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Energy - Sept 25

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How to Weaken the Power of Foreign Oil

Robet C. McFarlane and R. James Woolsey, New York Times
Oil’s strategic importance stems from its virtual monopoly as a transportation fuel. Today, 97 percent of all air, sea and land transportation systems in the United States have only one option: petroleum-based products. For more than 35 years we have engaged in self-delusion, saying either that we have reserves here at home large enough to meet our needs, or that the OPEC cartel will keep prices affordable out of self-interest. Neither assumption has proved valid. While the Western Hemisphere’s reserves are substantial and growing, they pale in the face of OPEC’s, which are substantial enough to effectively determine global supply and thus the global price.

According to senior executives in the oil industry, in the years ahead that price is going to rise beyond anything we’ve seen — well above the $147 per barrel we experienced three years ago. Such a run-up in the price of oil has been predicted as a consequence of an event like an attack on a major Saudi processing facility that takes production off line. But such a spike would be more likely to be caused by the predictable increase of demand in China, India and developing countries, alongside the cartel’s strategy of driving up prices by constraining supply. While OPEC sits on 79 percent of the world’s conventional oil reserves, it accounts for only one-third of global oil supply.

There is, however, a way out of this crisis. Ultimately, electric cars may become the norm, but for the near and middle term, the solution lies in opening the transportation fuel market to competition from sources other than petroleum.

... The time has come to strip oil of its strategic status. We owe it to those who lost their lives on 9/11 and in its aftermath, and to those whose fate still hangs in the balance.

Robert C. McFarlane was the national security adviser from 1983 to 1985. R. James Woolsey, chairman of the Foundation for Defense of Democracies, was the director of the Central Intelligence Agency from 1993 to 1995.
(20 September 2011)



New Fields May Propel Americas to Top of Oil Companies’ Lists

Simon Romero, New York Times
... For the first time in decades, the emerging prize of global energy may be the Americas, where Western oil companies are refocusing their gaze in a rush to explore clusters of coveted oil fields.

“This is an historic shift that’s occurring, recalling the time before World War II when the U.S. and its neighbors in the hemisphere were the world’s main source of oil,” said Daniel Yergin, an American oil historian. “To some degree, we’re going to see a new rebalancing, with the Western Hemisphere moving back to self-sufficiency.”

The hemisphere’s oil boom is all the more remarkable given that two of its traditional energy powerhouses, Venezuela and Mexico, have largely been left out, held in check by entrenched resource nationalism. Venezuela is now considered to have bigger oil reserves than Saudi Arabia, putting it at the top of OPEC’s rankings. If it opened up more to foreign investment, it could tip the scales further in the hemisphere’s direction.

Exactly how the Americas’ growing oil clout might rebalance energy geopolitics remains an open question. The Middle East can still influence oil prices greatly, its oil fields are generally cheaper to develop, and some countries in the region are endowed with great reserves.
(19 September 2011)
Comments by Jeffrey J. Brown (oil geologist, ASPO-USA board, TOD/EB contributor):
"Brazil remains a net importer of petroleum liquids, and their net imports increased from 2009 to 2010 (and increased from 0.36 mbpd in 2005 to 0.47 mbpd in 2010).

"Colombia's net exports were up from 2005 to 2010, but Argentina's were down. Their combined net exports increased from 0.64 mbpd in 2005 to 0.69 mbpd in 2010 (BP, Total Petroleum Liquids).

"Colombia was one of the 12 of the top 33 net oil exporters that showed higher net exports in 2010, versus 2005. And Argentina was one of the 21 of the top 33 that showed lower net exports in 2010, versus 2005.

Combined net oil exports from Brazil, Colombia and Argentina, fell from 0.28mbpd (280,000 bpd) in 2005 to 0.22 mbpd (220,000 bpd) in 2010. At the 2005 to 2010 rate of increase in their combined ratio of consumption to production, they would collectively approach zero net oil exports in about 10 years.

"Combined net exports from Canada, Mexico and Venezuela fell from 4.85 mbpd in 2005 to 3.73 mbpd in 2010. At the 2005 to 2010 rate of increase in their combined ratio of consumption to production, they would collectively approach zero net oil exports in about 20 years.

In the US, there are some good stories about rising Mid-continent production, and US crude oil production has rebounded from the hurricane related decline that started in 2005, but 2010 production was only very slightly above the pre-hurricane level that we saw in 2004, and monthly US crude oil production has been between 5.4 and 5.6 mbpd since the fourth quarter of 2009, versus the 1970 peak of 9.6 mbpd. Furthermore, we remain reliant on imports for two out of every three barrels of crude oil that we process in US refineries."

-BA


An Oil-Rich Cuba?

Robert Sandels, Monthly Review
Cuba is about to begin drilling for oil in the Gulf of Mexico. If it finds what it is looking for, oil wealth could snatch Cuba out of the century-old grasp of the United States before Obama leaves the White House. This possibility has brought out Miami’s congressional assault team led by the fanatical Representative Ileana Ros-Lehtinen (R-FL), who essentially wants to criminalize drilling in Cuba’s section of the Gulf.

In 2005, tests by Canadian companies found high-quality oil in Cuba’s Exclusive Economic Zone (EEZ), a section of the Gulf of Mexico allotted to Cuba in the 1997 Maritime Boundary Agreement with Mexico and the United States. The U.S. Geological Survey estimated the oil potential in the Cuban zone at 4.6 billion barrels and 9.8 trillion cubic feet of natural gas. Cuba’s state oil company Cubapetroleo (Cupet) says the reserves may be four or five times larger.

Unable to purchase drilling equipment in the United States because of the blockade, Cuba contracted with an Italian company (which in turn contracted with a Chinese company) to build Scarabeo 9, a monster semi-submersible drilling platform. The rig is capable of drilling to 3,600 meters; it is expected to arrive sometime this summer, after which a consortium led by the Spanish firm Repsol-YPF will begin operations in one the EEZ’s fifty-nine blocks. A dozen or so other firms, including Petronas (Malaysia), Gazprom (Russia), CNPC (China), Petrobras (Brazil), Sonangol (Angola), Petrovietnam (Vietnam), and PDVSA (Venezuela) have contracts to explore in other blocks.

Industry experts are not predicting a Cuban oil bonanza, but finding reserves even at the lower end of the estimates would make Cuba energy independent, and eventually a net exporter. This would have an incalculable impact on its economy, and would send the U.S. sanctions policy into the dustbin of imperial miscalculations.


Robert Sandels writes on Cuba for the online publication Cuba-L Direct (Albuquerque). His articles have also appeared in CounterPunch, Rebellion, Granma International, and other publications. He is a former professor of history at Quinnipiac University in Connecticut and currently lives in Mexico. This article is a co-publication with Cuba-L Direct.
(September 2011 issue)
Long article at original. -BA


Whose Subsidies Trump Whose?

Matthew L. Wald, Green (blog), New York Times
Renewable energy deserves subsidies, its partisans say, because conventional energy sources have enjoyed bigger subsidies for decades. The latter is a hard proposition to quantify, but a new report by a venture capital firm that specializes in renewables takes a stab at it.
Drilling for oil near Okawville, Ill.Getty ImagesDrilling for oil near Okawville, Ill.

The analysis is by Nancy Pfund, a managing partner of DBL Investors of San Francisco, which backs renewable energy ventures, and Ben Healey, an environmentalist who is earning a joint master’s degree in business administration and engineering management at Yale. It traces oil and gas subsidies beginning in 1918, biofuel subsidies since 1980 and renewable electricity subsidies since 1994. All of those are tracked through the end of 2009, meaning that the study does not capture all of the aid to renewable energy in the stimulus bill. It tracks nuclear energy from 1947 to 1999.

With differing periods and different eras, comparisons are difficult. But the report calculates that nuclear subsidies came to more than 1 percent of the federal budget in their first 15 years, and that oil and gas subsidies made up one-half of 1 percent of the total budget in their first 15 years. “Renewables have constituted only about a tenth of a percent,’’ the report says.
(22 September 2011)



Chevron loses latest stage of Amazon pollution battle

Dominic Rushe, Guardian
New York appeals judge unfreezes $18bn damages award over contamination of indigenous tribe's land in Ecuador
---
A US court has dealt oil giant Chevron a severe blow after lifting a ban on an $18bn judgment against the firm for contaminating the Amazon.

A New York appeals court has reversed an earlier order freezing enforcement of the record damages award. It is the latest reversal in a nearly two decade-long legal battle over pollution in the Amazon rainforest in Ecuador.

In February, a judge in Ecuador ordered Chevron to pay damages to the plaintiffs, but both Chevron and the residents appealed, and the case has yet to make its way to Ecuador's highest court.
(20 September 2011)



The coming German energy turnaround

Claudia Kemfert, Bulletin of the Atomic Scientists
Article Highlights

  • Germany has decided to close all of its nuclear power plants by 2022 and embark on an energy turnaround that focuses on large increases in sustainable energy production.

  • Such a turnaround is technically possible but will require an investment of about €200 billion ($290 billion) from private and public sources over the next decade.
  • Even if that investment is made, short-term electricity prices will probably rise slightly, but over time hundreds of thousands of jobs are likely to be created in the sustainability sector.

Following the terrible catastrophe at Fukushima, Germany's government has decided to usher in a sustainable energy turnaround that entails switching off all of the country's nuclear power plants by the year 2022. In the spring of 2011, in fact, eight nuclear power plants were immediately and irreversibly taken off line. The nuclear phase-out is not fundamentally new; in principle, Angela Merkel's Christian Democratic Union government is re-adopting the policies of the previous "red-green" Social Democrat-Green Party coalition.

But a successful energy turnaround -- one that provides sufficient electricity, holds climate-damaging carbon emissions in check, and limits electric-price increases -- involves much more than shutting down nuclear power plants. There is, first, the problem of fuel mix. More than 40 percent of electricity in Germany is generated from coal, and roughly half of Germany's coal-fired power plants are scheduled to be taken off line by 2022 due to old age. With a decline in nuclear power generation, the coal-fired segment of Germany's energy supply threatens to increase unless an ambitious alternative energy plan is followed.

Any plan that aggressively supports expansion in the renewable sector and replaces decommissioned coal-fired plants with natural gas power stations will be expensive. Total investment over the next decade for such an energy turnaround is estimated to be roughly €200 billion (or almost $290 billion). There is good news connected to that estimate, however. The investment can come mostly from private sources, with only a partial subsidy by government. And the German Institute of Economic Research calculates that electricity prices will rise only slightly as a result of the energy turnaround, giving existing businesses little incentive to move production outside the country and potentially creating hundreds of thousands of jobs in the German renewable-energy and sustainability sectors.

Of course, not all the energy news out of Germany is good, or clean. At the moment, more than 20 new coal-fired power plants are being planned or already under construction
(7 September 2011)

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