Clinton Raises Alarm On Peak Oil - Ex-President Warns Of Resource Wars

Heading For $100/Barrel
Clinton Raises Alarm On Peak Oil
www.btinternet.com/~nlpwessex/Documents/ClintonPeakOil.htm
Ex-President Warns Of Resource Wars
As US Department of Energy Anticipates
'Geopolitical Ramifications' From Changing Oil Trade Patterns

"We almost certainly are at or near what they call peak oil..."
Al Gore, former US Vice President
CNN, 14 June 2006

http://www.straight.com/content.cfm?id=18576

Straight Talk

Clinton raises alarm about oil depletion

By charlie smith

Publish Date: 22-Jun-2006

Former U.S. president Bill Clinton has urged newspaper editors to focus more attention on the depletion of the world’s oil reserves. In a June 17 speech to the Association of Alternative Newsweeklies convention in Little Rock, Arkansas, Clinton said a “significant number of petroleum geologists” have warned that the world could be nearing the peak in oil production.

Clinton suggested that at current consumption rates (now more than 30 billion barrels per year, according to the International Energy Agency), the world could be out of “recoverable oil” in 35 to 50 years, elevating the risk of “resource-based wars of all kinds”.

During a question-and-answer period, the Georgia Straight asked Clinton if he believed that Saudi Arabia, Iran, Kuwait, and United Arab Emirates had exaggerated claims about their proven oil reserves. The four Persian Gulf states are among the six nations with the greatest listed proven reserves. (Canada and Iraq are the other two.)

“I don’t know if they’re overstating their reserves,” Clinton replied. He added that he expects oil prices will reach US$100 per barrel “in five years or less”.

Texas-based energy-investment banker Matthew Simmons, author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (John Wiley & Sons, 2005), told the Straight last October that 60 percent of all Saudi oil has come from one field, Ghawar. Simmons said that after the Saudis nationalized the industry, they increased their proven reserves by 100 billion barrels without making any new discoveries. In 1998, retired petroleum geologists Colin Campbell and Jean Laherrère wrote an article in Scientific American, claiming that Saudi Arabia and several other Oil Producing and Exporting Countries had also increased their proven reserves. This enabled those countries to export more petroleum under OPEC’s quota system.

At the AAN convention, Clinton delivered a detailed scientific explanation of some of the problems with the Ghawar oil reservoir. Clinton echoed Simmons’s claim that massive amounts of water have been injected into Ghawar to maintain oil pressure. “It implies less oil than we previously thought,” Clinton said.

Clinton also recommended that everyone at the convention read The Empty Tank: Oil, Gas, Hot Air, and the Coming Global Financial Catastrophe (Random House, 2005), by Jeremy Leggett, a petroleum geologist and international campaigner for Greenpeace. (For more information on the book, see the Straight’s January 5-12, 2006, edition at www.straight.com/.) Clinton also emphasized the importance of developing the alternative-energy industry and weaning his country off its dependence on imported oil. He claimed that promoting renewable power would also stimulate the American economy.

“Unlike us, the U.K. has found a source of new jobs in this decade,” he said, referring to the Blair government’s efforts in this area. “The implications are dire if we don’t do something.”

Meanwhile 'Geopolitical Ramifications' Brewing
According To US Department Of Energy

"In 2003, China imported 0.9 million barrels per day of oil from Persian Gulf OPEC members, and in 2030 its [projected] Persian Gulf imports total 5.8 million barrels per day. The rising dependence of China on Middle Eastern oil supplies has geopolitical implications both for relations between the two regions and for the oil-consuming world as a whole.... anticipated changes in the world’s oil trading patterns— particularly, the shifting regional dependence of importing regions on producing regions—may have important geopolitical ramifications."
International Energy Outlook
US Department Of Energy, June 2006

(Major Increases In North American And Chinese Oil Consumption Projected To 2030)
Table 7, p34 International Energy Outlook
US Department Of Energy, June 2006

"With higher oil prices assumed to continue, oil production in the non-OECD Europe and Eurasian region exceeds 14.0 million barrels per day in 2015, based in large part on the potential investment outlook for the Caspian Basin region, where long-term production potential still is regarded with considerable optimism. Caspian output more than doubles, to 4.2 million barrels per day, in 2015 and increases steadily thereafter, although there still is considerable uncertainty about export routes from the Caspian Basin region.... With a moderate decline in North Sea production, OECD Europe is expected to import increasing amounts from Persian Gulf producers and from OPEC member nations in western Africa. Substantial imports from the Caspian Basin are also expected.... Security and diversity of natural gas supply are major concerns for OECD Europe now and going forward. Europe is aggressively expanding LNG receiving capacity, and several new pipelines have been proposed that would link Europe to supplies in Egypt, the Middle East, and the Caspian Basin..."
International Energy Outlook
US Department Of Energy, June 2006

"Leaders of the six-member Shanghai Cooperation Organization, which includes China, Russia, Kazakhstan, Uzbekistan, Tajikistan, and Kyrgyzstan, embraced a Chinese-led plan during the summit to increase military cooperation and discussed a Russian proposal to create a regional 'energy club' that would exclude the United States. The SCO also indicated it would soon invite Iran, India, Pakistan, and Mongolia -- nations that have observer status in the organization -- to become full members. That the SCO provided Iran with a diplomatic embrace at a time when the United States is trying to isolate Tehran over its nuclear program is yet another instance of how the grouping is thumbing its nose at Washington, analysts say.... Last July, as soon as Iran, India, and Pakistan were inducted into the SCO as observers, the organization also formally asked the United States to withdraw its troops from member states. Since then, Uzbekistan has asked the United States to vacate an air base it set up after the Sept. 11 attacks. Both Russia and India have also established military bases in Tajikistan, not far from the US base in that country. The economic endgame in all this is to dilute Washington's hold over the Caspian Sea's energy reserves, said Robert Karniol, Asia-Pacific editor for Jane's Defense Weekly. China and India, the world's fastest-growing energy consumers, want to divert Central Asia's energy resources toward their own economies, and Iran and Russia, the region's largest energy suppliers, are keen to reduce their dependence on sales to the West, Karniol said.....Over the last year, China, India, Russia, and Iran have signed energy deals valued at about $500 billion with one another and also have begun to talk of about creating a Central Asian 'energy club' that would have its own pipeline network and energy market. India and China have raised Washington's ire with a proposal to convert the prized Baku-Tbilisi-Ceyhan pipeline, which has been designed to bring gas to Europe, into a feeder for Asia. India wants to extend the pipeline to Syria, from where oil would be loaded onto tankers and shipped to Asia through the Red Sea."
Summit forges military ties in Central Asia
Boston Globe, 18 June 2006

"The U.S. and China, the world's top two oil consuming nations, must work together to avoid a competition for foreign supplies that might lead to military conflict, U.S. Senator Joseph Lieberman said.... China's demand for oil is forecast to grow 2.9 percent a year between now and 2025, and U.S. demand will grow 1.5 percent a year. Efforts by each nation to use imports to meet growing demand may escalate competition for oil to something 'as hot and dangerous' as the nuclear arms race between the U.S. and Soviet Union, Lieberman, 63, said in a speech today in Washington.... 'There is a problem because China, like the United States, is tying its energy deals to military assistance,' said Michael Klare, author of 'Blood and Oil: The Dangers and Consequences of America's Growing Dependency on Imported Petroleum.' 'In the short term, it's more a case of stirring up local conflicts, where the U.S. and China are competing for the loyalty of oil producing countries, but that does have a tendency over time to escalate into something bigger,' said Klare, a professor at Hampshire College in Amherst, Massachusetts."
U.S., China Must Cooperate or Risk Oil Conflict, Lieberman Says
Bloomberg, 30 November 2005

"... the reference case outlook for production of unconventional liquids (especially from oil sands and ultra-heavy oils) is twice as optimistic in IEO2006 as it was in IEO2005, reflecting the impact of a much higher price path. In the IEO2005 reference case, unconventional production rose to 5.7 million barrels per day in 2025; in IEO2006, unconventional supplies reach 9.7 million barrels per day in 2025 and 11.5 million barrels per day in 2030.... declining U.S. output is expected to be supplemented by significant production increases in Canada and Mexico. Canada’s conventional oil output contracts steadily in the reference case, by about 1.0 million barrels per day over the next 25 years, but an additional 2.8 million barrels per day of unconventional output from oil sands projects is added.... natural gas use in Canada’s electric power sector more than doubles from 2003 to 2030, the largest absolute increase is projected for the industrial sector, largely because significant amounts of natural gas are expected to be used in the mining of Canada’s expansive oil sands deposits."
International Energy Outlook
US Department Of Energy, June 2006

"..... My view is that 'easy' oil [i.e. conventional oil] has probably passed its peak... Other new hydrocarbon energy frontiers include heavy oils and where oil is contained in sand and shales... One prerequisite for success is ensuring sufficient investment to access more difficult resources ....."
Jeroen van der Veer, CEO of Royal Dutch Shell
Financial Times, 24 January 2006

"Companies have flocked to Alberta's oil sands in the last decade. Although the region's crude is difficult and expensive to extract because it's mixed with sand, higher global crude prices have made production here more economically feasible. As a result, investment in the region has skyrocketed. Around C$125 billion ($122 billion) of projects is planned over the next decade, while crude production is expected to triple to 3 million barrels a day by 2015. However, the strain of anticipating that investment is beginning to show, as there's not enough manpower or resources to meet the industry's needs. Earlier this year, Husky Energy (HSE.T) suspended plans to build an upgrader at its 200,000-b/d Sunrise project near Fort McMurray, Alberta - the hub of the oil sands industry - because it couldn't recruit the construction staff necessary. Upgraders process heavy Canadian oil to make it more palatable for refineries. Meanwhile, Shell Canada (SHC.T), Royal Dutch Shell's (RDSB.LN) Canadian unit, said in April that higher input costs have spurred it to review the economics of its oil sands expansion plans. It expects to report on its findings by the end of June. In addition to limits on manpower and raw materials, there are plenty of other checks in the system curbing development and decreasing the likelihood that new projects will be announced. 'There are an awful lot of projects that are trying to be constructed at the same time, and that creates bottlenecks in the system,' said Randy Eresman, president and chief executive of Canadian oil and gas firm EnCana Corp. (ECA). In particular, more pipeline capacity is needed if producers are to bring on new projects, Eresman said. A deficit of pipeline infrastructure already limits Canadian crude producers' access to U.S. markets, and extra output coming on stream will exacerbate the situation until new pipelines are constructed. Land availability also determines whether new projects are economically feasible, said Pat Carlson, president and chief executive of North American Oil Sands Corp. His company is seeking to build a 10,000-b/d oil sands project in Alberta by 2008, and production could rise to 160,000 b/d by 2016. 'It's increasingly difficult to assemble the land base necessary and get critical mass for a project,' Carlson said. And it's not getting any easier. Last week, the Regional Municipality of Wood Buffalo, which includes Fort McMurray, voted to apply for 'intervenor status' for oil sands projects heading to the Alberta Energy and Utilities Board for approval. If Wood Buffalo's application is approved, local officials could veto new oil sands developments if they feel that local infrastructure - especially housing, schools and hospitals - couldn't handle the impact. As the introduction of new projects becomes increasingly unlikely, the stage is set for consolidation, with mergers and acquisitions taking a bigger share of the Canadian oil spotlight. Already in 2006, numerous energy trusts - tax vehicles that develop mature oil and gas assets and pay out cash flow to shareholders - have merged, while Shell Canada, despite reconsidering its existing oil sands expansion plans, has paid C$2.4 billion for BlackRock Ventures Inc. (BVI.T). Although BlackRock produces only 20,000 b/d of crude, its operations are located next to Shell's Peace River holdings. These deals could represent the start of a wave of acquisitions in the sector, 'There's so many factors pointing toward consolidation that it's shocking there hasn't been more of it already,' Neff said. 'So many companies are so exposed on their planned investments that they'll be lucky to complete those, let alone plan any more. The larger companies will have the advantage when it comes to acquiring labor, so it pays to get bigger.'"
New Canada oil sands projects unlikely
MarketWatch, 21 June 2006

"World oil demand should soar 37 percent from this year's almost 86 million barrels per day to 118 million bpd by 2030, even though higher fuel prices will cut back some consumption, the U.S. government's top energy forecasting agency predicted on Tuesday. Much of the growth in global oil use over the next quarter century will come from the non-industrialized nations in Asia, where the strong economies of China and India will gobble up more barrels, according to the Energy Information Administration, the statistical arm of the Energy Department.... The Organization of Petroleum Exporting Countries will provide a large chunk of the additional oil supplies that will be needed to meet demand in 2030, the EIA said... Caruso said the EIA now expected long-term oil prices to be 35 percent higher, compared with last year's forecast, because of impediments to drilling for oil in non-OPEC countries, higher oil development costs due to the global rise in commodity prices, which has made steel for pipelines expensive, and problems finding personnel to manage big oil projects..... a benefit of high prices is that they will spur production of unconventional oil sources, such as oil sands in Canada, heavy oil in Venezuela and processing U.S. coal into liquid fuels, Caruso said... The United States, China and India together will account for half of the projected increase in world oil use. "
U.S. sees world oil demand rising 37 pct by 2030
Reuters, 20 June 2006

"The world lacks the means to produce enough oil to meet rising projections of demand for fuel over the next decade, according to Christophe de Margerie, head of exploration for Total and heir presumptive to the leadership of the French energy multinational. The world is mistakenly focusing on oil reserves when the problem is capacity to produce oil, M de Margerie said in an interview with The Times. Forecasters, such as the International Energy Agency (IEA), have failed to consider the speed at which new resources can be brought into production, he believes. 'Numbers like 120 million barrels per day will never be reached, never,' he said."
World 'cannot meet oil demand'
London Times, 8 April 2006