Greasing the Wrong Gears Energy and Environment for Strategists

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Energy Security Emerging Global Trends Dr.
Theresa Sabonis-Helf
National War College
RCNSC July 2009
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Regional primary energy consumption patterns 2007
coal
hydro
nuclear
gas
oil
From BP Statistical Review of World Energy 2008
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OECD Wind and Solar Electricity Generation
Capacity, 2004
41 of OECD
43 of OECD
Germany is a world leader in wind and solar
energy. Solar is currently 0.5 of Germanys
electricity mix, Wind is currently 6. Germany
is committed to making 12.5 of its electricity
renewable by 2010, 20 by 2020.
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Oil consumption per capita
Oil consumption per capita
From BP Statistical Review of World Energy 2008
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Chinas Oil Demand

• 2007 Demand grows to 7.6 million bbls/day
• 2006 China accounts for 35-40 of world demand
  growth over past 5 years
• 2025 Demand expected to reach 14.2 million
  bbl/day, (10.9 million bbl/day imports)

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World Fuel Consumption 2005 2030
25.2
North America
27.9
15.3
Non-OECD Asia
30.8
15.5
OECD Europe
16.0
8.6
OECD Asia
9.2
Central South America
5.5
7.8
5.9
Middle East
9.5
4.8
Non-OECD Europe and Eurasia
2005
6.9
2.9
2030
Africa
4.3
Million Barrels of Oil Equivalent per Day
Fuel Liquids only. 2008 Projections Data from
EIA International Energy Outlook 2008
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Distribution of proven oil reserves in billion
barrels
1987 910.2
1997 1069.3
2007 1237.9
From BP Statistical Review of World Energy 2007
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Ecuador Gabon left the OPEC cartel in the
1990s, Ecuador rejoined in 2007
Indonesia became a net importer in 2004
Angola joined OPEC in December 2006
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Iraq 2.0
Kuwait 2.7
Norway 2.8
Russia 9.7 (consumed 2.9)
UK 1.7
Kazakhstan 1.4
Libya 1.8
China 3.8 (consumed 7.6)
Algeria 2.2
Iran 4.1
Saudi Arabia 10.7
UAE 2.9
Indonesia 1.0 (consumed 1.2)
Nigeria 2.4
Qatar 1.1
Angola 1.8
Red text indicates consumption per day Blue box
designates members of OPEC Green box
designates oil producer (non-OPEC)
2007 Oil Producers
(mil bbl/day)
Base mapwww.petroleumgraphics.com Bbl/Day prod.
data from US Dept. of Energy EIA 2008, cons. data
from Nationmaster.com
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Canada 3.3 (consumed 2.4 )
United States 8.3 (consumed 20.7)
Venezuela 2.8 (consumed 0.7)
Mexico 3.7 (consumed 2.1)
Ecuador 0.5 (consumed 0.2)
Brazil 2.2 (consumed 2.4)
Red text indicates consumption
2007 Oil Producers (mil bbl/day)
Blue box designates members of OPEC
Green box designates oil producer (non-OPEC)
Base map www.petroleumgraphics.com Bbl/Day
prod. data from US Dept. of Energy EIA 2008,
cons. data from Nationmaster.com
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Swing Capacity
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Oil Chokepoints (Millions of Barrels per Day)
Bab el-Mandab 3.0 Bosporus/Turkish Straits
3.1 Strait of Hormuz 17
Strait of Malacca 11.7 Russia 2.0
Suez Canal/Sumed 4.2 Panama Canal 0.6
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1
2
5
3
6
7
5
2
6
3
1
7
4
Data from US Dept of Energy EIA 2005 (2004
estimates)
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Where are the Hydrocarbons?
Proven Oil Reserves 2006
Proven Nat. Gas Reserves 2006
From BP Statistical Review of World Energy 2007
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Major gas trade movements
From BP Statistical Review of World Energy 2008
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Photo by Gavin Helf
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Canadas Oil
Domestic Impacts of Oil Wealth ? Boom and bust
economic cycles ? Dutch Disease ? No taxation,
no representation syndrome ? Economic and
political development of petrostates has
had limited success ? High levels of corruption
are endemic ? State incurs obligations that are
hard to rescind
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Thomas Friedmans
First Law of Petropolitics
From Foreign Policy May/June 2006
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European Reliance on Russian Natural Gas
(2006-2007)
Data from EIA Russia Country Report 2008
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Russian Gas Sales Prices 2008( per thousand
cubic meters)
Data from EIA Russia Country Report May 2008
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Russian Oil and Gas Pipelines to Europe Actual
Proposed
Data from US Dept of Energy EIA 2008
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Russian Nord Stream Natural Gas Pipeline Facts

• Route Portovaya Bay, Russia to coast Germany
  (underwater) Baltic Sea
• Capacity 27.5 billion cubic meters (2010) 55
  bcm (2012 2nd pipeline)
• Length 1,200 km (Worlds largest underwater
  natural gas pipeline max depth 210 meters)
• Cost Estimate 5 Billion Euros (60 Increase 8
  Billion Euros) Cost 2.2 Billion Euros if built
  on land
• Supply Shtokman gas field (estimated reserves
  of 3.7 trillion cubic meters 2010 available)
• Shareholders Gazprom (51), BASF (24.5), E.ON
  (24.5)
• Contracts
• Wingas German Gas Co. 9 bcm for 25 yrs
• DONG Danish Co. 1 bcm for 20 yrs
• E.ON German Co. 4 bcm
• Gaz de France 2.5 bcm

Slide courtesy of Nelson Dodd, NWC Elective 5404
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Canadas Oil
Whats a National Security Strategist to Do?
Some Options to Consider ? Manage Demand ?
Seek New Traditional Supply ? Seek
Non-Traditional Supply ? Change Relationship
Between Buyers Sellers ? Change Relationship
Between States Markets
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Questions?
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What You Pay for in a Gallon of Gas
Retail price 4.06/gallon (July 2008)
Retail Price 1.79/gallon (January 2009)
9.8
Taxes
9.8
Distribution Marketing
11.2
Refining 3.2
75.8
Crude Oil
Image and data from Dept of Energy Jan 2009
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Coal production Coal consumption
From BP Statistical Review of World Energy 2007
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Nuclear energy consumption by area
From BP Statistical Review of World Energy 2007
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US Oil Consumption (Million Bbls/day)
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25
20
Total Oil Demand
15
Transportation Demand
10
Domestic Oil Production w/ANWR
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Domestic Oil Production
1960
1970
1980
1990
2000
2010
EIA, Annual Energy Outlook 2001 "Potential Oil
Production from the Coastal Plain of ANWR, -
EIA Reserves Production Division
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The Thermohaline Conveyor
Image from www.blog.thesietch.org
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Canadas Oil
Canadas Oil ? Claims 178.8 billion bbls in
proven reserves (second only to Saudi
Arabia), but much of this is Alberta oil
sands. ? Canadian traditional oil is in
decline. Oil sands supply approx. 50 of
its production. ? In most months Canada is
largest single supplier of USA, with approx
1.6 million bbl/day ? 2005 Canada produced 3.1
million bbl/day.