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Peak Oil

Times change, will attitudes?

Heading out, The Oil Drum
The passage of the Energy Bill may be the last major marker at the end of an era. But not perhaps in total, the one that you would immediately picture.
For, over the past decades, as oil replaced coal as the major fuel source, and natural gas also took its share of the market, proponents of each fuel have sought advantage at the cost to the other.

Tradeoffs and political favoritism has led to the passage of legislation that helps one source of power over another, and the management of each has sought to cut the costs to generate product, in order to remain competitive.
Thus mining companies have fought for relief from some provisions that were sought to tighten environmental constraints on their operation. Oil
companies sought tax relief as they put together the billion dollars or so required to drill in the deeper waters of the Gulf of Mexico. Each step had, as a driver, the need for that fuel to remain competitive, against the inroads of the other into the market.

Those days are coming to a close. As the nation and the world move to a time that we will need all sources of energy to meet the world supply in its various forms, the pressures to shave that last cent from the price of a ton of coal, for example, will no longer be there.

I can remember coming to the United States at a time when coal companies would not put in safer roof control measures because they would add pennies to the cost of a ton of coal, and thereby possibly lose that company a customer. Well there is a paradigm shift coming, that will I expect, initially be hard for company management to accept.
(31 July 2005)

The future on your street
Living with fewer resources

David Wann, Denver Post
[Denver Post]Editor’s note: David Wann is an advocate of sustainable lifestyles. In this imaginary scenario, set in the not-too-distant future, he explores the true cost of what we consume and suggests neighborhood-level lifestyle changes to cope with rising cost and scarcity of resources.

The microwave beeps as Eric and Margo Petrovak set the table for dinner. They’re listening to a feature story on Colorado Public Radio about the rising costs of energy, water, and food, a topic that’s much in the news these days. The year 2009 has been a wake-up call for the 50- something couple, whose three-bedroom, Front Range home is becoming less affordable every month. They’ve started talking about moving to a smaller, more efficient house – closer to their jobs, stores, parks and theaters – with good solar orientation and insulation.

“It’s true that roughly half of the world’s oil reserves are still in the ground,” an expert explains on the radio, “but the fact is that we need more oil than we can get, since world oil production has reached its peak and will soon begin to decline. Global demand now exceeds supply; it’s that simple. As prices rise for food, fuel, medicine and consumer products, we are finally seeing how dependent we are on fossil fuels in agriculture, transportation, food processing and the chemical industry … . That’s why oil at $110 a barrel is having such severe impacts on our daily lives.”

“Why didn’t we see this coming?” Margo comments as they sit down. “Why didn’t we design more efficient vehicles and appliances back in the ’70s? And new sources of energy and new ways to make chemicals from plants and waste?”

They both want to feel secure and upbeat about the future, but instead they feel overwhelmed by the lifestyle changes that face them. Just in the past few months, the cost of gasoline has gone up by a third, and since 2005, the cost of natural gas has more than doubled as Canadian supplies became less dependable. Steadily expanding demand for large homes, hot tubs, computers, large-screen TVs and a fleet of must-have appliances has been matched by a persistent thirst for gasoline….

David Wann is co-author of “Superbia! 31 Ways to Create Sustainable Neighborhoods,” and co-author of “Affluenza.”
(31 July 2005)
This post recommended by The Oil Drum. Biographical information on Wann is online at Speakers Platform and Terrain Editors. Wann also has published an article on Making Green Design Affordable.

The battle for oil fields is a deadly game

Ron Bullock, MetroWest Daily News (local columnist)
…20th century history seemed to testify that wars and rumors of wars do not normally hinder the flow of oil from the Middle East.

Warfare might decide, however, who actually benefits from the exchange of money and oil. It is a deadly game we inherited from the champions of the British Empire.

In the 21st century the game is being transformed by realignments in the balance of power on a global scale, caused largely by the scarcity of oil. Some might even call it the endgame phase of the age of oil. This stage is marked by the near approach or actual presence of peaking reserves.

Peak oil is the halfway point in the extraction of oil from an oil field. Global peak oil is when the same holds true for all known reserves. At this point, extracting oil becomes harder and more expensive each passing day. With demand at an all-time high and oil dependence intrinsic to every industrialized country, it is widely acknowledged that the end of an oil-driven civilization is at hand.

The stakes are therefore high. Having enough oil buys time to bring to maturity alternative forms of energy. A larger number of players, gambling for a viable future, now compete for an increasingly smaller and more precious pot. It seems probable that the individual players in this game will seek to shorten the odds by coalescing into larger, mutually reciprocating alliances as time passes. They also have learned a thing or two from the British and the Americans
(30 July 2005)
Article will be available free for about a week, according to the MetroWest website.

It’s Not the End Of the Oil Age
Technology and Higher Prices Drive a Supply Buildup

Daniel Yergin, Washington Post
…Our new, field-by-field analysis of production capacity, led by my colleagues Peter Jackson and Robert Esser, is quite at odds with the current view and leads to a strikingly different conclusion: There will be a large, unprecedented buildup of oil supply in the next few years. Between 2004 and 2010, capacity to produce oil (not actual production) could grow by 16 million barrels a day — from 85 million barrels per day to 101 million barrels a day — a 20 percent increase. Such growth over the next few years would relieve the current pressure on supply and demand.

Where will this growth come from? It is pretty evenly divided between non-OPEC and OPEC. The largest non-OPEC growth is projected for Canada, Kazakhstan, Brazil, Azerbaijan, Angola and Russia. In the OPEC countries, significant growth is expected to occur in Saudi Arabia, Nigeria, Algeria and Libya, among others. Our estimate for growth in Iraq is quite modest — only 1 million barrels a day — reflecting the high degree of uncertainty there. In the forecast, the United States remains almost level, with development in the deep-water areas of the Gulf of Mexico compensating for declines elsewhere.

The growing supply of energy should not lead us to underestimate the longer-term challenge of providing energy for a growing world economy. At this point, even with greater efficiency, it looks as though the world could be using 50 percent more oil 25 years from now. That is a very big challenge. But at least for the next several years, the growing production capacity will take the air out of the fear of imminent shortage. And that in turn will provide us the breathing space to address the investment needs and the full panoply of technologies and approaches — from development to conservation — that will be required to fuel a growing world economy, ensure energy security and meet the needs of what is becoming the global middle class.
The writer is chairman of Cambridge Energy Research Associates. His book “The Prize: the Epic Quest for Oil, Money and Power” received the Pulitzer Prize.
(31 July 2005)
Press release for the CERA report
Critical analysis of the CERTA report from Financial Sense Online.

Other Energy Issues

Indonesia: State-owned oil company on the brink of crisis

Mathias Hariyadi, AsiaNews
Pertamina is not managing to satisfy the growing internal demand for gas. Experts: increase prices to avert a crisis, but this solution risks serious social unrest.
Jakarta (AsiaNews) – Large-scale oil exporter Indonesia is facing a serious crisis of energy supply. Pertamina – the state-owned oil company – can no longer meet the high demand for gasoline and it has been forced to import stocks at excessive cost. The entire country must queues for hours at gas stations to get their tanks refilled. Several Indonesian experts have offered potential solutions to the problem which however may threaten social order.

Even before the alarm bells started to ring, President Susilo Bambang Yudhoyono (SBY) had decided to allocate a special budget for Pertamina to purchase a greater quantity of gasoline. The initiative did not serve to evade the current crisis: in regions like Aceh, South Sulawesi West and East Java, citizens can no longer find gas or premium to buy. Kurtubi, an expert in the sector, yesterday intervened in a public meeting on the matter in Jakarta, saying: “The oil crisis is very serious”.

The situation is not only due to the increased price of oil on the international market (more than 60 US dollars per barrel) but above all to the incapacity of Pertamina to meet internal demand. Kurtubi said the situation is radically different to what it was 20 yeas ago, when Pertamina managed to cope with national demand. “Today, demand has risen to 1.4 – 1.5 million barrels per day but the state company can only provide one million; the other 500,000 must be imported from the international market,” said the expert. The price of oil is very high and Pertamina is not managing to buy all the oil necessary because of a limited government budget. One of Kurtubi’s proposals is to increase the price of oil, an initiative which already months ago had led to nationwide protests on the streets.
(29 July 2005)

Back-To-Back Refinery Fires in the United States Send Crude Prices Above US$60

Edith Balazs Associated Press
Back-to-back refinery fires in Texas and Louisiana sent crude futures back above $60 a barrel Friday as the unplanned outages fanned fears that production may not be able to meet demand in coming months.
An explosion and fire at British Petroleum PLC’s Texas City plant Thursday night came hours after a fire at Murphy Oil Corp.’s 120,000-barrel-a-day Louisiana diesel hydrotreater, which removes sulfur from fuel. Murphy said damage to the unit was minimal, but offered no estimate of when it might restart.
The fire at the Texas City refinery was brought under control Friday morning, a BP spokesman told Dow Jones Newswires. An explosion at the same refinery in March killed 15 people. …
(29 July 2005)

Flood shuts India power project

Staff, BBC
High levels of silt left behind by an overflowing river have shut down India’s largest hydro-power project, forcing blackouts across north India.
Officials say they are not sure when they can run the mammoth 1,500 MW Nathpa hydro project, located in the northern state of Himachal Pradesh. …
(28 July 2005)

Politics and Economics

Bill does little to cut oil habit

David Lazarus, SF Chronicle (columnist)
The $14.5 billion energy bill approved by Congress on Friday — President Bush is expected to sign it into law this week — has been sold to consumers as a way to boost self-sufficiency and wean us from our addiction to imported oil.

The bottom line is this: The energy bill (all 1,724 pages of it) will indeed boost our self-sufficiency, but not by ushering in a bright new age of alternative fuels. Rather, it’ll help us out in a pinch by improving things like transmission grids and pipelines.

In other words, we hopefully won’t see a replay of the California energy crisis.

As for our dangerous Saudi oil habit, we’re nowhere close to enrolling in an energy 12-step program. …
(31 July 2005)

The Week in Sustainable Vehicles (07/31/05)

Mike Millikin, WorldChanging
Every Sunday, Green Car Congress’ Mike Millikin gives us an update on the week’s sustainable mobility news, looking at the ongoing evolution of personal transportation. Take it away, Mike:

The House and Senate this week quickly passed the conference version of the energy bill, sending it on to the White House for signature. The Energy Policy Act of 2005 is a plump 1,724 pages of policy, programs, and pork — as well as showing the occasional hint or glimmer of a shift in focus and attitude.

In general, the bill (a) incents more production through generous subsidies (some $14.5 billion) to the energy industry, but with some increasing emphasis on renewables (b) invests heavily in long-term, high-ticket technologies (hydrogen, fusion, clean coal, next-generation nuclear) (c) does essentially nothing for the short- to medium-term to reduce the consumption of petroleum.

Three of the more egregious omissions in the bill specifically are (1) the failure the increase fuel economy requirements, (2) the failure to set any sort of target or timeline for quantitative reductions in petroleum use; (3) the failure to set any sort of quantitative target or timeline for the reduction of greenhouse gas emissions.
(31 July 2005)

Uzbekistan and America’s Future Conflicts

Angelique van Engelen, Global Politician
As of next year, Central Asia will have come fully online to Western energy markets, as twin oil and gas pipelines linking the Caspian sea to Turkey will begin to deliver. By this time, the world will likely finally understand that US foreign policy, known to be energy focused, is intent on more than just bringing Iraq to its knees. This weekend’s decision by the leadership of Uzbekizstan, just hours ahead of a key meeting with US officials, to ask US forces to leave its Karsy Khanabad airbase -dubbed K2- might be a turning point however.

The US opened military bases in Uzbekistan and neighboring Kyrgyzstan, both bordering on China, in 2001. But the agreements were rather makeshift and the parties involved hardly trust each other. In the wake of the massacre by Uzbek government forces, the situation between the US and the regime in Uzbekistan have been especially jittery. US top officials did whatever they could to avoid Islam Karimov’s regime to change its mind on the US troops’ presence, including a shameful attempt to block UN action calling for an official investigation into the massacre. To no avail however. The deal -a collaboration of sorts- is off now. US troops are packing their bags.

…Moral issues aside, the question of whether the US really needs to maintain a foreign strategy centered on energy is an issue the experts disagree about. Some analysts believe that the day will come that the rationale for maintaining a military presence in conjunction with energy needs will be abandoned because it will prove too costly. So far, this does not seem to be the opinion of US policy makers; the current US’ worldwide presence outside resembles a specialist energy map of the globe. Aside from Central Asia, there are not many countries where US troops are stationed that do not have energy resources crucial to the US. They include Bahrain, Qatar, Kuwait, Saudi Arabia, Oman, Turkey, Pakistan, Afghanistan, Djibouti, the Philippines, Vietnam, Japan Jordan, Kuwait, Yemen and India.

…The true independence that most Central Asian countries are after will likely materialize as its mineral wealth gets monetized. Georgia for instance stands to gain an income from transit tariffs of $50-60 million per year of the oil pipeline that runs through its territory. What’s more, the pipeline will likely provide an economic snowball effect. In a few years, the country might be seen as more stable than ever, which will improve Georgia’s investment climate for other projects. This in turn will likely lead to greater independent foreign policy too. Hopefully, the countries will exhibit an appetite for unauthoritarian forms of democracy that yield a liberty that will prove to be simply incorruptible by outside powers.

Angelique van Engelen is a former Middle East correspondent and currently runs a writing agency She also participates in a writing ring
(31 July 2005)