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House of Commons ECC Committee: Shale Gas

 The House of Commons Energy and Climate Change Committee’s report on Shale Gas was published on 23 May 2011. You can read the report at, and the terms of reference for the inquiry at The Geological Society made a written submission, and Jonathan Craig, Chair of the Petroleum Group, gave oral evidence.

Submitted 13 January 2011

  1. The Geological Society is the national learned and professional body for Earth sciences, with 10,000 Fellows (members) worldwide. The Fellowship encompasses those working in industry, academia and government, with a wide range of perspectives and views on policy-relevant science, and the Society is a leading communicator of this science to government bodies and other non-technical audiences.
  2. The Geological Society is notable for its track record of seamless association between theory and practice, and routinely brings together the best from across academia, industry and government (particularly the British Geological Survey (BGS)), to exchange views and research findings through its scientific meetings and publications. This is especially true in the area of hydrocarbons, where there is a well developed community of Earth scientists spanning these sectors – they routinely collaborate on research, and there is considerable mobility of individuals between the sectors. This group has strong links with the engineering community, also active in the Society, including (but not limited to) petroleum engineers. Fellows from industry, academia and government have contributed to this submission. Notably, there is no evident divergence between the collective views of these groups. Rather, shale gas (and unconventional hydrocarbons more generally) is an area of active research and debate, with a variety of views being expressed across the community.

    What are the prospects for shale gas in the UK, and what are the risks of rapid depletion of shale gas resources?

  3. While there are large sedimentary basins in the UK which contain significant shale sections, and there are known to be some shale gas resources present, there is currently no clear consensus within the Earth science community regarding the quantity of these resources in the ground (either in the UK or more widely in Europe), and the prospects for extracting these economically. Exploration of these resources is at an early stage, but considerable effort is now being devoted to clarifying the extent and nature of the physical resources, across government (BGS), industry and academia. This work includes identification and characterisation of potential resources, and research to improve our understanding of the geology, which in turn promises better characterisation, and hence improved resource estimates and productivity (for instance by helping identify ‘sweet spots’ in gas plays). While some industry players are actively involved in this work, suggesting a degree of optimism about prospects for economic exploration and production of UK shale gas, others have no such plans and consider it unlikely that this resource will play any significant part in meeting UK gas needs.
  4. Notwithstanding this diversity of views, it seems likely that there are reasonably significant onshore physical resources present in the UK. However, there are geological, economic and regulatory constraints (see below) which will determine the extent to which these can be exploited, so in practice the contribution of domestic shale gas resources to the UK energy mix is likely to be modest. The suggestion that 10% of current UK gas needs could be met from domestic shale gas seems entirely speculative, and it appears unlikely that this will be achieved at least in the short to medium term, given the constraints (in particular, differences from the US, where shale gas has been extensively developed), and the fact that there is no UK production at present. 
  5. We note that BGS has also made a submission to the present inquiry, which includes a description of current UK shale gas prospects. Industry focus is currently on the onshore Carboniferous and especially the Pennine Basin Lower Carboniferous Bowland Shales, which are thought to be most likely to yield significant resources capable of exploitation. BGS has also produced more substantial reports for DECC on UK and worldwide shale gas prospectivity, and further work is reported in Smith et al, 2010. Offshore, there are likely to be substantial North Sea resources. But while some of the constraints which apply to onshore shale gas exploration and production will not apply offshore, this is not close to being economic given current costs and gas prices. It is rarely discussed in the hydrocarbons industry, as it is viewed as such a distant prospect. Furthermore, although the existing North Sea infrastructure for conventional hydrocarbons would confer some advantage, the UK would have to pioneer offshore shale gas exploration and production, particularly as the US has no need to look to offshore resources.
  6. Besides the physical resources present in the UK, key constraints on discovery and exploitation are:

    a) Geological: Shale gas plays vary enormously. In particular, the favourable geology characterising the major US plays – such as thick, high TOC (total organic content) oil prone source rocks with low clay contents, deposited in large, relatively unstructured basins – are not generally found elsewhere. European plays are smaller and more complex. There is often also a high level of heterogeneity within plays – on a scale of metres to hundreds of metres horizontally, and down to centimetres vertically. These challenges are not intractable, and drive research and data gathering, but act as a limiting factor.

    b) Economic: The costs of extraction (which depend inter alia on the nature of the deposit and the state of technology), the price of gas, carbon costs (shaped by the regulatory environment) and potential synergies with other elements of the energy system, will determine whether the resource can be exploited economically.

    c) Regulatory/legal: Environmental standards, policy with regard to carbon pricing and the tax regime will directly influence whether companies decide to invest in new hydrocarbon developments, including shale gas – so government has considerable capacity to shape such developments. Given the political will, it might in time even make offshore shale gas production a more realistic prospect – an indication on the part of government of the will to make this happen would stimulate creative thinking in the industry. Conversely, uncertainty about regulatory plans and future carbon prices is a strong disincentive to investment in new business lines. A fundamental difference between the UK and the US is the ownership of mineral rights. In the UK, these are held by government, whereas in the US they are owned by the landowner, who can therefore expect a share of revenues – a financial incentive which is absent in the UK. The size of individual land holdings in the UK (and other European countries) is smaller too. The complexity of the planning process, the possible need to seek compulsory purchase from many landowners, etc, has historically been a major obstacle to onshore hydrocarbon development in the UK.
  7. Shale gas should be seen in its context as one of a range of types of unconventional gas (and other hydrocarbons), including tight gas and coal bed methane (CBM) (there are some prospects for the latter in the UK). Internationally, shale gas plays tend to have high breakeven prices relative to tight gas and CBM. There is no agreed meaning of ‘unconventional’, though it now usually refers to resources which unlike classical reservoirs are not confined by geological boundaries. Greater effort is usually required to extract them compared to ‘conventionals’. (At one time, reservoirs under deep water were referred to as unconventional, but deep water drilling has become conventional.) Although many hydrocarbons companies still have separate teams for unconventionals, there is a healthy trend away from regarding these as a distinct well-defined category, and towards considering a range of hydrocarbon resources, with many varying characteristics (some of which will affect ease of extraction and economic viability), affected by common factors (regulatory frameworks, technologies, carbon price, energy prices) in the context of holistic global and local energy systems. A single field may have the potential to deliver some combination of conventional and unconventional hydrocarbons, hot water, and sequestration of CO2 (possibly with enhanced oil recovery). The economics of such a holistic view may be very different to considering each resource alone. In Saudi Arabia, for instance, it is thought unlikely that shale gas could be generated at a profit, but it might be used to generate sufficient energy to drive secondary oil recovery on the same site. There are synergies too with regard to research and data collection. For instance, past exploration of conventional reservoirs may provide a source of useful baseline data about shale gas lying above or below – though this is unlikely to be a substitute for purposeful shale gas exploration given the different information needs and geological factors involved.
  8. Compared to conventional gas, shale gas is produced at higher levels initially, which decline rapidly, with a very long ‘tail’ of low production rates. So physical depletion of any given shale gas play is not likely to happen quickly. However, as noted above, physical depletion of the total resource in the ground is not the primary constraint on production. It is important to draw a distinction between resources (the total amount in the ground) and reserves (the amount of a resource which can economically be extracted with current technology). As with other mineral resources, reserve levels will increase with rising prices and with technological improvements (and conversely, will reduce if prices fall).

    What are the implications of large discoveries of shale gas around the world for UK energy and climate change policy?

  9. The primary motivations for examining UK prospects in shale gas are economic benefit and security of supply. In both instances, the focus should not just be on domestic resources. There are major opportunities for the development and application of UK research and technology, and for UK-based industry, irrespective of the location of resources. A number of UK research institutions are internationally respected in conventional hydrocarbons, and some (including UCL and the Durham Energy Centre) are establishing themselves as world leaders in alternative energies. These opportunities can only be taken with government support. Furthermore, improved security of supply may be achieved by means other than moving towards self-sufficiency based on domestic resources. Developments elsewhere may decrease the market power of particular countries which are currently dominant, reducing international dependence on their supplies. Moreover, security of UK supply would be helped in particular by the realisation of prospects in the EU. 
  10. Shale gas production in the US has grown dramatically in only a few years, from 1% of US gas supply in 2000 to 20% in 2009 (projected to rise to 50% by 2035) according to one estimate from CERA, and this has stimulated widespread attention to shale gas elsewhere. (See the Chatham House report on shale gas (Stevens, 2010) for further detail). A key driver of this ‘revolution’ has been technological development, especially of hydraulic fracturing and horizontal drilling. But it has also depended on advantageous geology of North American shale gas plays which is not replicated elsewhere, and a distinctive regulatory environment, including with regard to planning and land/mineral rights ownership as outlined above. (The Chatham House report is right to point out that the US experience will therefore not directly translate to other national settings, but it is unduly pessimistic regarding the scope for international learning. Research and the development of new technologies and business models have been hugely stimulated. Notably, many European, Indian and Chinese companies have acquired small percentages of US shale gas plays, to build their knowledge, technology base and human capital.) The impact of US shale gas on global markets is often overstated. In feeding the domestic market, it has indeed reduced US dependence on liquefied natural gas (LNG) imports – but this has been largely offset by rapidly increasing demand in the Middle East, Latin America and South and East Asia, which have all emerged as material LNG importers. US shale gas is not expected to impact directly on UK energy policy unless it starts to be liquefied and exported, which is considered unlikely. 
  11. Large shale gas discoveries in mainland Europe could contribute to European (including UK) energy security. However, opinion differs regarding the prospects for discovering and exploiting such resources. There are technical, commercial and regulatory hurdles. BP’s view, for instance, is that usable shale gas resource in Europe is limited, and that any impact is likely to be local rather than pan-European. Shell, meanwhile, sees the possibility of a positive impact on security of gas supply, but not before 2020. (In addition to the long lead time for exploration and development, they note that regulation and permitting are not yet in place, and that economic assessment will also take time.) European prospects will not be comparable to those in North America. Nonetheless, active exploration is underway in many European countries. Among collaborative projects tackling associated research challenges and addressing the need for a systematic database of prospects, the most significant is the ‘Gas Shales in Europe’ (GASH) project, sponsored by industry and run by a multinational expert task force drawn from universities, other research institutions, geological surveys and consultants. (See, for example, Schulz et al, 2010.) 
  12. Outside Europe, only North Africa and Russia are likely to have shale gas resources which might impact UK energy policy if they were exploited. Algeria and Tunisia, with possible large unconventional resources, constructive established commercial relationships and existing export infrastructure to Europe, are well positioned to continue to be important suppliers of gas. (Libya may have similar physical resources, but lacks the other advantages.) However, there is little economic incentive at present to address issues which would need to be tackled to allow development at scale. In Russia, significant untapped conventional resources remain, so shale gas is unlikely to be an attractive prospect in the near future. (Notably, though, Russia appears to be scaling back conventional gas exploration in the Arctic, which was expected to supply Europe in future decades, at least partly in reaction to possible shale gas development in Europe.) There is also considerable shale gas exploration in China and India, both by multinationals and local companies, and government enthusiasm in the context of dependence on domestic coal and imported oil and gas, and the need to manage CO2 emissions.

    What are the risks and hazards associated with drilling for shale gas?

  13. All those who have contributed to this response are cognisant of potential environmental and social risks, and recognise the responsibility on industry to act responsibly and sensitively. Indeed, the move towards thinking of integrated energy systems outlined above brings environmental impacts centre stage, particularly as the regulatory system increasingly ensures that environmental costs (including those of carbon emissions) are captured. Some of the environmental risks which have been posited include:

    a) Water sourcing and subsequent disposal: Hydraulic fracturing requires a great deal of water to be injected (perhaps 100,000 barrels of fresh water per multi-stage fracture per well), much of which is then forced to the surface (now salinated) and has to be managed. There is the potential for competition, for example with agriculture, over water resources. This is certainly a legitimate constraint on shale gas development in some areas, for instance in parts of India, whose government is generally keen to see such development, but will rightly not allow it in areas where agriculture already contends with water shortages, despite the presence of promising shales. It has also been suggested that water supplies near to hydraulic fracturing operations may become contaminated, typically by added chemicals with which the hydrocarbons industry is very familiar from conventional drilling, or by the presence of hydrocarbons, heavy metals and organic compounds. There is no recorded evidence of this, and good reason to think it untrue, since the process takes place at depths of many hundreds of metres below the aquifer. Although the public debate about this in the US is not well informed, sensitive and responsible behaviour by industry is key to avoiding over-bureaucratic regulation. 

    b) Air quality: As with conventional drilling, this can and must be appropriately managed.

    c) Release of radioactive material: Recent research has raised the risk of mobilisation of natural uranium from source rocks. Again, US public debate about this is not well informed, and there is no evidence of harm.

    d) Induced seismicity: This is not thought to be a significant risk in the UK, but may be more of a concern where there is already earthquake risk (e.g. parts of India). The same risk applies to other processes which involve the injection of large volumes of fluid into rock (CCS, geothermal energy, etc), and this is an area of active research.
  14. Both the number of wells required to extract shale gas and the size of each well site (to accommodate fracturing), and therefore the physical footprint associated with onshore exploitation, are very large compared to conventional hydrocarbons. A typical full field development using 850 wells might occupy 110 square miles, over a period of 40 years. Noise, access and visual impact are associated factors. In countries such as the UK, which is much more densely populated than the US, and where landowners does not own the associated mineral rights, this is likely to be a major obstacle to development. Technological approaches to reduce land use requirement, developed in the US, include ‘superpads’ – rather than drill evenly spaced vertical wells, a group of wellheads is clustered together, and the well shafts ‘splay out’ into the gas field below. This is more expensive, but the additional cost may be offset by the reduced economic and social costs associated with land use.

    How does the carbon footprint of shale gas compare to other fossil fuels?

  15. The carbon footprint associated with shale gas production is essentially the same as for other types of natural gas production. CO2 emissions are dominated by end use, the energy used in producing and transporting the gas generally being small in comparison, despite the considerable work done in horizontal drilling and fracturing. This is illustrated in the chart below, showing Net Energy Ratio (NER) and technological maturity for various hydrocarbons including unconventional types. (The exception is when natural gas is converted to LNG, where typically 10–15% of the produced gas can be consumed in liquefaction and transportation of the product.) In comparison to other fossil fuels, natural gas results in up to 50% less CO2 emissions than coal when used to generate electricity. Emissions of other pollutants (sulphur dioxide, nitrogen oxides, mercury and particulate emissions) are also substantially less or negligible. In the US there is an emerging public debate, which is not well founded, about greenhouse gas emissions directly to the atmosphere as a result of ‘methane leakage’ associated with shale gas development. This is very unlikely to be due to hydraulic fracturing, since this occurs at depths of several thousand metres beneath the surface.

    Concluding remarks

  16. We would be pleased to discuss further any of the points raised in this submission, to provide more detailed information, or to suggest oral witnesses and other specialist contacts.
Energy input required for development of resource vs technical maturity


Schulz, H.-M. et al (2010), ‘Shale gas in Europe: a regional overview and current research activities’ in Vining, B.A. and Pickering, S.C. (eds.) Petroleum Geology: From Mature Basins to New Frontiers – Proceedings of the 7th Petroleum Geology Conference, London: Geological Society

Smith, N. et al (2010), ‘UK data and analysis for shale gas prospectivity’ in Vining, B.A. and Pickering, S.C. (eds.) Petroleum Geology: From Mature Basins to New Frontiers – Proceedings of the 7th Petroleum Geology Conference, London: Geological Society

Stevens, P. (2010), The ‘Shale Gas Revolution’: Hype and Reality, London: Chatham House

Response to additional questions following second evidence session

Further to the written submission of the Geological Society to the Committee’s inquiry into Shale Gas, Dr Jonathan Craig appeared at the oral evidence session on 1 March, in his capacity as chair of the Petroleum Group of the Society. Subsequently, the chair of the Committee wrote to him with further questions. The responses below have been prepared in discussion with Dr Craig, and are presented on behalf of the Geological Society.
  1. Is shale gas more likely to be a regional rather than a national phenomenon in the UK, i.e. is shale gas more likely to be locally distributed than transmitted nationally?

    Two distinct considerations should be taken into account: geology (regionality of occurrence of the resource) and distribution (regionality of use).

    First, the size and geographical location of shale gas resources in the ground is dependent on the geology, which varies from area to area. So the physical occurrence of shale gas in the ground is by its nature a regional phenomenon. In particular, some UK hydrocarbon basins are more likely to yield shale gas than others. The Midland Valley of Scotland, for instance, is more promising than the Grampian Highlands in this regard, as the rocks in the latter do not have the characteristics necessary to produce shale gas. The essential conditions for the occurrence of shale gas are relatively unstructured sedimentary basins which include a shale section of sufficient thickness (10s to 100s of metres) and thermal maturity, with high TOC (Total Organic Content) (>1%), preferably liquid-prone and overpressured, typically at depths of less than 3,500 metres. More is known about the geology of the UK than that of almost anywhere else in the world – but while we know that there is potential for shale gas, and we have a great deal of background data, we do not know whether it is economically viable, because past exploration has not been carried out with the objective of identifying shale gas resources. Exploration for this specific purpose remains in its early stages. 

    Second, once shale gas is extracted from the ground, its means and ease of distribution is a matter of the technology, engineering and economics of the gas grid. Shale gas and other forms of ‘unconventional’ gas, once they have been extracted from the ground, are no different from ‘conventional’ natural gas, and hence the factors affecting its distribution are the same. (It is the location, the nature of the reservoir rocks, and the concomitant means of extraction of gas which cause it to be considered ‘conventional’ or ‘unconventional’ – though as pointed out in our previous written evidence, these terms are not clearly defined.) The technical and economic factors affecting operation of the gas grid are outside our area of expertise, and we offer no comment on them, but assuming that these do not present a barrier there is no reason that the use of gas need be regionally restricted. However, as noted below, there may be benefits in using locally produced gas to supply local needs (see question 4).
  2. How difficult is it in the UK for new entrants to contribute gas to the grid? 

    The relevant factors regarding grid technology, engineering and economics (including system pressures, spare capacity, market structures and regulation) are outside our area of expertise, and we cannot comment.  
  3. Is the higher population density in the UK, compared to the US, a barrier to shale gas exploration?

    We take this question to refer to both exploration and production of shale gas. It is important to consider both physical and social/psychological potential barriers.

    To some extent, there is greater physical restriction on the development of shale gas resources in the UK compared to the US, because of greater competition for land use in many areas, and the greater likelihood of proximity of a gas field to population centres. These restrictions can be mitigated to some degree by the use of horizontal well drilling and ‘superpads’ (also known as ‘multipads’ – rather than drill evenly spaced vertical wells, a group of wellheads is clustered together, and the well shafts ‘splay out’ into the gas field below). This is more expensive, but the additional cost may be offset by the reduced economic and social costs associated with land use. Such methods have been used in the US, in some instances allowing drilling to take place under populated or build up areas, such as Dallas/Fort worth airport.

    There is also likely to be a greater social and psychological barrier to the development of shale gas in the UK. Open spaces may be more highly valued in light of their relative scarcity, bringing a greater public and regulatory determination to protect them. Significant parts of sparsely populated land are protected as National Parks, Areas of Outstanding Natural Beauty, etc. However, the UK hydrocarbons industry has demonstrated that it can successfully exploit resources in such areas while meeting the highest environmental and social standards. Wytch Farm, the largest onshore oil field in Western Europe, discovered by British Gas in the 1970s and operated by BP since 1984, is located in one of the world’s most famous and sensitive regions of outstanding beauty and natural interest (not least because of its geology and geological heritage), which includes the Jurassic Coast World Heritage Site, designated wetlands of international importance, and national nature reserves. BP has set world standards in environmental protection and community engagement, using horizontal drilling at distances of more than 10km, keeping the size of well sites and other facilities to a minimum, using innovative design, and screening them with trees, for instance, in order to minimise environmental and visual impacts.

    As identified in our earlier written evidence, the difference between the UK and US planning regimes is also a significant factor.
  4. How can the UK public be convinced to accept the impacts of onshore shale gas exploration and production? 

    Historically, the hydrocarbons industry has often not done as good a job as it could in communicating with the public and decision makers the benefits and the challenges of unconventional gas exploitation, and of building confidence and trust. Decision makers have frequently found themselves in the position of making judgments on the basis of poor knowledge, and sometimes inaccurate or misleading information from a variety of different sources. Responsible and forward looking oil and gas companies recognise the onus on them to behave accountably and transparently, and to provide evidence about their exploration and production plans and their likely impacts to the public and to policy makers. Given the current poor public perception of industry credibility in this regard, there is the potential for learned and professional bodies and academia to play a role in building trust and brokering dialogue.

    The industry also faces some challenges in communicating with the public which are beyond its control. In particular, inaccurate assertions made by some environmental campaigning groups may not be subject to the same levels of scrutiny and testing as the public statements of oil and gas companies, and the dissemination of such assertions through the media stands in contrast to the high levels of rigour and quality control achieved through the application of peer review to the pronouncements of professional scientists. It is incumbent on policy makers, responsible media organisations and scientific bodies such as learned societies to encourage open and balanced public debate about how we are to meet our energy needs in the context of affordability, security and environmental change, and to hold to account those on all sides of this debate.

    Public concern over such matters might helpfully be addressed by challenging the implicit assumption that the extraction and use of resources are aimed at providing ‘somebody else’s energy’. There is often a disconnect between local infrastructure projects, which may arouse opposition, and the provision of one’s own services. This perception is less likely to arise where installations predominantly meet local needs. For example, in countries where CHP (Combined Heat and Power) plants are common, these are often located near to population centres, the energy needs of which are met in part by the heat generated, lending to a higher level of public acceptance of such plants. If shale gas were to be used to supply local energy needs (e.g. if the Bowland Trough or Fylde area were seen to be providing a service to Blackpool and the surrounding conurbations), such development might be regarded more positively. This is consistent with a holistic system approach to energy resources, as outlined in our previous written evidence. 
  5. What more should the Government do if it wanted to support unconventional gas?

    The fundamental driver for exploitation of hydrocarbon resources, conventional or otherwise, is price. If such activity is profitable, or has sufficient potential to be so, companies will make the necessary investment – and at present, a number of companies are demonstrating their willingness to invest in UK exploration for unconventional gas. If Government should wish to influence resource prices in order to stimulate investment, several policy instruments are available to it, including subsidies for particular resources or technologies, feed-in tariffs, tax breaks, regulation, and carbon pricing. Policy with respect to unconventional gas should be seen in this context, as one aspect of energy policy and macroeconomic policy more generally. It is beyond the scope of this document for the Society to comment on such matters (and largely outside our area of competence, although many of our Fellows in industry will have informed views on issues such as the likely efficacy and unintended consequences of particular policy measures). Factors which might lead Government to favour one resource type over another might include energy security – for example, if growing domestic shale gas production were seen as likely to reduce dependence on gas imports (conventional or otherwise) from particular countries. Intervention to stimulate investment might also be prompted by considerations outside energy policy, as usually understood, including employment and training.

    To ensure that best use is made of domestic resources and that the UK shares in the economic and service value of global resources, it is vital to ensure the continued excellence of the UK’s world-leading Earth science research base and the supply of high-quality trained personnel. 

    Other issues such as the planning regime (which can also be regarded as being a cost factor) and ensuring balanced and open public debate have been addressed elsewhere.
  6. Are tax breaks necessary to stimulate the shale gas industry, as in the US?

    As noted above, tax breaks are one of the policy instruments available to government to influence price.
  7. Will the lack of an onshore service industry hinder development of unconventional gas in the UK and Europe?

    The phrase ‘service industry’ is broad and rather vague. The Earth science community tends rather to think of what might be termed the ‘geoscientific service industry’ which supplies geological consultancy and expertise to hydrocarbons companies with regard to exploration and production. (Such expertise and services derive from academia and government, specifically through the activities of the British Geological Survey, as well as from industry sensu stricto.)

    Although there is little history of unconventional gas exploration and production in the UK, there is no reason to think that the requisite service industry is a limiting factor. UK service industry geologists are among the best in the world. As noted above, there is no intrinsic difference between conventional and unconventional gas, and the geological understanding required in each case is shared. It is true that the service industry required to support the particular technologies of horizontal drilling and hydraulic fracturing of wells is less developed in Europe in comparison to the US, but this is unsurprising given the immaturity of the unconventional gas industry in Europe. The determining factor here is not whether development takes place onshore or offshore, but what activity is required to enable it to happen. The service industry supporting these technologies in Europe is sufficient for the current testing phase. The expertise for this industry to develop is not likely to be a limiting factor, and if they perceive that they can derive value from a growing onshore unconventional gas industry in Europe, companies will position themselves accordingly.

    The successful operation of Wytch Farm, referred to above, which set new records for horizontal directional drilling distances, both demonstrates the fitness for purpose of the UK service industry for horizontal drilling (and for onshore development), and constitutes a site for learning from best practice.