Energy Security

Energy Security

1. Rising demand

   • China
     • per capita demand still low > BUT will increase
       • Mega cities & Urbanisation
       • Manufacturing
       • Emerging middle class
       • Increased car ownership
       • Rising standard of living
     • 1.1 BILLION POPULATION
       • 2nd largest global consumer, but set to overtake USA
         • 2007: 15% of global demand
     • "Increasing energy insecurity due to increase in demand."
     • Inefficient usage
     • Issues with supply
       • Importing since 1993
       • Exploration hindered by territorial disputes
         • e.g. Japanese islands in S. China Sea
       • Dependence on fossil fuels
         • (70% coal)
       • PROTECTIONISM POLICY
         • Quotas and tariffs on imports to promote Chinese products
       • Past peak oil production
       • Natural gas production limited by cost of long distance pipelines
         • Gas fields in WEST
         • Mega cities in EAST
       • HEP development hindered by Earthquakes
     • Solutions
       • Resource based foreign policy
         • e.g. Burma, East African nations
       • 50% privatisation
       • Improved internal infrastructure (West/East)
       • New/upgraded pathways
         • 80% of oil via sea (Straits of Malacca)
           • Increased naval presence
         • Planned Burmese pipeline
         • Proposed Karachi highway (Iran)
         • Eastern Siberia- Pacific Ocean Pipeline (ESPO)
           • Russia no longer dependent on EU
           • 1.6 million b/day
           • Proposed 1000km branch to Daqing
           • Phase 1 began in 2006
       • Nuclear construction
   • BP Energy Outlook
     • 41% rise in demand by 2025
       • 50% of increase from India & China
     • USA produce 101% of their demand (69% in 2005)
     • Russia remains largest net exporter (4.2% of global usage)
     • China overtakes EU as largest importer by 2030
     • 72% of rise in emissions from non-OECD
     • Total renewables = 7% (2% today) Electricity renewables = 14% (5% today)
     • US, Russia, Saudi produce 1/3 global liquids
     • 87% of coal growth from India and China
   • IEA estimates $22 trillion investment required by 2030

2. Exploitation of sensitive areas

   • Alberta Tar Sands
     • Arctic contains 25% of global unexploited oil and gas reserves.
     • 2.5 trillion barrels of oil
       • More than Saudi Arabia's reserves
     • Unconventional oil deposits now commercially viable
       • Rising oil prices
       • New technology
     • Anthabasca deposit contains 1.75trillion barrels (> 50% of global proven reserves)
     • Canada replaced Saudi Arabia as US primary oil supplier in 2004
     • ENVIRONMENTAL IMPACTS
       • Emissions equiv. to 1.3bn cars
       • High pressure prevents dispersal of air pollution
       • Water tainted by heavy metals (used for steam seperation of tar/sand)
         • Cannot be decontaminated
           • Held in 30sq mile holding pens
     • PROCESS
       • Forest clearance
         • Strip mining
           • Tar sands sent to refinery (heating)
             • Proportion of oil used to refine more oil (low output)
     • 20% surface recoverable

3. "self sufficient in energy"

   • "access to reliable/affordable sources"
     • "diversity of supply"

4. UK renewable potential

   • Physical geography & climate
   • Renewables often 'intermittant'
   • HEP
   • Nuclear
   • Compare to Iceland...
   • Wind
   • CHP
   • Tidal
   • Solar
   • Biomass

5. Risks to energy security

   • Geopolitics & Pathways
     • Political stability of producer regions
     • Resource conflict (e.g. environmental issue in Arctic)
       • Lomonosov ridge
     • Pathway disruption
       • Natural disasters: Hurricane Katrina
         • 19% US gas affected
         • US Gov stockpiles used
         • Global price +$3pb
         • 113 offshore platforms damaged
       • Technical Interruption
         • National Grid warned of blackouts in winter 2014
         • 2 EDF nuclear shutdowns in 2014 and fire at coal plant
         • UK's ageing power stations shutting down and new plants slow to come online
       • Price and payment issues: Russia halts pipes to Ukraine (June 2004)
         • Dispute with state owned Gazprom
         • Conflict with pro-Russian seperatists
         • Ukraine owes £3.2billion
         • Dispute taken to ICCA (Stockholm)
       • Piracy: Horn of Africa
         • Europe's biggest alternative supply route to Russian oil (Quwait)
         • Piracy and robbery from shipping
         • EU 2014 Policy - naval antipiracy activity at Cape of Africa
       • Terrorism: Al Qaeda
         • One of their three methods of 'economic war' against America is OIL.
         • Destroying wells/pipelines
         • Attacking tankers
         • Menacing maritime chokepoints
         • Bombing TNC HQs and kidnapping officials
       • Diversion for higher price: ESPO Pipeline
         • EU fear Russia may 'turn off taps' if they can sell gas elsewhere
         • Previously, 76% of Russia's supply went to small EU states
         • Pipelines cost $50bn
         • Russia agreed with China in 2014 to sell $400bn gas over 50yrs
   • PHYSICAL: resource depletion
     • Control over supply
     • North Sea Oil Past Peak Production
   • ECONOMIC: sudden price rises
     • Control over prices
     • Marginal reserves become viable (e.g. Alberta Tar Sands)

6. PLAYERS ACTIONS FUTURES

7. Key players

   • TNCS
     • Monopolies
     • Upstream
       • Midstream
         • Downstream
           • Shell in Nigeria
           • Refining, processing, marketing & retail
         • Transport and storage
       • Exploration & Production
   • Environmentalists
     • Pressure & lobbying for renewables
     • Campaigns, protests & media attention
   • Scientists/R&D
     • Alternative & renewable sources
     • Efficiency gains
   • Consumers
     • via Regulator
       • Prevent exploitation by 'big 6'
     • Highly price sensitive
   • Distributers
     • Role of National Grid (see technical interruption)
   • Governments
     • OPEC
       • Adjust output to fix prices
       • 12 nations
     • Subsidies/ renewable incentives
     • Diplomatic relations & trade agreements