Archive for August, 2012


Geopolitics of Weapons Systems: The foundering F-35 program

August 31, 2012

Terrific, if worrying, article at Foreign Affairs on the decaying position of the United States in the global weapons trade.  The American reputation for building sophisticated weapons systems creates networks of dependency with other nations that tie them further into the US strategic schema.  However, the US share of the market has been decreasing as the cost of some of its weapons systems has skyrocketed.  A case in point is the F-35 Joint Strike Fighter.  As a fighter, the F-35 is clearly inferior to the F-22 Raptor, which production President Obama halted early in his presidency.  The advantage that the F-35 had was that it was cheaper and that, while not a top rated aerial combat plane, it could successfully carry out ground support missions.  Also, it was to be built in three variants (conventional, carrier based, and short take off and landing) with enough similar parts that there would be an economy of scale.

However, the costs of the F-35 have skyrocketed, so it is now nearly as expensive as the Raptor, while it has failed to meet its performance requirements.  And, on top of that, it is nearly 5 years behind schedule, leaving allies who expected deliveries in the lurch.  The Dutch voted earlier this summer to bail out of the program, while others have cut back their support by shrinking their purchase commitments.  Last spring, aviation experts told Foreign Policy that the F-35 was a failure that could never be fixed and had to be scrapped.

It will take a lot of guts to cancel the 2nd of two fifth generation fighters, especially after the billions that have already been poured into it.  I doubt that we can expect the current administration to do so.  I wonder if a Romney presidency would do it?  Romney’s business history indicates that he knows how to cut underperformers and also knows when to stop throwing good money after bad.  He will also (in my opinion) have to show a willingness to cut defense spending – or at least defense programs – if he wants to get broad support for his other budget plans.  But, if there is no alternative design ready to get rolling, would any president be willing
to summarily end a signature defense program?


China eyes natgas fracking as path to energy independence

August 31, 2012

China has even more shale gas reserves than the US – about 50% more (the EIA estimates 1.275 trillion cubic feet vs. 862 billion cubic feet in the US).   Chinese leaders recognize the fortune beneath their feet and have made exploitation of their shale gas reserves a focus of the nations 12th Five Year Plan. There is a very good summary of China’s efforts in this analysis from the University of Pennsylvania’s Wharton School.

However, although China has much greater shale reserves, they lack the technical expertise to exploit them.  Even more importantly, China is facing a tremendous water crisis, and fracking is highly dependent on water.   Between water scarcity and water pollution driven by the nation’s rapid industrialization, the World Bank estimates that more than 300 million Chinese citizens- equivalent to the entire population of the US – lacks adequate access to clean water supplies.  China has been working to develop non-hydraulic techniques – some of which are the basis of Chimera Energy’s claimed waterless fracking process which is currently being tested for extracting shale oil in Mexico – but they appear to be much less effective than hydraulic fracturing, especially for gas.




Chinese Admiral: US missile defense is a con game

August 30, 2012

Rear Admiral Yin Zhou says the the proposed US missile defense shield for South East Asia is really just a conspiracy designed to force China (and India) to misallocate their defense budgets on relatively useless weapons.  Yin told an open online Chinese defense forum this week that the real goal of the US system is not missile defense, but rather “to set up a big trap, a trap in fact for all other countries to fall in. That is to say, it aims to force America’s opponents to invest huge amounts into developing nuclear and ballistic weapons to drain your limited military resources. While in fact these nuclear and ballistic weapons you developed will not have real use in an actual war, they will leave you with no money for developing conventional weapons.”

Read more: Inside China: Missile defense conspiracy? – Washington Times

IEA may authorize release from the SPR

August 30, 2012

Petroleum Economist reports that the International Energy Agency (IEA) has agreed to approve a release of supplies from the US Strategic Petroleum Reserve (SPR).  While the IEA has no sovereign authority to stop any US action, it does represent an important coalition of allies and its views have to be taken into consideration.  The IEA had long opposed such a release because it believes that unilateral actions undermine its ability to leverage market power vs. oil producers, so this is big news.

Various factors are causing a diminished supply in oil at the moment – in addition to ongoing factors in the Persian Gulf, there have been two major recent refinery fires, and Hurricane Isaac temporarily idled production in the Gulf of Mexico.  With gas prices rising to all time highs, the Obama Administration has considered the idea of releasing stocks from the SPR in order to ease supply concerns and lower prices.  With what appears to be an exceptionally close election looming any cynics believe that such an act would be primarily for political reasons.   However, there is very good reason to take such an action that has nothing to do with politics.  The fact of the matter is that US petroleum supply has been below the five year minimum range for two full months.  This is the first time in years that the US supply has dipped below the average range for an extended period.  While the US is not at war and there is no obvious national emergency, this situation is certainly an appropriate one for the use of the SPR.  Could such a release help the President in his re-election campaign?  Possibly.  But, could it offer relief to the nation mired in a tepid economy? Certainly.  It falls within fair use, IMO.


Reports of Mexican oil demise appear to have been exaggerated

August 29, 2012

Mexico is one of the three largest sources of US oil imports,  consistently delivering over 1000 barrels per day on an annualized basis for over 15 years.  As such, the health of the Mexican petroleum industry is of major strategic interest to American analysts.  Over the last few years, Mexican oil production has clearly been in decline as their oil fields age and the industry suffers from lack of investment.

Today, however, will probably mark a reversal of that decline.  Mexican President Felipe Calderon has announced that PEMEX, the national Mexican petroleum company, has discovered their first ever high yield, light crude, deep water well in the Gulf of Mexico.  The finding is significant not just for its size, but for its quality – it is the easy to process and highly desirable light crude (most of Mexico’s reserves are of heavy crude).  The discovery is in the Perdido Fold Belt of the western Gulf of Mexico, off the coast of the northern state of Tamaulipas.  It is estimated that this particular well could deliver 400 million barrels, and that the entire sector could yield 29 billion barrels – which would increase Mexico’s proven reserves by nearly 50%.


The clean coal triad

August 28, 2012

Despite being the dirtiest fossil fuel, coal continues to be the world’s primary source of energy.  Although developed nations have slowed their use of coal, it is the fuel of choice in developing nations because it is so cheap and abundant.  Indeed, even in advanced nations, coal consumption has begun to increase again due to a variety of factors.   But, even as modern coal burning plants in advanced nations become more and more efficient, they still emit vast amounts of CO2.

Coal, even though it is a major contributor to global warming (and, if untreated, a source of even worse pollutants as well) will be a primary energy source for most if not all of the 21st century.   Energy is required not just to modernize the developing world, but to feed their growing populations, and that energy will come from fossil fuels in general and from coal in particular.   The policy question is not how to stop the use of coal, but how to clean it up.

coal pollution in Datong, Shanxi Province, China

Richard K. Morse is the Director of Research on Coal and Carbon Markets at Stanford University’s Program on Energy and Sustainable Development.  He addresses the problem of coal (we need it but we can’t use it) in the most recent issue of Foreign Affairs.   Morse believes that, essentially, the world can have its cake and eat it, too:

Given how dominant coal is, one of the most promising ways to fight global warming is to make it emit less carbon dioxide, a solution that is less elusive than commonly thought. Merely installing the best available technologies in coal plants in the developing world could slash the volume of carbon dioxide released by billions of tons per year, doing more to reduce emissions on an annual basis than all the world’s wind, solar, and geothermal power combined do today. And advanced technologies now in the works could someday allow coal to be burned without releasing any carbon dioxide into the atmosphere.

Morse focuses on two approaches.  The first is carbon capture and sequestration (CCS), which I have discussed several times on this blog.  CCS processes trap the CO2 that is emitted when coal is burned and stores it safely underground so that it cannot enter the atmosphere and contribute to global warming.   CCS, Morse acknowledges, is currently too expensive to be carried out on anything but a demonstration level, but he believes that increased research funding, proper regulatory changes, and coordination between countries could bring the cost down.

How CCS works

The second approach that Morse discusses is underground coal gasification (UCG), an even more esoteric technology than CCS.  As Morse notes, UCG

involves igniting coal seams deep below the earth’s surface, which transforms them into a gas that can then be piped aboveground to fuel electrical generators or create diesel substitutes. The technology is experiencing a wave of new investment thanks to new advances in drilling and computer modeling that are bringing down costs. UCG leaves most of the pollution associated with burning coal belowground, especially when the process is combined with CCS.

It seems to me that the CO2 reduction involved in UCG is a side benefit, not a main selling point.  The primary value of UCG is that is allows access to extremely deep seams of coal that could not otherwise be mined.  Here is a diagram of the UCG process from the UCG Association:

How underground coal gasification works

Both of these approaches involve treating CO2 primarily as a waste product to be disposed of (although, Morse does mention the potential for injecting captured CO2 into old oil wells to enhance recovery of remaining reserves while at the same time sequestering the gas deep in the wells).  However, there is a third approach that should be combined with these two – carbon capture and utilization (CCU), of which the most promising aspect is converting the excess CO2 into other chemicals, such as methanol for use as a clean burning fuel.   This approach both scrubs CO2 from the process, but extends the value of coal by turning it into a dual purpose agent.  This is the theory behind the Methanol Economy argument.

The coal gasificatioin process

So, this is the clean coal triad – CCS, UCG, and CCU.  Together, they lead to a cleaner environment without sacrificing the energy needs of a world growing not just in population, but in technological sophistication.  It won’t be cheap or easy to build this kind of economy, but it is a very clear path forward.  This is the essence of technological positivism – the twin crises of energy supply and global warming are technological problems demanding technological, not political, solutions.  Politics of course will have its place – we need to create a regulatory regime that at once allows this approach to flourish while at the same time protecting the environment.  But, make no mistake, the solutions are coming from the engineers, not the politicians.


ASTM to address industry standards for fracking

August 28, 2012

ASTM International is a well established group that develops standards and practices for various industries.  ASTM standards are entirely voluntary and have no legal  authority, but they often serve the basis for government regulations.  Earlier this month, ASTM announced the establishment of a subcommittee that will begin the process of drawing up standards for safe and efficient hydraulic fracturing activities.  The committee will consider not only natural gas fracking, but also procedures to be used for tight oil extraction and even proposed geothermal fracking.  This is an important and necessary step in moving energy extraction forward.  The development of a set of clear standards will give everyone – industry representatives, environmental activists, local citizens, government regulators, and politicians – a basis from which to assess individual projects that come up for approval.

From the ASTM press release:

To provide best practices for hydraulic fracturing, diverse stakeholders are coming together at ASTM to create sound technical standards for this dynamic field. Subcommittee D18.26 is planning on developing standards that will cover:

• Background site investigation and permitting;
• Well installation and borehole integrity testing;
• Engineering and drilling techniques;
• Management and disposal of drilling fluids;
• Groundwater monitoring and remediation;
• Reinjection of produced well fluids; and
• Permanent well abandonment and data reporting.

“As the oil and gas industry looks to tap into the vast energy resources in shale formations across the U.S., the surge in hydraulic fracturing activity is expected to continue for years to come,” says Kenneth R. Bell, Ph.D., P.E., D.GE, corporate manager of geotechnical and hydraulic engineering services at Bechtel Corp. and vice chairman of ASTM Committee D18. “New standards developed by D18.26 will help direct the work of the industry so that these operations can be performed to accepted best practices and oil and gas can be recovered in a safe and secure manner.”