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Three items: first two are commentary, the third an update on The Great
Game, directing attention to a strategic remote location. kwc Lundberg admits he has a rather ‘’fire and brimstone’ quality, which
may make some ignore his message, that we are on an unsustainable path, and
need to act urgently. Lundberg offers no optimism, however. Lundberg: The
main lesson from Katrina for our petrosociety: Pollution is constant.
When
the millions of gallons of gasoline, diesel, pesticides and other chemicals are
suddenly and accidentally loosed upon New Orleans and surrounding areas, it is
indeed a disaster. However, the result is all the same for the ecosystem and
the Earth in the long run if those toxic substances were to be put into the
environment gradually as intended. Monbiot plays the devil’s advocate for the most part… Monbiot: Energy
Intelligence? Are global oil
supplies
about to peak? Are they, in other words, about to reach their maximum and then
go into decline? There is a simple answer to this question: No one has the
faintest idea. Consider these two statements: 1.
"Last year Saudi Aramco made credible claims that as much as 500 billion
to 700 billion barrels remain to be discovered in the kingdom." 2.
"Saudi Arabia clearly seems to be nearing or at its peak output and cannot
materially grow its oil production." The first comes from a report by Energy Intelligence, a consultancy
used by the major oil companies. The second comes from a book by Matthew
Simmons, an energy investor who advises the Bush administration. Whom should we
believe? In 1985, Kuwait announced that it possessed 50 percent more oil
than it had previously declared. Had it just discovered a new field? Had it
developed a new technology that could extract more oil from the old fields? No.
OPEC, the price-fixing cartel to which it
belongs, had decided to allocate production quotas to its members based on the
size of their reserves. The
bigger your stated reserve, the more you were allowed to produce. The other states soon followed Kuwait,
adding a total of 300 billion barrels to their reserves: enough, if it
existed, to supply the world for 10 years. And their magic oil never runs out.
Though extraction has long outstripped discovery, Kuwait posts the same
reserves today as it claimed in 1985. …So we
turn to the U.S. Geological Survey for an answer, and find that its estimates
of global oil supply are as reliable as the Pentagon's assessments of Iraqi
weapons of mass destruction. In 1981, it said we possessed 1,719 billion
barrels of oil. In 2000, the number was 2,659 billion. Yet the discovery of major
oilfields peaked in 1964. Where has it come from? …
In February this
year, the Dept of Energy released a report called Peaking of World Oil Production: Impacts,
Mitigation and Risk Management .
I say "released," for it was never properly published. For several
months the only publicly available copy was lodged on the website of the
Hilltop High School in Chula Vista, Calif. The report’s lead consultant, energy
analyst Robert L Hirsch, concluded that "without timely mitigation, the economic, social and
political costs will be unprecedented." It is possible to
reduce demand and to start developing alternatives, but this would take
"10 to 20 years" and "trillions of dollars." "Waiting
until world oil production peaks before taking crash programme action leaves
the world with a significant liquid fuel deficit for more than two
decades," which would cause problems
"unlike any yet faced by modern industrial society."
Bottom line: Better to cry wolf, than be bleating sheep later… http://www.tompaine.com/articles/20050928/energy_intelligence.php So it’s better to plan and act with precautionary principles in mind,
like buying insurance just in case you need it. We can’t wait for technology to improve extraction, and if
the geology isn’t there, it’s all over. Paraphrasing Michael Klare referring to
our oil-based foreign policy, it’s cheaper to conserve energy than wage war for
it. And an energy consultant on the NewsHour last night said if we had enacted
conservation measures and increased CAFÉ standards post-9/11, we would be
saving the equivalent of what we’ve spent in Iraq now – without loss of life,
political turmoil and a radicalized terrorist network. This realization alone has converted
many political conservatives away from the Bush Doctrine and its fossil fuel
economy addiction. Off the top of my head, it’s 5-6 weeks from ports in Saudi Arabia, 2
weeks from the west coast of Africa, and less time from Venezuela, so the 2
weeks shipping time from this “New Kuwait” to the North American West Coast is
a critical factor in The Great Game. That the biggest customers so far are
ASEAN partners suggests some market stabilization, of sorts, though Indonesia
is already in meltdown. kwc Texas Tea From a Russian Sea
By James Brooke, NYT, September 28, 2005 YUZHNO-SAKHALINSK,
Russia - Just north of Japan and across the Pacific from California, a
long-forbidden Siberian island is about to join the global energy map. On Oct.
1, three decades after vast pools of oil and gas were discovered off the lonely
shores of this former Soviet-era prison colony, a consortium
led by Exxon Mobil
is to start pumping up to 250,000 barrels of oil a day, its first oil and gas from
seven wells drilled deep in the Sea of Okhotsk. That will be the start
of major production from Sakhalin's offshore reserves, a rich energy island
province that some geologists call, with a bit of swagger, this decade's Alaska
North Slope. Noting the string of ministers flying here from Moscow in
September to inspect the newest riches in oil, Galina N. Pavlova, Sakhalin's
top energy official, boasted: "They
believe Sakhalin is the second Kuwait." Mapped since the
1970's, the recoverable offshore reserves of Russia's easternmost major island
now total 14
billion barrels of oil - or just over 1 percent of global reserves - and 96
trillion cubic feet of gas.
In 2004 terms, this is the equivalent of four years of United States oil
imports. It would yield about 28 years of American gas imports, which account
for a relatively small share of consumption. Some of the energy will be headed
to American shores. After decades of
debate, this long, spindly island eight time zones from Moscow is getting the
largest inflow of foreign investment in Russian history. Analysts hope the
Sakhalin projects will help increase Russia's output and bring much needed oil
and gas supplies to energy-hungry world markets in coming decades. The recent slowdown in
Russian output and the Kremlin's tighter grip on its energy sector have raised
concerns over the investment climate in Russia. But with much of the Middle
East shut off to foreign oil companies, Russia still offers some of the best
prospects for growth in oil supplies. The Exxon-led
consortium is doling out $12.8 billion, and a second group, led by Royal Dutch Shell, is spending $20 billion to produce oil
and gas and to build Russia's first liquefied natural gas plant. "This is the
largest integrated gas project in the world," said Ate Visser, commercial
director for the Sakhalin
Energy Investment Company,
the Shell-led group that has an army of 17,000 workers on Sakhalin. BP is exploring a third section for energy
resources. Nine additional offshore sections remain virtually untouched. Sakhalin promises to
be a cash cow that will loom large in calculations of Russian economic might.
By 2050, the companies project it will have filled Moscow's coffers with $85
billion in oil revenues, royalties and taxes - $45 billion from the Shell
project and $40 billion from the Exxon project. Twelve
days
by tanker across the North Pacific from California, Sakhalin may also prompt
Americans to start looking to Russia for oil and gas. Until now, Russia, with 6
percent of the world's known oil and 27 percent of its known gas, largely
produced in western Russia to sell to Western Europe. Much of Sakhalin's energy will power
China, Japan and South Korea.
But recently, work started on a terminal in northern Mexico that is intended to
receive liquefied natural gas shipments from Sakhalin in the summer of 2008.
This gas will then head by pipeline to California. By 2008, Shell and
Exxon should also be pumping a total of 550,000 barrels of oil a day into
tankers, placing 10
percent of Russia's overall oil production onto Pacific waters and the
international spot market. Starting with two huge
offshore drilling platforms now in place up north, the Shell project is
building two 400-mile pipelines, one for oil and one for gas. These will end at
Aniva, where 7,250 workers, one third of them foreigners, are building a $2.5
billion liquefied gas plant and deepwater loading terminals on a bay 90 miles
northeast of Japan. To Shell's chagrin,
its gas-field-to-carrier project has become the largest in the world, partly
because the overall 10-year project cost estimate doubled in July, to $20
billion. The overruns seem to stem from the difficulties of doing business in
Russia and from rosy calculations made in 2003 to win final project approval by
the Russian government, the ultimate owner of most oil and gas produced after
constructions bills have been paid. Shell, which owns 55
percent of the project, says the cost overrun resulted from the dollar's 25
percent fall against the euro, the rising cost of Russian labor in the boomtown
atmosphere here, rising costs of pipeline steel and oil, and expenses incurred
to minimize disturbances to an endangered population of 100 western gray whales
that feed every summer in Shell's production area. "We will insist
on a very meticulous audit of this," Ms. Pavlova, director of oil and gas
for Sakhalin's regional government, said of the swelling cost. "We will be
meeting with Shell through the winter." Last July, Shell
disclosed the $10 billion cost overrun only one week after Shell and Gazprom,
Russia's state oil monopoly, announced an asset swap. The swap was intended to
bring a powerful Russian partner into an all-foreign project here. But now, the
two companies are embroiled in what are to be yearlong talks to calculate a price
difference that Shell needs to pay Gazprom to even the deal. "It has been a
hard swallow for our shareholders," Mr. Visser said of Japan's minority
shareholders, Mitsui & Company, with 25 percent, and the Mitsubishi
Corporation, with 20 percent. "But it also has been a hard swallow for
Shell. But people only see one side of the story, that costs have doubled, but
not that the price of oil has also doubled." Increasingly
nationalistic, Russia restricts foreign investment to the most technically
challenging energy developments, largely offshore and in the Arctic. Russian
state companies, for example, have pumped oil from onshore wells here since the
1930's. But after production dwindled, Russia sought foreign expertise for
offshore work. "Originally, Russia needed foreign companies for
technology and for the money," said William Dinty Miller,
senior vice president of BP Sakhalin. Referring to Russia's soaring foreign
currency reserves in the era of $70-a-barrel oil, he added: "Now the money argument has gone by the wayside."
Despite the
controversy, work is on track at the liquefied gas plant here. From a window of
a commercial flight one recent morning, a chalk-yellow trench for two
pipelines, one for gas, the other for oil, could be seen coursing south from
this island capital. At present, two
gas-processing "trains" are under construction, giving the plant an
annual capacity of 9.6 million tons. Around the world, the plant here is
rivaled in size only by Qatargas-2, a plant in Qatar that is to produce 15.6
million tons of liquefied gas by the end of 2007. On Sakhalin, room has been
left to expand the project by a third. One future supply source would be the
fields Exxon is to start tapping on Oct. 1. Exxon's oil and gas, from fields
with recoverable reserves estimated at 2.3 billion barrels of oil and 17.1
trillion cubic feet of gas, will flow into an existing Russian-owned pipeline
network, drawn from seven wells drilled by the Yastreb rig of Exxon. The land-based rig allows for wells to be drilled
to points seven miles offshore, a
strategy to minimize the environmental impact and to minimize the number of
offshore platforms in a harsh region known for Arctic cold fronts that blow
down from Siberia. Stephen Terni, the
president of Exxon-Neftegas Ltd., summed it up for Russian and American
executives here on Sept. 12, echoing typical Texas-style talk of the past, now
translated to Russia's energy frontier: "The shore-based rig, the Yastreb,
is the largest and the most powerful land rig ever built." Jad Mouawad, in New
York, contributed reporting for this article. http://www.nytimes.com/2005/09/28/business/worldbusiness/28sakhalin.html Energy Information Administration ; World Proved1 Reserves
of Oil and Natural Gas, Most Recent Estimates: June 22 , 2005 http://www.eia.doe.gov/emeu/international/reserves.html |
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