{"id":22265,"date":"2012-10-22T12:00:32","date_gmt":"2012-10-22T11:00:32","guid":{"rendered":"http:\/\/www.transcend.org\/tms\/?p=22265"},"modified":"2012-10-20T17:42:48","modified_gmt":"2012-10-20T16:42:48","slug":"the-new-golden-age-of-oil-that-wasnt","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2012\/10\/the-new-golden-age-of-oil-that-wasnt\/","title":{"rendered":"The New \u201cGolden Age of Oil\u201d That Wasn\u2019t"},"content":{"rendered":"

Forecasts of Abundance Collide with Planetary Realities<\/em><\/p>\n

Last winter, fossil-fuel enthusiasts began trumpeting the dawn of a new \u201cgolden age of oil\u201d that would kick-start the American economy, generate millions of new jobs, and free this country from its dependence on imported petroleum.\u00a0 Ed Morse, head commodities analyst at Citibank, was typical.\u00a0 In the Wall Street Journal<\/em> he crowed<\/a>, \u201cThe United States has become the fastest-growing oil and gas producer in the world, and is likely to remain so for the rest of this decade and into the 2020s.\u201d<\/p>\n

Once this surge in U.S. energy production was linked to a predicted boom in energy from Canada\u2019s tar sands reserves, the results seemed obvious and uncontestable.\u00a0 \u201cNorth America,\u201d he announced, \u201cis becoming the new Middle East.\u201d\u00a0 Many other analysts have elaborated similarly on this rosy scenario, which now provides the foundation for Mitt Romney\u2019s plan to achieve \u201cenergy independence<\/a>\u201d by 2020.<\/p>\n

By employing impressive new technologies — notably deepwater drilling and hydraulic fracturing (or hydro-fracking) — energy companies were said to be on the verge of unlocking vast new stores of oil in Alaska, the Gulf of Mexico, and shale formations across the United States.\u00a0 \u201cA \u2018Great Revival\u2019 in U.S. oil production is taking shape — a major break from the near 40-year trend of falling output,\u201d James Burkhard of IHS Cambridge Energy Research Associates (CERA) told<\/a> the Senate Committee on Energy and Natural Resources in January 2012.<\/p>\n

Increased output was also predicted elsewhere in the Western Hemisphere, especially Canada and Brazil.\u00a0 \u201cThe outline of a new world oil map is emerging, and it is centered not on the Middle East but on the Western Hemisphere,\u201d Daniel Yergin, chairman of CERA, wrote<\/a> in the Washington Post<\/em>.\u00a0 \u201cThe new energy axis runs from Alberta, Canada, down through North Dakota and South Texas… to huge offshore oil deposits found near Brazil.\u201d<\/p>\n

Extreme Oil<\/strong><\/p>\n

It turns out, however, that the future may prove far more recalcitrant than these prophets of an American energy cornucopia imagine.\u00a0 To reach their ambitious targets, energy firms will have to overcome severe geological and environmental barriers — and recent developments suggest that they are going to have a tough time doing so.<\/p>\n

Consider this: while many analysts and pundits joined in the premature celebration of the new \u201cgolden age,\u201d few emphasized that it would rest almost entirely on the exploitation of \u201cunconventional\u201d petroleum resources — shale oil, oil shale, Arctic oil, deep offshore oil, and tar sands (bitumen).\u00a0 As for conventional oil (petroleum substances that emerge from the ground in liquid form and can be extracted using familiar, standardized technology), no one doubts that it will continue its historic decline in North America.<\/p>\n

The \u201cunconventional\u201d oil that is to liberate the U.S. and its neighbors from the unreliable producers of the Middle East involves substances too hard or viscous to be extracted using standard technology or embedded in forbidding locations that require highly specialized equipment for extraction.\u00a0 Think of it as \u201ctough oil<\/a>.\u201d<\/p>\n

Shale oil, for instance, is oil trapped in shale rock.\u00a0 It can only be liberated through the application of concentrated force in a process known as hydraulic fracturing<\/a> that requires millions of gallons of chemically laced water per \u201cfrack,\u201d plus the subsequent disposal of vast quantities of toxic wastewater once the fracking has been completed. Oil shale<\/a>, or kerogen, is a primitive form of petroleum that must be melted to be useful, a process that itself consumes vast amounts of energy. Tar sands<\/a> (or \u201coil sands,\u201d as the industry prefers to call them) must be gouged from the earth using open-pit mining technology or pumped up after first being melted in place by underground steam jets, then treated with various chemicals.\u00a0 Only then can the material be transported to refineries via, for example, the highly controversial Keystone XL pipeline<\/a>.\u00a0 Similarly, deepwater and Arctic drilling requires the deployment of specialized multimillion-dollar rigs along with enormously costly backup safety systems under the most dangerous of conditions.<\/p>\n

All these processes have at least one thing in common: each pushes the envelope of what is technically possible in extracting oil (or natural gas) from geologically and geographically forbidding environments.\u00a0 They are all, that is, versions of \u201cextreme energy<\/a>.\u201d\u00a0 To produce them, energy companies will have to drill in extreme temperatures or extreme weather, or use extreme pressures, or operate under extreme danger — or some combination of all of these.\u00a0 In each, accidents, mishaps, and setbacks are guaranteed to be more frequent and their consequences more serious than in conventional drilling operations.\u00a0 The apocalyptic poster child for these processes already played out in 2010 with BP\u2019s Deepwater Horizon<\/em> disaster in the Gulf of Mexico, and this summer we saw intimations of how it will happen again as a range of major unconventional drilling initiatives — all promising that \u201cgolden age\u201d — ran into serious trouble.<\/p>\n

Perhaps the most notable example of this was Shell Oil\u2019s costly failure to commence test drilling in the Alaskan Arctic.\u00a0 After investing<\/a> $4.5 billion and years of preparation, Shell was poised to drill five test wells this summer in the Beaufort and Chukchi Seas off Alaska\u2019s northern and northwestern coasts.\u00a0 However, on September 17th, a series of accidents and mishaps forced the company to announce<\/a> that it would suspend operations until next summer — the only time when those waters are largely free of pack ice and so it is safer to drill.<\/p>\n

Shell\u2019s problems began early and picked up pace as the summer wore on.\u00a0 On September 10th, its Noble Discoverer<\/em> drill ship was forced to abandon operations<\/a> at the Burger Prospect, about 70 miles offshore in the Chukchi Sea, when floating sea ice threatened the safety of the ship.\u00a0 A more serious setback occurred later in the month when a containment dome designed to cover any leak that developed at an undersea well malfunctioned during tests in Puget Sound in Washington State.\u00a0 As Clifford Krauss noted<\/a> in the New York Times<\/em>, \u201cShell\u2019s inability to control its containment equipment in calm waters under predictable test conditions suggested that the company would not be able to effectively stop a sudden leak in treacherous Arctic waters, where powerful ice floes and gusty winds would complicate any spill response.\u201d<\/p>\n

Shell\u2019s effort was also impeded by persistent opposition<\/a> from environmentalists and native groups.\u00a0 They have repeatedly brought suit to block its operations on the grounds that Arctic drilling will threaten the survival of marine life essential to native livelihoods and culture.\u00a0 Only after promising to take immensely costly protective measures and winning the support<\/a> of the Obama administration — fearful of appearing to block \u201cjob creation\u201d or \u201cenergy independence\u201d during a presidential campaign — did the company obtain the necessary permits to proceed.\u00a0 But some lawsuits remain in play and, with this latest delay, Shell\u2019s opponents will have added time and ammunition.<\/p>\n

Officials from Shell insist that the company will overcome all these hurdles and be ready to drill next summer.\u00a0 But many observers view its experience as a deterrent to future drilling in the Arctic.\u00a0 \u201cAs long as Shell has not been able to show that they can get the permits and start to drill, we\u2019re a bit skeptical about moving forward,\u201d said<\/a> Tim Dodson of Norway\u2019s Statoil.\u00a0 That company also owns licenses for drilling in the Chukchi Sea, but has now decided to postpone operations until 2015 at the earliest.<\/p>\n

Extreme Water<\/strong><\/p>\n

Another unexpected impediment to the arrival of energy\u2019s next \u201cgolden age\u201d in North America emerged even more unexpectedly from this summer\u2019s record-breaking drought, which still has 80%<\/a> of U.S. agricultural land in its grip.\u00a0 The energy angle on all this was, however, a surprise.<\/p>\n

Any increase in U.S. hydrocarbon output will require greater extraction of oil and gas from shale rock, which can only be accomplished via hydro-fracking.\u00a0 More fracking, in turn, means more water consumption.\u00a0 With the planet warming thanks to climate change, such intensive droughts are expected to intensify<\/a> in many regions, which means rising agricultural demand for less water, including potentially in prime fracking locations like the Bakken formation of North Dakota, the Eagle Ford area of West Texas, and the Marcellus formation in Pennsylvania.<\/p>\n

The drought\u2019s impact on hydro-fracking became strikingly evident when, in June and July, wells and streams started drying up in many drought-stricken areas and drillers suddenly found themselves competing<\/a> with hard-pressed food-producers for whatever water was available.\u00a0 \u201cThe amount of water needed for drilling is a double whammy,\u201d Chris Faulkner, the president and chief executive officer of Breitling Oil & Gas<\/a>, told Oil & Gas Journal<\/em> in July.\u00a0 \u201cWe\u2019re getting pushback from farmers, and my fear is that it\u2019s going to get worse.\u201d\u00a0 In July, in fact, the situation became so dire in Pennsylvania that the Susquehanna River Basin Commission suspended permits<\/a> for water withdrawals from the Susquehanna River and its tributaries, forcing some drillers to suspend operations.<\/p>\n

If this year\u2019s \u201cendless summer<\/a>\u201d of unrelenting drought were just a fluke, and we could expect abundant water in the future, the golden age scenario might still be viable.\u00a0 But most climate scientists suggest that severe drought is likely to become the \u201cnew normal<\/a>\u201d in many parts of the United States, putting the fracking boom very much into question.\u00a0 \u201cBakken and Eagle Ford are our big keys to energy independence,\u201d Faulkner noted.\u00a0 \u201cWithout water, drilling shale gas and oil wells is not possible.\u00a0 A continuing drought could cause our domestic production to decline and derail our road to energy independence in a hurry.\u201d<\/p>\n

And then there are those Canadian tar sands.\u00a0 Turning them into \u201coil\u201d also requires vast amounts of water, and climate-change-related shortages of that vital commodity are also likely in Alberta, Canada, their heartland.\u00a0 In addition, tar sands production releases far more greenhouse gas emissions than conventional oil production, which has sparked its own fiercely determined opposition in Canada, the United States, and Europe.<\/p>\n

In the U.S., opposition to tar sands has until now largely focused on the construction of the Keystone XL pipeline<\/a>, a $7 billion, 2,000-mile conduit that would carry diluted tar sands oil from Hardisty, Alberta, to refineries on the U.S. Gulf Coast, thousands of miles away.\u00a0 Parts of the Keystone system are already in place.\u00a0 If completed, the pipeline is designed to carry 1.1 million barrels a day of unrefined liquid across the United States.<\/p>\n

Keystone XL opponents charge<\/a> that the project will contribute to the acceleration of climate change.\u00a0 It also exposes crucial underground water supplies in the Midwest to severe risk of contamination by the highly corrosive tar-sands fluid (and pipeline leaks are commonplace).\u00a0 Citing the closeness of its proposed route to the critical Ogallala Aquifer<\/a>, President Obama denied permission<\/a> for its construction last January. \u00a0(Because it will cross an international boundary, the president gets to make the call.)\u00a0 He is, however, expected to grant post-election approval to a new, less aquifer-threatening route; Mitt Romney has vowed to give it his approval on his first day in office.<\/p>\n

Even if Keystone XL were in place, the golden age of Canada\u2019s tar sands won\u2019t be in sight — not without yet more pipelines as the bitumen producers face mounting opposition to their extreme operations.\u00a0 As a result of fierce resistance to Keystone XL, led in large part by TomDispatch contributor Bill McKibben<\/a>, — the public has become far more aware of the perils of tar sands production.\u00a0 Resistance to it, for example, could stymie plans to deliver tar sands oil to Portland, Maine (for transshipment by ship to refineries elsewhere), via an existing pipeline that runs from Montreal through Vermont and New Hampshire to the Maine coast.\u00a0 Environmentalists in New England are already gearing up<\/a> to oppose the plan.<\/p>\n

If the U.S. proves too tough a nut to crack, Alberta has a backup plan: construction of the Northern Gateway, a proposed pipeline through British Columbia for the export of tar sands oil to Asia.\u00a0 However, it, too, is running into trouble.\u00a0 Environmentalists and native communities in that province are implacably opposed and have threatened civil disobedience<\/a> to prevent its construction (with major protests already set for October 22nd outside the Parliament Building in Victoria).<\/p>\n

Sending tar sands oil across the Atlantic is likely to have its own set of problems.\u00a0 The European Union is considering<\/a> adopting rules that would label it a dirtier form of energy, subjecting it to various penalties when imported into the European Union.\u00a0 All of this is, in turn, has forced Albertan authorities to consider tough new environmental regulations<\/a> that would make it more difficult and costly to extract bitumen, potentially dampening the enthusiasm of investors and so diminishing the future output of tar sands.<\/p>\n

Extreme Planet<\/strong><\/p>\n

In a sense, while the dreams of the boosters of these new forms of energy may thrill journalists and pundits, their reality could be expressed this way: extreme energy = extreme methods = extreme disasters = extreme opposition.<\/p>\n

There are already many indications that the new \u201cgolden age\u201d of North American oil is unlikely to materialize as publicized, including an unusually rapid decline<\/a> in oil output at existing shale oil drilling operations in Montana.\u00a0 (Although Montana is not a major producer, the decline there is significant because it is occurring in part of the Bakken field, widely considered a major source of new oil.)\u00a0 As for the rest of the Western Hemisphere, there is little room for optimism there either when it comes to the \u201cpromise\u201d of extreme energy. Typically, for instance, a Brazilian court has ordered<\/a> Chevron to cease production at its multibillion-dollar Frade field<\/a> in the Campos basin of Brazil\u2019s deep and dangerous Atlantic waters because of repeated oil leaks. Doubts<\/a> have meanwhile arisen over the ability of Petrobras, Brazil\u2019s state-controlled oil company, to develop the immensely challenging Atlantic \u201cpre-salt\u201d fields on its own.<\/p>\n

While output from unconventional oil operations in the U.S. and Canada is likely to show some growth in the years ahead, there is no \u201cgolden age\u201d on the horizon, only various kinds of potentially disastrous scenarios.\u00a0 Those like Mitt Romney who claim that the United States can achieve energy \u201cindependence\u201d by 2020 or any other near-term date are only fooling themselves, and perhaps some elements of the American public.\u00a0 They may indeed employ such claims to gain support for the rollback of what environmental protections exist against the exploitation of extreme energy, but the United States will remain dependent on Middle Eastern and African oil for the foreseeable future.<\/p>\n

Of course, were such a publicized golden age to come about, we would be burning vast quantities of the dirtiest energy on the planet with truly disastrous consequences. \u00a0The truth is this: there is just one possible golden age for U.S. (or any other kind of) energy and it would be based on a major push to produce breakthroughs in climate-friendly renewables, especially wind, solar, geothermal, wave, and tidal power.<\/p>\n

Otherwise the only \u201cgolden\u201d sight around is likely to be the sun on an ever hotter, ever dirtier, ever more extreme planet.<\/p>\n

____________________<\/p>\n

Michael T. Klare is a professor of peace and world security studies at Hampshire College, a <\/em>TomDispatch regular<\/em><\/a>, and the author, most recently, of <\/em>The Race for What\u2019s Left<\/a>.\u00a0 A movie based on one of his earlier books, <\/em>Blood and Oil, can be ordered at <\/em>http:\/\/www.bloodandoilmovie.com<\/em><\/a>.\u00a0 Klare\u2019s other books and articles are described at his <\/em>website<\/em><\/a>.\u00a0 You can follow Klare\u2019s work on <\/em>Facebook.<\/em><\/a> <\/em><\/p>\n

Copyright 2012 Michael T. Klare<\/em><\/p>\n

Go to Original \u2013 tomdispatch.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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