Peak Everything, Overshoot, & Collapse

Why is nearly all solar power built where subsidies are the highest?

Posted on October 8, 2017 by energyskeptic

If solar net energy return is as high as some solar advocates claim, why does solar need any subsidies? And not just U.S. subsidies, it’s subsidies on top of subsidies when you add in that we’re buying Chinese government subsidized solar panels and equipment.

States with only federal incentives produce the least solar power. Those that offer state and local incentives have the most. California is the King Kong of solar power due to its 49 incentives at the state, city, county, and utility levels ( http://www.dsireusa.org/). Subsidies are why California produces 60% of all U.S. solar power. High levels of subsidies are perhaps why Arizona has 14% of solar power, Nevada 7%, North Carolina 5.5%, New Jersey and New Mexico 2.5%, Massachusetts 1.8%, and Texas 1.6%. Together, these 8 states provide 94% of all solar power.

Of course, the southwestern states are by far the best places to put solar, since it is so damn seasonal as you can see in my post about Concentrated Solar Power (which applies to plain old solar power as well) here.

Federal, state, and local financial incentives can be rebates, corporate depreciation, tax credits, and tax exemptions, feed-in tariffs, grants, green building incentives, loans, net metering, PACE financing, personal tax credits and exemptions, and more. City level subsidies can be substantial. San Francisco has incentives of up to $10,500.

On top of that, solar (and wind) don’t pay anything at all for transmission or the natural gas plants essential to balancing their intermittent power. Sure, hydropower is dispatchable too, but it is seasonally limited and spoken for by cities, agriculture, and river ecosystems most of the year. Pumped hydro storage, compressed air energy storage, and utility-scale batteries are only able to store 1-2% of power generation.

When there is another financial crash, it is highly unlikely that these subsidies will be maintained.

In the 11 states with the most potential solar power (21 to 35 degrees latitude), Georgia, Louisiana, Mississippi, Alabama, South Carolina, and Arkansas, produce only half a percent of U.S. solar power. These states have few state level incentives and five of them have no Renewable Portfolio Standard (RPS).

But States at these latitudes that have more financial incentives produce 20% of solar power (Hawaii, Florida, Texas, Arizona, and New Mexico), and four of them have Renewable Portfolio Standards.

The entire United States is north of optimal solar power, but even so, on the whole the states with the most southerly latitudes (36 or less), where solar is most profitable, produced 68% of solar power. The 15 states with 13 incentives or more produced 88% of the power, and the 11 states with an RPS that began before 2003 produce 75% of the power. Of course, California skews everything with the lion’s share of production.

Conversely, the 14 states above 42 degrees latitude produced just three-tenths of one percent of all solar power. And the 36 states with few fewest incentives, those with 12 or less, produced just 12% of solar power.

Although the number of state subsidies is a rough indicator of how profitable it is to install solar, just one large incentive can be enough. For example, until 2016 North Carolina had one of the highest state renewable tax credits, 35%, a big reason why North Carolina now generates 5.5% of U.S. solar power.

Texas ought to have more solar power than it does, since it has 20% of the potential solar power in the U.S., but developers prefer wind power because it has lower front-end costs and is therefore less risky. According to Warren Buffett “we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit” (Pfotenhauer 2014).

Texas also doesn’t have net metering, which allows solar power to be sold back to the grid, which 43 other states have. And electricity is already dirt-cheap, making it hard for any kind of power plant to make profits, especially solar with its high up-front costs.

But it is questionable how much more solar power California will build. California appears to have hit the solar wall at just 7.7% in-state solar generation, yet after fossil fuels are gone, solar and wind will need to provide 80 to 90% of electricity generation. Which can’t be done without massive energy storage. Which is 99% provided by natural gas, a finite fossil fuel like oil and coal.

The California Enegy Commission is also concerned about being able to reach the RPS goal of 33%, and doesn’t see how it a 50% goal can be reached with today’s technology. Already an enormous power ramp rate that wasn’t expected until 2020 has occurred because solar power is mainly generated at noon, but electricity is most needed in the late afternoon, requiring vast amounts of natural gas power to ramp up to meet demand (Meier 2010, CEC 2016).

In 2016, Stanford scientists worried that California could hit the solar wall (Benson 2016).

In 2017, California did hit the solar wall, and this is rendering natural gas plants unprofitable, plants that cost $2.5 to 5 billion and were able to borrow money because the banks believed they would be generating power much of the time.

Nothing but natural gas can balance solar and wind. Energy storage batteries can’t be scaled up (only enough material exists on earth to build sodium sulfur batteries), there are few places to put dams for pumped hydro, even fewer places for compressed air underground storage, and hydrogen is the most ridiculous of all the possible ideas for providing energy.

APPENDIX A – Some details

The 8 states below produced 94% of all solar power, and tended to have one or more of these traits: latitude 36 or less (5), having an RPS (all), having an RPS that began before 2005 (5), and more financial incentives than average (6).

# state % of Average Year RPS
Subsidies power State Latitude Began
64 60 California 36 2002
16 14 Arizona 34 2006
8 7 Nevada 38 1997
13 6 North Carolina 36 2007
9 3 New Jersey 40 1999
30 2 Texas 31 1999
16 2 New Mexico 35 2002
21 2 Massachusetts 42 1997

ALASKA Despite Alaska’s high latitude, solar energy is playing a role in off-grid applications, especially in remote locations. Solar thermal technologies, primarily for hot water and building heat, and solar photovoltaic panels are all being used to tap solar energy when it is available, reducing the need for other fuels

In 2014, California became the first state in the nation to get more than 5% of its utility-scale electricity generation from its solar resource. In 2015, utility-scale solar photovoltaic (PV) and solar thermal resources supplied 7.5% of the state’s net generation. California has considerable solar potential, especially in the state’s southeastern deserts. Several of the world’s largest solar thermal plants are located in California’s Mojave Desert. On a smaller scale, the California Solar Initiative encourages Californians to install solar power systems on the rooftops of their homes and businesses. When distributed (customer-sited, small-scale) generation is included, about one-tenth of California’s total net generation is provided by solar power.89 Currently, California has about 14,000 megawatts of installed solar power generating capacity.90

MONTANA had 4.5 megawatts of installed solar generating capacity by the end of 2015, but none of it was at electric utility-scale solar facilities.

WYOMING Although the state has good solar resources no utility-scale solar generation has been installed, in part because of Wyoming’s relatively low electricity rates. A small amount of distributed (customer-sited, small-scale) solar photovoltaic capacity has been installed around the state.123,124 The state does not have a renewable portfolio standard or other requirement for renewable energy

References

Benson, S., Majumdar, A. July 12, 2016. On the path to deep decarbonization: Avoiding the solar wall. also see https://energyskeptic.com/2016/california-has-hit-the-solar-wall/

CEC. December 2016. Tracking resource flexibility. California Energy Commission.

DTF. June 2003. Diesel-Powered Machines and Equipment: Essential Uses, Economic Importance and Environmental Performance. Diesel Technology Forum.

Friedemann, Alice. 2015. When trucks stop running: energy and the future of transportation. Springer.

Heinberg, Richard and Fridley, David. 2016. Our Renewable Future: Laying the Path for One Hundred Percent Clean Energy. Island Press.

Meier, Alexandra von. (California Institute for Energy and Environment). 2010. Challenges to the Integration of Renewable Resources at High System Penetration. California Energy Commission. Publication number: CEC-500-2014-042.

NC. 2017. NC clean energy technology center database of incentives for renewables and efficiency http://www.dsireusa.org/. Also see https://solarpowerrocks.com/2017-state-solar-power-rankings/and https://energy.gov/savings

Pfotenhauer, N. May 12, 2014. Big wind’s bogus subsidies. Giving tax credits to the wind energy industry is a waste of time and money. U.S. News and world report.

Smil, Vaclav. 2013. Prime Movers of Globalization. The History and Impact of Diesel Engines and Gas Turbines. MIT press.

Posted in Concentrated Solar Power, Photovoltaic Solar, Solar EROI, U.S. Congress Energy Policy | Tagged fossil fuels, intermittent, natural gas, power, solar, subsidies, subsidy | 6 Comments

Minerals & Energy from Ugo Bardi’s “Extracted”

Posted on October 5, 2017 by energyskeptic

Preface. This is a small section of Ugo Bardi’s excellent book “Extracted”.

His most important observation is that:

“The limits to mineral extraction are not limits of quantity; they are limits of energy. Extracting minerals takes energy, and the more dispersed the minerals are, the more energy is needed. Today, humankind doesn’t produce sufficient amounts of energy to mine sources other than conventional ores, and probably never will.

But like all minerals, long before they “run out”, if oil peaks, then game over, fossil fuel resources are necessary for the extraction of almost everything else, and the easy high-grade ores have been mined, leaving crummy ore and expensive declining fossils left to extract it.”

Bardi also explains why we can’t extract copper, uranium, or any other metal from the ocean.

Alice Friedemann www.energyskeptic.com author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer, Barriers to Making Algal Biofuels, and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Collapse Chronicles, Derrick Jensen, Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report

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**Bardi, Ugo. 2014. Extracted: How the Quest for Mineral Wealth Is Plundering the Planet. Chelsea Green Publishing.**

The average crustal abundance of elements such as copper, zinc, lead, and others is below 0.01 percent in weight (100 parts per million). Some very rare elements, such as gold, platinum, and rhodium, exist in the crust as a few parts per billion or even less. However, most rare elements form specific chemical compounds that can be found at relatively high concentrations, called deposits, in certain regions. As we know, some of those deposits that are concentrated enough that we can actually extract minerals from them are called ores.

Mining ores is a multistage process. The first is the extraction phase, in which materials are extracted from the ground. Then follows the beneficiation stage, when the useful minerals are separated from the waste (also known as gangue). Further processing stages normally follow; for instance, the production of metals requires a smelting stage and a refining one. All these stages require energy. Table 1 lists the specific energy needed for the production of some common metals, together with the total energy requirement for the present world production.

Table 1. Energy required for production of some common metals.

From this table, we can see that the world’s production of steel alone requires 24 exajoules, equivalent to about 5% of the world’s total primary energy production (about 450 exajoules). Also note that, today, we extract copper from ores that contain it in concentrations of 0.5 to 1 percent. The total energy involved is 50 megajoules per kilogram. Using this value, we find that we need about 0.7 exajoules for the world’s copper production. This is about 0.2 percent of the world’s total energy production.

Taken together, the data of the table indicate that the total energy used by the mining and metal-producing industry might be close to 10% of the total world energy production—an estimate consistent with other projections.

As we run out of high-grade ores, we have to move to lower-grade ores.

In general, the lower the ore grade, the more energy is needed for extraction. For example, if an ore has a mineral concentration that is 10 times lower than another, it will take 10 times more energy to extract that mineral from the ore. This is an approximation, especially when applied to the whole production process that includes smelting and refining. But we can take it as a reasonable “first order” approximation. We saw that we are already committing about 10% of the world’s primary energy to the production of minerals. This amount can only increase as we access lower-grade resources, even if we are aiming at just maintaining the present production levels. Therefore, if we want to maintain the current fraction of energy allocated to the mining industry, we must increase the world’s total energy production in proportion. That has been possible, so far, by increasing the production of fossil fuels, but it is becoming more and more difficult. The problem of dwindling ore grades occurs also with fossil fuels; energy is becoming more and more energy-expensive to produce. Nevertheless, the extra energy needed to access low-grade ores must come from somewhere, and at present it is being drawn from other sectors of the economy. That can’t be painless, and the pain appears in the present trend of rising prices for all mineral commodities.

Copper is present at very small concentrations, about 25 parts per million, in the upper crust. To produce 1 kilogram of copper from the undifferentiated crust, we would need to process 40 tons of rock.

The average American home consumes about 9,000 kilowatt-hours per year of electric energy, or 32,400 MJ.

Antarctica is the only major continent still unexplored for mineral resources, and there are most likely ores there. But at present finding or extracting anything that exists under kilometers of ice is an unthinkable endeavor.

Underwater mining requires complex and expensive technologies. The high costs involved may be justified only in the case of very valuable minerals, such as offshore diamond mines. That is done, for instance, off the coast of Namibia. 21 In some cases it is possible to mine undersea deposits as an extension of conventional mines, as is done in Japan for some coal mines. 22 It is often possible to extract oil and gas from the continental shelf because the process of offshore drilling can be completely automated and is not much different than it is on land—except for the need for a floating platform for hosting the drilling equipment. Of course, this kind of drilling carries risks that are not seen on land, as when the Deepwater Horizon drilling platform operating in the Gulf of Mexico exploded in 2010, releasing huge amounts of oil into the ocean ecosystem.

In general, sea floor deposits are too dispersed and at concentrations too low to be commercially interesting, even without considering the energy and monetary cost of mining at such great depths.

The problems with extracting minerals from seawater are twofold: the limited amounts available and the energy requirement. Calculations of these parameters are not encouraging. The oceans are vast, but rare metals are dissolved in them in extremely tiny amounts. In the case of copper, for instance, there is about 1 billion tons of it in the form of copper ions dissolved in the whole mass of seawater on the Earth. That may seem to be a large amount, but consider that we now produce about 15 million tons of copper every year. Even if we were able to filter the whole mass of all the oceans—an unlikely prospect (also very bad from the viewpoint of fish, whales, and all other sea creatures)—we would run out of oceanic copper in little more than 60 years.

Extracting ions dissolved in water doesn’t require the energy-expensive process of rock breaking, lifting, and crushing of conventional mining. However, the concentrations of rare metal ions in seawater are enormously smaller than they are in mineral ores. So extracting a specific ion from seawater requires filtering enormously large amounts of water. That is not just a practical problem; it takes energy to pump water through a filtering membrane or, alternatively, for all the operations needed to transport the membrane to sea, leaving sea currents to move water in and out, and then to recover it.

Uranium extraction from seawater is still discussed as a future possibility. However, it is possible to calculate that the energy needed to extract and process uranium from seawater would be about the same as the energy that could be obtained by the same uranium using the current nuclear technology. That, of course, would make extraction from seawater useless.

Lithium recycling is almost non-existent – less than 1% globally partly because it’s cheaper to mining it than to recycle it.

Mining the solar system. Even if it turns out that asteroids and other planets have minerals we want, “the energy cost needed to reach them, mine ores, and then bring back the minded materials to earth is truly out of this world.

Nickel and zinc have limited exploitable deposits, so the problem of depletion cannot be ignored.

More than 12,000,000 tons of zinc are mined a year, the 6^th most used metal. The average ore grade decreased from 7 to 5.5% between just 2000 and 2012. The “official” current reserves represent 20 years of production.

Over 1,800,000 tons of nickel are mined a year, putting it in 10^th place. Nickel reserves-to-production ration yields estimate 45 years of supply at current production rates.

Dissipation of minerals makes them unavailable for recycling. For example, zinc oxide in toothpaste won’t be recycled at a water treatment plant or reclaimed when used as a white pigment or additive in plastics or glass. When used in car tires, infinitesimal amounts are left on the pavement, and the rest is lost in landfills or ashes when incinerated.

After collapse, the remaining population will have plenty of metals though. And once we’ve switched from cars to bicycles and horses, we’ll have little need for most of the high-tech ways we use many metals today.

Depletion is unavoidable

Perhaps this is why we have low oil prices now]: Jevons and Hotelling emphasized that over a certain limit, rising prices cause a reduction in demand, and that eventually stops rising production. Industry won’t extract resources so expensive they’re impossible to sell. Consequently, there’s a limit to the low-grade resources the industry can exploit. Economists assume that technology will always come to the rescue, lower costs of extraction and restoring both demand and industry profits. But this is a leap of faith: technology has monetary and energy costs so there are limits to what it can do.

And one thing is for sure: no technology can extract minerals that are not there.

The metaphor of Achilles’ heel is often used when a large and apparently solid structure fails because of a critical defect. Petroleum could be the Achilles’ heel of modern society. It could be argued that phosphorus is even more essential than oil.

Optimism about the depletion problem comes from a basic mistake – that of considering the amounts of minerals available and not the energy cost of recovering them.

Posted in Mining, Peak Critical Elements, Ugo Bardi | Tagged depletion, energy, mineral, mining, peak | Comments Off

House hearing on Venezuela’s collapse March 2017

Posted on October 2, 2017 by energyskeptic

“The economy of Venezuela is largely based on the petroleum sector and manufacturing. Revenue from petroleum exports accounts for more than 50% of the country’s GDP and roughly 95% of total exports” (wiki).

Preface. Venezuela supposedly has 18.2% of the world’s oil reserves, and they are near the U.S., so no wonder Congress pays attention to what’s going on there. Years ago we got 10% of our oil there, and with world peak oil production peaking in 2018, and our fracked shale oil in decline, Venezuela will only grow more in importance. But I wouldn’t get excited about their oil, it is very heavy, very expensive, very difficult and low quality to get and refine, so it’s energy return on invested is low.

This is a summary of the 2017 House hearing “Venezuela’s tragic meltdown’. According to representative McCarthy, collapse in Venezuela has already happened: “By most standards, Venezuela has collapsed. At this point, it is about preventing open civil strife in the country”.

Like North Korea, Venezuela has 30 million potential refugees. Already one million have moved to Colombia. Europe is worried about the 800,000 to 1 million Venezuelans with European Union passports arriving.

Oil decline is why North Korea, Syria, Yemen, Iraq, Egypt, Nigeria and other countries are failing, plus climate change. Until oil and consequently oil revenues decline, Middle Eastern and other nations could buy their way out of a lack of food and water and other goods by being able to afford to import them.

Alice Friedemann www.energyskeptic.com Author of Life After Fossil Fuels: A Reality Check on Alternative Energy; When Trucks Stop Running: Energy and the Future of Transportation”, Barriers to Making Algal Biofuels, & “Crunch! Whole Grain Artisan Chips and Crackers”. Women in ecology Podcasts: WGBH, Jore, Planet: Critical, Crazy Town, Collapse Chronicles, Derrick Jensen, Practical Prepping, Kunstler 253 &278, Peak Prosperity, Index of best energyskeptic posts

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House 115-13. 2017-3-28. Venezuela’s tragic meltdown. U.S. House of Representatives.

What will happen if there’s a collapse?

Steve Hanke, Institute for applied economics, Johns Hopkins University

In a collapse scenario, neighbor Colombia would experience the most severe direct repercussions. This is of great concern to US interests in South America. While Colombia has made important strides in strengthening state institutions and expanding sovereignty throughout the countryside, it is still in a very fragile place.

Globally, a collapse in Venezuela would likely produce three sets of disruptive effects: financial panic amid an increased chance of debt defaults, oil market volatility from the loss of Venezuelan oil exports, and a deepening of already complex security challenges regarding transnational crime. A collapse would significantly heighten concern about a debt default. With Chinese and Russian state enterprises extending critical loans to Venezuela, both these governments have financial leverage. We do not know the fuII details of their bilateral financial arrangements. But it seems plausible to assume that Chinese and Russian government-linked companies could make claims on Venezuela’s oil assets in the context of a default. Such claims could also include U.S.-based Citgo.

Commercially, a collapse would roil international oil markets and create challenges tor importers of Venezuela’s oil. A disruption of Venezuelan oil exports to the United States would have a substantial commercial impact, in particular along U.S. Gulf Coast. From 2000 to 2016, Venezuelan oil exports to the United States declined roughly 50% — from1.54 million barrels a day to 796,000barrels a day, according to the United States Energy Information Agency. Venezuelan oil now makes up 9% of total US. imports.

For global security, a collapse would provide an important opportunity window for the numerous criminal actors operating in-country. Narco-trafficking interests have penetrated the highest levels of the government and military, police corruption severely undermines the capacity to tight organized crime and reduce the astonishing murder rate of 70 per 100,000, and security forces are seriously hampered in their effort to safeguard borders because informal economic mafias exercise de facto control. In a situation of civil strife, the various criminal actors would likely expand their influences over illicit economies and state institutions.

The United States should continue contingency planning efforts for two possibilities: debt default and a migration crisis.

Collapse also means less oil for the United States. Venezuela provides 9% of our oil today.

Steve Hanke, Institute for applied economics, Johns Hopkins University

Venezuela has the largest proven oil reserves in the world, and not surprisingly produces one major product, oil. Oil production is carried out by a state-owned oil company, Petroleos de Venezuela, S.A. (PDVSA). PDVSA is so poorly ru1 and its proven oil reserves arc exploited so slowly as to render the value of its reserves worthless (Hanke, 2017).

Despite sitting on the world’s largest oil reserves, Venezuela’s oil production has fallen below 2 million barrels per day (bpd). That is down from 3.5 million bpd when Chavez took over the country. According to PDVSA’s 2015 audited financials, Venezuela uses 580,000 bpd domestically for fuel and power plants. Most of that is sold at less than a penny a gallon– at a total loss -leaving just 1.4 million bpd for export.

Of that remaining exportable 1.4 million bpd, 579,000 bpd go to China. The problem being that Venezuela receives no cash for those exports. China has loaned Venezuela over $60 billion dollars (65% of all its investment in Latin America) and Venezuela has already spent all that money and repays that loan by sending crude to Beijing.

With 580,000 bpd being burned domestically at a loss and 579,000 bpd going to China for free to repay loans, Venezuela is left with just 800,000 bpd to export for hard cash. The bulk of that goes to the USA, where according to the Energy Information Agency, Venezuela shipped 719,000 bpd to the U.S. in December, making us their largest customer- and the largest consistently paying customer. To keep it simple, rounding up to 1 million bpd for cash sale at Venezuela’s average price so far in 2017 of $45 a barrel (Venezuela’s mix of heavy oil trades at $10 below Brent and WTT), Venezuela is realizing just $45 million per day. $45 million per day in a country of 31 million is less than $1.50 per person. And that is before the actual costs of producing the 2 million bpd which is conservatively $10 a barrel).

Mr Duncan. We are at a critical point in Venezuela’s history. Severe widespread shortages in food, electricity, medicine, and the basic goods in what was once the richest country in Latin America have led to starvation, the highest infant mortality rate in the world, and horrific conditions in the hospitals. Today, Venezuela is on the edge of a complete meltdown. The country has the highest inflation rate in the world, a falling GDP, its oil company PDVS, is not generating enough revenue, and the Venezuelan currency is worthless. Gross economic mismanagement, widespread corruption throughout the government, and an erosion of democracy, rule of law, and human rights in the country have led Venezuela to its sad state today. Americans should take note, Venezuela is a case study for the failures of socialism [my comment: and oil decline].

Venezuela has the largest oil and second-largest gold reserves in the world. But, incredibly, under President Maduro’s tenure—and dating back to President Chavez’s tenure—the country has become practically a failed state. Last year, the economy shrank by almost 17%. This year, the International Monetary Fund estimates that inflation will in (1) crease to over 1,600%. The poverty rate is the highest in four decades and the homicide rate is at a 35-year high.

Those who can afford to leave are fleeing in droves to Colombia, and Brazil, seeking food and medicine. In the U.S. Venezuelans make up the largest percentage of asylum requests to the United States, with those numbers growing by 150% since 2015, according to the United States Department of Homeland Security. If the crisis in Venezuela continues, we could all have a situation on our hands where we are faced with massive refugee flows and public health threats from rising numbers of malaria and diphtheria cases in Venezuela, and those do not respect borders.

Venezuela’s PDVSA continues to creep along, but corruption and low oil prices have led to slower output. This situation has the potential to greatly impact gas prices here at home, as the United States is the third-largest importer of Venezuelan oil.

The recent news that PDVSA received a $1.5 billion loan in exchange for giving Russia’s state-owned oil company Rosneft 49.1% of its shares in CITGO is problematic for U.S. interests. Should Venezuela default on its debt obligation to Rosneft, the Russians would become the 2nd-largest foreign owner of U.S. refining capacity and thereby take control of a critical U.S. energy infrastructure, including three U.S. refineries and a network of pipelines.

Maduro and his cronies continue to get richer as they traffic money and drugs, while doing nothing to help billions of suffering people. Instead of focusing on the economy, Maduro is staging mock military exercises and stoking fears by spreading propaganda of a U.S. led invasion. Press reports show that of the 800,000 businesses that operated under Chavez, nearly 600,000 have shut down.

Maduro’s tactics are making it next to impossible to survive. With the recent sanctions of Vice President Tareck El Aissami under the Kingpin Act, it has become clear that Venezuela’s Government is acting as a narco-state and facilitating the shipment of narcotics throughout the region.

Steve Hanke, Institute for applied economics, Johns Hopkins University

The United States is keeping the lights on in Venezuela.

Allowing Venezuela to fall further into the hands of drug kingpins — with close relationships with Cuba, Iran, Hamas, Hezbollah, Russia and China — intent on doing us harm while sitting on top of the world’s largest oil reserves must not be an option. Confirmation that coca cultivation spiked to 188,000 hectares -a level unseen in two decades -is very alarming.

The collapse of the public health system has been much worsened by the government’s incompetence and its criminal refusal to accept international humanitarian aid. The Maduro government talks about foreign invasion. They reject the foreign invasion of the Red Cross to assist this humanitarian crisis.

Venezuela experienced 28,000 killings and violent acts throughout the country in 2015. Caracas is the most violent city on Earth, with a murder rate of 120 per 100,000 inhabitants.

There are 1 million refugees in Colombia alone. Venezuela is a large country, 30 million people, bordering Brazil, Colombia, Guyana, and with a coast in the Caribbean.

In Europe, governments in Italy, Portugal, and Spain are casting a watchful eye over events. There are between 800,000 and 1 million Venezuelans with European Union passports. The overwhelming majority of these passport holders are from these three countries.

The bottom line is, well, what should the U.S. actually do in terms of policy? I would strongly advise no meddling, no direct meddling, forget the regime change kind of rhetoric that is so common in certain circles in Washington.

Mr. HANKE. If there is an increase in the price of a barrel of oil, in the short term PDVSA, the state-owned oil company, might actually move from a negative cash flow—they are spending more money than they are actually taking in right now. So they are running a negative cash flow. And they are exploiting their proven reserves at a very slow rate, and the rate is so slow, actually, that the reserves are actually worthless. And the reason they are doing that is that they haven’t been able to maintain their production capacity or expand it.

So if the price goes up my models show that oil prices will probably reach $70 a barrel by the end of the year, which is quite a bit above the $50 now. That would be helpful, but it is just going to be a Band-Aid on PDVSA. It will help them. The bleeding will slow down, but they will keep bleeding. This is the worst run state-owned oil company in the world.

Mr. Putin and Mr. Sechin both wrote their graduate theses on using oil as a geopolitical tool. And some of the decisions that Rosneft has made have not been economically rewarding, but they have given them access and control of important markets all over the world, including our allies in Germany, making them the third-largest refiner now in Germany.

Mr. SIRES. We have been hearing about Venezuela being on the verge of collapse for the last few years.

Mr. HANKE. It has been going on for a long time. Even when I was President Caldera’s adviser, things were deteriorating massively, and that is why he brought me in to see if something could be done. It turned out he didn’t have the political power at the time to make some of the changes that would have probably corrected the situation.

Posted in Mass migrations, U.S. Congress Energy Dependence, Venezuela | Tagged collapse, house hearing, refugees, Venezuela | 4 Comments

How long will the marriage of fracked oil and tar sands last?

Posted on September 29, 2017 by energyskeptic

[ Below is a post by Art Berman which I found interesting because I’m concerned about whether enough diesel can be made in the future to keep trucks running. Light tight “fracked” oil is better at making plastics and gasoline than diesel fuel. Tar sands need natural gas or light oil additions to thin the tarry asphalt enough to get through pipelines to refineries to be further refined with light “fracked” oil, hence the happy marriage of light oil and tar sands.

But can their marriage last? TransCanada is betting oil prices will go much higher and faster than most forecasts anticipate and that the volumes will be there by the time that the Keystone pipeline is built. Canada would like to build the this pipeline to make sure any expansion of tar sands can deliver them for blending with tight oil.

But Berman questions the longevity of the tight oil plays, since production from both the Bakken and Eagle Ford plays is declining and Permian tight oil production growth has slowed.

U.S. ultra-light oil production is a central component of the global supply dilemma. When tight oil output is high, some fraction can neither be refined nor exported and simply adds to inventories.

An oil crunch surely is coming a few years from now, causing oil prices to rise dramatically. New E&P project investments are being deferred at a time when production from developed fields is accelerating. Improved production efficiency now will just further accelerate reserve depletion and make the decline rate steeper later. Meanwhile, new field discoveries are at the lowest level in decades and their average reserve size has gotten smaller.

The risk for the Keystone XL is that much higher prices will collapse the global economy before new projects can fill the pipeline and pay out the investment.

Alice Friedemann www.energyskeptic.com author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report ]

Art Berman. February 3, 2017. The Keystone XL Pipeline: A Risky Bet on Higher Oil Prices and Tight Oil. artberman.com

The Keystone XL Pipeline (KXL) is a bet on much higher oil prices several years from now. It will take at least $85 oil prices to develop the new oil sand projects needed to fill the pipeline.

It is also a bet that U.S. tight oil output will continue to grow and will need heavy oil to blend for refining. Both bets are risky.

A Bet On Higher Oil Prices

Figure 1. Location map of Keystone XL and Base Keystone pipeline systems. Source: TransCanada and Labyrinth Consulting Services, Inc.

It was not until prices exceeded $70 per barrel in 2005 (December 2016 dollars) that oil sands expansion began to accelerate (Figure 2). Since then, production has almost doubled from 1.3 to 2.4 mmb/d and cumulative production has increased from 5.4 to 10 billion barrels.

Figure 2. Oil Sands Production Nearly Doubled After Oil Prices Exceeded $70 Per Barrel. Source: Statistics Canada and Labyrinth Consulting Services, Inc.

By comparison, the Bakken and Eagle Ford tight oil plays have each produced 2.4 billion barrels. The Permian horizontal tight oil plays–Spraberry, Wolfcamp and Bone Spring–have produced less than 1 billion barrels.*

Table 1. Comparison of Oil Sands and U.S. tight oil plays. Source: Statistics Canada, EIA, Drilling Info and Labyrinth Consulting Services, Inc.

In 2015, oil prices averaged only $43 per barrel. No new oil sand projects have been sanctioned since oil prices collapsed in 2014 although 3 pilot projects have been approved since prices moved into the $50 per barrel range. Approval is not the same as sanctioning and these 3 projects together would add only 35,000 b/d.

It seems unlikely that new greenfield projects will be sanctioned until oil prices move much higher (Canadian heavy oil (WCS) trades at a 25% discount to WTI). Assuming that prices stabilize in the $50 to $60 range, it is reasonable that pilots may evolve into brownfield expansion projects over the next year or two.

The Canadian Association of Petroleum Producers estimates that annual oil sand production will grow 128,000 b/d until 2021 and then, grow more slowly at 59,000 b/d. If all of that new oil were going to KXL, it would not reach capacity for about 10 years. But other pipelines are already approved for expansion and will probably get much of the oil before KXL is completed.

TransCanada’s bet, therefore, is that oil prices will move much higher and more quickly than most forecasts anticipate and that the volumes will be there by the time that the pipeline is built.

Light Oil and Heavy Oil

U.S. tight oil plays produce ultra-light oil. Almost all of it is too light for refinery specifications. That means that it must be blended with heavy oil in order to be refined and that is why there is demand for Canadian heavy oil.

The Keystone XL Pipeline is, therefore, a bet that tight oil plays will continue for several decades.

Similarly, Canadian viscous, heavy oil must be diluted with ultra-light oil to move through pipelines. Because of that, Canada is the biggest importer of U.S. light oil.

The U.S. imports almost 3 times more oil from Canada than from Saudi Arabia (Figure 3). Imports from Canada are roughly equal to the amount from Saudi Arabia, Venezuela, Mexico, Colombia and Iraq combined.

Figure 3. The U.S. imports almost 3 times more oil from Canada than from Saudi Arabia. Source: EIA and Labyrinth Consulting Services, Inc.

The average U.S. refinery is designed for 31° API gravity oil but 80% of domestic crude oil is more than 30° and 70% is more than 35° API gravity so it must be blended with heavier oil before it can be refined (Figure 4). The Keystone Pipeline carries oil that is approximately 22° API so the fit with lighter U.S. oil is perfect.

Figure 4. 80% of U.S. Crude Oil is greater than 30° API and 70% is greater than 35° API. Source: Drilling Info, EIA, Labyrinth Consulting Services, Inc. and Crude Oil Peak.

The increasing percentage of ultra-light oil (>40° API) after 2011 shown in Figure 4 is because of the growth of tight oil plays. More than 95% of tight oil is greater than 30° API and these plays now account for more than half (52%) of U.S. output.

It is, therefore, no surprise that 98% of the oil imported by the U.S. is heavy that is, less than 35° API gravity (Figure 5). The biggest sources of heavy oil other than Canada are Saudi Arabia, Venezuela and Mexico.

Figure 5. 98% of U.S. Imports Less Than 35° API Gravity. Source: Drilling Info, Labyrinth Consulting Services, Inc. and Crude Oil Peak.

Production from Venezuela and Mexico is declining (Figure 6). Canada, Iraq and Saudi Arabia have strong production histories and are, therefore, more reliable long-term providers of heavy oil to the U.S. Canada has many advantages over other providers because of geographic proximity, supply security and price.

Figure 6. Mexico, Venezuela, Nigeria and Angola Have Declining Incremental Production. Source: EIA and Labyrinth Consulting Services, Inc.

Venezuela has enormous reserves of heavy oil and declining production is mostly because of political and social instability. This could change but it is more likely that Venezuela’s problems will continue. Mexico’s production decline is more systemic because the country has not made a significant new discovery since 1980.

A Bet on Tight Oil

So far, so good for the Keystone XL Pipeline but what about the longevity of the tight oil plays?

Production from the Bakken and Eagle Ford plays is in marked decline and Permian tight oil production growth has slowed (Figure 7). This is despite record high numbers of producing wells in all 3 plays.

Figure 7. Bakken and Eagle Ford production are declining and Permian basin tight oil production growth has slowed. Source: Drilling Info, Labyrinth Consulting Services, Inc. and Crude Oil Peak.

The Bakken and Eagle Ford plays have probably peaked based on remaining core area locations, generally poorer performance from recently drilled wells compared to older wells, and current rig activity. Assuming that oil prices recover to the $70 range in coming years, production should increase as more marginal locations become economically viable–just not to peak levels reached in 2015.

The Permian basin, on the other hand, should continue to grow for several years for all of the reasons that the Bakken and Eagle Ford will not. There are substantial areas in the Permian core that have not been fully developed. Well performance continues to improve and the horizontal rig count has increased 70% since mid-August to 243.

Most forecasts are optimistic about tight oil output. The EIA Annual Energy Outlook 2017 anticipates that tight oil production will decline in 2017 but recover to 2015 peak levels by 2019 (Figure 8). WTI oil prices are expected to be $64 per barrel then and slowly increase to $80 by 2025. Tight oil production will rise to 6 mmb/d by 2026.

Figure 8. EIA Forecast: Tight Oil Will Not Recover to 2015 Levels Until 2019 and Then Increase to 6 mmb/d by 2026. Source: EIA AEO 2017 and Labyrinth Consulting Services, Inc.

Although the forecast seems reasonable, it assumes that 2016 was the oil-price floor and that prices will continue to increase. It also suggests that prices will not reach the $70 threshold for new oil sand projects for 5 years. Other forecasts like HSBC are more aggressive and anticipate mid-$70 WTI prices as early as 2018.

The Big Long

If the last few years since the oil-price collapse have taught us anything it is that prices are unlikely to move in one direction. Nor are they likely to conform to mainstream analyst views.

Markets have been driven partly by an expectation that prices must inevitably return to levels of at least $70 to $80 per barrel sooner than later. This belief has endured despite a persistent global supply surplus and outsized inventories. The long-anticipated OPEC deus ex machina was lowered onto the stage in late 2016 and markets responded enthusiastically. Yet WTI prices have not crossed $55 per barrel so far.

It is difficult to find supply-demand fundamentals support even for the limited price rally that began with the OPEC announcement. There may already be an expectation premium of $10-12 per barrel built into current prices. Yet markets don’t always follow fundamentals in the short term although they return to them eventually.

U.S. ultra-light oil production is a central component of the global supply dilemma. Permian basin companies are adding rigs like the boom days of 2011 to 2014 have already returned. When tight oil output is high, some fraction can neither be refined nor exported and simply adds to inventories. This occurs despite the best efforts of Canadian oil sand producers to bring as much heavy oil to the party as they can.

Oil consumption remains relatively weak in the U.S. This is disturbing against the backdrop of surging tight oil rig counts.

Consumption increased with very low oil prices in 2015 and early 2016 but not to the levels before the Financial Collapse of 2007-2008 (Figure 9). Most of the increase was from greater gasoline use and more refined products exports. Modestly increasing prices in 2016 dampened consumption suggesting that demand is highly price-sensitive.

Figure 9. Consumption fell >2 mmb/d after 2005 but recovered 1 mmb/d with increased refined product exports, lower oil prices & increased gasoline use. Source: EIA and Labyrinth Consulting Services, Inc.

This does not represent peak demand. All credible forecast anticipate oil-demand growth over the next decade or so, albeit at a slower rate. Instead, it reflects an economy weakened by excessive debt and changes in Federal Reserve Bank monetary policy after mid-2014.

These rather gloomy observations may explain TransCanada’s motivation to complete the Keystone XL Pipeline now. I’m talking about a long bet on oil prices.

Future supply constraints will become greater the longer new E&P project investments are deferred. At the same time, the decline of production from developed fields will be more pronounced. Improved production efficiency will further accelerate reserve depletion. Meanwhile, new field discoveries are at the lowest level in decades and the average reserve size of those discoveries has gotten smaller.

Oil prices will increase dramatically at some time in the next several years. That should lead to the next oil boom and the Keystone XL Pipeline will be there to provide heavy oil to U.S. tight oil plays.

There is little doubt that a supply crunch lurks in the future. The risk for the Keystone XL is that much higher prices will collapse the global economy before new projects can fill the pipeline and pay out the investment.

___________________________________________________________________________________

*EIA’s Drilling Productivity Report estimate of 4.8 billion barrels includes all conventional production in the counties in which the tight oil plays are located.

Matt Mushalik contributed to the research on light oil.

Posted in Oil & Gas Fracked, Tar Sands (Oil Sands) | Tagged fracked oil, light tight oil, oil sands, tar sands | 4 Comments

Underground pumped hydro storage is the only technology capable of massive storage for renewable electricity

Posted on September 27, 2017 by energyskeptic

[ Picard concludes that “None of the candidate technologies for massive-scale renewable and sustainable generation of ‘‘green’’ electricity deliver it in a form suitable for high-efficiency storage. None of the prospectively-massive storage modes for transformed electricity is at present well enough developed to be designated a sovereign remedy for intermittency. His “current foci are the theory of heat exchangers upon which thermal storage depends and underground pumped hydro, the only electro-technology that currently seems scalable to the multi-terawatt-day levels needed”.

**Picard, W.F. August 28, 2015. Massive Electricity Storage for a Developed Economy of Ten Billion People. IEEE Access.**

FIGURE 3. Ragone diagram of the discharge time at rated power (a factor in energy storage) vs. system power rating for a number of different electricity storage technologies; it is similar to many others that can be found on the Web. This one, ascribed to Nobelist Steven Chu and available at http://energy.wesrch.com/wiki-511-energy-storage-is-critical-to-grid-operations, has been augmented to include: (i) gravity storage; and (ii) stable synthetic chemicals (e.g., hydrogen gas, methane, or ammonia) that can be manipulated to produce mechanical energy. The maximum rates of charging and discharging of a storage module need not necessarily be the same.

Excerpts from this 16 page paper:

ABSTRACT Presently, America’s average electrical power consumption is~1.3 kW/p; in the world as a whole, it is~0.33 kW/p. If, for 2050, a world goal of 1 kW/p is adopted, this implies an average electric power draw of 1 GW for each population cohort of 1,000,000 residents; and the Earth will have ~10,000 such cohorts. Multi-hour outages are already common; demand peaks daily; and renewable generation is intermittent. Hence, as a hedge against rare supply failures, each cohort would profit from local backup storage of electricity/energy in the order of 1–2 GWd. For comparison, the biggest electrochemical storage scheme yet seriously proposed will contain~240 MWh, while most of the largest pumped hydro storage reservoirs are <50 GWh. In approximately 50 years, when fossil fuels have become scarce, we should already have constructed this bulk storage. This review argues that the principal contenders for the storage of electricity in bulk are: 1) electrochemical storage in flow batteries; 2) chemical storage in agents, such as ammonia, hydrogen, methanol, or light hydrocarbons; 3) compressed air energy storage; and 4) underground pumped hydro. Finally, it will argue that not one of these four contenders has yet been built, tested, and perfected, while virtually none of the needed storage capacity exists today.

INTRODUCTION

Mankind is on a trajectory towards exhaustion of our planet’s supply of economically recoverable fossil fuels [1].

When that inevitable exhaustion has been accomplished, whatever electrical energy is consumed by our civilization must be derived from renewables or (possibly) nuclear.

And that means we risk losing the convenient electricity-on-demand to which we have become accustomed — unless, of course, we have had the foresight to build massive electricity storage sufficient to buffer the variations of supply and demand, accumulating energy during times of abundance and disbursing it during times of scarcity [2]–[4].

The term ‘massive electricity storage’ is vague because ‘massive’ has no agreed upon definition. In the context of this paper, it will be defined as ‘at least one gigawatt-day [GWd]’. This follows from the projection that, in 2050, the planet we be home to approximately 10 billion persons, each seeking a lifestyle undergirded by approximately 1 kilowatt of reliable electricity. Therefore, a typical geographical enclave of a million persons should desire at least 1 GWd of backup electricity storage sited locally because (i) the modern world doesn’t operate without electricity and (ii) backup a few hundred kilometers away is not very helpful if the grid fragments.

Recent models of intermittent renewable generation seem uniformly to recognize a necessity for at least some form of electricity storage [2]–[4]. The type and quantity of such storage is open to debate. Massive electricity storage for ten billion people in the latter half of this century is a task so far outside the historical experience of humanity that even conservative estimates of how much of it will be desired, are daunting.

Nobody knows how many people will be on Earth in 2050; but the best estimate of the United Nations was 8.9 to 10.6 billion [22]; more recent studies have modestly increased these estimates [23]. Therefore, it will be assumed that, in 2050, the population of earth will be roughly 10 billion people.

Ten billion consumers could require an average generation of ~10 TW : this is roughly ten-fold the current nameplate capacity of America’s generators.

To meet such a demand will require a global electricity production of ~87,600 TWh a year. If these electrical joules are to be derived from fossil fuel combustion in typical steam plants, then – due to Carnot inefficiencies – more thermal primary energy will be needed:~160 billion barrels per year of petroleum ([25], or ~34 billion metric tonnes of coal per year [26], or ~2,7000,000,000,000 standard cubic meters per year of natural gas [26]; alternatively, this amounts to ~24,000,000,000 tonnes of oil equivalent.11

These figures are far in excess of the World’s current annual production in metric tons of oil equivalent [9] of oil (~4.2 billion), coal (~3.5 billion toe), or natural gas (~2.7 billion).

And this is to provide in 2050 just the electricity for a world that is based on today’s technology but has eliminated electricity poverty, a world in which the Haves and the Have-Nots cannot be readily identified on the basis of per capita electricity consumption: energy generation for transportation or process heating, which today proceeds largely without electrical intermediate steps, is not included [11]

As the fossil fuels bequeathed mankind are used up the demand for renewable energy and its associated storage solutions will markedly exceed that which arises from electricity use.

Ten billion consumers could require an average generation of~10 TW : this is roughly ten-fold the current nameplate capacity of America’s generators. To meet such a demand will require a global electricity production of ~87600 TWh y-1 or~320×1018 Je y-1. If these electrical joules are to be derived from fossil fuel combustion in typical steam plants, then – due to Carnot inefficiencies – more thermal primary energy will be needed:~1000×1018 Jth y-1, or ~160×109 barrels per year of petroleum ([25], s. 45K(d)(5)), or~34×109 metric tonnes per year of coal [26], or~27×1012 standard cubic meters per year of natural gas [26]; alternatively, this amounts to ~24×109 toe (tonne of oil equivalent).11 These figures are far in excess of the World’s current annual production [9] of oil (~4.2×109 toe), coal (~3.5×109 toe), or natural gas (~2.7×109 toe). And this is to provide in 2050 just the electricity for a world that is based on today’s technology but has eliminated electricity poverty, a world in which the Haves and the Have-Nots can not be readily identified on the basis of per capita electricity consumption: energy generation for transportation or process heating, which today proceeds largely without electrical intermediate steps, is not 11 Often it is hard to translate joules into the non-metric units employed in practical energy calculations. The ‘‘barrel of oil equivalent’’ or ‘‘boe’’ is defined by the U.S. Internal Revenue Service as precisely 5.8 million Btu [25], which – employing thermochemical calories – yields the SI equivalence~6.115 GJ per boe; the Reader is cautioned that this value is nominal only and that the actual caloric content of a particular barrel may vary by a few percent from this defined equivalence [9]. The ‘‘tonne of coal equivalent’’ or ‘‘TCE’’ is defined nominally as 7E09 calories [26], here taken to be thermochemical calories; and thus, 1 TCE= 29.288 GJ, although considerable variation is to be expected from coal seam to coal seam ([9, p. 59]). The natural gas is traditionally measured in ‘‘standard cubic feet’’ for which a nominal caloric equivalent is 1000 Btu per cubic foot, which translates into~37.24 MJ per cubic meter; once again, there is considerable variation from gas field to gas field ([9, p. 60]). Alternatively, the energy content of any source of fossil fuel can be measured in terms of: 1 metric tonne of oil equivalent= 1 toe= 10E09 thermochemical calories=~ 41.84 GJ

In addition to assuring an adequate supply of electrical energy, the world of 2050 must, if it is to be sustainable, also assure a sustainable supply of mineral resources. This task is predicted to be, with much much effort, tractable: but only if the sustainable energy hurdle has already been successfully jumped [30], [31].

WORLD RESOURCES OF FOSSIL FUEL. Since the Pearl Street generating station came on line in 1882, developed economies have enjoyed the benefits of massive energy storage. This has always been visible as the coal pile behind the generating station, and almost no utility customers ever remarked upon this because they never connected the dots. Today that fossil fuel is rapidly being depleted and is forecasted to be nearly gone and rather costly within a few decades [1], [32], [33].

ULTIMATELY RECOVERABLE RESOURCES. With respect to a particular nonrenewable substance, the ultimately recoverable resource is ‘‘an estimate of the total amount of [that substance] that will ever be recovered and produced. It is a subjective estimate in the face of only partial information.’’ [34]. Moreover, the estimated URR is subject to revision as the economic worth of the substance varies and as the technologies of extraction change. Nevertheless, there are two useful rules of thumb: (i) when resource depletion becomes so marked that the processes of extracting the substance costs more money than will be received when the substance is marketed, the substance ceases to be recoverable; and (ii), when the substance is a fossil fuel and a deposit becomes so lean that the energy stored in the substance is less than the energy expended extracting the substance, then the substance likewise ceases to be recoverable. Useful subsets of the URR are [34]: (i) proved reserves, the subset that is still recoverable with 90% probability; (ii) probable reserves, the subset that is still recoverable with 50% probability; and (iii) ) possible reserves, the subset that is still recoverable with 20% probability.

Whenever a substance is nonrenewable and mankind is consuming it at a rate that will soon exhaust the URR, mankind is facing a crisis.

COAL IS RUNNING OUT. The October 2013 prediction from Professor David Rutledge of the California Institute of Technology is that 90% of the World’s economically recoverable coal will have been recovered by 2067 [35]. Because his quantitative methodology has been so successful in modeling the exhaustion of already depleted coal fields, his date of 2067 should be taken seriously. Moreover, quantitatively similar predictions abound [1], [36]–[40].

The URR of coal has been estimated by several different authors. Mohr and Evans [36] predicted a URR of 700-1243 Gt. Höök et al. ([38, Table 4]) predicted~1000 Gt.

Rutledge [41] predicted 653-749 Gt. These predictions average out at around 860 Gt.

PETROLEUM IS RUNNING OUT. First, recent studies predict that oil resources also are being depleted and will, by the end of this century, be sharply diminished [1], [32], [40], [42]–[44]. Second, ‘‘From the beginning it was plain that only a finite amount of oil was in the ground and that no level of production, however low, could be maintained indefinitely. But as long as oil was being discovered faster than it was being produced, this limitation was a matter of only vague concern.’’ ([45, p.648]). Petroleum discovery, though complex, does seem to follow certain simple rules: (i) most of the petroleum in a region is contained in a few large fields [45]; (ii) when a region is explored, its large fields are discovered early [45]; (iii) giant oil fields (URR above 0.5 Gbbl) are responsible for~60% of world production [46]; (iv) in recent decades the discovery of giant fields has fallen precipitously [46]; and (v) for the past thirty or so years the consumption of oil has exceeded the discovery of new reserves ([47, Fig. 5.10]).

The data analyses of Brecha [44] suggest an estimate range of 2-3 Tbbl for ultimate planetary petroleum production. Therefore, for Fermi calculations, a reasonable URR value for Fermi calculations could be 2.5 Tbbl.

NATURAL GAS IS RUNNING OUT. Natural gas, oil, and tar sands are different end points achieved by the same basic geological processes ([32, Ch. 4): just as oil is a finite resource that is running out, the same is to be expected of natural gas – although its timeline may be modestly different ([1, Fig. 5]).

THE SIZE OF THE PLANET’S DOWRY OF FOSSIL FUEL. Fermi estimates of the planet’s RRR of fossil fuels are provided in Table 2. It seems clear that, if the World’s developing economies are to achieve Human Development Indices characteristic of present OECD economies, fresh energy supplies must be developed. Even if the projections of Table 2 are off by a factor of as much as three, the situation is still dire. For remember that Table 2 considers only the energy needs of traditional electricity generation: the demands of process heating in industry and the demands of transportation were not included.

A World Economy based upon energy from exhaustible fossil fuels therefore faces a triple whammy: (i) World population is growing; (ii) within developing economies, expectations and consumption are growing; and (iii), as a result of production and consumption, the resource bases themselves are shrinking rapidly. These trends combine to expand global demand for the benefits of fossil fuels while simultaneously diminishing mankind’s dowry of those fuels: what appears today to be an ample reserve can become depleted with startling rapidity.

RENEWABLE ENERGY AND ITS CHALLENGES. On no timescale relevant to human evolution is renewal of our rapidly depleting fossil fuels resource a rational possibility: when what we now have is used up, it is gone forever [32].

Fissile nuclei are a finite resource, even though their supply can (in principle) be extended by neutron irradiation of rather more common fertile but non-fissile nuclei. The ultimately recoverable resource (URR) of naturally occurring fissile nuclei is a matter of debate, as is the case with the better studied fossil fuels [40]. The supply of fertile nuclei (e.g., 232Th and 238U) is very large so that (in principle) ‘‘breeding’’ of fissile nuclei by irradiating fertile nuclei with neutrons could supply many thousands of years of fissile material. A significant impediment to a nuclear fission solution is that safe and profitable breeding has yet to be well-demonstrated, despite decades of off-again on-again research activity. A major downside to fission power is the generation of large quantities of radioactive waste that must be somehow be permanently and safely disposed of; and nigh seventy years into the ‘‘atomic era’’ this problem has not demonstrably and unequivocally been solved [51].

Nuclei for use in fusion reactors are much more abundant, but profitable fusion reactors have neither (i) been built nor (ii) been operated safely and for extended periods; moreover, they too should generate long-lived radioactive waste. In summary, there is widespread doubt that anthropogenically generated nuclear-based power can meet the World’s electricity needs [8], [52]–[56].

If a nuclear reactor of some sort is not a realistic source of sustainable power, then one must fall back upon the renewables. Two eminently readable treatises on renewable/sustainable energy are those of Armaroli and Balzani [57] and of MacKay [58]; the latter is notable for its dedication (p. vii) ‘‘to those who will not have the benefit of two billion years’ accumulated energy reserves’’. For readers in a hurry, the review article by Abbott ([59, pp. 48–52]) provides a compact no-nonsense summary of the relevant numbers: solar radiation and wind, both conspicuously intermittent generators of electricity, are the obvious hegemonic sources; and the others are anticipated to be niche players only.

MATCHING SUPPLY AND DEMAND: THE ACHILLES’ HEEL IS MASSIVE ELECTRICITY STORAGE. Early in the Twentieth Century, the celebrated radio pioneer Reginald Fessenden pithily described the challenge of electricity storage [60]: ‘‘ The problem of the commercial utilization, for the production of power, of the energy of solar radiation, the wind and other intermittent natural sources is a double one. The energy of the sources must first be changed so as to be suitable in form; it must next be stored so as to be available in time.’’

This Intermittency Challenge is with us still, so much so that the World’s questionable technological preparedness has been memorialized by calling massive electricity storage “the Achilles” heel of renewable energy’’ [61]. If electricity storage of requisite quality and quantity does not become available in timely fashion, then both developed’’ and ‘‘developing’’ economies will most probably stagnate and, in some cases, may regress egregiously.

As it would be most unwise to bungle the transition from the Age of Fossil Fuels to an Age of Renewable Energy, we should presumably develop storage facilities for massive amounts of electrical energy.

Absolute safety of supply is not achievable, but a hundred hours of backup would be enough to ride out most catastrophes. The quantity the World would need works out to be on the order of 1000 TWeh.16

STEADY-OUTPUT GENERATORS OF ELECTRIC POWER ALSO PROFIT FROM ELECTRICITY STORAGE. A practical device for ‘‘storing’’ massive quantities of electricity as electricity seems not at present exist [62]. However, as suggested by Fessenden [60], the energy can be converted into a form that can be stored; and the stored form can, at will, then be back-converted into electricity. Thus, for practical purposes, an electrical storage device can be thought of as a sort of ‘‘granary’’ for electricity, storing when electrical energy is in surplus and disbursing when it is in deficit: in concept it should work equally well, either with solar photovoltaic generation on a day of scudding clouds or with nuclear plant generation, which is output-sluggish and hard to match to diurnally shifting consumer demand.

UNTESTED SOLUTIONS TO THE INTERMITTENCY CHALLENGE SHOULD BE DISCOUNTED. While many papers are written in which the merits of massive electricity storage are modeled, the evidence for the existence of such storage is sparse [63]–[66]. To be specific, if one defines ‘‘massive’’ as ‘‘at least one gigawatt-hour’’ and consults the U. S. Department of Energy’s ‘‘Global Energy Storage Database’’ [67], one discovers that the database does not sort entries by energy capacity! If instead one tries ‘at least 250,000 kW rated output’ plus ‘at least 4 h operation at rated output’, one comes up with 37 projects that have a record of successful operation: all are pumped hydro and only 10 exceed 9.9 GWh, the largest being 39.1 GWh. This last figure is minuscule compared to the electricity storage that will be desirable in an era of renewable energy: it misses the impending need by perhaps four orders of magnitude!

Some Readers may stand firm in their belief that modern science and technology will, when the need becomes urgent, triumphantly surmount the technological challenges facing mankind. They are requested to study the cautionary tales presented in extenso in the Appendix: the history of technology abounds with compelling ideas that just did not work out as expected. Deus ex machina solutions may have been a useful devices in classical drama, but they have no place in guiding the course of nations.

THE RAGONE DIAGRAM AND ITS CONSEQUENCES. THE STORAGE “SMORGASBORD”. A storage facility for electrical energy is conceptually decomposable into three parts: (1) an input energy conversion module, which accepts electrical energy from (for example) a grid and converts it to a storable form; (2) an energy storage module, which actually warehouses that storable form; and (3) an output conversion module, which back-converts the stored form into electrical energy to be transported over the grid. Such a storage facility will typically be described by a Ragone diagram17 that displays two of the three variables: (i) the maximum rate (W) of energy conversion to/from the stored form; (ii) or the time (s) that this maximum rate can be sustained; or (iii) the rated capacity (J) of the storage module. A typical Ragone diagram is shown in Figure 3. The many colored areas indicate roughly (very roughly) the current operating ranges for single units within the ‘‘smorgasbord’’ of available storage technologies [67]; but all these technologies can in principle be stretched by building bigger or by combining storage units in series or parallel.18 What are vital to massive electricity storage are those technologies that appear in the upper right of the diagram, because (i) that corner is where extant massive storage technologies are located and (ii) all devices located there can (easily, in principle) be scaled up enormously. It is they that will be focussed upon below: synthetic combustibles, electrochemical storage in flow batteries, and storage as mechanical energy via either compressed air or elevated mass.

The discussions of electricity storage given below are intended, not to be encyclopedic, but rather to provide brief overviews of those technologies that cluster toward the upper right-hand corner of the Ragone chart of Fig. 3.

CANDIDATE MASSIVE TECHNOLOGIES 1) SYNTHETIC COMBUSTIBLES. Coal, oil, and natural gas – the backbone of the Age of Fossil Fuels [32], [73]–[75]19 – are natural products, the end result of photosynthesis coupled with eons of ordinary geological processes. What rendered them so historically important were: first, their ease of harvesting, with the useful energy returned by the harvest greatly exceeding the energy expended during the harvest; and, second, their high energy density, making their transport, storage, and use relatively convenient. As exhaustion of fossil fuels forces a switch to renewable energy, that convenience is in danger of being lost. Without jet fuel, the convenience of modern air travel vanishes. Without high energy liquid fuel, ground transport as we know it likewise vanishes. Consequently, many researchers have suggested that surplus renewably-generated electricity could be stored by using it to drive the synthesis of suitable combustible chemicals, which might then be used in roughly traditional ways: this certainly seems better than letting the surplus energy go to waste.

2) STORAGE IN BATTERIES In Fig. 3, the only batteries that appear anywhere near the upper right-hand corner are flow batteries. Flow batteries are exceptional among batteries in that the current-limiting surface areas of the anode, ion-selective membrane, and cathode are effectively independent of the volumes of anolyte and catholyte that determine the quantity of energy stored [91]. However, despite much research and many specialist meetings over the past several years, there is not yet very much of such storage extant. For example, among the operational flow-battery facilities listed by the DOE Global Energy Storage Database [67], the largest appears to be only 10 MWh. A recent DOE publication states that ‘‘. . . due to lack of MW-scale field history, flow batteries have not gained substantial commercial traction in the US, with various flow battery technologies still in the demonstration phase, and the largest single operational system at 0.6 MW . . . ’’ ([92, p. 18]). Moreover, even if one were tempted to fall back upon the tried and true non-flow lead-acid battery, this prospective energy storage device has been considered by two different groups and judged non-viable at the terawatt-day quantities needed [93], [94]. Finally, the modularity of batteries should make them seem extremely attractive, but only if (i) the chosen module uses no scarce mineral elements and (ii) the problem of weak links in the storage array can be resolved. With flow batteries, as with all batteries, questions of round-trip energy efficiency, storage, supply sustainability end-of-life recycling (or waste management) loom large.

Hydroelectric pumped storage. Storing water at a high head is desirable, whereas flat-topped mountains over 500 m high and suitable for an upper reservoir are scarce near metropolitan areas;

None of the candidate technologies for massive-scale renewable/sustainable generation of ‘‘green’’ electricity deliver it in a form suitable for high-efficiency storage. None of the prospectively-massive storage modes for transformed electricity is at present well enough developed to be designated a sovereign remedy for Intermittency.

ABOUT WILLIAM F. PICKARD. He received the Ph.D. degree in applied physics from Harvard University. He has pursued a continuously evolving career in teaching and academic research, the preponderance of which has been spent as a Professor with the Department of Electrical and Systems Engineering, Washington University in St. Louis, MO. His research areas have included:

high voltage engineering, electrobiology, the biological effects of electromagnetic elds, and biological transport and systems biology. He currently concentrates upon the theory and practice of massive energy storage because the sustainability of an industrial civilization depends upon reliable dispatchable energy even though the major renewables are intermittent.

His current foci are the theory of heat exchangers upon which thermal storage depends and underground pumped hydro, the only electrotechnology that currently seems scalable to the multi-terawatt-day levels needed.

Abbreviations (including units not commonly employed in SI): bbl, barrel (of oil, equivalent); d, day; kcf, 1000 standard cubic feet; p, person; scf, standard cubic foot (of natural gas, equivalent); scm, standard cubic meter (of natural gas, equivalent); st, short ton of 2000 pounds; toe, metric tonne of oil equivalent; URR, ultimately recoverable resource;

MWh y-1 translates to 0.114 kW, which by Fig. 2 implies that a steady 1 kW per capita should deliver an HDI in the range of 0.88±0.05. That is, the 1 kW- assumption of Section II.B should, other things being equal, suffice to sustain what most of humanity would deem an enviable quality of life.

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[144] A. Ciralsky. (Sep. 16, 2013). Will it Fly? Vanity Fair. http://www.vanityfair.com/politics/2013/09/joint-strike-ghter-lockheed-martin
[145] W. Boardman. (2014). F-35 Burns on Runway During Testing. http://readersupportednews.org/opinion2/277-75/24466-focus-f-35-burns-on-runway-during-testing
[146] W. Boardman. (2014). F-35: Zombie Fighter-Bomber of American `Defense’ Fantasies? http://www.smirkingchimp.com/thread/william-boardman/58078/f-35-zombie-ghter-bomber-ofamerican-defense-fantasies
[147] T. Mason, T. Curry, and D. Wilson. (2012). Capital costs for transmission and substations. Black & Veatch.
https://www.wecc.biz/Reliability/1210_BV_WECC_TransCostReportFinal.pdf
[148] H. Petroski, Success Through Failure: The Paradox of Design. Princeton, NJ, USA: Princeton Univ. Press, 2006.

Posted in Electric Grid & EMP Electromagnetic Pulse, Energy Storage, Grid instability, Hydropower, Renewable Integration | Tagged energy storage, intermittency | 4 Comments

Nate Hagens “Peak Oil” – Why Smart Folks Disagree – Part II

Posted on September 25, 2017 by energyskeptic

[ There’s a great deal of interest in the Hill’s Group report, but Nate Hagens came up with similar results back in 2007 and he explains his ideas far more eloquently. Although much production of U.S. oil and gas may perhaps go net energy negative by 2030, the Middle East and a few other areas will still be producing net energy positive barrels. Though whether they will be exporting as much is doubtful given that their population is growing at the same time their oil production is declining — see the export land model post for details. There is also a part 1 here and a part 3 here. See all of Nate Hagens posts at theoildrum here]

Nate Hagens. April 2, 2007. “Peak Oil” – Why Smart Folks Disagree – Part II. The Oil Drum.

There continues to be considerable disagreement on both the timing and the magnitude of Peak Oil, though last week’s GAO report(pdf) should be helpful in shrinking that gap. Part I of this 3 part series summarized some of the recent discussion of why some are very concerned about Peak Oil and others are relatively unconcerned. We also discussed why there needs to be a clear definition of Peak Oil so that policymakers discuss ‘apples and apples’. This post will continue to examine areas of disagreement between the two camps, and will particularly focus on what I perceive to be the largest disconnect in energy, financial and government circles – that of the difference between gross and net production of finite resources.

Decline in Net Energy on US Oil Production
A Hypothetical Sensitivity Analysis on EIA Projections (mbpd)(click to enlarge)

If you ask 100 people about Peak Oil, you will get a few shrugs of disdain, a few vehement diatribes and about 90 blank stares. Its not a subject easily talked about, easily understood, or easily internalized. This post points out some major areas of why people either disagree about or don’t comprehend the magnitude of this human problem. These issues have been thoroughly discussed on this site for the past 2 years, but for new readers I will attempt to briefly summarize some of these major areas of disagreement – for old readers (err..seasoned readers), please jump down to Reason #6, where begins some new analysis. This post will be followed by Part III, which will discuss the more interesting and controversial social and psychological reasons why there exists such a polarization of opinion on this important topic.

REASON #1 THERE IS VERY LITTLE RELIABLE DATA ON OIL, GAS (AND COAL)

Neither the concerned nor the unconcerned camp can have any great confidence in reserve or future production data due to the fact that 85-90% of the worlds oil is owned or controlled by nations or national oil companies. Furthermore, estimates on the dollar and energy costs to produce this oil are all but nonexistent. The unconcerned camp leans heavily on forecasts from the USGS and EIA, both of which have in recent years been overly optimistic. (The US government Energy Information Agency has a $60 median forecast for oil for 2030!!(1) While there is a (very slight) chance they could be right, the prediction is based on not only a paucity of data, but (at least historically) has been comprised of economic as opposed to scientific analysis:

“..These adjustments to the USGS and MMS estimates are based on non-technical considerations that support domestic supply growth to the levels necessary to meet projected demand levels.”(2)

In other words, the figures were rearranged to show that we will always have enough. Yet these pronouncements and predictions are received by corporate America as carrying the weight of certainty (more on this in part III).

The concerned camp at least uses the data that we DO have – that of past and current production. 50 countries have already peaked in production and many more could peak in the very near future based on logistical and hubbert linearization methods discussed on this website. While its possible these countries could rebound and see new peaks, that has not been the pattern. The USA peaked in production in 1970 and has since been in terminal decline with the exception of the blip up from the North Slope in Alaska. Yet the EIA ccurrently continues to forecast increased US production from now until 2016 in their latest report.

The basic point here is: we don’t know, so isn’t it better to use the precautionary principle than keep driving and hoping we’re not on fumes?

REASON #2 -ACTUAL PRODUCTION FLOWS DO NOT EQUAL “PRODUCTIVE CAPACITY”

CERA forecasts some 3.7 trillion barrels of (notional) oil remaining while most in the concerned camp estimate remaining recoverable reserves of about 1 trillion barrels. We currently produce around 85 million barrels per day which is over 30 billion per year.

THOUGHT EXPERIMENT

Imagine for the moment that a large group of apple orchards represents the worlds oil fields (apples being the oil). As frugivores, we care about the rate at which apples can be picked in one orchard (and all orchards) and delivered to the grocer. CERA type analysis is focused on counting how many total apples are in all the orchards, including the wormy ones (heavy oil), the ones on top of trees requiring heavy equipment to pick (oil sands) and the ones on farmers land they have never been allowed onto, but take the word of the farmer how many apples he has (middle east). They also are including oranges (coal-to liquids), pears (oil shale) and kumquats (ethanol) to come up with their ‘apple resource’. Even if we can and should count all these fruits as apples, the rate at which our apple picking resources can extract the apples and get them to the supermarket is a far more limiting statistic than the number of apples in the orchards. Plus many of our recipes just don’t taste as good using kumquats.

The second half of oil(or even 3/4 according to CERA) will follow vastly different rules than the first half. Deeper wells in more remote, sensitive locations, heavier, sourer oil, growing populations and internal consumption in exporting countries, lack of skilled oil personnel and geologists, geopolitical conflict, hurricanes in new exploration areas, expensive rigs, environmental limitations, first nation disputes, lack of upstream capital expenditures, etc will all contribute to actual production being unlikely to match ‘productive capacity’. Again, maybe it will. But maybe it won’t. And the flow rate of liquid fuels is what makes the world economy run, not how much is conceivably underground.

A prime example of the risk of these type of projections was pointed out by our resident water cut sleuth” last week. Cambridge Energy (CERA) expects Saudi Arabia to grow to 14.3 million barrels a day in 2015 from 12.7 mbpd in 2005 (actual production in 2005 was under 9.5 mbpd). So, sometimes productive capacity is even higher than actual production in the past.

REASON #3 – THE TIMING OF PEAK OIL IS SO IMPORTANT BECAUSE OF THE TIME LAGS REQUIRED FOR MITIGATION

The worlds transportation (and therefore food) system is utterly dependent on oil. In the DOE funded Hirsch Report, the economist authors made it very clear that the Peaking of global oil production was a monumental task and would require 20 years! lead time to effectively mitigate (noticeably absent from the report were environmental consequences of the choices of mitigation). Even at 10 year lead time they predicted liquid fuel shortfalls. In other words, this is not a problem that we can solve overnight.

Last weeks release of the much anticipated GAO Report on Peak Oil echoes the urgency with which to change policy due to long lead times and the pervasivness of oil services in our society.

REASON #4 – THE MARKET WILL SOLVE IT, RIGHT?

In Part III of this article I will discuss our penchant for believing confident authority figures. For now lets address the most embedded theme among the unconcerned – that the market will automatically solve the energy problem via advanced price signals that will lead to new energy technology that replaces fossil fuels.

Neoclassical economic theory has as a core assumption perfect information. But, as we have seen above, we actually have very little good information on future oil supplies and flows. The worlds major oil exporters mostly have below investment grade sovereign credit ratings, and the market is priced at the marginal barrel. As long as the market is reasonably supplied over the short term, and the major media focus on the government forecast for oil prices to remain constant for the next 25 years (the EIA has two forecasts a high of $90 in 2030 and a low of $28), the classic Hotelling model of resource extraction, where resource owners charge increasing rents and withhold production to maximize rents, has not yet started to kick in. From the above referenced TOD post:

The authors (Gowdy et al) conclude that temporary incremental production gains are offset by later steeper decline rates in the tail end of production without increasing the overall URR. Their main conclusions are essentially that 1) oil is not being treated as a finite resource as oil field analyses predict and 2) temporary production gains mask real scarcity and result in misleading low oil prices.

This is consistent with the thesis that parts of Ghawar are mostly watered out and there will not be a gradual decline when they quit but more of an abrupt crash. How many of the worlds productive fields will show this pattern due to horizontal drilling and advanced techniques getting out as much as possible as soon as possible? As ‘John’ said in the introductory interview, people may believe in the concept of peak oil, but they are trying to make money and live for today – the market probably wont give us a strong signal until we are well past peak oil – and that may even be masked by demand destruction due to recession/depression. Following the precautionary principle is not a strong suit of a market based economy. Without good information on 90% of the worlds oil, and decades needed to properly adapt, it is likely the market will be in for some surprises that don’t have easy invisible hand fixes.

Briefly regarding alternative energy, we a)have to replace the total liquid fuels lost by a source or sources that give us the same or higher energy gain and can scale/grow at the same or higher rate than oil and gas deplete and b) do so without running into limitations of other finite resources such as water, land, soil, etc.(3) A colleague and I have just completed a paper showing that global bio-energy growth will be severely limited by water constraints by 2025, as one example.

REASON #5 – ITS NOT ABOUT RUNNING OUT OF OIL, BUT RUNNING OUT OF THE PERCEPTION OF GROWTH

There will still be oil in the ground 100 years from now, and even 1 million years from now. Peak oil has never been about it ‘running out’. But society has become accustomed to growth. The embodied energy in fossil fuels generates this growth (aided and leveraged by human labor and ingenuity, but the vast majority due to the energy capacity of oil to do work). Remember one barrel of oil has the amount of BTUs it would take an average man 12.5 years of 40 hours a week of labor to produce.

Our debt based capitalist society is based on the ability of everyone to climb the ladder. If it becomes apparent that there is a ceiling, all the rules of the system breakdown. Growth is based on the ability of people to get loans, grow businesses and repay the loans with interest. If there is less and less energy available each year thats one thing – it might just show up as recession/belt-tightening. However, if peoples PERCEPTION is that less and less energy will be available then why would banks give out loans, why would people go to work, etc? The economy can only grow if the Energy Return on Investment from oil is replaced with something as high or higher. (more on that below)

Largely because oil is finite and dollars are not, King Hubbert concluded we would have either a zero interest rate, or (very high) inflation(5).

REASON #6 – THERE IS AN INCREASING GAP BETWEEN REPORTED BTU CONTENT AND USABLE ENERGY

Most oil analysts focus on the gross amount of oil produced. This will be increasingly misleading, for many reasons. First of all, the different liquids called ‘oil’ in the EIA and CERA forecasts differ in their BTU content.

Gross Heat Content of 42 Gallons (1 US Barrel) of different fuels (Source EIA -ConversionFactors and Gross Heat Contents and the DEO (BiomassEnergy Book, Appendix A).

Natural Gas Plant Liquids(NGPL) and “Other Liquids” (primarily ethanol) are taking up a larger share of world production (the relative width of the two lighter gray areas is growing on left graph). These liquids have much less BTU content than crude oil and we need more of these products to accomplish the same amount of work as with straight crude oil. 42 gallons of Ethanol equals 0.61 barrel of crude oil. One barrel of NGPL only equates to 0.64 barrel of crude oil. The graph on the top is what is reported by the EIA as ‘total oil production’. The graph on the bottom is adjusted for the lower BTU content of NGPL and ethanol. As you can see – there is about a 5mpbd drop in BTU content available to do economic work.

We need oil for the energy services it provides. Though we notionally have 85mbpd, we only get to use 80mbpd of ‘oil’ BTU content. So other than convenience, using gross figures in projecting supply, especially when an increasing % of the liquids will be coming from lower BTU sources is overly optimistic.

US ONLY


EIA Forecast US Production (gross)in mbpd	EIA BTU Adjusted US Production in mbpd

Above are the EIA oil production forecasts through 2030 for domestic US production. As can be seen the lower BTU content in NGPL and ethanol cause our governments gross production to be about 12% too high by BTU content.

But wait. It gets worse. Potentially much worse.

REASON #7 NET ENERGY MATTERS FAR MORE THAN GROSS ENERGY

Net energy analysis is little used and much misunderstood. Essentially, the economy is 100% dependent on energy to do work. The first law of thermodynamics states there is a finite amount of energy in a closed system – that capital, labor and technology cannot create more energy. Available energy must be used to transform existing resources (e.g., oil), or to divert existing energy flows (e.g., wind or solar) into more available energy.

The second law of thermodynamics posits that there is an energy loss at every step in the economic process. (for example – about 30% of the BTUs in internal combustion engines are ‘utilized’ the rest is dissipated as heat loss). An energy resource has to produce more energy than it uses, otherwise it becomes an energy sink. It takes about 735 joules of energy to lift 15 kg of oil 5 meters out of the ground just to overcome gravity -imagine how much energy is required to lift oil from 27,000 feet beneath the ocean (Jack II). The most concentrated and easiest accessible oil is produced as soon as technology and scale can access it; thereafter, more and more energy is required to locate, harvest, refine and and distribute oil. At some unknown point in the future, more energy will be required to find and procure oil than the energy recovered in the oil– and the “resource” will become a “sink”, irrespective of oil prices. I wrote a specific example of how declines in net energy would take away from productive sectors of society here.

This is theoretically illustrated in the below graphic from an upcoming paper in AMBIO.

Graphic from Energy Return on Investment – Towards a Consistent Framework Mulder, K. and Hagens, N. forthcoming (Click to Enlarge)

The total ‘resource’ in the above graphic is the area A+B+C+D. It directly requires D energy to extract A+B+C+D energy. Extraction and distribution also requires indirect costs (like employees driving to work, health insurance, steel for the drillpipes, sandwich meat, etc.) This is energy cost C. As the scale of resource extraction increases, the ratio of A/(C+D) declines. Though conventional economics might not have done so, we also included cost B, which is the environmental externality costs of increased extraction. Once the scale of extraction reaches the point between A and B on the X axis, it takes more energy to produce the marginal unit than the marginal unit is worth. The ‘resource’ is still in the ground but is energetically unprofitable to produce. If at this point, (assuming one values the environmental tier B), an energy company uses its own stocks of energy to continue production, they do so at an energy loss, and would be better of selling or using their stored energy for other purposes.

As Richard Heinberg recently wrote about, an upcoming report from Energy Watch Group called “Coal: Resources and Future Production,” notes that:

Each coal class has a different energy content:

anthracite 30 MJ/kg
bituminous coal 18.8–29.3 MJ/kg
sub-bitiminous coal 8.3–25 MJ/kg
lignite 5.5–14.3 MJ/kg

and

“the authors of the report conclude that growth in total volumes (in USA) can continue for 10 to 15 years. However, in terms of energy content U.S. coal production peaked in 1998 at 598 million tons of oil equivalents (Mtoe); by 2005 this had fallen to 576 Mtoe.”

In other words, we can continue to grow the gross amount of resource, but the amount of BTUs available to do work has declined since 1998. (Ive not yet seen this report so dont know what to make of it, but illustrate the concept here so as to make declining net energy on oil and gas more easy to grasp.

WE NEED THE SAME TYPE OF ANALYSIS ON OIL AND GAS

Where does the oil ‘resource’ fall on this scale? It is difficult to say for certain. Analysis by Cutler Cleveland suggests that the net energy of oil (EROI-1) was over 100:1 in the 1930s when discovery peaked in the US. It dropped to 30:1 in the 1970s and has since fallen to 10-15:1. Once you account for refining the EROI declines to 5-10:1 Why does this matter? Well lets put it in its simplest terms. Lets for the moment assume that the energy inputs in oil extraction are completely oil and gas. This is actually not far from the truth:

Source Cutler ClevelandClick to EnlargeIn this example, if the world oil and gas industry is averaging a 10:1 energy gain, that means 10% of the worlds oil and gas is needed to procure the rest. If the net energy drops to 4:1, then 20% of the worlds oil and gas is needed to procure the other 80%. If the net energy drops to 3:1, which it eventually could, 25% of the worlds oil and gas will be needed to get the other 75% used by society. So clearly 85 million barrels a day doesn’t tell us the whole picture. Perhaps 50 million bpd at 20:1 net energy generates more ‘wealth’ for the world than 120mbpd of 5:1 oil – because an increasing part of the ‘gross resource’ will be required by oil companies before non-energy society ever sees it.

Most people think of net energy as some esoteric topic that has fleeting relevance to our energy predicament. However, as Joseph Tainter outlined, energy gain (or lack thereof) is critical to the functioning and expansion of society.(3) Many in the investment community are confused as to why energy prices are so high, yet many energy companies (particularly exploration) are struggling to show profits. One reason is their own higher energy use coupled with higher prices for everything in the last few years.

I dont have accurate net energy figures for current oil and gas exploration. (No one does, but it is sorely needed). If we use Professor Clevelands’ net energy figures for US exploration and production and linearly extrapolate the average EROI decline over the last 3 decades forward in time and then overlay it with the EIA forecast for US production, you’d get a graph that would look something like this!:

Total domestic oil projection (EIA)(1) in mbpd with sensitivity on net available to society (green)The total area of black and green is total US liquids EIA production forecast whereas the green is what is left over for non-energy company society under a linear declining net energy assumptions above. As can be seen, an energy break even point is reached within 20 years – at which point it makes no sense to drill/extract any more resource because it takes as much energy to do so as you get out. The resource has become a sink. Of important note, is WELL before that date, a significant amount of energy is removed from productive society and allocated towards energy production. This graph is probably unrealistic as new technology and demand/credit issues will impact extraction in next decade or so, making the net closer to the gross than the graph shows. But as a hypothetical exercise, it calls attention to a critical issue. At some point, declining net energy will mean the end of economic growth, unless it’s replaced with equally high or higher energy gain systems. (*cautionary note – an energy source that DOES replace the energy gain from fossil fuels will still contribute to planetary waste absorption limits)

As natural gas prices increase, the costs of petroleum extraction will also increase (which at least partially explains the higher cost numbers from E&P last year). If North America doesn’t get off the natural gas treadmill, there will start to be a strong positive feedback loop as natural gas is the largest energy input into petroleum extraction. More and more gas will be needed for exploration and production leaving less for plastic bags, fertilizers, and furnaces.

INDIRECT COSTS

Another aspect of net energy that is missed by most wall street analysts (in my opinion) is indirect costs. In addition to the direct electricity, natural gas, etc needed for E&P, there are also pipes, machinery, cement, lumber, steel, wires, tools, etc. As much energy that is used directly in the discovery and harvesting process, the indirect energy is even greater:

Source: Cleveland, CJ, “Net Energy from the Extraction of Oil and Gas in the United States”There are even wider boundary costs not included here but are part of the global closed economy. Part of the 85 million bpd goes to highways, insurance, wheels for employees cars, schools, medicine, dogfood, etc. A wide boundary energy analysis such as this, as you might imagine, is difficult to accurately model in a world of dollar data. Yet its important – because this is how our interconnected world really works.

What does this all mean? It has two important implications. First, it suggests that the ‘total resource’ that gives CERA its confidence to delay the timing of Peak Oil, is not an apples and apples comparison of energy-many of the resources that make up their ‘stacked resource’ are not equivalent in terms of how much energy is left over for society. Second, and more worrisome, is the fact that as net energy of each fossil resource declines, a greater and greater % of its productive flows, will have to be used by the oil and gas companies themselves. This at a minimum robs economic growth and energy services from the rest of society and at a maximum, robs from both the economy and the environment, as energy companies seek out resources that have not yet become sinks (think Florida coast, ANWAR, etc)

SOME REAL LIFE DATA

There is some compelling and concerning pieces of evidence that tie together the last several paragraphs. Much of the expected growth in ‘oil’ in the coming decades comes from unconventional sources. The net energy of shale oil, tar sands, ethanol, etc is a fraction of that of historical crude production. Though a credible net energy study has yet to be done on tar sands, equity research on SUNCOR from John S Herold suggests it costs $30 a barrel to upgrade bitumen to oil. This presumably covers direct costs of the easier mining of bitumen as opposed to the in-situ production. If oil goes to $150 per barrel, will it still cost $30 to produce? Or do costs keep up with or outpace the commodity price? What happens if there is a cost blowout in Fort McMurray for housing, helicopters, services, raw materials, transportation, water, etc?

Before you look at the next graph, imagine how the above net energy information might translate into dollars, as net energy declines. As depleted regions require more energy to be productive, the costs should increase, and if we are approaching energy break even they should increase more than the commodity itself.

Finding and Development Costs per Barrel Oil Equivalent – Source – John S. Herold, IncClick to EnlargeThough this is only a two year sample and comprises about half of the industry, the implications of extreme increases in finding and development costs in a country like the US which peaked 37 years ago, suggests that energy break even may not be science fiction. First of all, the % increase in costs from 2005 to 2006 far outpaces the % increase in oil prices for both US and Worldwide projects. Furthermore, consistent with the ‘best-first’ principle, costs of development went up much higher in the US, which relative to the rest of the world as a whole, is more fully depleted.

A FEW CLOSING WORDS ON NET ENERGY

Net energy analysis is not a purely physical principle, as the economy dictates how much energy it takes to make and deliver products that are used to procure energy. More efficient methods will result in higher net energy and vice versa. If the markets were perfectly functioning, devoid of subsidies and inclusive of environmental externalities, then in theory energy return would equate to financial return. But since the market is focused on the marginal barrel, if enough dollars exist to pay for production at a profit then those dollars will be printed. Net energy analysis holds moving pieces more constant than financial analysis (though the two can never totally be separated)

In sum, net energy analysis is important not only for comparing alternative energy technologies, but for determining how much energy out of our fixed pie is used by the energy sector. Since its the ‘net’ that we care about, it’s important that the energy data agencies move towards ‘net liquid fuel available to non-energy producing sectors’ as a measure of Peak Oil. Oil production and cost to society will increasingly be obfuscated as debt and credit become more significant drivers of growth. As such, we are highly likely to grow gross production, while net energy declines. The unawares will be focused on the gross, as usual.

As an important future exercise, I would like to analyze how much of the worlds 85 million barrels per day of oil (which we now know has a BTU content equal to 80 million) is used by the energy and utility companies finding and delivering the energy services to the rest of society. Is it 20%, 25%? Whatever % this is, I expect it to increase. If it increases, some other economic sectors use will decrease – hospitals? shopping centers? individual drivers? airplanes? Disneyland?

CONCLUSIONS

In the era of fossil fuel use and depletion, much uncertainty and confusion still exists in policy circles and the general public as to the urgency of the situation. CERA, historically respected in oil supply analysis, is in my opinion providing detailed maps to the wrong destinations. In the only category that really matters in the Peak Oil debate, net liquid fuel availability and cost to non-energy producing society, there is ample evidence suggesting that the peak in cheap oil, which society and institutions are built around, is already behind us. This is not a binomial equation. An imminent peak or a peak of affordable oil in 2040 (CERAs projection) have dramatically different risk profiles for society. The best case scenario brewed by conflating reserves with resources, net energy with gross energy, capacity with flow-rates and ignoring the environment makes for a sweet tasting drink. But should we be drinking it?

(**I admit the possibility that although I am looking 2 steps ahead CERA might be looking 3 steps ahead, meaning they are part of an intentional effort to make the 2040 peak message take hold, so that societal uncertainty and pell-mell policy doesn’t disrupt needed upstream investment. But I think it more likely they, and others, are just too narrowly focused in the boundaries of their analysis.)

Actual production can and will differ dramatically from productive capacity. To base decade lag time decisions (like changing transportation infrastructure to more electric, and relocalizing certain basic goods manufacturing) on best case scenarios is foolhardy. What is the risk reward scenario of such decisions? If CERA is right and we get to some 120 mbpd (net)of oil, all the better to use it for an early transition. If they are wrong or potentially WAY wrong, then the complacency in corporate circles from CERA and EIA optimism will mean we have missed our chance to prepare. To focus on a particular productive capacity or even flow rate are the wrong goals, because at 120 mpbd of lower quality/much more expensive oil, we will be stealing from both the environment and the economy. Using dollars to forecast costs is using a moving target. If tar sands are profitable at $32 with oil at $55, will the cost be $132 when oil is $155? Or even higher given wide boundary costs? Money, research and effort needs to go towards a better accounting and estimation of the energy costs of extracting our remaining fossil fuels.

This is the most important issue facing the 3 generations sharing the planet today. We are at a critical time for our nation and our world. Whether we make no changes, small changes or huge paradigm shifts in the direction of our policies and priorities is an open question, but one that will affect not only the environment and our children, but us as well.

THE BOTTOM LINE

1. Flow rates of liquid fuels available to non-energy society matter. Productive capacity means little.

2. Better technology is in a race with depletion, and so far is losing (declining net energy).

3. Focusing on energy return (gross minus energy cost) bypasses many of the moving pieces in project decision criteria inherent in financial analysis which increasingly includes debt/credit.

4. Modern society has been built around high energy density infrastructure. Declines in net energy, if not replaced, will have serious economic implications.

5. Declines in net energy, if replaced, must adhere to increasing limitations on other resources, particularly water, food, and waste absorption.

6. During the last 150 years, the market treated oil as a ‘near infinite resource’. Increasing awareness of many of the issues raised above means classic Hotelling analysis of resource owners acting to maximize rents may soon become a reality (e.g. Opec permanently restraining production, knowing they will get higher prices in the future)

7. The window to address these issues at a societal level is before net energy declines so much that half of us are working for Exxon. Oil at $80, $100, $120, etc. will increasingly price out sectors of the global economy, and eventually population.

To conclude, here is a hypothetical conversation between the head of an oil analysis company and the president of the United States circa 2020. It is one of many such possible conversations for a decade hence. As a citizen of the US or of the planet, how would you want to change it?

SOURCES

(1) EIA Annual Energy Outlook 2007
(2) US Department of Energy: Annual Energy Outlook, 1998 pg. 217
(3) Tainter, Joseph Resource Transitions and Energy Gain: Contexts of Organization Ecology and Society 2003
(4) Cleveland, CJ, “Net Energy from the Extraction of Oil and Gas in the United States
(5) Hubbert, M King. “On the Nature of Growth – Testimony on Hearing for National Energy Conservation Policy Act 1974” June 6, 1974

Posted in How Much Left, Nate Hagens | Tagged how much left, peak oil | 2 Comments

Kurt Cobb: Peak oil production has been hidden by the EIA by including condensate and other non-transportation fuels

Posted on September 20, 2017 by energyskeptic

[ The Energy Information Administration has done what they can to hide peak oil production by adding in everything but the kitchen sink to overall oil production numbers, such as ethanol and natural gas liquids, which are not true transportation fuels (diesel engines can’t burn ethanol). Only 13% of NGL’s can be blended with gasoline (the pentane). The rest is ethane, butane, propane, and isobutane — mainly useful for petrochemicals, plastics, and heating (propane).

Kurt Cobb argues in his post that lease condensates ought to be left out too: “As for condensates and NGLs, terminology in this case is the enemy of clarity. For a good treatment of this problem How the changing definition of oil has deceived both policymakers and the public. NGLs generally refer to both natural gas plant liquids and lease condensate which originate from two different sources, i.e. gas wells vs. oil wells. Part of the storage issue is the storage of lease condensate since it is often mixed with crude oil. Natural gas plant liquids come from natural gas processing plants and so are not typically stored in combination with crude oil.”

Westexas added: “The Cornucopian Crowd argues that there is no sign of any kind of peak in sight. I would argue that this assertion is manifestly false when it comes to actual crude oil production (45 API and lower crude oil). In my opinion, the available data strongly suggest that we have been on an “Undulating Plateau” in actual global crude oil production since 2005, while global natural gas production and associated liquids, condensate & natural gas liquids, have so far continued to increase. Again, what the EIA calls “Crude oil” is actually Crude + Condensate (C+C), and based on EIA data, 22% of Lower 48 C+C production in 2015 exceeded 45 API gravity and about 40% of US Lower 48 C+C production exceeded the maximum API limit for WTI crude (42 API Gravity).

The EIA has a section called international energy statistics where you used to be able to isolate out ethanol or NGL’s or crude oil and lease condensate (Table 6.1) in the International Energy Statistics. But now this is a BETA version, and even though it is 2017, there is no 2015 or 2016 data. You can only select crude oil and lease condensate for OPEC nations). Globally you must select petroleum and other liquids production. The results have no grand total or an excel spreadsheet download so you can do your own sums and calculations. I’ve been waiting almost a year now for the BETA version to be fixed. Is the EIA trying to hide peak oil?

Kurt Cobb. January 17, 2016. The great condensate con: Is the oil glut just about oil? Resource Insights.

My favorite Texas oilman Jeffrey Brown is at it again. In a recent email he’s pointing out to everyone who will listen that the supposed oversupply of crude oil isn’t quite what it seems. Yes, there is a large overhang of excess oil in the market. But how much of that oversupply is honest-to-god oil and how much is so-called lease condensate which gets carelessly lumped in with crude oil? And, why is this important to understanding the true state of world oil supplies?

In order to answer these questions we need to get some preliminaries out of the way.

Lease condensate consists of very light hydrocarbons which condense from gaseous into liquid form when they leave the high pressure of oil reservoirs and exit through the top of an oil well. This condensate is less dense than oil and can interfere with optimal refining if too much is mixed with actual crude oil. The oil industry’s own engineers classify oil as hydrocarbons having an API gravity of less than 45–the higher the number, the lower the density and the “lighter” the substance. Lease condensate is defined as hydrocarbons having an API gravity between 45 and 70. (For a good discussion about condensates and their place in the marketplace, read “Neither Fish nor Fowl – Condensates Muscle in on NGL and Crude Markets.”)

Refiners are already complaining that so-called “blended crudes” contain too much lease condensate, and they are seeking out better crudes straight from the wellhead. Brown has dubbed all of this the great condensate con.

Brown points out that U.S. net crude oil imports for December 2015 grew from the previous December, according to the U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy. U.S. statistics for crude oil imports include condensate, but don’t break out condensate separately. Brown believes that with America already awash in condensate, almost all of those imports must have been crude oil proper.

Brown asks, “Why would refiners continue to import large–and increasing–volumes of actual crude oil, if they didn’t have to–even as we saw a huge build in [U.S.] C+C [crude oil plus condensate] inventories?”

Part of the answer is that U.S. production of crude oil has been declining since mid-2015. But another part of the answer is that what the EIA calls crude oil is actually crude plus lease condensate. With huge new amounts of lease condensate coming from America’s condensate-rich tight oil fields–the ones tapped by hydraulic fracturing or fracking–the United States isn’t producing quite as much actual crude oil as the raw numbers would lead us to believe. This EIA chart breaking down the API gravity of U.S. crude production supports this view.

Exactly how much of America’s and the world’s presumed crude oil production is actually condensate remains a mystery. The data just aren’t sufficient to separate condensate production from crude oil in most instances.

Brown explains: “My premise is that U.S. (and probably global) refiners hit in late 2014 the upper limit of the volume of condensate that they could process” and still maintain the product mix they want to produce. That would imply that condensate inventories have been building faster than crude inventories and that the condensate is looking for an outlet.

That outlet has been in blended crudes, that is heavier crude oil that is blended with condensates to make it lighter and therefore something that fits the definition of light crude. Light crude is generally easier to refine and thus more valuable.

Trouble is, the blends lack the characteristics of nonblended crudes of comparable density (that is, the same API gravity), and refiners are discovering to their chagrin that the mix of products they can get out of blended crudes isn’t what they expect.

So, now we can try to answer our questions. Brown believes that worldwide production of condensate “accounts for virtually all of the post-2005 increase in C+C [crude plus condensate] production.” What this implies is that almost all of the 4 million-barrel-per-day increase in world “oil” production from 2005 through 2014 may actually be lease condensate. And that would mean crude oil production proper has been nearly flat during this period–a conjecture supported by record and near record average daily prices for crude oil from 2011 through 2014. Only when demand softened in late 2014 did prices begin to drop.

Here it is worth mentioning that when oil companies talk about the price of oil, they are referring to the price quoted on popular futures exchanges–prices which reflect only the price of crude oil itself. The exchanges do not allow other products such as condensates to be mixed with the oil that is delivered to holders of exchange contracts. But when oil companies (and governments) talk about oil supply, they include all sorts of things that cannot be sold as oil on the world market including biofuels, refinery gains and natural gas plant liquids as well as lease condensate. Which leads to a simple rule coined by Brown: If what you’re selling cannot be sold on the world market as crude oil, then it’s not crude oil.

The glut that developed in 2015 may ultimately be tied to some increases in actual, honest-to-god crude oil production. The accepted story from 2005 through 2014 has been that crude oil production has been growing, albeit at a significantly slower rate than the previous nine-year period–15.7 percent from 1996 through 2005 versus 5.4 percent from 2005 through 2014 according to the EIA. If Brown is right, we have all been victims of the great condensate con which has lulled the world into a sense of complacency with regard to actual oil supplies–supplies he believes have been barely growing or stagnant since 2005.

“Oil traders are acting on fundamentally flawed data,” Brown told me by phone. Often a contrarian, Brown added: “The time to invest is when there’s blood in the streets. And, there’s blood in the streets.”

He explained: “Who of us in January of 2014 believed that prices would be below $30 in January of 2016? If the conventional wisdom was wrong in 2014, maybe it’s similarly wrong in 2016” that prices will remain low for a long time.

Brown points out that it took trillions of dollars of investment from 2005 through today just to maintain what he believes is almost flat production in oil. With oil companies slashing exploration budgets in the face of low oil prices and production declining at an estimated 4.5 and 6.7 percent per year for existing wells worldwide, a recovery in oil demand might push oil prices much higher very quickly.

That possibility is being obscured by the supposed rise in crude oil production in recent years that may just turn out to be an artifact of the great condensate con.

Posted in How Much Left, Kurt Cobb, Peak Oil | Tagged API, how much oil left, kurt cobb, lease condensate, peak oil | 2 Comments

House hearing: no solutions for North Korea in sight

Posted on September 17, 2017 by energyskeptic

[ This is a summary of the March 2017 house hearing titled “Pressuring North Korea–evaluating options”. First are some of the reasons why nothing is going to change –in my own wording–followed by congressional testimony. Then Chairman Yoho gives a good overview of the history of our strategy in North Korea, followed by Bruce Klingner, senior research fellow for Northeast Asia at the Heritage Foundation. There is also much testimony about what we could do — leaflet, economic sanctions, stop their flow of Johnny Walker, war, etc.

Related posts:

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House 115-12. 2017-3-21. Pressuring North Korea — evaluating options. U.S. House of Representatives.

There are no solutions because the nukes are blackmail for oil, monetary and food aid

Mr. Lee: What would they do once they give up their nuclear weapons and no longer have that great lever with which to bully, extort the biggest powers in the world, including the United States? Depend on the goodwill of their neighbors? That would be a very poor policy.

Mr. BERA. At this juncture, North Korea is not going to back down and become nonnuclear. They see this as their only negotiating leverage. So we don’t see voluntarily stepping back; probably the exact opposite. In addition, if we are not going to have a war, which none of us think would be very easy, that means a commitment to the region, a commitment to deterrence, making sure all options are on the table, and making sure our allies in the region are fully secure in our commitment.

We are not going to crack down on the Chinese because Wall Street would not like it

YOHO (Chairman): Our Secretary of State says all options are on the table. I don’t think the military option is on the table. I think, to some extent, his statement distracts us from the actions that we really need to take, actions that Wall Street will not like.

Sherman: China fully understands the Wall Street policy here: Make a lot of noise, pound the table, sanction a few companies, but don’t interrupt the huge exports of China to the United States; do nothing that really forces China to change its policy, but pound the table loud enough so that you cannot be accused of being weak. We are not going to be successful in changing China’s policy until we are willing to put a tariff on all Chinese, or virtually all Chinese, exports to the United States. Wall Street doesn’t want us to do it, therefore, we won’t do it. Therefore, the real objective of the Trump administration is to yell loudly, call that strength, and not actually do anything that would upset Wall Street or be effective.

The Chinese are not going to crack down and overthrow the regime or 30 million refugees will flood China and neighboring countries. They are going to continue to give aid to North Korea.

SUNG-YOON LEE, PH.D., Kim Koo Korea foundation professor:

In the wake of North Korea’s third nuclear test in February 2013, the new, Chinese president Xi Jinping was quite irate. The Chinese said a lot of things that pleased American ears in the spring of 2013: ‘‘We are going to put some hurt on them. We have finally come around. We are going to punish North Korea.’’ This is pure illusion. Historically, North Korea has insulted, defied the top Chinese leaders far more egregiously than in 2013. Always, the Chinese grit their teeth, increase aid. And, indeed, in 2013, China-North Korea trade increased to $6.5 billion, an all-time high.

North Korea is a Korean state vying for legitimacy against a far more successful, attractive Korean state. The basic internal dynamic in the Korean Peninsula almost dictates that North Korea try to maximize its one strategic advantage over its neighbor. By the conventional industries of measuring state power, military power, political economic power, territorial size, soft power, North Korea does not fare very well against its southern neighbor except in the field of—except for military power. Therefore, the proposition that through artful diplomacy or a little bit of coercion, we can get North Korea to give up its nuclear weapons… is quite unrealistic.

The situation in North Korea may lead to nearby nations also developing nuclear weapons

Mr. LEE. With every North Korean provocation, nuclear test, the public opinion in South Korea, admittedly emotional as it may be as a snapshot of indignation of North Korea’s nuclear tests, supports South Korea going nuclear. We know South Korea has the technical capability within a few months or a year to go nuclear. And in the past, of course, South Korea attempted just that under President Park Chung-hee in the early 1970s. So although it is unlikely that South Korea will move in that direction in the foreseeable future, I think one should not be surprised if 10 years from now, South Korea does make that determination at the risk of irritating or poor relations with its treaty ally, the United States, because the truth is, in the past when Britain, France, Israel went nuclear, what did the United States do? Abandon its allies and friends? No.

Mr. KLINGNER. I think on South Korea or Japan going nuclear, while it goes against U.S. nonproliferation policy for decades, it would undermine the Nonproliferation Treaty, it could subject our allies to international sanctions themselves. But if nothing else, it would also require them to divert a large amount of their defense budget away from what they should be spending on toward duplicating a system that the U.S. is already providing with our extended deterrence guarantee.

HISTORY OF NEGOTIATIONS AND STRAGEGIES WITH NORTH KOREA

Ted Yoho (chairman of the subcommittee). We are meeting today during what is probably the most significant shift in U.S. policy toward North Korea since it began its illicit nuclear program. The new administration has shown a willingness to embrace new thinking on the North Korea issue when Secretary of State Tillerson left the world’s media breathless last week when he restated that all options are on the table regarding North Korea, implying military options. His next statement that we have had many, many steps we can take before we get to that point, received less attention, but was really actually more significant. This is what I hope to focus on today: The many unused or incompletely implemented tools that we can use before the last resort of military action, something none of us would like to see.

North Korea’s nuclear program has never been a bigger threat, and we need to respond with all the tools at our disposal.

Since 2015 Kim Jong Un has tested more missiles than Kim Jong Il, his father, and Kim Il Sung, his grandfather, combined, while making continued progress toward an ICBM capable of targeting nearly the entire continental U.S.

For 20 years, we have responded to every North Korean provocation with either isolation or inducements to negotiate. Our efforts to isolate Pyongyang have either been incomplete or hamstrung by China. Meanwhile, North Korea has used negotiations to extract wealth without ever slowing weapons development. Since 1995, we have provided $1.3 billion in economic and humanitarian assistance to North Korea, and weapons development has only accelerated. As Secretary Tillerson stated during his trip to the region last week, this is 20 years of failed approaches.

The Obama administration’s strategic patience was a low-effort strategy, taking some measures to isolate North Korea, and then simply waiting for the Kim Jong Un regime to wake up and give away his nuclear weapons. Certainly, there is plenty of blame to go around, if we are looking at George Bush taking North Korea off the State Sponsors of Terrorism record, or the Clinton administration allowing North Korea to even start a nuclear program, although it was deemed for peaceful purposes, we saw they strayed from that.

The administration must also start using its secondary sanctions authority against the Chinese entities that have allowed for North Korea’s continued weapons development. China accounts for 90% of North Korea’s economic activity. The failed policies of the past assumed that if the United States did not anger China, China would help promote de-nuclearization. It is time to stop pretending that China’s North Korea policy is motivated by anything else than extreme self-interest of China. China has benefited from undermining sanctions and tolerating North Korea’s nuclear belligerence.

We must reaffirm our critical alliance with the Republic of Korea and Japan. Our officials also rightly continue to reject proposals that we halt military exercise with South Korea to bring North Korea to negotiations.

China’s retaliation against South Korea over the deployment of THAAD is also unacceptable. THAAD is solely oriented toward the defense of South Korea. China should address the threat that makes that necessary rather than interfering with our security cooperation.

It is encouraging to hear that the administration will not make further concessions to hold talks or to negotiate a weapons freeze that leaves North Korea’s threat in place. SWIFT’s recent decision to finally cut off the remaining North Korean banks from its financial messaging service has also been a welcome development.

BRUCE KLINGNER, senior research fellow for Northeast Asia, The Heritage Foundation.

There is a disturbingly long list of reasons to be pessimistic about maintaining peace and stability in Northeast Asia. In response, some experts advocate negotiating a nuclear freeze, but a premature return to talks would be another case of ‘‘abandon hope, all ye who enter here. Will the 9th time be the charm? Pyongyang signed 4 previous agreements never to develop nuclear weapons, and once caught with their hand in the nuclear cookie jar, 4 subsequent promises to abandon those weapons. And a record of 0-for-8 does not instill a strong sense of confidence about any future attempts of negotiation.

During the decades of negotiation, the U.S. and its allies offered economic benefits, developmental and humanitarian assistance, diplomatic recognition, declarations of non-hostility, and turning a blind eye to violations and non-implementation of U.S. law. All failed. Seoul has signed 240 inter-Korean agreements and participated in large joint economic ventures at Kaesong and Kumgangsan. All of these failed to induce Pyongyang to begin to comply with its de-nuclearization pledges, moderate its belligerent behavior, or implement economic or political reform.

It is difficult to have dialogue with a country that shuns it. It was North Korea that closed the New York Channel in July 2016, severing the last official communication link; they walked away from inter-Korean dialogue; and even refuses to answer the phone in the Joint Security Area which straddles the DMZ.

And the freeze proposals all call for yet more concessions by the U.S. and its allies in return for North Korea to begin—to undertake a portion of what it has already obligated to do under U.N. resolutions. The strongest case against diplomacy can be found in the regime’s own words, in which the highest levels of the regime, including Kim Jong Un, have repeatedly and unambiguously made clear they will never abandon their ‘‘treasured sword’’ of nuclear weapons, as well as that the Six-Party Talks are dead and ‘‘null and void.’’ Hope is a poor reason to ignore a consistent track record of failure.

And there are consequences of a bad agreement. A freeze would undermine the nonproliferation treaty and send the wrong signal to nuclear aspirants like Iran, that the path is open to nuclear weapons. Doing so would sacrifice one arms control agreement on the altar of expediency to get another.

Instead, there is now an international consensus on the need to punish and pressure North Korea for its repeated violations. Increased financial sanctions, combined with the increasing pariah status of the regime from its human rights violations, have led nations and companies to sever their business relationships with North Korea, curtail North Korean overseas workers visas, and reduce the flow of hard currency to the regime

Cumulatively, these efforts reduce North Korea’s foreign revenue sources, they increase strains on the regime, and generate internal pressure.

Now is also the time to break some China. The U.S. should stop pulling its punches, and go where the evidence takes it. The North Korea Sanctions and Policy Enhancement Act mandates secondary sanctions on third country, including China, whose banks and companies that violate U.N. sanctions and U.S. laws.

Put North Korea back on the State Sponsors of Terrorism list. Since its removal from the list, Pyongyang has conducted numerous terrorist acts which meet the U.S. legal requirements for being put back on the list. Returning North Korea to the list would be a proper and pragmatic recognition of the behavior that violates U.S. statutes. It also increases North Korea’s diplomatic and economic isolation for its actions.

We should improve information access into North Korea. Promoting democracy and access to information in North Korea is in both the strategic and humanitarian interests of the United States. International efforts to penetrate the information firewall in North Korea should expand on ongoing efforts with radios, DVDs, cell phones, and thumb drives, but also utilize new technology for more innovative ways to get information in and out of North Korea.

Washington must sharpen the choice for North Korea by raising the risk and the costs for its actions, as well as for those, particularly Beijing, who have been willing to facilitate the regime’s prohibited programs and illicit activities and condone its human rights violations. Sanctions require time and political will to maintain them in order to work. We must approach sanctions pressures and isolation in a sustained and comprehensive way. It is a policy of a slow python constriction rather than a rapid cobra strike.

MR SHERMAN: As to China, our efforts have not been enough to change China’s cooperation with North Korea. China accounts for 90% of North Korea’s legitimate trade, 95% of its foreign direct investment. It is North Korea’s lifeline. China recently cut off purchases of North Korean coal. There is more there than meets the eye. China may have already reached its quota under U.N. Security Council resolution, which limits the amount of coal that it can purchase in any year.

One more area I think we can be effective is in deterring Pyongyang from selling nuclear missile material or completed weapons to terrorist organizations or to Iran. This starts with reaching an agreement with China that at least they should not allow overflights of their territory from Iran to Pyongyang, unless those flights stop for inspection or refueling, which would include inspection, in China.

The North Korean Human Rights Act is set to expire. We need to reauthorize it this year. Yes, we have had 20 years of failure, 20 years in which we have refused to make any concession, not even a nonaggression pact, and therefore, we can seem strong while accomplishing nothing. I suspect that that is the policy that we will continue, and that we will be back in this room next year and the year after, and the only difference is the latest North Korean provocation will be a missile that flew further or a nuclear stockpile that is larger. I regret that I believe we will be in this room within a few years to talk about not atomic, but hydrogen nuclear weapons.

Mr. ROHRABACHER. It is time to get tough with Korea, right? North Korea, however, shouldn’t be mistaken, when we get tough with North Korea, that we are getting tough with the North Korean people. North Korean people are a subjugated people. They are kept in place by a bloody tyranny. And whatever we do, it should be aimed at the leadership in North Korea, and not the people of North Korea. So, in fact, we should look at the people of North Korea as potential allies, our greatest potential allies in bringing about what needs to be brought about to have a more peaceful and secure world. Our goal should be the removal of this wacko regime that is just—that now is threatening the world as it develops its nuclear capability. Let us not forget that the Chinese have had the most influence of anyone. They could have stopped this a long time ago. So I suggest we look at banking, I suggest we look at other ways of putting the pressure directly on the North Korean leadership and make sure that our Chinese friends know they are accountable for what happens.

I think the first step is to reassure our allies in the region, the Republic of Korea and Japan, that our commitment to the region, our commitment to the defense of the region has not wavered. I think that is important for the North Koreans to understand we are not wavering in our commitment.

ANTHONY RUGGIERO, SENIOR FELLOW, FOUNDATION FOR DEFENSE OF DEMOCRACIES

The Kim family dynasty continues to threaten the United States and our allies in Japan and South Korea with its nuclear program. Secretary of State Tillerson’s trip to Asia last week noted that all options are on the table, including the military option. This is the right approach. We must take a page out of the Iran economic warfare effort and ensure that every option is considered.

We should not kid ourselves. North Korea tested a four-missile salvo as preparation for a military conflict, and we need to be equally prepared. U.S.-South Korea military exercises are crucial to our preparedness. We should also look to increase military cooperation with Japan and South Korea, and even explore the possibility of stationing additional military assets in the region.

We must act against Chinese banks that facilitate North Korean financial transactions, just as we acted against several European banks that helped Iran evade sanctions. In fact, the U.S. fined these banks over $12 billion collectively for sanctions violations. Chinese banks continue to be the financial lifeline for North Korea, and we have not done enough to cut off this flow of money.

North Korea is a global foreign policy challenge. North Korea proliferated ballistic missiles to Iran, Syria, and other countries, and secretly built a nuclear reactor in Syria in a location that has since fallen to ISIS. The reactor was destroyed in 2007, reportedly by Israel. There have also been unconfirmed reports that Israel destroyed missiles destined for Hezbollah.

SHERMAN: Sanctions against North Korea and China are the only peaceful means for coercing the regime and are, for that reason, indispensable, but we must be prepared to deploy a full range of other measures to deter the threat. You have indicated that it goes to the very core of this regime to become a nuclear state. Would they give up on their nuclear program if that meant more luxury goods for their ruling elite, or would they be willing to suffer a 10 or 20% decline in luxury goods rather than give up their nuclear program? What is more important to them, Johnny Walker or nukes?

Mr. LEE. Continued supply of Johnny Walker.

Mr. ROHRABACHER. Let me note that the problem is not North Korea or North Koreans, it is the mentally ill clique that runs North Korea. The people of North Korea are victims, people who don’t even know they are victims. Our greatest strategy could be putting out an all-out effort to inform the people of North Korea exactly what is happening in the rest of the world, and how they are being short-changed and that their future is being robbed from their children by this current unscrupulous and brutal regime that controls their lives.

Mr. BERA. [To let North Korea know we won’t stand for their nuclear weapons, we could have] exercises, a deployment of THAAD, and other assets that would send a strong message to North Korea that any military intervention, an errant missile going into Seoul or Tokyo would lead to dramatic repercussions.

I think South Korea pursuing nuclear weapons or Japan pursuing nuclear weapons would be not in our interests.

As a negotiating leverage, China needs to understand that if North Korea continues on its current path, then it may have more nuclear-armed nations in its neighborhood, which the Chinese obviously don’t want. So it is in China’s interest to also step up to the table.

Mr. RUGGIERO. Well, they have stated publicly that they believe they have no levers or no way to convince North Korea to do what we essentially want them to do. And I guess my argument is that we can talk here about how do we get North Korea to change its policy, but I think we equally have to talk about how China needs to change its policy. And the way to do that is to go after their companies and banks that are allowing North Korea to do these activities.

Mr. KLINGNER. Yes. But they certainly have been pursuing it for years. We think the Nodong medium-range ballistic missile is already nuclear capable, that they can already range South Korea and Japan with nuclear weapons today. We think they have perhaps 5,000 tons of chemical agent, both pervasive and nonpervasive.

I think it is the threat that they hope not to use. But there is sort of a famous story that Kim Il-sung, the grandfather, asked his generals, including Kim Jong-il, of, you know, what would we do if we were losing a war? And the generals all said, we would never lose. But Kim Jong-il said, what would be the worth of the world without North Korea? So they may do a Twilight of the Gods, use it in a last ditch pulling the temple down upon themselves.

Mr. CONNOLLY. How much leverage does the United States have with respect to sanctions that we haven’t deployed over North Korea? Because we don’t have trade relations. We don’t have economic relations. We don’t directly bank with them or invest in them. What are the levers here we can use? It seems to me they are pretty limited.

Mr. RUGGIERO. Well, the U.N. Report noted, and others have noted, that North Korea needs U.S. dollars. And they need euros as well.

Mr. CONNOLLY. Right. But there are lots of ways of getting both.

Mr. RUGGIERO. Well, the ways they are doing it currently is through the American financial system. So that is a leverage point. How much leverage does China have? They said they are going to cease the purchase of coal exports from the north, which presumably is something pretty injurious to their economy. What other levers do they have they are not using?

Mr. RUGGIERO. I would say on the coal ban that they had a similar ban in April last year, and after that point, they imported $800 million worth of North Korean coal. So whether or not they abide by the ban is still up for a decision. I would also go back to the Iran example, which what we saw was European banks and European companies, mostly banks, that abided by the U.S. decision to say you want to do business with Iran, you may lose your access to the United States. And that happened before European Governments came to that same decision. That is the attitude we have to have with China.

Mr. CONNOLLY. Do you believe a robust diplomatic effort by the United States is still called for and could still be efficacious?

Mr. RUGGIERO. At this time, the North Koreans say they are not interested in it. But I would say that it could be down the road after robust sanctions implementation. I think accepting a freeze at this time would just put their program in place and have the United States accepting their program as a nuclear weapons state.

Mr. CONNOLLY. Presumably, when and if that diplomatic effort needs to be launched, a planned 31% cut in the State Department and USAID’s budget would not really be helpful.

Mr. RUGGIERO. I think the diplomats at the State Department are more than capable of negotiating a deal with North Korea if they are ready to do so.

Mr. CONNOLLY. Not if there are 31% fewer of them.

Mr. SHERMAN. I want to build on Gerry’s comment about the need for a robust State Department. We may be able, no matter how big the State Department is, to send five diplomats or ten diplomats to Six-Party Talks or any kind of talks. But if we want sanctions, that means going to every country and trying to get them to change the behavior of their bank, their distillery, or I guess if you want cognac, maybe some other kind. That is incredibly labor-intensive. It is company by company, country by country.

So they had other non-Chinese opportunities. What are the estimated hard currency and gold reserves of the North Korean Government?

Mr. LEE. There have been newspaper reports of $1 billion to $5 billion in offshore secret accounts in Europe and in China.

Mr. SHERMAN. So they trust the international banking system, or at least they are partners in it. It is not like they have the currency or the gold in Pyongyang itself. They are relying on bank accounts.

Mr. LEE. According to the U.N. Panel of Experts report, most of North Korea’s international financial transactions were denominated in the U.S. dollar from foreign-based banks, transferred through corresponding accounts in the United States.

Mr. SHERMAN. But their reserves they are willing to deposit with foreign-based banks rather than under their mattress?

Mr. LEE. I think that gives us leverage.

Mr. SHERMAN. It does, and I am surprised they are willing to do that. How much does North Korea earn from the export of coal or anything else that they can actually export from their own territory? And how does that compare to how much they generate by exporting labor, whether it be, you know, the workers that they have sent abroad? Can we put these two sources of foreign income in perspective.

Mr. KLINGNER. One point two billion in coal.

SHERMAN: Do they export anything else other than coal from their territory that is worth talking about?

Mr. KLINGNER. Other resources. Resources are a large part of their exports.

Mr. SHERMAN. How willing is North Korea to sell a nuclear bomb? How many nuclear weapons would they have to have for their own use before they would think, well, this one might be extra? Or at least something that we would sell if we could get a really good deal? I

Mr. LEE. Experts vary on what a second strike capability is, perhaps 40 or 50 bombs. Some people estimate that North Korea is very close to having 20 right now. And this will be accelerated in the years to come.

Mr. SHERMAN. So you think they would want 40 for their own defense strategy before they might be willing to sell missile material. Though, of course, they have already shown the last decade a willingness to sell a technology kit, if you will, that was destroyed in Syria. Do you have any comment? Mr. RUGGIERO. I would just say I think they are far more likely to try and milk any nuclear technology in terms of the amount of money they can get. So they are far more likely to duplicate what they did in Syria. So selling the means to be able to produce missile material. I think North Korea values their nuclear weapons. I don’t think they will actually sell a device.

My point is there is more money. Obviously they would get a lot of money if they sold one weapon. But they can get more money, like their ballistic missile program, if countries or other groups are interested in the full nuclear cycle. The bottom line is that if you don’t change the regime, they are not going to give up the crown jewels.

Mr. YOHO. How do you involve the rest of the world? This is a serious problem. Obviously, they don’t see it as serious as we do, or maybe Japan or South Korea do, that we need to get the buy-in for the sanctions to work. How do you go to the U.N. and say we need world cooperation? Because this is not good for anybody, not just the region, but it would upset the whole applecart of the world, not just trade, but stability around the world. How do you get the rest of the world to buy into that and say we need you at the table to do this? Is this something we can put pressure on through our U.N. partners and just say, you know what, we cut off funds until you come to the table

Mr. LEE. I believe the United States is in a unique position, uniquely well positioned to take that leadership role to make the point that tougher sanctions are necessary through the respective U.S. Embassies in those nations. Give other nations the choice. No one is calling for an all-out trade war with China, but U.S. sanctions against North Korea have been very, very weak, both in degree and kind.

I believe the United States is in a unique position, uniquely well positioned to take that leadership role to make the point that tougher sanctions are necessary.

The self-restraint exercise over the past 70 years with each North Korean lethal provocation probably has contributed to the de facto peace in the region, but we have spoiled North Korea.

Mr. YOHO. Mr. Ruggiero, in addition to the sanctions following the reinstatement of the North Korean State Sponsor of Terrorism, Thae Yong-ho was noted as saying that the best thing that we can do—who is the highest ranking North Korean defector in decades—recently said that this was the best way to force change in North Korea by injecting outside information. And I don’t look at it as propaganda. I look at it as injecting truth to the North Korean people. Because you have got a society for 70 years who has only known repression. They don’t know what it is outside. And my wife and I watched a video the other day of the young girl that came through China and told a very compelling story that would bring tears to anybody’s eyes. How do you get that story into North Korea? What is the best way? Is it through the SIM cards, through broadcasting? All of the above? Leaflets? I would like to hear your thoughts on that.

Mr. RUGGIERO. All of the above is the right approach.

Mr. SHERMAN. I certainly agree on an all-out effort on information, an all-out effort on the sanctions regime that we have. But when you hold up the Iran model, keep in mind, that Iran was a much more vulnerable country because it has to provide a higher standard of living to its people and because it doesn’t have China in its corner. And in spite of that, we were only able to extract rather modest limits on its nuclear program. We are trying to do far more with regard to North Korea.

Posted in North Korea, Oil shock collapse, U.S. Congress Energy Policy | Tagged collapse, North Korea | Comments Off

Pentagon video warns of unavoidable dystopian future for world’s biggest cities

Posted on September 14, 2017 by energyskeptic

Preface. A few excerpts:

Megacities are, by definition, urban areas with a population of 10 million or more, and they have been a recent source of worry and research for the U.S. military. A 2014 Army report, titled “Megacities and the United States Army,” warned that “the Army is currently unprepared. Although the Army has a long history of urban fighting, it has never dealt with an environment so complex and beyond the scope of its resources.” A separate Army study published this year bemoans the fact that the “U.S. Army is incapable of operating within the megacity.”

As the film unfolds, we’re bombarded with an apocalyptic list of ills endemic to this new urban environment: “criminal networks,” “substandard infrastructure,” “religious and ethnic tensions,” “impoverishment, slums,” “open landfills, over-burdened sewers,” and a “growing mass of unemployed.” The list, as long as it is grim, accompanies photos of garbage-choked streets, masked rock throwers, and riot cops battling protesters in the developing world. “Growth will magnify the increasing separation between rich and poor,” the narrator warns as the scene shifts to New York City.

But I think much is nonsense, especially anything involving electricity — one of the tragedies of declining energy is that the electric grid will come down for most people and eventually everyone, and certainly the fancy electronic devices like computers and cell phones will have stopped being made.

Alice Friedemann www.energyskeptic.com Author of Life After Fossil Fuels: A Reality Check on Alternative Energy; When Trucks Stop Running: Energy and the Future of Transportation”, Barriers to Making Algal Biofuels, & “Crunch! Whole Grain Artisan Chips and Crackers”. Women in ecology Podcasts: WGBH, Planet: Critical, Crazy Town, Collapse Chronicles, Derrick Jensen, Practical Prepping, Kunstler 253 &278, Peak Prosperity, Index of best energyskeptic posts

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Nick Turse. Pentagon Video Warns of “Unavoidable” Dystopian Future for World’s Biggest Cities. October 13 2016. theintercept.com

The year is 2030. Forget about the flying cars, robot maids, and moving sidewalks we were promised. They’re not happening. But that doesn’t mean the future is a total unknown.

According to a startling Pentagon video obtained by The Intercept, the future of global cities will be an amalgam of the settings of “Escape from New York” and “Robocop” — with dashes of the “Warriors” and “Divergent” thrown in. It will be a world of Robert Kaplan-esque urban hellscapes — brutal and anarchic supercities filled with gangs of youth-gone-wild, a restive underclass, criminal syndicates, and bands of malicious hackers.

At least that’s the scenario outlined in “Megacities: Urban Future, the Emerging Complexity,” a five-minute video that has been used at the Pentagon’s Joint Special Operations University. All that stands between the coming chaos and the good people of Lagos and Dhaka (or maybe even New York City) is the U.S. Army, according to the video, which The Intercept obtained via the Freedom of Information Act.

“Megacities: Urban Future, the Emerging Complexity,” a video created by the Army and used at the Pentagon’s Joint Special Operations University.

The video is nothing if not an instant dystopian classic: melancholy music, an ominous voiceover, and cascading images of sprawling slums and urban conflict. “Megacities are complex systems where people and structures are compressed together in ways that defy both our understanding of city planning and military doctrine,” says a disembodied voice. “These are the future breeding grounds, incubators, and launching pads for adversaries and hybrid threats.”

The video was used as part of an “Advanced Special Operations Combating Terrorism” course offered at JSOU earlier this year, for a lesson on “The Emerging Terrorism Threat.” JSOU is operated by U.S. Special Operations Command, the umbrella organization for America’s most elite troops. JSOU describes itself as geared toward preparing special operations forces “to shape the future strategic environment by providing specialized joint professional military education, developing SOF specific undergraduate and graduate level academic programs and by fostering special operations research.”

Looking down from a high vantage point on Third Avenue, we’re left to ponder if the Army will one day find itself defending the lunchtime crowd dining on $57 “NY Cut Sirloin” steaks at (the plainly visible) Smith and Wollensky.

Lacking opening and closing credits, the provenance of “Megacities” was initially unclear, with SOCOM claiming the video was produced by JSOU, before indicating it was actually created by the Army. “It was made for an internal military audience to illuminate the challenges of operating in megacity environments,” Army spokesperson William Layer told The Intercept in an email. “The video was privately produced pro-bono in spring of 2014 based on ‘Megacities and the United States Army.’… The producer of the film wishes to remain anonymous.”

According to the video, tomorrow’s vast urban jungles will be replete with “subterranean labyrinths” governed by their “own social code and rule of law.” They’ll also enable a proliferation of “digital domains” that facilitate “sophisticated illicit economies and decentralized syndicates of crime to give adversaries global reach at an unprecedented level.” If the photo montage in the video is to be believed, hackers will use outdoor electrical outlets to do grave digital damage, such as donning Guy Fawkes masks and filming segments of “Anonymous News.” This, we’re told, will somehow “add to the complexities of human targeting as a proportionally smaller number of adversaries intermingle with the larger and increasing number of citizens.”

“Megacities” posits that despite the lessons learned from the ur-urban battle at Aachen, Germany, in 1944, and the city-busting in Hue, South Vietnam, in 1968, the U.S. military is fundamentally ill-equipped for future battles in Lagos or Dhaka.

“Even our counterinsurgency doctrine, honed in the cities of Iraq and the mountains of Afghanistan, is inadequate to address the sheer scale of population in the future urban reality,” the film notes, as if the results of two futile forever wars might possibly hold the keys to future success. “We are facing environments that the masters of war never foresaw,” warns the narrator. “We are facing a threat that requires us to redefine doctrine and the force in radically new and different ways.”

Mike Davis, author of “Planet of Slums” and “Buda’s Wagon: A Brief History of the Car Bomb,” was not impressed by the video.

“This is a fantasy, the idea that there is a special military science of megacities,” he said. “It’s simply not the case. … They seem to envision large cities with slum peripheries governed by antagonistic gangs, militias, or guerrilla movements that you can somehow fight using special ops methods. In truth, that’s pretty far-fetched. … You only have to watch ‘Black Hawk Down’ and scale that up to the kind of problems you would have if you were in Karachi, for example. You can do special ops on a small-scale basis, but it’s absurd to imagine it being effective as any kind of strategy for control of a megacity.”

The U.S. military appears unlikely to heed Davis’s advice, however.

“This is the world of our future,” warns the narrator of “Megacities.” “It is one we are not prepared to effectively operate within and it is unavoidable. The threat is clear. Our direction remains to be defined. The future is urban.”

Top photo: An officer from the CORE police special forces aims his weapon during an operation to search for fugitives in the Complexo do Alemao favela on May 13, 2014, in Rio de Janeiro, Brazil, one of the world’s megacities. A Pentagon video forecasting the future of the world’s urban populations suggests that the U.S. military is fundamentally ill-equipped for future battles in megacities.

Posted in Military | Tagged collapse, megacity, poverty, social unrest | 2 Comments

Of course the reason the U.S. invades other countries for oil

Posted on September 11, 2017 by energyskeptic

Deaths from terrorism between 2000–2014. Deaths from terrorism have increased dramatically over the last 15 years. The number of people who have died from terrorist activity has increased nine-fold since the year 2000. Source : ABC News (Australia) based on Global Terrorism Index

This post contains information from Nafeez Ahmed’s 2017 book “Failing States, Collapsing Systems BioPhysical Triggers of Political Violence“, Springer.

It appears that military planning for the war-on-terror began long before 9/11. Compelling evidence can be found in official documents, high-level government testimony, industry sources and statistical analysis.

Major interventions most often occur in strategic areas near the remaining Middle East fossil fuel resources, whether by direct, covert, or via proxy forces (Stokes and Raphael 2010).

Lately scientific studies have shown that the main reasons motivating U.S. military invasions are access to fossil fuels, mainly petroleum (Bove et al. 2015), and to force countries to open their markets to US exports (Berger et al. 2013).

Bove and Sekeris say that their research on the role of oil as a source of conflict “motivates military interventions and assistance to promote the commercial interests of the invading country, adding a dark dimension to the implications of modern societies’ dependency on oil, while also raising questions about the ethical grounds of such military interventions” (Bove and Sekeris 2016).

Attempts to control the world’s oil resources is also done to be sure economic growth continues. For example, documents from one of the US military’s most important commands, Central Command (CENTCOM), show that US military interventions have been motivated to support the ‘free market’ for decades. CENTCOM’s mission has become one of “keeping the global economy open” (Morrissey 2016).

Violence has become the main way fossil-fuel producing countries are forced and exploited by the global neoliberal capitalist order to be sure that global economic growth continues via increasing energy production.

As both EROI and social unrest destabilizes Middle Eastern countries, so have military interventions increased. A RAND report that looked at how often US military interventions occurred from 1949 to 2010 came to the startling conclusion that not only did the overall frequency of US interventions increase, but that an intervention increases the probability of an ensuing cluster of interventions, with each new intervention increasing “the likelihood of an additional intervention in the next by at least 20% and possibly as much as 50%.” The report further found that such “clustered deployments” have been “more likely since the fall of the Soviet Union than during the Cold War,” and further that the number of US interventions “increased dramatically over this period, especially between 1988 and 2004 (Fig 6.5).

Fig. 6.5 Timing of military interventions by year of onset. Source : Kavanagh ( 2013 )

Given the links between US military interventions, energy interests, and the global economy, this establishes a strong empirical case for the conclusion that escalating Western state-militarization is a direct response to the destabilization of the global system as declining EROI has weakened the foundations of the global neoliberal capitalist order, and undermined state-territorial integrity in key strategic regions, particularly across parts of the Middle East, North Africa and Central Asia which contain most of the world’s fossil fuel resources and energy transshipment routes.

Fig. 6.6 Global rise of number of Islamist militant groups. Source : Seth G. Jones (2014)

Terrorism

In turn, the escalation of Western military interventionism has provoked an increase in Islamist militancy, which has further fueled far-right extremism, and further military invasions. Since the 1990s, the rise in Islamist militant groups has increased steadily, and the rate of increase has particularly accelerated in the period following the 2011 Arab Spring (Fig. 6.6 ).

There has been a parallel rise in the number of far-right extremist groups in the US, coupled with an alarming rise in terrorist attacks by far-right groups worldwide. In the US, by far the biggest threat to homeland security is from far-right extremists, and within Europe, there has been a corresponding rise in popular support for far-right political parties (Fig. 6.7).

Fig. 6.7 Rise in US far-right militant groups. Source : Salon.com based on data via Southern
Poverty Law Center

Every single one of the far-right parties gaining popularity in Europe has strong neo-Nazi connections, and mobilizes largely on an anti-Muslim platform (Ahmed 2016).

REFERENCES

Ahmed, N. 2016. At the Root of Egyptian Rage Is a Deepening Resource Crisis. Quartz. Accessed August 16. http://qz.com/116276/at-the-root-of-egyptian-rage-is-a-deepening-resource-crisis/

Berger, Daniel, William Easterly, Nathan Nunn, and Shanker Satyanath. 2013. Commercial Imperialism? Political Influence and Trade during the Cold War. American Economic Review 103(2): 863–896. doi: 10.1257/aer.103.2.863

Bove, Vincenzo, Kristian Skrede Gleditsch, and Petros G. Sekeris. 2015. ‘Oil above Water’ Economic Interdependence and Third-Party Intervention. Journal of Conflict Resolution, January 27: 0022002714567952. doi: 10.1177/0022002714567952 .

Bove, Vincenzo, and Petros G. Sekeris. 2016. Fueling Conflict: The Role of Oil in Foreign Interventions. IPI Global Observatory. Accessed July 19. https://theglobalobservatory. org/2015/03/civil-wars-oil-above-water-military-intervention/

Morrissey, John. 2016. US Central Command and Liberal Imperial Reach: Shaping the Central Region for the 21st Century. The Geographical Journal 182(1): 15–26.

Stokes, Doug, and Sam Raphael. 2010. Global Energy Security and American Hegemony. Baltimore: JHU Press. Stott, Peter. 2016. How Climate Change Affects Extreme Weather Events. Science 352(6293): 1517–1518.

Posted in Middle East, Over Oil, Social Disorder, Terrorism | 1 Comment