Richard Moorman: Notes from the Shale Gas Trenches

The former CEO of Tamboran Resources, Richard Moorman was determined to convince the public in Ireland of the benefits of developing their unconventional gas resources. It was not an easy job, but for months he was on the ground at public forums engaging with locals and answering their questions - a formidable task.

At the end of September this year, Mr. Moorman stepped down as CEO, but remains a technical advisor at Tamboran.

Of the change he comments, "The company's going in a bit of a different direction. They're aggressively pursuing a joint venture party for the Australian assets and so the company is essentially going slower in Ireland. It became impossible to keep the pace there."

Ahead of the European Unconventional Gas Summit, taking place in Vienna, Austria 29-31 January 2013, Mr. Moorman offered Natural Gas Europe his perspectives on shale gas in Europe.

You were on the ground and engaging the public face-to-face in Ireland. How would you assess the public's mood there today towards the development of unconventional gas?

I think the mood is positive. We have to be careful when we talk about this, because the exploration companies shouldn't be considered a consumer product - we're not trying to sell a beverage to a wide spread of people.

We really need to provide a product that meets safety requirements, that provides essential energy - but to say it simply, the typical person on the street probably doesn't need to be any more for or against natural gas than they are for electricity, for example. It's just a product that's a part of life.

The opposition forces tend to try and isolate - shale gas, sometimes even wind, or coal - and those are personal opinions which are very important to them, and part of the process, but it really isn't the battle for 50% of the public's support; it's really about, is this an essential product that's needed, and then how do we go about making sure that it's done safely?

So I spent a lot of time considering public opinion in Ireland, mainly because it was so new to Ireland - considering having its own supply of natural gas and the industry that comes with that. But otherwise it's not really about working to get people to like gas; it is the way it is: almost one quarter of the island’s total energy is powered by natural gas.

Given your experiences in Ireland, how would you assess the overall prospects for the development of unconventional gas in Europe?

The European experience so far has been frustrating.

Certainly Cuadrilla in the UK, sitting on what appears to be a very viable asset, had the misfortune of setting off tremors on their first fracture stimulation and subsequently the report has come out that showed that there were steps they could take to prevent that from happening, but that's in the record.

In Poland I think it was overemphasized in the beginning - kind of like a land rush - and everybody got out of perspective on it, forgetting how long it took for things to actually succeed in the United States and that new projects require a lot of effort.

Unfortunately, in Poland we've seen operators like ExxonMobil drill two wells and then back out. That's just poor practice. The bottom line is, in the US most of these shale projects took dozens of wells and it's not realistic to think that someone can solve these problems in a couple of wells.

It's been disappointing in the sense that some companies exaggerated the ease with which it would come. I think that most of them believed it themselves, because most of those companies didn't actually have hands-on, self-generated experience in the US. Exxon had acquired companies there such as XTO, but they themselves were not significant unconventional developers.

In Poland, only BNK has real hands-on experience that they've brought over from the US, and I think their approach is consistent with the way you need to do these things: you keep working at it. And as long as people are willing to do that, I think that Poland will be successful, the UK play will be successful and I think when the Irish government finally has its rules in place that shale gas will be successful there, too, but unfortunately all these things take time.

There are movements, but it looks uncertain whether the EU will enact regulation specifically for shale gas. Do you think such broader regulation could reassure policymakers?

I say yes, but regulation means different things to me than it does to other people. Some hear that word and they run away from it, because they think it just means 'red tape', extra bureaucrats and more forms to be filled.

The kind of regulation I think Europe needs more of with respect to unconventional gas are related to a clear monitoring of what's going on, a clear presentation of development plans before they are initiated and a clear enforcement procedure for companies that violate their own commitments and the rules that are put out.

It really can't be useful for people to take risks with water or air contamination. There's no reason that that has to happen - the technology and the processes are there to prevent all of this. So while the situational occurrences are quite rare in the US, even if one were to say it happens in one in a thousand wells, that's still one in a thousand too many times and can be prevented.

In Europe a lot more can be done by the regulatory authorities to really try and understand unconventional gas, to make sure that companies declare what they're going to do upfront, that they are monitored while they're doing it - that we don't have any surprises, and finally so that there's enforcement, because without that there's no way that the public can trust that the rules mean anything.

Recently an official from OMV was quoted as saying Europe risks its competitiveness by not developing unconventional gas. What are your thoughts regarding that?

I think it's a fair statement, but I'd probably broaden it to say that at all times, countries are all dependent on energy, and lowering the cost of that energy makes them more competitive; unfortunately, the reality is that the world is continuing to grow aggressively, particularly in Asia and that represents a significant pull on energy and keeps the price of energy rising.

In the US, the shale gas effect has substantially reduced the price of natural gas, going from about USD 14/TCF in 2008 to less than USD 2/TCF within the last year - that's a substantial savings, and when you get about one quarter of your energy from natural gas, that does make you overall much more competitive as a nation.

Europe's challenge is that it is ultimately dependent upon imports. Some 40% of their natural gas comes from Russia and the Middle East, and that will only rise over time without shale. Since those prices are guaranteed to be closer to oil-indexed pricing, whereas the US natural gas prices are completely broken from oil prices, then it's almost a certainty that Europe's prices will be much higher, making it less competitive.

Does that mean you should spend every penny you can to develop shale gas? No. It still has to be done in perspective, done responsibly. But if your energy costs keep rising and other countries have that under control, then you're not going to be as competitive. I think western nations are already under pressure from the role of Asia - they can't afford to have expensive energy.

What would you suggest to the industry in Europe to help push things forward?

First of all, I think the industry needs to do a much better job of communicating what it's actually doing and intends to do rather than relying on government regulators to provide cover. The reality is, that's not the government's business. If we're working in someone's community, then it's our business to make sure that the community knows what we intend to do; the government needs to make sure that we do it, but it's our responsibility to do that and a lot more.

Several European shale companies do this in their local communities, but it's not necessarily seen beyond those, and there's a lot more work that could be done there.

The other thing is, they could do well to stop blanket opposition to any kind of regulation. It seems like the knee-jerk response for every industry when asked for more regulations to protect the public is to oppose them instead of working with the responsible authorities to make sure they're better for both sides. So I think the industry could do a lot more to cooperate.

One of the challenges is, all these business are competitive and so to a certain extent you have people feeling that they have to hold on to their technologies or their efforts, minimize their spending and participating in all these things can be expensive. That attitude has to change about the public - it needs to be recognized that the public is essential to the success of energy; really in terms of all science, if we don't start getting more public support for what we're doing and the chance to understand it - if we don't do that as a society, we'll find it increasingly difficult to do those projects that are essential to society. And I think the natural gas industry is no exception to this.

People have taken too long to get shale gas off the ground already to the point that some people believe it won't happen now. At the same time, it's so important that we get lower cost and more plentiful energy supplies, especially in Europe for an economic boost.

What are your views on natural gas and competition from subsidized renewables in Europe?

Subsidies are a policy decision and they should reflect what people want. Sometimes people want more than we can afford, so the challenge, I think, for government is to balance a sufficient amount of investment in renewables and subsidization for the future, with the current need to keep energy costs as low as possible, and certainly to keep industries going today that do provide jobs.

That’s a tricky business, and that's why I'm glad I'm not in politics. Ultimately, governments have to find a balance. I think there's a lot more work to be done in the renewables space, because we have to be realistic; hydrocarbons will not last forever, they will not keep growing past 100 years, so one way or another we're going to need more sustainable energy products.

My personal opinion is that today, on average, renewables cannot supply a substantial amount of the energy needed at an affordable cost; a lot more work is needed to prove them up and to keep us going until renewables can take over the load.

 


Natural Gas World welcomes all viewpoints. Should you wish to provide an alternative perspective on the above article, please contact editor@naturalgasworld.com

Kindly note that for external submissions we only lightly edit content for grammar and do not edit externally contributed content. 

POLICY ON COPYRIGHT & REPUBLICATION POLICY

 

We use cookies to ensure that we give you the best experience on our site. If you continue we assume that you understand and accept to receive cookies from this website. Dismiss