Petroleum Production Engineering • PROF. M. J.

ECONOMIDES
 Energy
Geopolitics

Michael J.
Economides

Petroleum Production Engineering • PROF. M. J. ECONOMIDES

©2009
The Continuous Energy Crisis
of the 21st Century

Oil almost $150, then fell to below $40…
headlines rule … “crisis”

OPEC has little excess capacity “behind
the valve”, Venezuela, Nigeria, Iraq

IEA (Nov. 2008) 9.1% decline in oil production

China still grows in economy and energy

Saudi Arabia world regulator

Less than $40 to $100 by end 2009
Energy Geopolitics • PROF. M. J. ECONOMIDES
Energy Geopolitics • PROF. M. J. ECONOMIDES
 Natural Gas

International demand destruction is
larger than was anticipated

Because of LNG developments in Qatar,
Egypt and Sakhalin 2, there could be 10
Bcf/d excess supply. Considerable
impact on gas prices in Europe and the
United States – Cheniere LNG

$4 gas for two to three years?
Devastating impact on US shale gas
Energy Geopolitics • PROF. M. J. ECONOMIDES
Oil Demand and Price

Abu Ghraib
Yukos
Faja

Energy Geopolitics • PROF. M. J. ECONOMIDES

 World
World Oil
Oil and
and Gas
Gas Reserves
Reserves
Drift
Drift Toward
Toward Constrained
Constrained IOC
IOC Access
Access

1960s Today
Full IOC Reserves held by
access NOC reserves Russian
(equity access) companies
NOC reserves
(no equity access) Full IOC 12% 8%
access
7%
1%
85%
14% 73%
SOVIET
reserves

NOC reserves
(no equity access)
IOC = International oil company
NOC = National oil company

Only 7% of the world’s reserves are fully accessible by IOCs

Source: PFC Energy, Oil & Gas Journal, BP Statistical Review 2008
Note: Excludes unconventional crude oil and bitumen reserves
7
 0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Aramco (Saudi)

MMBOE
NIOC (Iran)

INOC (Iraq)

QP (Qatar)
Gazprom
(Russia)
KPC (Kuwait)
PDV
(Venezuela)
Oil,

Adnoc (Abu
Dhabi)
NNPC (Nigeria)
Oil,
Top
Oil, NGL

Sonatrach
Top

(Algeria)
Oil, NGL
Top 25

Libya NOC
Top 25
NGL and

NGL and

CNPC (China)
Petronas
(Malaysia)
Exxon Mobil
and Natural

Source: Energy Intelligence Group, Ranking the World’s Oil Companies 2008
Rosneft
(Russia)
and Natural

25 Reserves
Reserves
25 Reserves

BP
Natural Gas
Reserves

Gas

Turkmengas
Natural Gas
Gas

Lukoil
Pemex
(Mexico)
Shell
Majors

Chevron

Petrobras

ConocoPhillips

Total

Surgutneftegas
8
Energy Geopolitics • PROF. M. J. ECONOMIDES
Energy Geopolitics • PROF. M. J. ECONOMIDES
Oil & Gas Remain as Primary Energy Sources
Total Energy Other Energy Wind & Solar
MBDOE MBDOE MBDOE

400 60 3.0
Growth Rate Growth Rate
1980-2003, % 2003-2030, % Wind & Solar
350
1.6 1.7 50 2.5
300 1.4
40 2.0
250
Other 1.7 Biomass,
200 30 MSW 1.5 Wind
1.5 1.2
2.7 Coal 11.1
150 2.2
1.5 20 1.0
Gas
100
2.2
5.9 Nuclear 0.8 0.5
10
50
1.0 Oil 1.5
2.2 Hydro 2.1 Solar 9.5
0 0 0.0
80 90 00 10 20 30 80 90 00 10 20 30 80 90 00 10 20 30
Energy Geopolitics • PROF. M. J. ECONOMIDES
Energy Geopolitics • PROF. M. J. ECONOMIDES
 What Congress and the
President need is a Calculator
• Cardinal mine in Kentucky (35th-largest in
the U.S., producing about 15,350 tons of
coal per day, 66,000 barrels of oil equivalent
• All solar panels and wind mills
– 76,000 barrels of oil equivalent
• The US total energy use
– 47,400,000 barrels of oil equivalent
– Solar and wind 0.2 to 0.4%
» (Robert Bryce, 2009)

Energy Geopolitics • PROF. M. J. ECONOMIDES

Energy Geopolitics • PROF. M. J. ECONOMIDES
Let me make a prediction

• First do not choke on the

daringness
• By the end of Pres. Obama’s first
term
–The US will use more oil
–It will import a larger
percentage
Energy Geopolitics • PROF. M. J. ECONOMIDES
 National Transportation
Energy Perspective
140 Other
Conventional Hydroelectric Power
120 Nuclear Power
Coal
100
Quadrillion BTU

Natural Gas
Imported Oil
80 Oil Transportation
Oil Products
60

40
Imported Oil
20
Biofuels
0
1950 1960 1970 1980 1990 2000 2010 2020
Energy Geopolitics • PROF. M. J. ECONOMIDES
 The New Energy Economy
Carbon
content: Increasingly:
• Wood (1800s) High • Clean
• Coal • Energy intensive
Medium
• Oil
• Technologically
• Natural Gas Low sophisticated
• Hydrogen • Distributed
(Zero)
(envisioned)
 ````````

Energy Geopolitics • PROF. M. J. ECONOMIDES

Golfing for Hydrogen
Bovine Brain Power > Mad Car Disease?
The Ethanol Scam

Energy Geopolitics • PROF. M. J. ECONOMIDES

 Wind Power Exposed: Expensive,
Unreliable and Won’t Save Natural Gas

UK Ofgem: wind “grossly distorting the market”

29.7% of cost for 1.3% of electric supply
Load factor: 27.4%. Gas demand goes up
Energy Geopolitics • PROF. M. J. ECONOMIDES
There are no alternatives
to hydrocarbon energy
sources in the
foreseeable future
Energy Geopolitics • PROF. M. J. ECONOMIDES
 Gwyneth Paltrow

rg y
n e t
E er
Ex p

Energy Geopolitics • PROF. M. J. ECONOMIDES

Energy Geopolitics • PROF. M. J. ECONOMIDES
 TIME, AUGUST 26, 2002

Energy Geopolitics • PROF. M. J. ECONOMIDES

Energy Geopolitics • PROF. M. J. ECONOMIDES
Energy Geopolitics • PROF. M. J. ECONOMIDES
Energy Geopolitics • PROF. M. J. ECONOMIDES
Energy Geopolitics • PROF. M. J. ECONOMIDES
Energy
Geopolitics
The Axis of Energy Militants

•Iran
•Venezuela
•Russia under Putin

•The quagmire that is Iraq

•China
Energy Geopolitics • PROF. M. J. ECONOMIDES
Energy Geopolitics • PROF. M. J. ECONOMIDES
Energy Geopolitics • PROF. M. J. ECONOMIDES
Russia under Putin

•Bright spot in oil is gone

•Re-Sovietization
•Corruption
•Total control of press
•Investment climate has
cooled down
•Production is bound
to decline
Energy Geopolitics • PROF. M. J. ECONOMIDES
Gazprom’s New Imperium

Energy Geopolitics • PROF. M. J. ECONOMIDES

Energy Geopolitics • PROF. M. J. ECONOMIDES
Energy Geopolitics • PROF. M. J. ECONOMIDES
 Can
i
Keep the Lights On?

Energy Geopolitics • PROF. M. J. ECONOMIDES

Energy Geopolitics • PROF. M. J. ECONOMIDES
Energy: China’s Choke Point

Energy Geopolitics • PROF. M. J. ECONOMIDES

Energy Geopolitics • PROF. M. J. ECONOMIDES
 From Stratfor, 2009
Energy Geopolitics • PROF. M. J. ECONOMIDES
 China and Russia
• Energy will be China’s choke point
• Has become recently very assertive,
if not belligerent.
– Sudan, Nigeria
– Canada
– Argentina, Venezuela

• China’s energy future passes

through Russia….
Energy Geopolitics • PROF. M. J. ECONOMIDES
Russia and China

Energy Geopolitics • PROF. M. J. ECONOMIDES

Russia, China and Japan

Energy Geopolitics • PROF. M. J. ECONOMIDES

China will probably lead

Energy Geopolitics • PROF. M. J. ECONOMIDES