Energy Security

[Bill Moore]

Rick,

I copied your link to a new thread:

http://council.smallwarsjournal.com/...099#post125099

[Rick M]

Thanks for doing that, Bill.
The U.S. Strategy thread is a much more appropriate place for it. (I rarely explore other threads but I guess I should... not enough hours in the day.)


- rick

[Rick M]

As I have mentioned here before, the most comprehensive of the military analyses of peak oil is the recent report of the Bundeswehr Future Analysis team. Despite the credibility of these authors and the gravity of their concerns, this report has been almost entirely ignored by mainstream media.

Hopefully this will change, now that a complete English translation has been provided by the Bundeswehr, which really has made every effort to make this important information available.

Here is an intro with link to the new translation:
http://www.energybulletin.net/storie...-now-available

[davidbfpo]

A curious report, on FP Blog, alas minus a map and any references - especially when it is news to me and I suspect others.

Israel has found massive deep-sea natural gas reserves in the Mediterranean, which naturally do not follow clear boundaries and the report ends with:

But in the short term, the lure of riches makes conflict resolution more difficult and gives hard-liners on all sides another casus belli. Tamar and Leviathan are unfortunately not the catalyst for regional peace and prosperity, but, rather, more fuel in an already combustible mix.

Link:http://www.foreignpolicy.com/article...honey?page=0,0

[Dayuhan]

Hardly a reassuring picture; the border as drawn - presumably the Israeli version - does look like it's certain to be disputed by the Lebanese.

[Surferbeetle]

A curious report, on FP Blog, alas minus a map and any references - especially when it is news to me and I suspect others.

David,

Last year's Economist had an interesting article on this topic, as did the NYT.

Israel and its natural resources Israel’s new gas finds may affect its strategic friendships too, Nov 2010

Gas Field Confirmed of Coast of Israel, by Ethan Bronner, Dec 30, 2010

[Rick M]

As posted above, last month the Bundeswehr released an English translation of their very thorough report on peak oil:
http://www.energybulletin.net/storie...-now-available

Last Friday two American energy analysts spent 12 minutes discussing the Bundeswehr report, the need for resiliency/redundancies and the ongoing inaction of governments.
This provides an intro:
http://www.getreallist.com/

- rick

[Rick M]

Further to the recent posts on Leviathan, etc:
http://oilprice.com/Energy/Energy-Ge...gy-Dreams.html

[Dayuhan]

Further to the recent posts on Leviathan, etc:
http://oilprice.com/Energy/Energy-Ge...gy-Dreams.html

This quote from the above:

Quite aside from the ominous regional implications, there is the possibility that the U.S. could become involved in the looming dispute, as Texas-based Noble Energy has partnered with Israel’s Delek Group Ltd. to develop Israel’s Leviathan, Tamar, Dalit, and Noa offshore natural gas fields, and also has a concession to Cyprus's Bloc 12 offshore Mediterranean field, located near Leviathan.

... seems to me well overstated, as I do not believe that the presence of an American company in a joint venture would lead to US military involvement, especially one that involved Turkey and Egypt, both of which have extensive links to the US.

I expect a fair bit of dispute among Israel, Turkey, Cyprus, and Egypt, but I doubt that it wil, but I doubt that it would come to fighting. Israel and Lebanon are a different story.

[slapout9]

Link to "Sustainable Critical Infrastructure Systems-A Framework For Meeting 21st Century Imperatives" Go to the link and you can download the PDF for free. Critical Infrastructure are the life blood systems for any country to survive. They are Water,Energy,Transpostation,and Communications.




http://www.nap.edu/catalog.php?record_id=12638

[Rick M]

Thanks for the Infrastructure report, Slap.
I had not seen it... interesting list of conference participants.

Energy is the heart of DOD's infrastructure, and last week Pew released an 88-pg report which updates DOD's progressive work on alt-energy:
http://www.pewenvironment.org/upload...port_FINAL.pdf

Much of it is has been reported elsewhere, but there are many details which I was not aware of, and this report pulls it all together. It also has an extensive bibliography.

[Rick M]

Lt. Col. Fleming's study is both concise and useful:
http://www.energybulletin.net/storie...hesis-peak-oil

Please note his observation on the need for realistic planning: “It is important to make the distinction between a temporary oil supply disruption and oil’s terminal production decline. Managing the risk of one is much different than managing the risk of the other” (p. 12).

Thank you for considering this information.

- rm

[davidbfpo]

Something to consider Rick and others, although I await the actual production of natural gas off Mozambique's coast:http://oilandglory.foreignpolicy.com..._cleaner_china

[Misifus]

"Peak Oil" theory is simply another manifestation of the psychosis of anti-development, anti-civilization. Other examples of this are Malthusian food shortages, global cooling, ozone depletion, global warming, etc. There seems to be one or two of these manifestations per decade. The psychosis is developed as a defense mechanism by those who "think" as a way to mask their shame of not being members of those who "do." In other words, men who don't build railroads will often hate men who do build railroads. Why? This is a psychological reaction by those who see themselves as bystanders to events that they do not participate in.

Unfortunately the psychosis can even spread to those who would normally be classified as reasonable men, including soldiers at a war colleges. The would-be general needs to be studying how to maneuver his battalions, not how to maneuver oil companies.

Hydrocarbon Man and the Petroleum Age? The author of the paper needs to reference Daniel Yergin and his book The Prize when using such phrases. In fact a good deal of that section is a paraphrase of Yergin's work for which I do not see footnotes or endnotes other than endnote 6 regarding Drake's well.

You will find that that most of those spreading the Peak Oil hysteria have backgrounds in economics, politics, international affairs, etc., with very few participating who are actually in the business of extracting oil.

[Misifus]

Something to consider Rick and others, although I await the actual production of natural gas off Mozambique's coast:http://oilandglory.foreignpolicy.com..._cleaner_china

Not so fast with the promotion. Look up the definition of "stranded gas."

Author's definition via PM (added by Moderator):Stranded Gas is gas that we can't get too either due to lack of infrastructure and/or too costly to develop.

[Dayuhan]

Something to consider Rick and others, although I await the actual production of natural gas off Mozambique's coast:http://oilandglory.foreignpolicy.com..._cleaner_china

For perspective... Anadarko is claiming a find of 10tcf off Mozambique, ENI says they found 15.

Qatar has almost 900tcf in proven reserves

The Mozambique finds are significant, and it will be interesting to see how much more is found. Whether it's viable to extract the gas at current prices is another question, but current prices won't last forever. Still, talk of the finds as "huge" or as game-changers in gas markets is a bit exaggerated.

[Rick M]

Misifus,
I presume that you accept that petroleum is a reasonably finite/non-renewable substance. Given that we are are consuming over 1,000 barrels per second of the finest fuel that mankind has ever discovered, I really cannot understand why you would call legitimate concerns over future oil supply a "psychosis."

Second, you say that officers should be studying "how to maneuver [their] battalions, not how to maneuver oil companies."
I agree, but surely you accept that for the foreseeable future, an uninterrupted flow of affordable oil is essential to the maneuverability of military operations.
Therefore it is entirely prudent of military officers to examine the best evidence (which may not come from oil companies) regarding future oil supply.

As for peak oil analysts, I would argue that many of the leading PO proponents have been veteran geologists and petroleum engineers, while the leading opponents have been economists who argue that higher prices will readily bring on more supply, which is the very point that LTC Fleming refutes.

[Dayuhan]

As for peak oil analysts, I would argue that many of the leading PO proponents have been veteran geologists and petroleum engineers, while the leading opponents have been economists who argue that higher prices will readily bring on more supply, which is the very point that LTC Fleming refutes.

Like most of the work done on elasticity, I think the Fleming study misses the point completely. You can't look at 2005-2010 without looking at what came before that, if you want to reach any kind of reasonable conclusion.

We've been through this before, but for benefit of others...

World oil prices were in a deep trough from 1986-2005, with a brief spike for gulf war 1. That led to a general reduction in exploration and in spending to maintain and upgrade production capacity at existing facilities.

When prices first started curving up, the industry perceived it as a risk premium due to the deteriorating situation in Iraq and the potential for continued instability in the Middle East... they'd been there before, prices always spiked on the basis of political events. It wasn't really perceived as a basic alteration in the supply/demand picture until 2007-2008.

At that time investment in new capacity did start. However, there is a substantial time lag between the decision to invest in new capacity and the time new capacity actually comes onstream (new capacity not just meaning new fields or discoveries, but improved production at existing ones). By the time any of those plans started becoming real, prices were already plunging again.

We actually don't know how much capacity was added, especially in the Arabian Gulf, where a great deal of money has been spent, because the countries involved aren't using it. Capacity and actual production are different things. The GCC wants the political leverage of added capacity, but they don't want to use it if they don't have to, because they have a vested interest in holding prices up.

At the moment I think politics is constraining production more than geology. The few producers with excess capacity are deliberately restraining it to keep prices high. Iran's exports are constrained by sanctions. Iraqi production is still way below geologic potential. Venezuela has been in a steady decline for years, driven by underinvestment, not geology. Libya has been plodding along below 2mbpd for decades despite huge potential; again due to political factors.

Higher prices will bring up more oil and they will eventually constrain consumption, but they won't do it overnight and the reactions will be shaped by politics and will not necessarily conform to expectations based on "pure" elasticity: it's naive to expect a nice little graph like you'd find in econ 101, where there are no externalities. I see no reason at all to think a geologic peak has arrived or is imminent. We're still in the process of a shift out of glut mode - these changes take time - and there are all kinds of politics involved, so we have to expect the unexpected... but the evidence overall does not suggest to me that geology or absolute quantity of oil in place is what's constraining production.

One of the problems with "peak oil" discourse, much like climate change discourse, is that the discussion is heavily influenced by emotional hyperventilating, much of it coming from people who are mainly looking for leverage to advance other political causes.

Look at this citation

“The synchrony of unprecedented low production variance, unprecedented high price variance, and the number of peak oil forecasts in the range of 2005 to 2010 provide strong evidence that, regardless of price pull, geological factors could be presently limiting world oil production”

The number of forecasts simply isn't evidence, especially since so much forecasting is done by people with political agendas and vested interests. We already know there was no peak from 2005-2009, since 2010 production was higher than any of those. If 2011 dips or stays flat - and it could, for reasons discussed above - there will be howls that the peak has been reached. If 2012 pushes up the forecasters will have to push back a year or two.

[Misifus]

Misifus,
I presume that you accept that petroleum is a reasonably finite/non-renewable substance. Given that we are consuming over 1,000 barrels per second of the finest fuel that mankind has ever discovered, I really cannot understand why you would call legitimate concerns over future oil supply a "psychosis."

Second, you say that officers should be studying "how to maneuver [their] battalions, not how to maneuver oil companies."
I agree, but surely you accept that for the foreseeable future, an uninterrupted flow of affordable oil is essential to the maneuverability of military operations.
Therefore it is entirely prudent of military officers to examine the best evidence (which may not come from oil companies) regarding future oil supply.

As for peak oil analysts, I would argue that many of the leading PO proponents have been veteran geologists and petroleum engineers, while the leading opponents have been economists who argue that higher prices will readily bring on more supply, which is the very point that LTC Fleming refutes.

Pardon me if this sounds too direct.

1. Oil for the most part it is a finite resource. We can find agreement on that. Peak Oil psychosis, however, goes beyond that.

2. "Affordable" is a subjective term. Most would like oil for free. The market, with its imperfections, determines what is "affordable." With regards to oil’s use for warfighting, it is another commodity to be procured. Just like ammo.

3. Peak Oil is indeed a psychosis. It is presented as an "end of days" scenario like in the novel "The Crash of '79."

4. The US has more than enough domestic oil production to support any war efforts, here or abroad. For foreign theaters the easier route is of course to purchase what's needed. In fact, that is what we have done in OIF/OEF. Perhaps Fleming should be focusing more on the procurement process so we don't have fuel scandals like we did in OIF/OEF. This would be more relevant to the Army's needs.

5. Look closely. Most of the PO analysts are in fact not geologists, unless disgruntled retirees. I know of none that are bona fide petroleum engineers. Academicians and think tank types dominate, and these are where most of the Chicken Little types come from.

6. Fleming is simply wrong. He is a bystander to the industry. Probably not his fault, but the Army really should focus on having its lieutenant colonels focus on matters more relevant to their craft, instead of trying to create the next American Cesar.

7.

...while the leading opponents have been economists who argue that higher prices will readily bring on more supply...

This is a laughable statement. It is not even economists who run investment economics in oil companies. It is petroleum reservoir engineers. Any bystanders out there in the cackling masses really need to see how these guys work and how a decision to drill and produce is made before commenting or joining fashionista waves like Peak Oil. These onlookers would also get a real idea of oil-in-place estimates, what is recoverable at current prices, what gets left behind, current/past/future extraction technologies, etc.

8. Dayuhan seems to have the more correct perspective on the issue.

***

[Rick M]

I'm glad that we at least agree on #1: after all, there are believers in abiotic oil. That said, there is the matter of how we define what oil is (and is not), all-liquids, etc (which we can address later).

2. Agree: "affordable" is both subjective and relative to one's ability to pay. Fuel may be just "another commodity to be procured" with one proviso: it is finite and increasingly expensive.
Fleming chose a worthy topic.

3. Disagree. You seem to have tarred all PO analysts with the same brush (psychotic and focused on "end of days" scenarios).
Could you please let us know exactly which PO analysts you are referring to and what they said about "end of days?"

4. Disagree. If you are claiming that US domestic production exceeds US military requirements then of course you are correct.
However, the US military is funded by the larger US economy, which consumes more than double the US domestic production.
Since the military cannot be divorced from the economy which sustains it, I fail to understand your point.

5. Before I provide a list of credible PO analysts with formal scientific training/certification in fields such as geology, petroleum engineering, energy, etc., I would ask (if you don't mind) you to please first identify which PO analysts you consider to be the Chicken Littles.

6. Disagree. I'm also a "bystander to the industry:" are you suggesting that only industry insiders are qualified to analyze and comment on energy data and trends?

7. Your final statement strikes me as rambling and unclear.
I will be clear regarding my point about economists. For the past several years I have been in ongoing contact with senior Government of Canada officials in several department (and with US gov't as well). Most of these individuals are described as Senior Economists (or if they are Directors, they say that their training/background is in economics).
So far these bureaucrats have been unanimous in reiterating the government position that "there is no imminent peak oil challenge... Canada's oil supply is secure for about 200 years."
They base this view on what they view as an economic truism: higher oil prices will "incentivize"/bring on new supplies of higher-cost fuels, thus solving the problem.

Fleming argues that the past half-decade does not support this truism: we had sustained high prices but very little increase in the production of liquid fuels in general (and no increase whatsoever in conventional crude oil).

I believe that LTC Fleming is correct in his analysis, and I certainly believe that military analysts are correct in voicing their unequivocal concerns over future oil supply, which they have done for many years.