Oil Change » Rosa Lin http://oilchangeproject.nationalsecurityzone.org The World's Most Precious Commodity and the Future of U.S. Security Wed, 08 May 2013 18:39:32 +0000 en-US hourly 1 http://wordpress.org/?v=3.5.2 Reliable access to oil is at the core of energy security http://oilchangeproject.nationalsecurityzone.org/oil-is-the-largest-component-of-energy/ http://oilchangeproject.nationalsecurityzone.org/oil-is-the-largest-component-of-energy/#comments Wed, 28 Nov 2012 15:38:40 +0000 Rosa Lin http://oilchangeproject.nationalsecurityzone.org/?p=75

U.S. Energy Sources, 2011

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Source: Energy Information Administration, 2011

Affordable and reliable access to oil is the core of energy security. Despite the rise of natural gas and efforts to develop alternative energy sources, the U.S. and the world still rely on oil as their largest source of energy. Consider how much oil the U.S. consumed last year. The U.S. consumed 6.87 billion barrels of oil in 2011, which contributed to about 35% of total U.S. energy consumption. Natural gas followed at 25%, while coal came in third at 20%.

Over 70 percent of this oil consumption went toward transportation purposes. However, not only is oil used to power cars, trucks, and airplanes, it is also used to create plastics, synthetic materials, chemicals, asphalt, heating oil, and more.

The director of the energy security initiative at Brookings Institution, Charles Ebinger gave this definition of energy security: “At the most basic level, energy security means having access to the requisite volumes of energy at affordable prices.

The brunt of energy security revolves around the fuel that is being pumped through the world at the greatest volume, and is thus also the most vulnerable to price fluctuations. That fuel is oil, and is projected to be oil for decades into the future.

   World Energy Sources, 2011

Liquid fuel sources, of which oil makes up the majority, contributed to about 33% of worldwide energy consumption. Coal was the second largest source of energy at 28%, while natural gas followed at 22%. Overall, U.S. oil consumption accounted for about 22% of total world oil consumption.

world

Source: Energy Information Administration, 2011

         Projection of World Energy Consumption

         (quadrillion btu)

World energy consumption is projected to rise steadily into the future, and the U.S. Energy Information Administration predicts that oil will remain the largest energy source. The world consumed 176.4 quadrillion Btu of oil in 2011, which is projected to rise to 225.2 quadrillion Btu in 2035.

consumptionProjections2

Source: Energy Information Administration, 2011

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The marketplace of oil http://oilchangeproject.nationalsecurityzone.org/oil-companies-are-big-players-in-the-flow-of-oil/ http://oilchangeproject.nationalsecurityzone.org/oil-companies-are-big-players-in-the-flow-of-oil/#comments Mon, 26 Nov 2012 15:39:41 +0000 Rosa Lin http://oilchangeproject.nationalsecurityzone.org/?p=82

Energy security is not a military operation issue … it’s a market-centered subject.

- Michael Rühle, Head of Energy Security Section, NATO

When the public thinks of ensuring energy security, they may think of military combat and defense of physical infrastructure crucial for producing or shipping petroleum. In reality, such military operations are rarely required. Rather, the global marketplace is the main stage for regulating energy security through pricing, production levels, and trade between nations. The market determines how much oil is available, how much it costs, and where it can be shipped to. As a result, energy security, defined as ready access to energy at affordable prices, is dependent on the international oil market.

Players in the global oil trade include international oil and gas corporations, such as Exxon Mobil Corporation, as well as state-run enterprises, such as Saudi Aramco Oil Company of Saudi Arabia. In the latter case, governments have a key voice in determining the operations of the company, which are focused on strategic national interests rather than maximizing profits.

The military does play a key role in maintaining the peace and stability in regions necessary for the free trade of oil. But as long as the market is allowed to function normally, global energy security is ensured by the decisions and operations of the oil companies themselves.

So who are these corporate movers of the world’s energy?

Oil companies run the gamut from a few hundred employees to tens of thousands; production capacities from a few thousand barrels per day to tens of millions; and from wholly state owned and run to private, for-profits. The most influential of them can be grouped into three categories:

International oil companies (IOC) – Private companies that operate internationally and independently of national interests. IOCs are profit-driven and have to answer to shareholders. Examples include Exxon Mobil, Royal Dutch Shell and BP (formerly British Petroleum).

National oil companies (NOC) – State-owned companies that primarily operate within national borders and according to national interests. The OPEC countries and some non-OPEC countries run national oil companies, and use the revenue stream as a significant source of funding for their governments. Examples include Saudi Aramco and Petroleos Mexicanos (PEMEX).

NOCs that operate like IOCs – State-owned companies that are market-oriented and operate with a corporate strategy, while acknowledging the objectives of their country. Examples include Petrobras of Brazil, Statoil of Norway.

How big are these oil companies?

State-run NOCs are, in general, much larger than IOCs. Saudi Aramco, the largest of the NOCs and overall, earns over $1 billion in daily revenue according to Forbes, with estimates of annual profit usually north of $180 billion . It had an average production of 11.15 million barrels of oil a day in 2011, according to the CIA World Factbook. By comparison, Exxon Mobil, the largest of the IOCs, brought in $41.1 billion in profits and produced an average of 2.3 million barrels a day.

Oil Company Revenue and Profits, 2010-2011

companyRevenue

    Daily Average Oil Production, 2011 (barrels per day)

companyProd

Proven Reserves, 2011 (barrels)

companyReserves

Below are the production and revenue statistics for five of the largest oil companies: Saudi Aramco (NOC, Saudi Arabia), National Iranian Oil Company (NOC, Iran), Exxon Mobil (IOC, United States), Petroleos de Venezuela, South America (NOC, Venezuela), and PetroChina (Public subsidiary of China National Petroleum Corporation, NOC, China).

Saudi Aramco does not disclose its actual revenue results, so these numbers are estimates. However, Saudi Aramco is widely known to be the most profitable company in the world, owing to the ease of its access to the kingdom’s vast petroleum reserves.

Saudi Oil Minister Ali al-Naimi remarked in 2008 that the cost of producing a barrel of Saudi oil was likely less than $2, compared with an average $10-$15 in the U.S. Meanwhile, the selling price has fluctuated from $80 to over $100 per barrel.

Production targets, especially those set by the Organization of the Petroleum Exporting Countries (OPEC), are a key influence on the price of oil. OPEC member countries are net oil exporters, and export about 60% of the world’s oil.

Crude oil prices have historically increased when OPEC lowered their production targets, which they have done intentionally at times to keep prices — and profits – up. Member countries do not always comply with OPEC production targets, which also impacts oil prices. The OPEC member countries are: Saudi Arabia, Venezuela, Iran, Iraq, United Arab Emirates, Qatar, Kuwait, Nigeria, Libya, Ecuador, Angola, and Algeria.

Venezuela surpassed Saudi Arabia in 2010 as the country with the world’s largest proven reserves, at 296.5 billion barrels. However, much of these newly proven reserves are in hard-to-access sources. Saudi Arabia’s reserves, by contrast, are largely liquid and easily accessible.


Where do these oil companies operate?

To get a sense of where oil companies operate, we’ve profiled two companies: the largest NOC and the largest IOC. They come from two of the top oil-producing countries in the world: Saudi Arabia and the United States.

A look at a national oil company: Saudi Aramco Oil Company

Saudi Aramco, headquartered in Dhahran, is the largest oil company in the world and Saudi Arabia’s national oil company. It holds approximately one-fifth of the world’s proven conventional oil reserves, spread out over about 100 oil and gas fields, including eight “super-giant” fields, in the kingdom.

Location of Saudi Aramco operations, 2011

Eighty-three percent of Saudi Aramco’s oil production is of premium light grades, as reported by Saudi Aramco in 2009. By contrast, over 100 billion barrels of Venezuela’s proven reserves are in extra-heavy crude oil and bitumen deposits, which are harder and more expensive to extract. Canada, the third-largest holder of proven reserves, holds 170 billion barrels, or 98%, of its reserves in heavy oil sands. Because of this, Saudi Arabia still produces the most oil in the world by a wide margin.


International oil company: Exxon Mobil Corporation

Exxon Mobil, based in Irving, TX, is the largest of the world’s public multinational oil companies. As a public multinational company, it operates worldwide, unlike Saudi Aramco, which focuses its operations in Saudi Arabia.

key

Click on the map to see where Exxon Mobil operates across the globe.


Map tiles by Stamen Design, under CC BY 3.0. Data by OpenStreetMap, under CC BY SA.

Exxon Mobil operations in North and South America

Oil companies are constantly involved in exploration to replenish their reserves. Last year Exxon Mobil added 2 billion oil-equivalent barrels to its proven oil and gas reserves, replacing 116% of production for the year.Their activities include partnering up with Rosneft, Russia’s biggest oil company, to jointly develop 31 million acres in the Kara Sea north of Siberia. They also made a significant discovery in the Gulf of Mexico Hadrian complex, bringing their total estimated recoverable resources in the area to over 700 million oil-equivalent barrels.

2011NorthAmerica
2011SouthAmerica

Maps: Exxon Mobil 2011 Financial and Operating Review.

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Technology is a promising path to future security http://oilchangeproject.nationalsecurityzone.org/were-pushing-technology-frontiers/ http://oilchangeproject.nationalsecurityzone.org/were-pushing-technology-frontiers/#comments Sun, 18 Nov 2012 15:45:17 +0000 Rosa Lin http://oilchangeproject.nationalsecurityzone.org/?p=105
precipitate

Advances in technology over the past decade have opened up vast quantities of untapped oil and gas reserves, from increasing Canadian oil reserves by 170 billion barrels to radically shifting the global energy landscape by finding better ways to extract natural gas. Technology is a major determinant of where and how the world will attain its energy, now and in the future. Here, we profile a major research effort to develop more advanced fossil fuel technologies in a unique partnership between leading U.S. national laboratories and one of the world’s biggest oil companies.


Research in Profile: Fossil fuel bioprocessing at Energy Biosciences Institute

 

About two-thirds of oil available in a reservoir is inaccessible and left in the ground.

Researchers are investigating the use of microbes to enhance oil recovery from reservoirs as part of a unique $500 million research collaboration between BP and top U.S. research institutions, the largest public-private partnership of its kind in the world. Through the Energy Biosciences Institute, founded in 2007 by the BP oil company, scientists at Lawrence Berkeley National Laboratory, the University of California at Berkeley and the University of Illinois at Urbana-Champaign are researching ways to maximize recovery from oil reservoirs in efficient, environmentally friendly ways.


Video: The Process of Oil Recovery

Background
Current methods to extract oil from the ground include three phases of recovery. In primary recovery, when a well is first drilled into the ground, the natural pressure difference between the subsurface and the surface drives the oil out of the well to the surface. You may have seen video of black oil gushing out of the ground; this is primary recovery. However, once the pressure difference evens out, the oil will not gush out any more. At this point, extraction enters the secondary phase. In secondary recovery, water is injected into the ground from an adjacent well to push the oil out to the surface at the production well. The process is not efficient, though; the water may travel through holes in the rocks where there is no oil, resulting in low amounts of oil driven out. At the end of these two methods, approximately one-third of the oil in the reservoir has been extracted.

At this point, engineers inject chemicals and surfactants into the ground to try to wash out the oil in the tertiary recovery phase. A surfactant is a compound that binds with both oil and water – an example is detergent. But the chemicals that are used pose environmental and cost issues.


Video: Microbes in Our Energy Future

Research on Microbes
Scientists at EBI explore the use of microbes to extract oil in environmentally friendly and efficient ways. Microbes – tiny organisms that include bacteria – exist in abundance everywhere on Earth, including below ground. There is a vast variety of microbial species, and each species has unique abilities to produce useful compounds or carry out key tasks. The scientists at EBI are working to channel the special abilities of microbes to enhance oil recovery.

Plugging Rock Pores
Microbes below ground can be stimulated to produce solid compounds that plug up unwanted rock pores. With the help of microbes, secondary recovery can be made more efficient as the water is channeled to the oil instead of through empty pores.

Lightening the Load
Heavy oil does not flow well. Microbes can be used to break the heavy oil into lighter parts, improving its viscosity, or resistance to flow.

Producing Surfactants


Video: A Private-Public Partnership

Microbes can produce surfactants to help the oil and water mix. Instead of injecting foreign chemicals and surfactants into the ground, native microbes can produce similar surfactants naturally.

Biosouring
A problem with oil production, especially where seawater is involved, is souring. The injection of seawater into an oil well induces the production of hydrogen sulfide, which is a toxic and corrosive compound. Microbes can be used to reduce the sulfur in the oil and combat souring.

Could this be the next big thing?
Natural gas hydraulic fracturing, or fracking, revolutionized the energy landscape in the U.S. and around the globe in the last decade. Fracking has been around for at least half a century, but recent advances in technology made the process economical, thus enabling the widespread adoption of the technique. Similarly, microbially enhanced oil recovery has been around for about 75 years. EBI scientists expect to move some aspects of their research to the field in the next few years. Perhaps the use of microbes will be the next game-changer in the energy industry.




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Conclusions about U.S. energy security http://oilchangeproject.nationalsecurityzone.org/does-the-u-s-have-an-energy-strategy/ http://oilchangeproject.nationalsecurityzone.org/does-the-u-s-have-an-energy-strategy/#comments Fri, 16 Nov 2012 15:48:36 +0000 Rosa Lin http://oilchangeproject.nationalsecurityzone.org/?p=118 - With the resource boom of natural gas, the U.S. seems to be more energy secure than it has been in a long time. However, this can be deceptive because U.S. energy security is intertwined with that of other nations. With the U.S. less reliant on foreign oil and nations in the East growing in their appetite for oil, the balance of energy, and power, relations is shifting across the globe.

- There is no such thing as absolute energy security, due to the globalized nature of the energy market and the complexity of energy geopolitics. With oil a globally traded commodity, unrest and disruption anywhere in the world has the potential to impact oil prices and supply everywhere.

- Nor is complete energy independence particularly desirable. Though presidents and politicians have long touted energy independence as a holy grail of sorts, in reality energy independence would make the United States an island and vulnerable to the threats that such isolation brings. It would also make the U.S. less of a leader around the world, affecting trade relationships with other countries and lessening U.S. influence and sway in those regions.

- The U.S. military has used force or the threat of force to protect its energy interests around the world, primarily in the Middle East, for more than five decades, safeguarding foreign oil sources and the sea lanes through which they pass. Oil has remained a vital U.S. national security interest, shaping America’s foreign policy toward many countries and regions.

- More than half of the world’s oil is transported by sea, making maritime security one the most crucial factors of energy security. Before getting to U.S. consumers and industry, oil leaves ports and harbors around the world and passes through global choke points – narrow sea lanes that are often highly vulnerable to disruption. Throughout history, the world’s largest choke points have been the target of attacks, including piracy, robbery, and mining by hostile nations. These vulnerabilities continue today, and in some cases are on the increase.

- Protecting oil tankers passing through the Strait of Hormuz, a key choke point, is extremely expensive. By some estimates, the United States has spent as much as $8 trillion on maintaining its military presence in the Persian Gulf in recent decades. But with greater domestic energy supply and Obama’s ‘pivot to Asia’ policy, America is reassessing its role in the region.

- The balance of power is shifting to the East. With burgeoning economies driving Asia to lead the world in net oil imports, emerging countries such as India and China are changing the global political landscape in the postmillennial era.

- The U.S. builds close relationships with oil-rich countries to help secure our energy supply, but it can also turn a blind eye to corruption, human rights abuses and other problems in those countries that can also undermine global security. Many argue that only if the U.S. becomes less dependent on foreign sources of oil can it firmly and effectively promote reforms in many of these oil-rich countries.

- The U.S. may be overlooking what people call its natural partner in energy security — Latin America. The region, home to many of the world’s biggest oil suppliers such as Venezuela, is close and much more stable than the Middle East. Several other nations there, such as Brazil, are on the cusp of becoming major producers. But because of the so-called U.S. disengagement in the region, Americans are losing opportunities in terms of energy security cooperation with Latin American countries, especially South American countries. This has potential negative long-term implications for U.S. energy security.

- In terms of technology, the U.S. has benefited greatly from the development of economical hydraulic fracturing and technologies to recover previously inaccessible heavy oil. Ongoing research and development of new technologies, such as the use of microbes to enhance oil recovery, is certain to greatly affect our future energy supply and help increase energy security.

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