Shale Gas & Fracking - Week 4

It's the final week of the MOOC and it's a shame because I am thoroughly enjoying it but all good things come to an end!  This week we have learnt about regulation, communities and public engagement.  There's little point in me using this blog post to repeat the course material, I would rather summarise my closing thoughts on the issue of fracking to society.  I will admit that my views have changed somewhat during the period of the course.  Opinions amongst those who are directly engaged or have an interest in fracking, appear to be polarised - for or against.  At the beginning of the course I was against and now that we are approaching the end of the course, I'm still against.  So what's changed?  Well, three weeks ago I was very dismissive of pro-fracking views, whereas I now have a greater understanding of the pro-fracking arguments.

Professor Sarah O'Hara provided an excellent presentation on the perceptions of shale gas where she summarised some of the results from The University of Nottingham shale gas survey, which has been running since March 2012.  One of the most interesting results, from my point of view, was that although there has been a decline in the yes vote since the Balcombe protests, still over 50% of the population are of the view that shale gas extraction should proceed in the UK.  Public opinion really is split and in my opinion, that's not surprising when you view the issue from the perspectives of UK national energy security, an alternative to 'dirty' coal and a 'bridge' to a low carbon economy.  If you look at fracking from these three perspectives in isolation and within the framework of a well regulated and therefore, hopefully, safe environment, there is almost (but not quite!) a compelling argument to proceed with fracking for shale gas.  In my opinion, however, where the argument is flawed is when you look at the bigger picture and in particular, the urgent need to tackle climate change by drastically reducing carbon dioxide emissions and well before the timescale of a 'bridge' to a low carbon economy.  So I believe we need massive global investment into renewables, or even 'safe nuclear', now rather than pursuing a diversion into shale gas.

That's it!  I've had my say.  Thanks to Sarah, Mat and Wil, together with their supporters and all the guests, for a really first class MOOC, which has been a fantastic learning experience for me.  It's been great! 

Shale Gas & Fracking - Week 3

Well it's week 3 and the time's flying.  This week we are learning all about the environmental considerations.  Oh boy, there are plenty of conflicting opinions amongst the experts on just how clean, or conversely how dirty, shale gas is.  The arguments are continuing to be well debated on the course.

There is a lovely phrase, which is "the bridge to a low carbon society".  A few words that make the extraction of shale gas by fracking seem such a logical thing to do.  The argument goes something like this.  Energy emissions from shale gas are about 40% cleaner than coal, so let's use shale gas as a replacement for coal on our journey (hence the 'bridge') to something even cleaner.  Sounds good!  But then along came a guy called Howarth who looked at fugitive emissions (leakages of methane gas during fracking going straight into the atmosphere) and he concluded that when viewed on a timescale of 20 years, the greenhouse gas footprint for shale gas is at least 20% greater and perhaps more than twice as great as coal.  Wow!!

Well of course Howarth really did rock the boat until Cathles offered his response and argued that Howarth's analysis was "seriously flawed" because he had overestimated the fugitive emissions.  So who's right?  We don't know because there isn't enough evidence to make a judgement.  Now that in my opinion is the real worry.  The 'bridge' is beginning to feel a bit wobbly.

As well as greenhouse gas emissions, we also learnt about other concerns like seismic activity, water pollution and the possible harmful effects on health.  There is a tremendous amount of data but really no firm conclusions because many of the findings were by inference rather than evidence-based.  I haven't trawled through all the comments that have been posted, but it would appear the views are very polarised for or against fracking.  That said, there are many well-thought-through arguments to support each stance.  Have I changed my anti-fracking views?  No, but I do feel I am becoming much better informed.

Shale Gas & Fracking - Week 2

I'm now into week 2 of the Shale Gas & Fracking Course.  This week we are focussing on the economics and energy security of shale gas development.  The material and quality of tuition continue to be excellent.  Although I admit to being opposed to fracking, I came into the course determined to become better informed and take a serious look at both sides of the argument.  Well so far my views have not changed.  The information provided on the world's energy mix and specifically the actual usage for 1990 to 2012 and the forecast for 2012 to 2035, illustrated a predicted growth in energy requirements and a continuing dependence on fossil fuels.  Probably not surprising as the data were provided by BP!  My comment on the forecast is that it would appear to be an extrapolation of the past with a small increase in absolute terms of renewable energy.  Maybe that's what will happen if we continue business as usual, but as far as I'm concerned that is a totally unacceptable scenario.  We should determine what energy mix there needs to be by 2035 if the planet has a chance of survival and then take positive actions to achieve our objectives.

As well as some very informative material on natural gas and how it's used, we were also provided with an analysis of energy security, as well as a positive and a negative view on the economics of shale gas.  The debate will continue with an online discussion later this week.  I don't want to repeat the course material in this blog post, so I will conclude this post with my personal view based on the debate so far.  I feel that no matter how the economic argument is presented, the financial justification for fracking is extremely flakey.  But that aside, I think the cost benefits or penalties are immaterial.  We really shouldn't be perpetuating the combustion of fossil fuels.  In my opinion, shale gas will not provide a bridge to a low carbon economy, as claimed by some of those in favour, but an excuse for world political leaders to delay further the actions that are already overdue, to go green.

So, that's almost half the course completed and it's going too quickly!  Watch this blog for my next update.

Shale Gas & Fracking - Week 1

I have commenced the Shale Gas & Fracking: the Politics and Science MOOC (Massive Open Online Course), delivered by The University of Nottingham for FutureLearn.  Shale gas is a hot topic in the news right now and I felt this course would be an ideal follow-on to the Climate Change MOOC that I completed last year.  I will be interested to see if the knowledge that I gain from the course will change any of my views on fracking.  At the moment, I strongly believe that fracking is perpetuating the combustion of fossil fuels and therefore, exacerbating global warming and climate change.  In my opinion, the effort and resources directed towards fracking could be better spent developing green energy, for which the technology is available but frankly, the political will seems to be lacking.  So that's what I feel now!  It will be interesting to see the views that I express in my Week 4 blog post at the conclusion of the course.

This week I have learnt about the geology of shale gas, how it is extracted by hydraulic fracturing (fracking), the story so far from the developments in the USA and the locations and resource estimates in the UK.  I have learnt that there is a big difference between what might be present (resource) and how much can be commercially extracted (reserve).  So far the UK is in the exploration stage for shale gas and oil and it is too early, therefore, to determine its commercial viability.

So that's the story of my course so far.  I'll keep you posted!

A Message to David Cameron

I am appalled at the government’s blasé attitude towards climate change.  Yesterday’s (26/1/15) Commons debate rejecting a bid to suspend fracking for shale gas, ignoring the Environment Audit Committee’s warning that there were “huge uncertainties” about the environmental impact of fracking, shows a complete disregard for the future of society by those who are entrusted to govern the country. Apart from the uncertainties relating to the impact of fracking on the environment, there is overwhelming evidence that the burning of fossil fuels is directly responsible for climate change, yet most UK politicians are clearly in denial mode.  Lord Hailsham was right when he described the UK government as an elective dictatorship.  No matter how strongly people feel about an issue that affects the whole of humanity for generations to come, the government of the day acts totally irresponsibly putting some short-term economic arguments before the future of the planet.  It’s disgraceful.

Drucker's Disciple

I made the career transition from engineering to management in the 1970s and it was, to put it mildly, a shock to my system.  Engineering is a highly respected profession and although the answers to all engineering problems are not known, the questions that have to be asked to establish solutions, can usually be formulated.  Management, on the other hand, is not an applied science.  It is an attempt to control complex organisational systems usually, although most managers would not admit to it, by employing trial-and-error problem solving and asking the right questions is not easy.  As a young engineer I could always consult a senior or principal engineer if I needed assistance and usually their help and guidance were invaluable.  As a young manager, it was more difficult to seek help, pride had something to do with it but also, I found the opinions of more senior managers often were no better than my own.  That might sound arrogant, but for complex business decisions, there are not always precedents against which others can provide useful guidance.

What about management consultants, business schools and respected gurus, how can they help?  Well in a previous post, 'Business School Crap', I was a bit disparaging about some of the outputs of business schools and maybe I went over the top!  I do believe, however, that attempts to apply simple models and tools to complex business problems can be dangerous.  Less scrupulous, or perhaps naive, consultants sometimes cherry-pick the outputs of business schools and offer quick-fix solutions to ailing businesses.  There are, however, respected management practitioners and that leads me to world-class gurus and my long-held admiration for Peter Drucker.  I first started reading his works in the mid 1970s and I was impressed by both his extreme intellect and impressive foresight.  Maybe to call me a Drucker's Disciple is a bit presumptuous, but he certainly had a major influence on my management career.  Here is just a handful of his quotes that I like:

"A manager is responsible for the application and performance of knowledge."

"If you want something new, you have to stop doing something old."

"There is nothing quite so useless, as doing with great efficiency, something that should not be done at all."

"Results are obtained by exploiting opportunities, not by solving problems."

They are all simple statements and I could quote many more, which for me are extremely thought-provoking.  As an example, I will explain how thought processes might develop around the last quote on the need to exploit opportunities, rather than solving problems.  I recall the years when I had a rather dashing, but old, bright yellow Triumph Spitfire sports car.  I could barely afford to buy it and I certainly found it difficult to meet the running costs, unless I did my own car maintenance.  I could tackle most car repair work but I loathed doing it.  The universal joints (UJs) on the rear half shafts, seemed to need replacing far too often.  On one occasion whilst lying under the car, covered in oil and grease, replacing a UJ, I recalled Peter Drucker's quote - "Results are obtained by exploiting opportunities, not by solving problems."  There I was solving a problem, one knackered UJ, whilst denying myself an opportunity of showing off my bright yellow bobby-dazzler and exploring pastures new!  Yes, problems need to be solved to return a system to 'normality' but the primary focus of attention should be on new opportunities not old problems.  That's a good lesson for anyone running a business, where, from my experience, managers very often put the emphasis on internal operational problem solving, rather than external exploitation of market opportunities.

There might be many disciples but there was only one Peter Drucker :-)

Strategy vs Culture - No Contest

"Culture eats strategy for breakfast."  Those were fine words from Peter Drucker and are confirmed from my own experiences, which I will touch on later.  What is an organisation's culture?  Well, simply put, 'it's the way we do things around here'.  I like that definition, it's short, succinct and I'm sure we can all relate to it.  Let me give you an analogy, which I also love.  My wife and I are UK nationals living in Turkey - yes, the dreaded 'expats'!  We have a very large garden, which we both look after and my wife is extremely green-fingered and loves gardening.  On the other hand, my forté is lawn-cutting and general maintenance.  So we're a good team!  That said, there is always a danger to try to create an English country garden in a Mediterranean environment and it doesn't work.  The climatic environment is analogous to business culture - 'it's the way nature does things around here'.  Some things will thrive.  Some things will just survive.  Some things will die.  As an example of the latter category, we have our failed attempt to grow a willow tree!  In the business environment, strategy (planting the 'business trees') has to compatible with the business culture (the prevailing 'climate'), otherwise, like our willow tree in Turkey, it will get eaten for breakfast!  I will mention no company names but here are two examples from my own career.

I worked for a large multi-national corporation, which was a hard task master, highly integrated and entrepreneurial and real fun to work for.  It was acquired by an even larger company, which was a cash rich conglomerate, risk averse and extremely dull and boring from a young high flyer's perspective.  There was certainly a good synergistic fit in terms of technology and markets, but a real clash of cultures.  The acquirer's culture not surprisingly dominated in the newly consummated relationship, but much of the top talent from the acquired company soon moved on and gradually the added-value of the 'marriage' was lost.

The other example was when I became the managing director of a well-established, medium-sized engineering company, highly respected by its customers for value, quality, responsiveness and support of its sophisticated products and services.  But it had a high market share of a niche sector within a gradually declining market, so from its rapid growth in its early formative years, it was now suffering from a flat to declining sales profile.  I spearheaded a strategy of moving the company into pastures new, whilst not neglecting its existing markets.  It was a case of establishing current technology into new markets, i.e. the classic market development strategy.  Strategically it made sense but it was hampered, although fortunately not defeated, by culture.  The company's existing customers were a good cultural fit with the organisation - risk averse and highly procedural.  The new customers were very different.  They came from fast-moving new industries where the priority was on getting the job done and worrying about the contractual issues later!  Ultimately the new strategic direction did turn out well for the company but it took much longer than originally anticipated.

So what are the lessons learnt from my experiences and numerous other case studies?  Well, there is an interesting piece in 'Strategy Bites Back', in a chapter by Karl Weick, under the heading 'Strategy is Culture is Strategy'.  He suggests that there is a common set of issues in organisations that some choose to call culture and others choose to call strategy.  Having considered my experiences as well as the case studies, I am now firmly of the opinion that culture is an emergent property of a highly complex organisational system and is usually deeply-rooted, i.e. difficult to change.  Strategy, or more specifically a strategic plan, contains goals that haven't been achieved but exist as aspirations.  So we have a deeply-rooted culture that firmly exists, coming together with strategic aspirations that have yet to be realised.  Well, that says it all doesn't it?  They just better be compatible with each other, otherwise as sure as eggs are eggs........

"Culture eats strategy for breakfast."

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