent shale gas producers “will spend $1.50 drilling this year for every dollar they get back.”
The article explains that shale output drops faster than production from conventional methods. It will take 2,500 new wells a year just to sustain output of 1 million barrels a day in North Dakota’s Bakken shale, according to the Paris-based International Energy Agency.Bloomberg also cites the Houston-based Sanchez Energy Corporation company, which plans to spend as much as $600 million this year - almost double its estimated 2013 revenue - on the Eagle Ford shale formation in south Texas, which is the main drilling centre, along with North Dakota, for shale gas exploitation
By contrast, the net debt of the world’s biggest oil and gas exploration company by market value, Exxon Mobil, is less than half of the cash earned from operations last year. Bloomberg stresses that it plans to spend 68 cents for every dollar it gets back this year.
In February ExxonMobil’s CEO Rex Tillerson even joined lawsuit against a fracking well water tower being built near his $5 million Texas home, the Wall Street Journal reported.On 5 March at its annual investors meeting in New York, Exxon Mobil said it expects capital expenditures (capex) of $39.8 billion in 2014, 6.4% lower than last year’s spending of $42.5 billion. The company indicated it will reduce upstream spending and remain selective in terms of investments in downstream operations, as it loses faith in shale.
Exxon announced in June 2012 it was quitting shale gas drilling in Poland, on eof the European Union’s great hopes for shale reserves. Talisman Energy of Canada have scaled back their Polish shale investments after “disappointing” early attempts at extraction, the New York Times reported on April 24 last year.
Nuclear fissionedFarage claimed to want to support jobs in Britain, but in supporting new nuclear, he is actually supporting jobs in Socialist France! And the export of billions in profits to French State-owned EDF: an odd way to support British jobs by freeing up the private markets for energy.
Speaking in the Commons debate on an Energy Price Freeze on 2 April, Labour back bencher Paul Flynn MP- a long time opponent of nuclear power- pertinently asked: but what is British about Hinkley Point?He wenton to argue to fellow MPs: “Did Members read the French newspapers when the deal was announced? They regarded it as the deal of the century. It will create 10,000 jobs—not at Hinkley Point, but in France. It is an extraordinary deal. For Britain, it is the rip-off of the century. We have agreed to buy energy—this is hard to believe—at £92 per megawatt-hour, which is twice the going rate at present, and that is the minimum rate. We have indexed linked that price and guaranteed it for 35 years. We do not know what energy prices will be in 35 months…….”
Flynn concluded “ We are buying a European pressurised water reactor. They have been around for a little while, but they have not yet produced enough electricity to power a bicycle lamp. The first one was in Finland. According to the deal, it was going to start generating electricity in 2009. The original cost was €3 billion—it is now reckoned to be €8.5 billion—and it is not expected to be generating until 2019, 10 years late. The other one is Flamanville. It had a very similar original cost and is now also expected to cost nearly three times that—€8.5 billion. It is not expected to be completed for four years after the year when it was supposed to be generating electricity, which was last year.”“When Liberal democrat MP Simon Hughes used to start his speeches by announcing that no nuclear power station in the world has ever been built on time or on budget. Of course, the Liberal Democrats are now singing from a different hymn sheet because they have a Lib Dem Secretary of State for Energy
We are waltzing into a future that is not well informed by science …Sadly, however, we go on thinking along tram lines. I believe we will find that the EU decides that the £17.5 billion subsidy we intend to pay for Hinkley Point—for one power station—is against European rules because such subsidies are not allowed.”
After Flynn had spoken, yet more news of the failures of the Finnish nuclear programme emerged. Leading Finnish newspaper, Helsingen Sanomat, reported that at € 8.5 billion The failed reactor at Olkiluoto 3 is now more expensive than any skyscraper. The most expensive single commercial building is known to have a casino hotel in Singapore Marina Bay Sands , which cost in today's money of € 5.2 billion . The price of the Olkiluoto3 would have been able to three new One World Trade Center skyscrapers build in New York City.
Nils Bøhmer, director general of Norwegian-based Scandinavian environment group, Bellona – who is a trained nuclear physicist - called the new round of cost overruns “absolutely insane’”
Yet these are the pro-nuclear and pro-fracking energy policies both Farage and Clegg’s parties are backing. What does it say about their judgment?
Dr David Lowry is an independent environmental policy and research consultant and a member of energy secretary Ed Davey's Geological Disposal Implementation Board.