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Tomgram: Michael Klare, War in the Arctic?

Tomgram: Michael Klare, War in the Arctic?

When I first met Michael Klare in the late Neolithic age (it was actually the early 1970s), he was already researching the U.S. military in a way no one else was doing. His first book on the subject, War Without End: American Planning for the Next Vietnams, had just been published. The title remains eerily apt, given Washington’s twenty-first-century “forever wars.” Almost 50 years later, he’s still ahead of the curve and his newest book on that military, All Hell Breaking Loose: The Pentagon’s Perspective on Climate Change, has only recently come out.

And he hasn’t stopped yet, as you’ll see in today’s piece on a new nuclear flashpoint for the U.S. and Russia: the melting Arctic. It’s the sort of thing that, in another world, would be headline news. Still, his latest piece saddens me for personal reasons. When Klare and I first met, the Cold War with the other superpower of that moment, the Soviet Union, was still in high gear; the Vietnam War had yet to end; and the Cuban Missile Crisis (the one time in my life when I truly felt like “ducking and covering”) was only a decade past. In other words, the possibility of a global conflagration that might end life as we know it on this planet still seemed all too possible. As late as the early 1980s, in the age of Ronald Reagan, I would find myself on the streets of New York City with my family, marching in the company of Hibakusha — survivors of the Hiroshima atomic bombing — and perhaps a million other protestors, part of a global antinuclear movement calling for disarmament and protesting the possibility of an annihilating war. That seemed a moment of fear but also of hope when it came to the nuclear issue.

…click on the above link to read the rest of the article…

US Slams China’s Escalating Oil & Gas ‘Interference’ In Vietnam Recognized Waters

US Slams China’s Escalating Oil & Gas ‘Interference’ In Vietnam Recognized Waters

Late this week, the US State Department accused China of escalating its coercive actions against Vietnam in the South China Sea. 

A spokesman said the US is “deeply concerned” China is continuing its interference with Vietnam’s longstanding oil and gas activities in the Vietnamese Exclusive Economic Zone (EEZ) claim.

“This calls into serious question China’s commitment, including in the ASEAN-China Declaration on the Conduct of Parties in the South China Sea, to the peaceful resolution of maritime disputes,” the statement said

Military officers of the Vietnamese Navy’s Second Regional Command signalling territorial claims. Source: Viet Nam News

This week the National Interest described in detail the worsening situation in a piece aptly titled South China Sea Showdown: China vs. Vietnam (Round 2).

The report described a Chinese survey vessel dispatched inside the Vietnam claimed EEZ accompanied by Chinese Coast Guard military vessels:

The Haiyang Dizhi 8, a survey vessel belonging to a Chinese government-run corporation, began surveying a large swath of seabed on 3 July northeast of Vanguard Bank, which falls within Vietnam’s exclusive economic zone. The ship has been escorted by other vessels, including from the China Coast Guard and maritime militia. At the same time, China Coast Guard ships have been harassing Vietnamese drilling operations to the south.

Western analysts see Beijing’s expansion in regional waters as part of a broader campaign of natural resource exploitation, with the ultimate goal of forcing rival countries into ‘joint exploration’ partnerships, even in undisputed waters. 

According to the report, the current crisis is the most serious tensions have been between China and US ally Vietnam in years

Chinese incursions into Vietnam’s EEZ are by no means a new phenomenon. The most serious recent incident occurred in 2014, when China deployed an oil rig into Vietnam’s EEZ, sparking a diplomatic crisis between the two neighbors. The current situation near Vanguard Bank, however, represents a more serious challenge on several levels.

 …click on the above link to read the rest of the article…

Norway Oil and Gas: Reserves, Production and Future Projection

Norway Oil and Gas: Reserves, Production and Future Projection

Norwegian oil production peaked in 2000 to 2001; gas production may be peaking about now. Oil hit a low in 2013 and then recovered towards a new local peak, probably concurrent with the gas.

drilling and development

The most surprising thing I find with their industry is that the drop in oil price made almost no difference the drilling activity shown here (all data here and below taken from the NPD – Norwegian Petroleum Directorate – which provides more data than just about any other such organisation).

chart/

The chart shows numbers of wells drilled, as stacked bars, and number of operating rigs (unstacked) against the left hand axis, other curves are ratios of total against the right axis. There was a high level of drilling activity in 2013 and 2014 which then actually increased in 2015 and was still high in 2016, although exploration well numbers look to be decreasing now. This may be just a consequence of the momentum built up in the high price years, or because of the influence of Norwegian regulatory regime (which has always sought to smooth out development activity, though less so recently with new Conservative governments), or a move to new frontiers in the Norwegian and Barents Seas (the background area chart shows proportion of wells in each sea). The development wells marked N/A (information not available) are probably mostly oil judging by the fields being drilled, the non-production wells are mostly injection with a few for observation and disposal. The number of rigs and proportion of dry wells have remained pretty steady, as has the proportion of subsea wells.

…click on the above link to read the rest of the article…

Why This Oil Crisis Is Different To 2008

Why This Oil Crisis Is Different To 2008

Rig

They say history repeats itself, and given the cyclical nature of the oil and gas business, many look to the past when trying to guess what is coming next, but past experience doesn’t always offer an exact model for the present.

Much has changed between the 2008 oil and gas downcycle and the one the industry is currently working through today. The drop in oil prices that started in 2008 took place against the backdrop of the Global Financial Crisis, aka The Great Recession. Economies all around the world sputtered to a halt, and demand for oil dropped. Lehman Brothers filed for bankruptcy protection on September 15, 2008. It was the all-time largest bankruptcy filing.

Oil prices dropped from historic highs of $144.29 in July 2008, to $33.87 five months later. OPEC, the world’s traditional “swing crude oil producer,” took its traditional actions, cutting production by 16 percent in eight months to bring stability to global prices, which was led primarily by the group’s largest producer, Saudi Arabia. Crude oil consumption and production dropped by 1.5 percent and 1.2 percent, respectively, before coming back to parity from 2008 to 2010. U.S. producers pulled back on drilling operations until prices began to improve, switching from conventional drilling to horizontal drilling following the 2008 crash. And except for the banks and car companies, there wasn’t much going on at the bankruptcy court house by the E&P or OilService (OFS) companies.

In aggregate, debt-to-EBITDA for the E&P companies was approximately 1.6x, and the average capital efficiency (EBITDA per BOE divided by finding and development costs per BOE) was 230 percent, while for the OFS sector debt-to-EBITDA was 0.9x, while capital intensity (capital expenditures divided by EBITDA) was 62 percent. The companies, in general, had the cash and balance sheet to work through another downward descent in the 7th commodity cycle since 1981.

…click on the above link to read the rest of the article…

 

Energy policy and uninformed opinion

Energy policy and uninformed opinion

Famed economist John Kenneth Galbraith used to respond to questions about the direction of the economy and financial markets by saying: “I answer because I’m asked not because I know.”

Such is also the case with poorly informed members of the public whose views pollsters seek on every conceivable topic including energy. A recent Gallup poll asked a sampling of Americans whether they believe the United States will face a critical energy shortage in the next five years.

Some 31 percent responded yes, the lowest number on record since the question was first asked in 1978 (though it was not asked again by Gallup until 2001.) In 2012, the last time the question appeared in a Gallup survey, the number was 50 percent. The highest result came, not surprisingly, in 2008 when oil was making its historic climb to an all-time high of $147 per barrel. In March of that year (five months before the oil price peak) some 62 percent of American respondents thought the United States would face a critical energy shortage in the next five years.

There is, of course, the problem of what “critical energy shortage” means to each respondent. Prices for all varieties of energy were elevated in 2008, but there weren’t any critical shortages–just very high prices which made it impossible for some to afford as much energy as they would like.

Currently, in the face of gasoline prices which have fallen to $2.11 per gallon nationally and natural gas prices that recently touched lows reminiscent of the late 1990s, it is remarkable that even 31 percent still think critical energy shortages could show up within five years. That belief be may the after-effect of the highest average daily prices on record for crude oil four years running from 2011 through 2014.

…click on the above link to read the rest of the article…

Shale Euphoria: The Boom and Bust of Sub Prime Oil and Natural Gas

Shale Euphoria: The Boom and Bust of Sub Prime Oil and Natural Gas

Those whom the gods wish to destroy they first send mad

Introduction

The aim of this article is to show that the shale industry, whether extracting oil or gas, has never been financially sustainable. All around the world it has consistently disappointed profit expectations. Even though it has produced considerable quantities of oil and gas, and enough to influence oil and gas prices, the industry has mostly been unprofitable and has only been able to continue by running up more and more debt. How could this be? It seems paradoxical and defies ordinary economic logic. The answer is to be found in the way that the shale gas sector has been funded. It is part of a bubble economy inflated by monetary policy that has kept down interest rates. This has made investors “hunt for yield”. These investors believed that they had found a paying investment in shale companies – but they were really proving that they were susceptible to wishful thinking, vulnerable to hype and highly unethical practices that enabled Wall Street and other bankers to do very nicely. Those who invested in fracking are going to lose a lot of money.

A Global Picture of disappointed expectations

Around the world big expectations for fracking have not been realised. One example is Argentina where shale oil reserves were thought to rival those in the USA. It is a country where there has been local opposition while central government pushed the industry in alliance with multinational companies and its own company YPC. However profitability has been elusive. To have any hope of profitability shale development has to be done at scale to rapidly bring down costs enough to make a profit.

 

…click on the above link to read the rest of the article…

Key Greenhouse Gas Study May Have “Systematically Understated” Methane Leaks, New Research Shows

A widely cited study on the amount of methane leaking from oil and gas sites, including fracked wells, shows signs of a major flaw, a newly published peer-reviewed paper concludes.

“The University of Texas reported on a campaign to measure methane emissions from United States natural gas production sites as part of an improved national inventory,” researcher Touché Howard wrote in a paperpublished today in the journal Energy Science & Engineering. “Unfortunately, their study appears to have systematically underestimated emissions.”

The University of Texas study, the first in a 16-part research series backed by the oil and gas industry and the Environmental Defense Fund , had been hailed as “unprecedented” when it was published in October 2013.  The drilling industry and its supporters cited it as clear-cut evidence that methane leaks were lower than previously believed and falling further due to new technology.

The study’s key contribution to the science on methane leaks was that researchers were allowed to access to oil and gas wells, including 27 wells where fracking was underway, and test individual pieces of equipment. “This is actual data, and it’s the first time we’ve had the opportunity to get actual data from unconventional natural gas development,” Mark Brownstein, an Environmental Defense Fund associate vice president, told FuelFix when the UT study was published.

But the problem stems from the tool that the University of Texas study used to collect its data – which can malfunction when leaks are spewing at high rates. The “University of Texas study underestimates national methane emissions at natural gas production sites due to instrument sensor failure,” Mr. Howard, who invented the basic technology used by that instrument, wrote.

…click on the above link to read the rest of the article…

Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds

Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds

If you were waiting for a “black swan event” to come along and devastate the global economy, you don’t have to wait any longer.  As I write this, the price of U.S. oil is sitting at $45.76 a barrel.  It has fallen by more than 60 dollars a barrel since June.  There is only one other time in history when we have seen anything like this happen before.  That was in 2008, just prior to the worst financial crisis since the Great Depression.  But following the financial crisis of 2008, the price of oil rebounded fairly rapidly.  As you will see below, there are very strong reasons to believe that it will not happen this time.  And the longer the price of oil stays this low, the worse our problems are going to get.  At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before.  So let’s hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead.  Because if not, the price of oil is going to absolutely rip the global economy to shreds.

What amazes me is that there are still many economic “experts” in the mainstream media that are proclaiming that the collapse in the price of oil is going to be a good thing for the U.S. economy.

The only precedent that we can compare the current crash to is the oil price collapse of 2008.  You can see both crashes on the chart below…

…click on the above link to read the rest of the article…

 

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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