Oil, Natural Gas and Energy Security

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1 Oil, Natural Gas and Energy Security Jürgen Scheffran Institute of Geography, CliSAP/CEN Universität Hamburg Energy Landscapes and Climate Policy" Lecture , April 21, 2016 p. 1

2 Migration of oil and gas from organic-rich source to reservoir bed Source: Priest, Energy: Principles, Problems, Alternatives, p

3 Petroleum traps Source: Priest, Energy: Principles, Problems, Alternatives, 1991 p. 3

4 Definitions Crude oil: naturally occurring mixture, predominantly of hydrocarbons in liquid phase in natural underground reservoirs and recoverable as liquids at typical atmospheric conditions. Crude oil viscosity below 10,000 mpa.s (centipoises); oils of greater viscosity are included in natural bitumen and extra-heavy oil (fluid viscosity: resistance to gradual deformation by stress) Natural gas liquids (NGLs): hydrocarbons as constituents of natural gas but recovered as liquids. NGLs include ethane, propane, butanes, pentanes, natural gasoline and condensate. Proven amount in place: resource remaining in known natural reservoirs measured and assessed as exploitable under present and expected local economic conditions with existing available technology. Recoverable reserves can be recovered in the future. R/P (reserves/production) ratio: calculated by dividing the volume of proven recoverable reserves by volumetric production in a given year (time in years that the proved recoverable reserves would last for production at current level). Source: 2010 Survey of Energy Resources, World Energy Council (WEC) p. 4

Petroleum volumes and probabilities Proven reserves: Quantity of energy sources estimated with reasonable certainty (90%) to be recoverable from well

5 Petroleum volumes and probabilities Proven reserves: Quantity of energy sources estimated with reasonable certainty (90%) to be recoverable from well established or known reservoirs with the existing equipment and under the existing operating conditions. Source: p. 5

6 World crude oil endowment p. 6

7 Definitions of oil recovery Primary recovery produces oil and gas using the natural pressure of the reservoir as the driving force to push the material to the surface. Secondary recovery uses other mechanisms - such as gas reinjection and water flooding - to produce residual oil and gas remaining after the primary recovery phase. Tertiary recovery involves injecting other gases (such as carbon dioxide), or heat (steam or hot water) to stimulate oil and gas flow to produce remaining fluids that were not extracted during primary or secondary recovery phases. p. 7

8 Distribution of oil production Fractions of primary, secondary, and tertiary U.S. oil extraction towards the end of the 20th century p. 8

9 The Hubbert curve and reality p. 9

10 Growing gap between oil discovery and consumption worldwide Source: Campbell, 2003 p. 10

11 Oil and War World War I: Transition from coal to oil WWII: Oil plays a central role Cold War: Battleground Middle East and Persian Gulf Post Cold War: Asymmetric conflicts with historical connections to oil (Iraq Wars, Kaspian oil, pipelines) p. 11

12 Oil price and conflict p. 12

13 Oil price development (Brent) in USD/barrel p. 13

14 Increasing demand and volatile prices of oil Average Barrel price Source: Atlas der Globalisierung, LMD 2009 p. 14

15 World oil reserves 2013 Highest proved oil reserves including non-conventional oil deposits are in Venezuela (20% of global reserves), Saudi Arabia (18% of global reserves), Canada (13% of global reserves), and Iran (9%) (Source: Wikipedia based on data from OPEC 2013) p. 15

16 Cumulative reserves of crude oil and natural gas liquids (by country, plotted in order of decreasing increment) Source: 2010 Survey of Energy Resources, World Energy Council (WEC) p. 16

17 Oil producers of the world Oil production Development of production compared to previous year Source: Atlas der Globalisierung p

18 Comparison of reserves to production ratios in 2008 Source: World Energy Council, SER p. 18

19 Comparing financial power of oil companies and states Profits of large oil producers (2007) Billion US Dollar Economic power of selected African countries (2006) Source: Atlas der Globalisierung, LMD 2009 p. 19

20 Percentage share of oil in fiscal revenues in Latin American countries p. 20

tons) Annual average 1997-2007 Economic migrants in

21 Production of oil, natural gas and economic migrants in Gulf countries Oil production (mio.tons) Annual average Economic migrants in Gulf countries Gas production (mio.cubic meters) Annual average p. 21

22 Oil fields bordering Iraq Source: 12/18/2009 p. 22

23 Oil investments in and oil exports from Africa Source: Atlas der Globalisierung, LMD 2009 Oil exports in billion US$ Investments of big oil companies p. 23

24 Natural gas production by region Reference Case Source: WEC 2010 p. 24

25 Natural gas demand by region Reference Case Source: WEC 2010 p. 25

26 Regional share of natural gas in primary energy consumption Reference Case Source: IGU p. 26

27 Few producers dominate supply of natural gas Countries which supply natural gas to EU Natural gas consumption Billion cubic meters Natural gas exports Billion cubic meters To EU To other countries Source: Atlas der Globalisierung, LMD 2009 p. 27

28 Natural gas pipelines to EU: Existing and proposed (---) p. 28

29 Map of proposed cross-border natural-gas pipeline network in Northeast Asia p. 29

30 Central Asia pipeline proposals p. 30

31 Natural gas pipeline in Africa p. 31

32 Risks of oil drilling and transportation Exxon Valdez 1989 Deepwater Horizon 2010 p. 32

Important oil and gas pipelines Existing Planned or under construction Tanker or pipeline accidents with more

33 Arctic region and its resources Expansion of North pole ice cover (early 21st century) Proven oil and gas deposits Large nature preserves Production of oil and gas From oilsands From conventional oil and gas sources Important oil and gas pipelines Existing Planned or under construction Tanker or pipeline accidents with more than 50,000 tons of leaked oil Full year ocean route in years Source: Atlas der Globalisierung, LMD 2009 p. 33

34 World oil sands (bitumen) and heavy oil resources (in billions of cubic meters) Encyclopedia of Energy, 2004 p. 34

The viscosity of a fluid is a measure of its resistance

35 Response of viscosity to change in temperature for some Alberta oils Source: WEC 2010, Raicar and Procter, 1984 The viscosity of a fluid is a measure of its resistance to gradual deformation by shear stress or tensile stress p. 35

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36 Conventional and unconventional gas fields p. 36

CO2 flood technology 1 CO2 is injected into the reservoir via injection wells. 2 The CO2 reduces the viscosity of the trapped oil so it flows more easily.

37 CO2 flood technology 1 CO2 is injected into the reservoir via injection wells. 2 The CO2 reduces the viscosity of the trapped oil so it flows more easily. 3 Water is injected in alternating cycles with CO2 to sweep the oil to the producing wells. 4 Production wells pump the oil, along with CO2, produced water and any associated natural gas to the surface. 5 The CO2 and associated natural gas are separated at the production satellite facility and transported offsite for additional processing. Natural gas liquids are extracted and sold and the CO2 is recycled for reinjection. 6 The oil and produced water are separated at the central tank battery. The oil is piped to holding tanks where it is metered and sold. Oil, produced water, CO2 and natural gas Water CO2 7 The produced water is transported to the central water injection station and is pressurized for reinjection. Source: p. 37

38 Location of the oil sands deposits of Canada Source: WEC 2010, modified from McPhee and Ranger, 1998 p. 38

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39 Gas shales in the United States p. 39

40 Natural gas change in the USA Conventional gas Large, wellconnected pores Tight gas Small, badlyconnected pores Shale gas Extremely small, almost not connected pores p. 40

41 Hydraulic fracturing (Fracking) Source: Wikipedia p. 41

42 p. 42

43 Fracking potential in Northern Germany Yellow: Gas concessions p. 43

44 p. 44

fuel Extraction cost in US Dollar per barrel conventional oil Oil recovery Oil sands

45 Costs and climate effect of different energy carriers Greenhouse gas emissions caused by the production and handling of fossil fuels in gram CO2 equivalent per Megajoule fuel Extraction cost in US Dollar per barrel conventional oil Oil recovery Oil sands Liquified natural gas Liquid coal Oil shale Source: Atlas der Globalisierung, LMD 2009 p. 45

47 Energy vulnerability: Katrina s impact Oil and Gas Platforms: About 800 manned and thousands of unmanned platforms in the Gulf. Ports: Some 6,000 seagoing vessels a year go through the Port of New Orleans. Pipelines: Over 9,000 miles of pipeline connect the Gulf with the eastern U.S. Railroads: With New Orleans out, trains are routed through Memphis and St. Louis. Lousiana s Share of Trade: The combined ports of South Louisiana and New Orleans equal 12% of the U.S. total Sources: Associated Press; Association of Oil Pipelines; American Association of Port Authorities; Association of American Railroads; U.S. Army Corps of Engineers. Map by National Geographic p. 47

48 Canadian wildfire reduces oil production (May 2016) The out-of-control wildfire that is scorching large swathes of land and displacing thousands of people in Alberta, Canada, has also knocked out nearly a third of Canada's daily crude oil production. p. 48

49 Links between energy and security Energy security requires sufficient energy flow to ensure wealth. Military action to protect energy-related interests (e.g. war on oil) Wars, civil wars, other conflict or social disruption impedes access to energy resources. Energy system may cause risks and conflicts, e.g. by having disaster potential or polluting the environment. Energy system is potentially vulnerable to attack by state or non-state actors. Debate on energy paths can induce struggles within or between countries, companies, and citizens. Energy use and prevention of risks and conflicts can be a field for international cooperation and global security. p. 49

50 Vulnerability of the energy infrastructure Components of energy infrastructure: pumping stations, gathering plants, and terminals, tankers and pipelines, refineries, power stations, transmission lines, and distribution networks (Energy Security 21 st century). Facilities to handle 14 million barrels per day of imports and exports 4,000 offshore platforms More than 150 refineries 160,000 miles of crude oil pipelines 10,400 power plants 160,000 miles of high-voltage transmission lines Millions of miles of distribution wires 410 underground gas storage fields 1.4 million miles of natural gas transmission and distribution lines. High energy density" targets, such as nuclear reactors large dams, or major concentrations of fuels (refineries, oil storage farms: LNG tankers or terminal). Soft targets" for disruption: Distributed oil and oil products, natural gas, and electricity networks, crossing over national borders p. 50

51 Potential threats of the energy system 1. Attacks on energy systems: Attacks on port facilities, refineries, petrochemical plants, reactors, compression stations, dams, transmission lines, and substations. Coordinated cyberattacks and electromagnetic attacks to control or disrupt energy control systems 2. Attacks by an energy system (e.g. using power plant cooling tower to disperse chemical or biological agents) 3. Attacks through an energy system (e.g. spreading chemical or biological agents through underground conduits) Source: Kalicki/Goldwyn 2002, US Energy Association p. 51

US Oil and Gas Import Dependence: Department of Energy Projections in 2011

1800 K Street, NW Suite 400 Washington, DC 20006 Phone: 1.202.775.3270 Fax: 1.202.775.3199 Email: acordesman@gmail.com Web: www.csis.org/burke/reports US Oil and Gas Import Dependence: Department of Energy