Canadian military view of future oil supply (FSE, 2009)
I have carefully read a document issued by the Chief of Force Development (DND Canada) entitled "The Future Security Environment 2008-2030."
What follows is from FSE Part 1, subtitled "Current and Emerging Trends" (27 January 2009).
First, this quote: "many experts believe that peak oil has been reached and.... Consequently, the world will face oil shortages and disruptions, rising prices, and increased competition" (FSE, p. 41).
The use of the word "will" in this context is significant, as this document (following the practice of the DCDC Global Strategic Trends Programme in the UK) attaches a probabilistic meaning to the term.
In its Terminology of Probability, the term "Will" means "Circumstances are already moving in this direction, and moving off this trajectory is not foreseeable."
Therefore I'm very pleased to see DND accept the view that peak oil is a fairly imminent issue, and there is some reassurance in seeing it warn of the near-certainty of oil shortages, disruptions and higher prices.
Part Two of the FSE series will be entitled "Future Shocks," where some attention should be given to the extraordinary complexity of dealing with oil supply shocks.
I will try to connect with the DND researchers who are working on this aspect.
Also, the footnote for the above info (#60) is credited to six sources, including Cameron Leckie (Major, Australian Army), Peter Johnston (researcher at DRDC in Canada), Kjel Aleklett (President of ASPO) and Robert Hirsch (who was the lead author of the Hirsch Report for DoE in 2005).
Links to the excellent research of all four have been provided on this site over the years.
Here is the link:
http://www.cfd-cdf.forces.gc.ca/docu...0Jul09_eng.pdf
Of course it's one thing for DND to identify the concerns (though that certainly is step one, and I'm thankful for it), and another to do anything about it.
Canada's lead agency for energy, Natural Resources Canada, still insists that "there is no imminent peak oil challenge," and DND may be understandably reluctant to call them on that.
Also, there is a clear disjuncture between DND's warning of the near-certainty of oil shocks and the inadequacy of Canada's existing LFE plans at all three levels (national, provincial and local).
But it's encouraging to see such a prudent medium-term outlook on oil supply.
It's a clear statement from Canada's military analysts that
a) it views peak oil as a valid concern and
b) it views future oil shocks as a near-certainty.
Now we need civilian authorities to act on these prudent warnings....
Some references to consider
Dammit Bill I'm a civil engineer not a mechanical, chemical or petroleum engineer...:rolleyes:
IMHO this book is worth every penny. Beyond Oil and Gas: the Methanol Economy by George A. Olah, Alain Goeppert, G.K. Surya Prakash
Quote:
Amazon Review -The increasing world population and the declining availability of cheap oil threaten to plunge the world into a global energy crisis. Concerns over our reliance on oil and gas and the impact of fossil fuels on the environment have escalated significantly in recent years. This book explores current energy sources (oil, natural gas, coal, atomic energy) as well as renewable alternative energies (wind, solar, geothermal, biomass, etc), the interrelation of fuels and energy, and the extent of non-renewable fossil fuel resources. Besides the need to find alternates to diminishing fossil fuels, the authors outline the need for hydrocarbons and their products way into the future despite depleting reserves and global warming, and examine the envisioned hydrogen economy and its significant shortcomings.It illustrates how methanol can be used as a convenient liquid fuel and a raw material for hydrocarbons and their products. The needed methanol can be made from a variety of sources including carbon dioxide (the main greenhouse gas). This timely book demonstrates how carbon dioxide from industrial exhausts (and eventually even atmospheric carbon dioxide) can be converted into safe liquid methanol.
Natural gas changes the energy map by David Rotman in the November/December 2009 edition of Technology Review
Lifeline for Renewable Power By David Talbot in the January/February 2009 edition of Technology Review
A Path to Sustainable Energy by 2030; November 2009; Scientific American Magazine; by Mark Z. Jacobson; Mark A. Delucchi
22 Dec '09 Bloomberg, Iraq’s Oil Output Quota May Become OPEC’s ‘Hot Iron’ (Update1) By Rob Verdonck
Quote:
Iraq’s plan to boost oil output with the help of foreign companies may upset the Organization of Petroleum Exporting Countries’ efforts to support prices because the nation has no quota to limit its production.
Oil companies including Royal Dutch Shell Plc, BP Plc and OAO Lukoil may help Iraq meet a target to boost oil output capacity to 12 million barrels a day in the next six years after winning oil licensing rounds earlier this year.
DARPA breakthrough on algae?
This has the potential to be a story of the highest order.
It's early yet, but the military has led the way on many fronts.
This is from yesterday's Guardian in the UK:
http://www.guardian.co.uk/environmen...-problem/print
This provides some background from DARPA (last Oct):
http://www.defencetalk.com/darpa-wor...endence-22549/
Anthony Kimery's work on Oil Disruptions
Anthony Kimery at Homeland Security Today has demonstrated a sustained focus on oil supply vulnerabilities.
In this respect he is not unique: a growing number of analysts, both in the Peak Oil camp and outside of it, are active on this issue.
But Kimery is one of the few analysts who have moved beyond the usual concerns (eg. dependence on foreign oil, the transfer of funds from American citizens to unfriendly regimes, etc.) and considered the potential effects domestically of a major oil disruption.
Kimery has written numerous articles on various aspects, but I will introduce two which are particularly relevant.
1. Petrojihad: Bin Laden and the Oil Weapon (Sept. 07, 2 pgs)
This article provides some background context and gives a concise summary of Al Qaeda’s efforts against major oil installations (following Bin Laden’s 2004 call to prioritize such targets).
North America of course needs to have effective plans for fuel emergencies in any event, but knowing that there are determined people who are actively working to cause disruptions should be sufficient cause for us to review our fuel emergency plans.
Here is the link:
http://www.hstoday.us/content/view/578/92/
2. Oil Disruptions Threaten National Security (Aug. 08, 8 pgs)
This study provides further analysis of the Oil Shockwave exercises as well as issues which surround the Strategic Petroleum Reserve.
But most striking are Kimery’s warnings about the domestic vulnerability to a major oil shock.
He correctly warns that a well-executed terrorist attack could create a problem “unlike anything the nation has confronted.”
Kimery points out that “having no plan to deal with a catastrophic interruption” is an obvious vulnerability and specifically warns of the potential for “unprecedented civil unrest.”
He also points out that such a disruption would weaken the response capability of “law enforcement and first responders.”
Increased civil unrest coupled with decreased response capability is clearly a dangerous internal threat.
Furthermore, despite DHS awareness of the vulnerabilities and their ongoing efforts to grapple with these concerns, “the department does not have an overarching oil and fuel contingency plan in the event of a sudden disruption of imports….”
This, however, should not really be a surprise: I have a 2” binder full of studies (done by the GAO alone) over two decades (1974 - 1994) which consistently pointed out deficiencies in the DoE fuel emergency plan.
I have found no evidence that these problems were ever corrected.
Anthony Kimery is to be commended for his efforts to draw attention to this long-standing (and ever-increasing) vulnerability.
Here is the link:
http://www.hstoday.us/content/view/4750/150/
Thanks for your response, Steve, and thanks to you all for considering this information.
If anyone has suggestions on how your nation and mine might address this vulnerability, please offer them.
Shockwave examines Cyber-terrorism (CNN)
The first Oil Shockwave exercise was conducted in June 05 using top-level Washington insiders and senior military officers (Gates, Woolsey, Gen. Kelley, etc).
Other Oil Shockwave exercises have been conducting in subsequent years.
Last night CNN carried the first Cyber Shockwave exercise (2 hrs).
I only got to see the final 45 mins but it was very interesting.
It's supposed to be repeated tonight on CNN @ 8 pm.
Export Decline, prudence, etc
Hi, Steve
As usual, you have given a very detailed reply, and I thank you for it.
I will address your points in the same order that you presented them.
1. SA and China
I’m not so sure that the recent (and quite dramatic) drop in US imports from SA could not lead to problems down the road.
USA was SA’s primary customer for decades, and although diversification is supposed to enhance security of supply, the obvious American shift away from the world’s largest supplier could have the opposite effect.
(American purchases of Saudi oil were only 837,000 bpd in Nov. 09, the lowest in 21 years.)
Most suppliers will prioritize their loyal customers, and the US may now appear less than loyal.
As for the shift in buying and selling, there is an increasing trend for China to enter into bilateral long-term contracts with various suppliers.
This trend understandably raised concern not just for Kimery but also for the US admin.
Please note Energy Bulletin’s “quote of the week” a month ago:
http://www.energybulletin.net/node/51213
As this article (yesterday) indicates, ties between China and SA are strengthening:
http://www.thenational.ae/apps/pbcs....702279924/1137
It could be China, not the USA, that enjoys the benefits of "preferred customer" in the years ahead.
I agree, these trends aren’t going to produce a shockwave, but Kimery did not claim that they would, least of all with exaggerated rhetoric.
2. Export decline
You are clearly more optimistic than I (and many others) re. future oil supply, but I doubt that you would deny the increasing evidence on export decline (ie. that many of the major producers have already peaked both in production and in their capacity to export).
I certainly assume that you agree that we cannot all be importers.
I don’t accept that declining production in Mexico and Venezuela is due more to politics than geology. I really doubt that Mexico will find another Cantarell, and there is little optimism that Mexico can ever return to its peak production of 3.4 mbpd.
As for Venezuela, comparison with Canada is probably apt: both peaked in conventional oil some time ago, and future production lies primarily in oil sands.
However, oil sands production is never assessed as net energy, which is a gross overestimation of the energy which actually comes from the resource.
If we adopt a net energy evaluation, we have a less favourable (but more honest) assessment of production from these reserves.
In short, I accept that political and technical issues are significant factors, but I do believe that even larger forces are at work and that neither MX not VZ will ever surpass their historic peaks, least of all when net energy is factored in.
I agree with you that their current declines may not be permanent… there is certainly the potential for improvement, and I agree that we will eventually see some.
Bottom line: I doubt that a decade from now, importers will have the freedom to “shop around” that you describe.
You are correct in stating, “all consumers are dependent on all producers,” though one might add, “all importers are dependent on all exporters.”
As the number of exporters and their individual export capacities decline (as they must), importers will have less of the freedom to shop around that you describe, and there will be more potential for the sort of supply crunches that Kimery and I believe are likely and need to be planned for.
I don’t see this as imminent catastrophe, but I do see this as a reasonably imminent threat which ought not to be minimized, either.
Indeed, I see few other high-probability events which have the potential to cause so much internal distress to your country and mine as a major constriction of oil supply.
3. Central Asia
I won’t attempt to respond to your arguments… I don’t know enough about those issues and will not pretend that I do.
4. Prudence
I won’t debate the semantics.
I agree, panic is rarely a productive response.
But I think you are being a bit unfair in the way that you characterize the noting of some well-documented trends on a matter as vital as our oil supply.
Far from howling about impending doom, I think we are asking that the concerns which have been raised by Hirsch, the CNA study, War College analysts, the 2008 WEO, etc on future oil supply, and by the GAO, etc on fuel emergency plans, be addressed in a sustained manner.
I have made every effort to provide SWC with links to credible, sourced information (often from military/security researchers) on these issues, and have done my best to summarize their concerns in accurate, reasoned, non-alarmist language.
I agree with your final statement: crying wolf reinforces complacency.
But so does regular discounting of credible evidence (which the tobacco industry did for decades, and which we see in the ongoing debate over climate change).
National Geographic examines Peak Oil
I just stumbled upon this... it should be aired tomorrow evening on Nat Geo channel (7 pm eastern time?):
http://channel.nationalgeographic.co...ideos/07862_00
It seems overly sensational.. from abundance to running out very suddenly, but it may warrant watching, if only to see how Nat Geo (which often does excellent work) presents the issues.
Some day someone (PBS and CBC should be among the more likely prospects) will take a thorough, reasoned, unsensational examination of the issue of fossil fuel depletion.
Meanwhile, this Nat Geo film may introduce the public to some basic facts and the overall concept.
This should have some merit, although an overly sensational presentation may cause people to dismiss peak oil as alarmist nonsense.
Planning for fuel emergencies
Hi, Steve
Sorry for my very slow response.
I have 3 shorter items and then some observations on planning for liquid fuel emergencies.
1. Nat Geo film
I found nothing on Monday evening on the Nat Geo Channel that we receive here in Ontario.
Did anyone see their show on PO/oil emergency?
2. Preferred customers
If I’m not mistaken, VZ had (maybe still has) a special price for Cuba, so the global marketplace does not work entirely on the basis of international supply and demand.
During the 73-74 embargo, ME suppliers were clearly prepared to take the financial hit to prove a point.
Should global oil supply become tight, and the price become very high, it is conceivable that we may see more preferential treatment, not less.
If producers are getting unprecedented prices, say of $175/b, they may be thrilled with that and may be quite happy to exercise the political freedoms which high prices allow them to exercise.
3. China
Today’s report from the IEA citing a 28% increase in China’s demand (Jan. 09 to Jan 2010) is indeed stunning.
Their prediction that we will soon be back to 86.6 mbpd should have us bracing for a return to $147 oil.
http://www.bloomberg.com/apps/news?p...d=aUSnfxw9xh6s
4. Gov’t plans for fuel emergencies
You said that you “have very limited faith in Government’s ability to plan effectively in advance for the sort of event that’s being discussed here.”
I agree, though I think for different reasons.
My sense is that you believe that they are being asked to plan for the unplannable… that the crisis which will occur will be significantly different from the one(s) that they planned for.
And you could be correct… there is a long & expensive history of people making major investments against a crisis which soon faded away (eg. the 1960s bomb shelters, air raid sirens, etc which I recall as a kid).
You may also be correct that “when the crisis comes, it will not follow the parameters of any of the plans” but I think that will be due primarily to a reluctance to subject the existing plan to hard-nosed scrutiny (here is where military logisticians could help), not to an inability to predict the deficiencies of the plan.
I agree with your point about responses being “developed to suit the circumstances that occur, as they occur.”
Unfortunately, the need for future flexibility seems to be a standard rationale for vague planning now… let’s have general guidelines but few specifics, since we don’t if or when or what shape the actual fuel emergency will take.
This is entirely understandable for several reasons:
1. we truly don’t know the specifics of the next fuel emergency
2. it’s easier and cheaper to keep plans vague in the interim.
But meanwhile, there are several things that we can anticipate with some certainty:
a. Any fuel supply problem (or even the perception of one) will quickly translate into a price spike, as you have indicated.
b. To take just one sector, the price spike will adversely affect rural residents more than urban residents since they lack mass transit and have longer distances to travel to obtain their essentials.
c. Farmers are both rural and usually low-income, so they will have a doubly hard time.
d. Farmers will therefore cut back on expenses (including production activities) but food imports will also become increasingly problematic. Reducing both domestic production and imports is clearly a recipe for food supply chain trouble.
e. Having high fuel prices and high prices for food and other essentials is bound to cause domestic discontent.
f. Add to the food supply issues all the non-essential sectors that cannot function without cheap fuel (eg. pizza deliveries, pro sports, tourism)… then the tax base takes a triple hit: declining tax revenue, increasing demand for financial support, and increasing need for law enforcement.
My point here I that all of this is quite foreseeable.
I you have watched the video from ASPO-Denver, you will know that the GAO, Alan Smart, Kathy Leotta and Helen Peck have all outlined numerous potential problems.
A fuel supply problem in 2013 may not be all that different from one in 1973… we should be able to anticipate the main problems and proactively mitigate some of them.
But as you point out, that would not be the American way (and I must agree, ditto for Canada)… there seems to be no prospect of planning an effective response prior to the stimulus…. “the response of Government will be governed… by what is politically salable in the short term.”
I think that you are (sadly) correct in this assessment, but that does not mean that it’s right/proper.
We are sensible individuals, and we come from strong, practical-minded nations.
Surely we can do better than bumbling along with impractical fuel emergency strategies whose inadequacies have been obvious for decades.
Simmons' latest: Oil & Water
Matt Simmons continues to do excellent work on global energy supply.
His most recent presentation is entitled Twin Threats to Resource Scarcity: Oil & Water and was presented three weeks ago in Dubai.
This slide deck is shorter than most (32 slides) and of course I don’t know the oral content which accompanied it.
But one underlying theme is this: nothing could unravel global security of energy supplies faster than disorder and conflict, and Simmons points to water supply as a growing threat to both civil order and oil supply.
Simmons begins by pointing out our inability to substitute for water or oil (slides 1-7), long-term concerns over oil supply (8-11), and the looming threat of water scarcity (12-16).
He then focuses on the Middle East for several reasons: its growing population, its precarious water supply, and its surging internal demand for energy… all of which point in one direction: diminishing export capacity (17-21).
If we factor in the underlying potential for disorder (eg. conflict with Iran, terrorist damage to major oil infrastructure), there is little justification for complacency, especially in import-dependent regions such as ours.
As for solutions, Simmons mentions two: proper pricing (slides 7 & 22) and ocean energy (24-29).
This presentation is available here:
http://www.simmonsco-intl.com/files/Marsh.pdf
Simmons’ focus on the nexus between energy and water provides an effective complement to the ongoing work of the U.S. Government Accountability Office, which has undertaken a multi-stage (and quite detailed) analysis of this nexus.
Part one on biofuels was reviewed here (Dec. 09):
http://www.energybulletin.net/node/50988
The GAO’s study of water and oil shale should be released soon.
Nat’l Intelligence Council report on Caribbean Region & CC
The National Intelligence Council has released a report on the expected effects of climate change to the Caribbean region.
This 21 page report is entitled Mexico, The Caribbean and Central America: The Impact of Climate Change to 2030: Geopolitical Implications (NIC Conference Report., Jan. 2010).
The report is authored by a team of private research contractors under the Global Climate Change Research Program contract with the CIA’s Office of the Chief Scientist.
The prognosis of these analysts is bleak.
They see considerable potential for “civil unrest and internal conflicts leading to increased migration” (p. 3).
The source of these tensions is both predictable and (apparently) intractable: increasing population, energy consumption, rising sea levels, fresh-water scarcity and land degradation, coupled with declining food production and an overwhelming dependence on oil imports.
The plight of Mexico City is particularly concerning: it is already “experiencing severe water scarcity and aquifer depletion…. With a population of more than 20 million, the city must pump water from great distances and has had to ration water at least three times in 2009” (p. 12).
Almost all countries in the region have inadequate health services and limited emergency response capability.
The authors are to be commended for their honest and direct assessment.
At the top and bottom of every page is the disclaimer, “This paper does not represent US Government views,” which is entirely understandable.
The full report is available here:
http://www.dni.gov/nic/PDF_GIF_other...ate_change.pdf