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Joint Operating Environment 2010: Oil Supply Concerns (review)

The United States Joint Forces Command regularly (about every two years) issues its “perspective on future trends, shocks, contexts and implications for… the national security field.” The newly released version of the Joint Operating Environment (JOE) is fundamentally similar to its predecessor, which was released in 2008. Its overall structure is only slightly altered, much of the text is identical, and the time-frame under consideration is the same (to 2030).

Amid the multitude of security threats, energy has moved rapidly to the forefront, and it is the oil supply issue which is the focus of this review. The main oil supply vulnerabilities which were cited in 2008 are reiterated, thus indicating that there has been no amelioration. It restates that “oil and coal will continue to drive the energy train” until 2030, though it warns that in order to do so, “the world would need to add roughly the equivalent of Saudi Arabia’s current production every seven years” (p. 24).

Significantly, a text box has been added on Peak Oil which states in part:
“… Assuming the most optimistic scenario for improved petroleum production … [it] will be hard pressed to meet the expected demand of 118 million barrels per day [in 2030]” (emphasis added).

However, the JOE also states, “The central problem for the coming decade will not be a lack of petroleum reserves, but rather a shortage of drilling platforms, engineers and refining capacity” (p. 24).

Many peak oil analysts, including this reviewer, would agree with that statement. There is enough oil to get us through this decade, but ten years is a brief period in time, and the following decade could be a very different story. Drilling platforms and experienced engineers will indeed be at a premium, since land-based and shallow-water options seem be waning. As for refining capacity, we seem to be going the other way, with refiners struggling and numerous closures world-wide.

A graph at the bottom of page 25 illustrates the precipitous drop in production from existing wells and the relatively small flow which can be obtained from non-conventional oil. Given the use of natural gas to produce bitumen, the contribution of non-conventional oil would be even less significant if “net energy” were properly factored in.

The text box on Possible Future Energy Resources is similar to its 2008 predecessor, and again highlights the fact that despite intensive research and improved efficiencies, the contributions of oil sands and shale, biofuels, wind and solar will be minimal.

The JOE then warns, “A severe energy crunch is inevitable without a massive expansion of production and refining capacity” (p. 28). To add to the urgency, it restates its 2008 warning, “By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD” (p. 29). This warning is consistent with others which have been issued during the past 18 months (eg. the repeated verbal statements made by IEA chief economist Fatih Birol, the 2008 WEO, Paul Stevens of Chatham House, ITPOES, etc.).

However, while it warns in general terms of “the dangerous vulnerabilities the growing energy crisis presents” (p. 24), the JOE fails to mention two “next questions” which are as obvious as they are vital:
- How might a global supply crunch affect oil exports? and
- How can governments best prepare for and administer a liquid fuel emergency?
Both issues require immediate and thorough examination, regardless of how close we are to peak oil.

While the JOE warns, “The implications for future conflict are ominous,” it fails to mention the strains which a severe oil supply crunch could place on civil order at home. It acknowledges the resulting potential for a prolonged US recession, deep cuts to defense spending, and diminished capabilities “at the moment they may have to undertake increasingly dangerous missions” (p. 28). However, the JOE makes no mention of the serious and predictable strains on the North American social fabric.

The difficulty of maintaining the domestic food supply chain and other essential services in the face of unprecedented energy prices needs to be considered as a reasonably probable piece of the future operating environment, given that the JOE’s own evidence points to a high probability of the very circumstances which would trigger such conditions.

The JOE’s Energy Summary is not optimistic. It does not mention peak oil a second time, but reiterates its prior warning that “production could reach a prolonged plateau. By 2030, the world will require production of 118 MBD, but energy producers may only be producing 100 MBD unless there are major changes in current investment and drilling capacity” (p. 29).

In short, elevating the profile of energy security within the JOE is a helpful step.
Perhaps civilian as well as military planners will take note. The entire document is an interesting mix of philosophical quotes, a realistic assessment of intractable and formidable issues, and some very astute lessons from history.

Petroleum is something which we take for granted, with little consideration of its unique properties or its finite nature. Suddenly, concerns about its future availability are rocketing to the forefront. If nothing else, those lessons from history should warn us of our timeless tendency to see what we prefer to see. What many of us see is an endless supply of cheap oil for our grandchildren. This document prudently encourages us to look again….

Here is the link:
http://www.jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf

Editorial Notes: UPDATE (April 6, 2010) Also being covered by Matthieu Auzanneau, a French journalist: "Le Pentagone s’attend lui aussi à un choc pétrolier imminent" ("The Pentagon also expects an imminent oil shock") http://petrole.blog.lemonde.fr/2010/04/06/le-pentagone-sattend-a-un-choc-petrolier-imminent/ UPDATE (Apr 11): English translation here http://www.energybulletin.net/node/52334 -BA

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