Archive for the ‘energy geopolitics’ Category

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US energy sanctions on Russia must thread the needle

May 15, 2014

Russia’s resurgent geopolitical power is dependent on it’s vast energy wealth.  That makes the Russian energy sector a juicy target for policies aimed at punishing Russian machinations in Ukraine.

However, America’s European allies are dependent on Russia as their primary energy source.  That creates a dilemma – how to get European support for meaningful sanctions that won’t end up hurting themselves as much or more as the intended targets?

The US is trying to thread the needle by targeting Russia’s energy future while keeping its current productivity intact.   Although it remains a major exporter, Russia’s reserves of conventional oil are in steady decline.  However, as reported here in the past, Russia has immense shale reserves.  Shale oil has resuscitated the US oil industry (oil production in the US hit a 26 year high last year and the Energy Information Agency projects continued growth to a 40 year high next year).  No other nation has been able to leverage their shale resource as effectively as the US, and Russia needs access to US experience and technology if they want to similarly extend their own energy industry.

Therefore, the Atlantic allies are crafting sanctions that will prohibit participation in Russian shale (and Arctic) energy development by Western companies.  Of course, there is nothing preventing the Kremlin from retaliating by squeezing current exports to the allies, anyway.  It would end up just being a test of wills.  And, so far, Putin has demonstrated ownership of much more of that particular resource as well.

Russia's vast but untapped shale resources

Russia’s vast but untapped shale resources

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Can the US energy bounty defeat Russia’s energy weapon?

March 6, 2014

Russia’s energy weapon is the presumed ability of Russia to bully European governments into acquiescing to its policies by threatening to withhold natural gas deliveries, on which most of Europe is heavily dependent.  Some people argue that the ongoing American boom in natural gas production gives the US the ability to blunt Russia’s weapon by offering to ship natural gas to any and all European countries.  Seems simple and straightforward, but the reality is that it is not true.

As Michael Levi explains, there are several factors that limit the influence American gas can have in Europe.  First is the fact that natural gas production and sale is a private, commercial enterprise.  The US government has no gas to sale, and the European governments are not purchasers.  Second, there is a lack of infrastructure to support any large scale gas transfers to Europe.  Finally, the prices in the Asian market are much higher and that is the direction in which  US sellers have pointed their infrastructure.

Now, it is true that a change in government policies could change the situation.  For instance, the US could adopt a policy which loosens LNG export restrictions.  And the EU could subsidize North American gas purchases so that the European market is as financially attractive to sellers as the Asian market.   But Russia has never actually used their weapon against EU nations, so there is no will for the latter.  As long as the energy weapon remains nothing but an implied threat, it will not motivate European leaders to take extraordinary steps to diversify their supply.

In the end, the North American energy boom is a source of security for North America, but it cannot serve as an energy shield for anyone else.

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Saudi options for filling strategic vacuum left by US disengagement #geopolitics

January 28, 2014

The energy rich Persian Gulf has long been held in balance between two local powers, Iran and Saudi Arabia.  The much more populous Iran has been held in check by the House of Saud through the deft geopolitical moves of the latter.  In particular, the Saudis have leveraged US energy dependence to create a large and decades long US military presence in the region which Iran has never had a chance of matching.  However, as the War on Terror shifts to a low intensity phase and the United States abandons the two major combat theaters (Iraq and Afghanistan), the Saudis are confronted with an Iran that has proxy forces in Iraq and Syria, is on the verge of having its nuclear ambitions legitimized, and left with a US ally in which it no longer has confidence.

Brandon Friedman examines the Saudi options in this analysis for Israel’s Dayan Center (link opens a pdf file) and concludes that it is possible that Saudi Arabia, too, will seek nuclear weapons and further destabilize the most important energy producing region in the world.

This is energy geopolitics at its most basic and most dangerous level.

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Important Oil Shale test to begin in Utah

January 17, 2014

After years of delay, British oil firm TomCo has finally received all the necessary permits from the state of Utah to begin the test of the EcoShale method of extracting crude oil from shale deposits.  These deposits, known as kerogen, are different from shale oil.  The formations are much tighter and, though rich in oil, are extremely difficult to render into usable form.  Other methods use copious amounts of both water and energy to extract and have negligible – even negative – returns on investment for both capital and energy.  However, the lure remains because the size of the resource is so immense – the estimated extractable amount of crude from Western US states kerogen deposits is up to three times the total oil in Saudi Arabia.    From an energy concentration point of view, US oil shale is one of the richest resources in the world.

Comparative Energy Concentrations

Tomco, and their partner Red Leaf Resources (the developers of the EcoShale process) have been prepping the test site for nearly three years.   Red Leaf believes that the energy return on energy invested (EROI) will be at least 10 – comparable to domestic crude oil production, which has an EROI of 10.5.  That means it will return 10 unites of energy for every one unit of energy used in its production.   EROI is every bit as important as financial return on investment – we know historically that high EROIs are necessary conditions for economic productivity and growth.   The EROI figure is actually more important than the total amount of oil the test is able to generate, and that is the figure that I am most eager to see.

Shale gas and oil have already shaken the foundations of the energy world, undermining the despotic regimes and weakening the “energy weapon” of the mostly autocratic nations which control the bulk of the world’s “easy” carbon fuels.  A successful test of the EcoShale process would crash that old energy model completely.  The US could become – at once – the worlds greatest energy producer, consumer and exporter.  And it would reverse the slipping geopolitical power of the United States for a century or more.

 

 

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CFR Identifies the Top Security Threats in 2014

January 7, 2014

The Council on Foreign Relations’ Center for Preventative Action has conducted a survey of over 1,200 experts to identify the most dangerous potential security threats facing the world in 2014.   The threats are ranked according to their probable impact on the US and are broken into three tiers.  The Tier One threats that the CPA believes should draw the most attention are:

  • Intensification of the Syrian civil war, including possible limited military intervention
  • Growing violence and instability in Afghanistan resulting from the drawdown of coalition forces and/or contested national elections
  • Growing political instability and civil violence in Jordan triggered by spillover from the Syrian civil war
  • A severe North Korean crisis caused by a military provocation, internal political instability, or threatening nuclear weapons/long-range missiles
  • A mass-casualty terrorist attack on the U.S. homeland or a treaty ally
  • A highly disruptive cyberattack on U.S. critical infrastructure
  • Renewed threat of military strikes against Iran as a result of a breakdown in nuclear negotiations and/or clear evidence of Iran’s intent to develop a nuclear weapons capability
  • Increasing internal violence and political instability in Pakistan
  • Civil war in Iraq due to rising Sunni-Shia sectarian violence
  • Strengthening of al-Qaeda in the Arabian Peninsula (AQAP) resulting from continued political instability in Yemen and/or backlash from U.S. counterterrorism operations

Most of these would certainly have direct and immediate impact on energy geopolitics both in the US and worldwide.  The CPA’s Conflict Tracker is an interactive presentation of both current and potential conflicts.  The image captured below shows all 30 of the potential threats identified in the survey; Tier One threats are in dark red.

Tier One threats are noted by deep red tags

Tier One threats are noted by deep red tags

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How will development of new natgas fields impact the Middle East?

October 28, 2013

Not much, argues Paul Rivlin of Israel’s Dayan Center (pdf):

” . . . even if Cyprus and Israel (and later perhaps Lebanon and Syria) decide to export gas it will not be a game-changer. Much of the speculation about dramatic changes in the strategic balance because of East Mediterranean gas has been exaggerated. The benefits to an industrialized country like Israel will be substantial if the revenues are used for investment rather than consumption, and a stronger economy will strengthen the country’s strategic position too. This will also be true for other countries in the region if they use the revenues correctly. These kinds of gains will be more significant than some of the grandiose export schemes that have been proposed.

In other words, Rivlin sees real potential for local economic benefits, but little chance that gas will re-order the geopolitical landscape.  Indeed, the gas bounty might well increase tensions as everyone vies for a larger piece of the pie.

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What are America’s core geopolitical interests?

August 1, 2013

Robert Kaplan takes a stab at that question his National Interest piece The Tragedy of US Foreign Policy.   The tragedy, Kaplan asserts, is that the US cannot – and arguably must not – always and everywhere pursue the goals of personal liberty and human rights that it claims for its own citizens (the debate of how well we do protecting those rights at home is always worth having, but I’ll leave it aside in this post).  Kaplan argues (and I tend to agree) that the responsibilities attendant to the unique US geopolitical position actually constrains its ability to act in what might otherwise be its moral interests.

“The United States, like any nation—but especially because it is a great power—simply has interests that do not always cohere with its values. That is tragic, but it is a tragedy that has to be embraced and accepted.

What are those overriding interests? The United States, as the dominant power in the Western Hemisphere, must always prevent any other power from becoming equally dominant in the Eastern Hemisphere. Moreover, as a liberal maritime power, the United States must seek to protect the sea lines of communication that enable world trade. It must also seek to protect both treaty and de facto allies, and especially their access to hydrocarbons. These are all interests that, while not necessarily contradictory to human rights, simply do not operate in the same category.

Because the United States is a liberal power, its interests—even when they are not directly concerned with human rights—are generally moral. But they are only secondarily moral. For seeking to adjust the balance of power in one’s favor has been throughout history an amoral enterprise pursued by both liberal and illiberal powers. Nevertheless, when a liberal power like the United States pursues such a goal in the service of preventing war among major states, it is acting morally in the highest sense.”

Kaplan is associated with the neo-conservative school of US foreign policy, but the broad description that he gives in the above cited section would just as easily have been embraced by JFK or even FDR as by any conservative president.  It was even applied directly by one of our most pacifist presidents, who instituted the Carter Doctrine, which dedicated US military force to the protection of oil flows out of the Persian Gulf and is the genesis of our entanglement with a large number of anti-democratic, anti-Western, religiously intolerant and misogynistic regimes for over 30 years.  Technological and policy innovation in the energy sphere – both of which are within our grasp – would free us from that entanglement and perhaps even free us to act more easily in the moral interest.