Energy and National Security

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  • Scarce resources can lead to conflict, as Klare predicts, or to cooperation/substitution, as your reading on the Middle East water problem suggests.
  • Oil – dominant everywhere but Europe/Eurasia and Asia Pacific (former is gas, latter is coal), Coal dominance is China’s 70% reliance on coal. Gas consumption weak in Europe in 2007, but still in lead.
  • Germany’s total generation capacity:120.4 Billion Kilowatt Hours; Europe’s total generation capacity: 802 Billion Kilowatt Hours
  • 2006 demand represents ½ million bbl/day over previous year. CPNC concessions in Azerbaijan, Canada, Kazakhstan, Venezuela, Sudan, Indonesia, Iraq and Iran. Acquisitions in Kazakhstan the most significant so far
  • 2005 2030 North America 25.2 27.9 Non-OECD Asia 15.3 30.8 OECD Europe 15.5 16.0 OECD Asia 8.6 9.2 Central and South America 5.5 7.8 Middle East 5.9 9.5 Non-OECD Europe and Eurasia 4.8 6.9 Africa 2.9 4.3
  • As strategists, we have to get this resource thing right. Russian example… we don’t want to arrive in the wrong place at the wrong time, a gallon short.
  • China consumed 7.6 million barrels per day in 2007 Japan consumed 5 million Russia consumed 2.9 million India consumed 2.7 million Germany consumed 2.5
  • Canada’s 3.3 is about 50% oil sands, of which Canada consumed about 2.4 million barrels (2007) This stands in contrast to consumption: US Consumed 20.7 million barrels per day (2007) – greatest amount in the world
  • 40% of world’s oil flows through pipelines
  • The actual history of political and economic development in petrostates has not been one of success ( Algeria, Indonesia, Iran, Iraq, Nigeria and Venezuela ); States have followed a common trajectory: the policy environment becomes “petrolized” while the State remains weak, serving the interests of the oil industry, but not the larger community; The state relies on public spending as a substitute for statecraft and domestic tranquility depends on revenues (“No taxation; no representation”); This commodity produces extraordinary revenues which are funneled through weak institutions virtually ensuring that State bureaucracy will be corrupt and weak.
  • The next largest importers (Slovakia, Finland, Romania) include two that import over 100%. Slovakia and Finland import 108% and 105% respectively. Belarus (701 bcf) , the Baltic States (205 bcf) and Georgia (46 bcf) were at this time 100% reliant on Russian gas. Ukraine volumes were at 2113 bcf, with Russian reliance 79%
  • Note that Distribution and Marketing remains 11% as the price goes up and down… so there is enormous profit when price of oil is up. Refining, on the other hand, is a relatively fixed cost. When the price of oil goes up, it remains the same (making it a smaller percentage of the price).
  • The belt is also special because of the way in which it is driven. It moves around because of differences in the salinity of ocean water. Warm less salty water is less dense so it “floats” up. Salty water is more dense and so it sinks. This rising and sinking causing currents. In the same way that the differences in temperature can cause wind currents to flow, differences in salt content can cause ocean currents to flow. Saline differences do not move the water around the planet very fast, in fact this current takes a very long time to make one trip around the world, over 2000 years . A shut down of the North Atlantic conveyor would cause average temperature in Europe to fall by 5-10 degrees Celcius. The deep current moves because of its differences in heat and salinity.
  • Energy and National Security

    1. 1. Energy Security: Emerging Global Trends Dr. Theresa Sabonis-Helf National War College RCNSC – July 2009
    2. 2. Regional primary energy consumption patterns 2007 coal hydro nuclear gas oil From BP Statistical Review of World Energy 2008
    3. 3. Germany is a world leader in wind and solar energy. Solar is currently 0.5% of Germany’s electricity mix, Wind is currently 6%. Germany is committed to making 12.5% of its electricity renewable by 2010, 20% by 2020. OECD Wind and Solar Electricity Generation Capacity, 2004 41% of OECD 43% of OECD
    4. 4. Oil consumption per capita Oil consumption per capita From BP Statistical Review of World Energy 2008
    5. 5. China’s Oil Demand <ul><li>2007: Demand grows to 7.6 million bbls/day </li></ul><ul><li>2006: China accounts for 35-40% of world demand growth over past 5 years </li></ul><ul><li>2025: Demand expected to reach 14.2 million bbl/day, (10.9 million bbl/day imports) </li></ul>
    6. 6. Africa Non-OECD Europe and Eurasia Middle East Central & South America OECD Asia OECD Europe Non-OECD Asia North America 25.2 27.9 15.3 30.8 15.5 16.0 8.6 9.2 5.5 7.8 5.9 9.5 4.8 6.9 2.9 4.3 World Fuel Consumption: 2005 & 2030 Million Barrels of Oil Equivalent per Day Fuel Liquids only. 2008 Projections: Data from EIA International Energy Outlook 2008 2005 2030
    7. 8. 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
    8. 9. Angola joined OPEC in December 2006 Ecuador & Gabon left the OPEC cartel in the 1990s, Ecuador rejoined in 2007 Indonesia became a net importer in 2004
    9. 10. Red text indicates consumption per day Blue box designates members of OPEC Green box designates oil producer (non-OPEC) China: 3.8 (consumed 7.6) Russia: 9.7 (consumed 2.9) Kazakhstan: 1.4 Nigeria: 2.4 Angola: 1.8 Libya: 1.8 Norway: 2.8 Saudi Arabia: 10.7 Iran: 4.1 Iraq: 2.0 Algeria: 2.2 Kuwait 2.7 UAE: 2.9 Indonesia: 1.0 (consumed 1.2) Qatar: 1.1 2007 Oil Producers (mil bbl/day) UK: 1.7 Base map:www.petroleumgraphics.com; Bbl/Day prod. data from US Dept. of Energy EIA 2008, cons. data from Nationmaster.com
    10. 11. Mexico: 3.7 (consumed 2.1) Canada: 3.3 (consumed 2.4 ) United States: 8.3 (consumed 20.7) Venezuela: 2.8 (consumed 0.7) 2007 Oil Producers (mil bbl/day) Base map: www.petroleumgraphics.com; Bbl/Day prod. data from US Dept. of Energy EIA 2008, cons. data from Nationmaster.com Brazil: 2.2 (consumed 2.4) Ecuador: 0.5 (consumed 0.2) Blue box designates members of OPEC Green box designates oil producer (non-OPEC) Red text indicates consumption
    11. 12. Swing Capacity
    12. 13. 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 7 2 3 4 5 6 7 5 6 1 1 2 3 4 Oil Chokepoints (Millions of Barrels per Day) Data from US Dept of Energy EIA 2005 (2004 estimates)
    13. 14. Where are the Hydrocarbons? Proven Oil Reserves 2006 Proven Nat. Gas Reserves 2006 From BP Statistical Review of World Energy 2007
    14. 15. Major gas trade movements From BP Statistical Review of World Energy 2008
    15. 16. Photo by Gavin Helf
    16. 17. Canada’s 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
    17. 18. Thomas Friedman’s First Law of Petropolitics From Foreign Policy May/June 2006
    18. 19. European Reliance on Russian Natural Gas (2006-2007) Data from EIA Russia Country Report 2008 54% Hungary (226 bcf) 7 47% Poland (247 bcf) 6 79% Czech Rep (247) 5 20% France (346 bcf) 4 25% Italy (742 bcf) 3 36% Germany (1,378 bcf) 1 100% Slovakia (223 bcf) 8 64% Turkey (827 bcf) 2 2006 % of Dom. Cons. Country (bcf in 2007) Rank
    19. 20. Russian Gas Sales Prices 2008 ($ per thousand cubic meters) Data from EIA Russia Country Report May 2008 $110.00 Armenia $119.00 Belarus (Q1) (98% of supply) $179.50 Ukraine (66% of supply) $191.25 Moldova $230.00 Georgia (100% of supply) $280.00 Estonia (~78% of supply) $280.00 Latvia ( ~ 78% of supply) $280.00 Lithuania (~78% of supply) $370.00 European Market price
    20. 21. Russian Oil and Gas Pipelines to Europe: Actual & Proposed Data from US Dept of Energy EIA 2008
    21. 22. Russian Nord Stream Natural Gas Pipeline Facts <ul><li>Route : Portovaya Bay, Russia to coast Germany (underwater) – Baltic Sea </li></ul><ul><li>Capacity : 27.5 billion cubic meters (2010); 55 bcm (2012 – 2nd pipeline) </li></ul><ul><li>Length : 1,200 km (World’s largest underwater natural gas pipeline – max depth : 210 meters) </li></ul><ul><li>Cost Estimate : 5 Billion Euros (60% Increase – 8 Billion Euros) – Cost 2.2 Billion Euros if built on land </li></ul><ul><li>Supply : Shtokman gas field (estimated reserves of 3.7 trillion cubic meters – 2010 available) </li></ul><ul><li>Shareholders : Gazprom (51%), BASF (24.5%), E.ON (24.5%) </li></ul><ul><li>Contracts : </li></ul><ul><li>Wingas – German Gas Co. – 9 bcm for 25 yrs </li></ul><ul><li>DONG – Danish Co. – 1 bcm for 20 yrs </li></ul><ul><li>E.ON – German Co. – 4 bcm </li></ul><ul><li>Gaz de France – 2.5 bcm </li></ul>Slide courtesy of Nelson Dodd, NWC Elective 5404
    22. 24. Canada’s Oil What’s 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
    23. 25. Questions?
    24. 26. Retail price: $4.06/gallon (July 2008) 9.8 75.8 % 11.2% 9.8% Crude Oil Refining 3.2% Distribution & Marketing Taxes Retail Price: $1.79/gallon (January 2009) What You Pay for in a Gallon of Gas Image and data from Dept of Energy Jan 2009
    25. 27. Coal production – Coal consumption From BP Statistical Review of World Energy 2007
    26. 28. Nuclear energy consumption by area From BP Statistical Review of World Energy 2007
    27. 29. US Oil Consumption (Million Bbls/day) EIA, Annual Energy Outlook 2001; &quot;Potential Oil Production from the Coastal Plain of ANWR,“ - EIA Reserves & Production Division Total Oil Demand Transportation Demand Domestic Oil Production Domestic Oil Production w/ANWR 1960 1970 1980 1990 2000 2010 5 10 15 20 25 30
    28. 30. The Thermohaline Conveyor Image from www.blog.thesietch.org
    29. 31. Canada’s Oil Canada’s 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 .

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