Saturday, May 28, 2011

The Oil-Autocracy Link and Drill, Drill, Drill

The chart above is from a Bloomberg article and shows that "Most of the world's oil is produced in states that are undemocratic. The U.S., Canada and Norway are the exceptions."

The article refers to this 2009 research paper "Oil and Democracy Revisited" by UCLA professor Michael Ross whose findings include:

a) "Oil wealth strongly inhibits democratic transitions in authoritarian states, and b) Oil’s anti-democratic effects seem to vary over time and across regions: they have grown stronger over time, but do not hold in Latin America.

The mechanism that seems to account for the oil-autocracy link is the ‘rentier effect’ – the combination of low taxes and high government spending that seems to dampen support for democratic transitions."

MP: The oil-autocracy link is one of the indirect costs of our "dependence on foreign oil" because we provide support to authoritarian states and inhibit the growth of democracy in those countries.  This is one more reason to drill, drill, drill domestically, in places like the Eagle Ford Field in Texas, which is featured in yesterday's NY Times:

"The Texas field, known as the Eagle Ford, is just one of about 20 new onshore oil fields that advocates say could collectively increase the nation’s oil output by 25 percent within a decade — without the dangers of drilling in the deep waters of the Gulf of Mexico or the delicate coastal areas off Alaska. More than a dozen companies plan to drill up to 3,000 wells there in the next 12 months."

MP: It's all made possible by the technological "miracle" of "fracking," which is not without its critics and controversy, here's more from the NY Times:

"There is only one catch: the oil from the Eagle Ford and similar fields of tightly packed rock can be extracted only by using hydraulic fracturing, a method that uses a high-pressure mix of water, sand and hazardous chemicals to blast through the rocks to release the oil inside.

The technique, also called fracking, has been widely used in the last decade to unlock vast new fields of natural gas, but drillers only recently figured out how to release large quantities of oil, which flows less easily through rock than gas. As evidence mounts that fracking poses risks to water supplies, the federal government and regulators in various states are considering tighter regulations on it." 

The oil industry says any environmental concerns are far outweighed by the economic benefits of pumping previously inaccessible oil from fields that could collectively hold two or three times as much oil as Prudhoe Bay, the Alaskan field that was the last great onshore discovery. The companies estimate that the boom will create more than two million new jobs, directly or indirectly, and bring tens of billions of dollars to the states where the fields are located, which include traditional oil sites like Texas and Oklahoma, industrial stalwarts like Ohio and Michigan and even farm states like Kansas."

It’s the one thing we have seen in our adult lives that could take us away from imported oil,” said Aubrey McClendon, chief executive of Chesapeake Energy, one of the most aggressive drillers. “What if we have found three of the world’s biggest oil fields in the last three years right here in the U.S.? How transformative could that be for the U.S. economy?”

“This is very big and it’s coming on very fast,” said Daniel Yergin, the chairman of IHS CERA. “This is like adding another Venezuela or Kuwait by 2020, except these tight oil fields are in the United States.”

Thanks to Thomas Keene and Dan Greller for the pointers.  


At 5/28/2011 10:22 AM, Blogger Che is dead said...

This comment has been removed by the author.

At 5/28/2011 10:24 AM, Blogger Che is dead said...

"I’m not aware of any proven case where the fracking process itself has affected water, although there are investigations ongoing” -- President Barack Obama’s EPA administrator, Lisa Jackson

At 5/28/2011 10:30 AM, Blogger Che is dead said...

Unfortunately, Gasland producer Josh Fox turned down my invitation, as did representatives of the big national environmental groups that oppose fracking. I think I know why. The movie and the left's arguments against fracking are deceitful.

First, the movie implies that nasty chemicals get into the water table. That seems logical, since they shoot them down into gas wells. But it turns out that the shale gas wells are thousands of feet below the water table. Do the chemicals flow up—against gravity?

But then what's the explanation for the most dramatic part of the movie: tap water so laden with gas that people can set it on fire?

It turns out that has little to do with fracking. In many parts of America, there is enough methane in the ground to leak into people's well water. The best fire scene in the movie was shot in Colorado, where the filmmaker is in the kitchen of a man who lights his faucet. But Colorado investigators went to that man's house, checked out his well, and found that fracking had nothing to do with his water catching fire. His well-digger had drilled into a naturally occurring methane pocket. ...

Filmmaker Josh Fox concedes that the states concluded that the fire wasn't caused by fracking, but he says the government regulators collude with industry, or don't use good science. His movie portrays Hanger as an indifferent bureaucrat. Hanger says the movie is just inaccurate. "Josh Fox has a mission. ... He is trying to shut down the gas-drilling industry."

"Plentiful Fuel", Reason

At 5/28/2011 10:39 AM, Blogger Che is dead said...

... there may be a technical fix that addresses these water worries and does an end run around drilling opponents: gas-fracking. Developed by GasFrac Energy Services in Alberta, Canada, gas-fracking uses liquefied petroleum gas (LPG), which consists mostly of propane, instead of water to crack open shale formations to release oil and natural gas. Robert Lestz, GasFrac’s chief technology officer, and his colleague Audis Byrd spent 10 years developing the technique. Lestz explains that the company produces a LPG gel using phosphate esters, iron sulfate activator, and magnesium oxide. None are seriously toxic or are thought to be carcinogenic. The injected LPG gel combined with sand fractures shale formations to release trapped oil and/or natural gas.

As a hydrocarbon, propane easily mixes with natural gas and returns to the surface where it can be recovered and reused or flared. Since essentially no water is used and the gelling chemicals are relatively benign, there is no possibility that well wastewater can contaminate wells or streams.

Gas-fracking is also more efficient than hydrofracking ... gas-fracked wells often produce 20 to 30 percent more natural gas than do hydrofracked wells.

"A Better Way to Frack", Reason

At 5/28/2011 11:02 AM, Blogger Che is dead said...

Canadian journalist Ezra Levant has written extensively on this topic and regularly debates "environmentalists" about the moral efficacy of trying to shut down fossil fuel production in Western countries given that the alternative is to enrich totalitarian regimes.

Here's a video of him debating the issue: Ezra Levant and Andrew Nikiforuk debate ethics of Alberta's oilsands

At 5/28/2011 11:13 AM, Blogger Che is dead said...

Leftists are working hard to undermine North American fossil fuel production:

Like most protests, the one against oil tankers has all the look and feel of a Canadian grassroots movement. The campaign against Alberta's oil sands also seems to rise out of the people, but the interesting thing is that there are very few roots under that grass.

All the money, at least US$6-million, comes from a single, foreign charity. The Tides U.S. campaign against Alberta oil is a campaign against one of Canada's most important industries. It's fair for Canadians to inquire about who's funding this campaign and why. The trouble is, nobody knows.

But Tides U.S. is not alone. U.S. tax returns and public records show that Tides U.S. and charities based in California and New York have granted US$15-million since 2003 specifically for campaigns against Alberta oil and against oil tanker traffic and pipelines through British Columbia. The purposes for these grants are clearly outlined in the filings. For example, Tides U.S. received US$700,000 in 2009 from the Oak Foundation of San Francisco "to raise the visibility of the tar sands issue and slow the expansion of tar sands production by stopping new infrastructure development."

The Financial Post

The American left, who sees no irony in their chanting "no blood for oil", is very busy trying to shut down fossil fuel production in Canada and the U.S.. The fact that their misguided activities only serve to push production overseas and to enrich some of the meanest tyrants in the world seems completely lost on them. What they care about is killing capitalism.

At 5/28/2011 2:34 PM, Anonymous Anonymous said...

Che, here's some data that contradicts the notion that methane is only being released naturally, I happened to stumble across that recently. I'm all for drilling, but we need to make sure we do it safely.

At 5/28/2011 2:49 PM, Blogger Rufus II said...

I think it would behoove us to keep some of these numbers in perspective. From Mar of 2010 to Mar of 2011 oil production in the U.S. Increased by 90,000 barrels/day

In the meantime We're Consuming 19,100,000 barrels/day of Petroleum Products.

90,000/19,100,000 = 0.004

We Added an amount equal to 4/10ths of 1% of our total consumption.

At 5/28/2011 2:55 PM, Blogger Rufus II said...

In the meantime our Total production of 5.59 million bpd is 0.296 of our Total Consumption (see first link.)

At 5/28/2011 3:03 PM, Blogger Rufus II said...

Concurrently, the deal iin Libya has Removed 1,200,000 barrels/day from world production.

At 5/28/2011 4:13 PM, Blogger PeakTrader said...

North Dakota added 250,000 barrels a day since 2004.

The greater Prudhoe Bay area went from producing no oil in 1976 to 2 million barrels a day in 1989.

ANWR, California, the Gulf of Mexico, etc. can provide much more oil.

At 5/28/2011 4:27 PM, Blogger PeakTrader said...

The Democrats not only promoted risky loans in the housing market, for years, causing the financial crisis in 2008, they also prevented oil production, for years, causing the oil shock in 2008.

At 5/28/2011 4:40 PM, Blogger PeakTrader said...

It's easy to blame the Republicans. I'm surprised they're not in jail.

At 5/28/2011 4:57 PM, Blogger Ron H. said...

"The greater Prudhoe Bay area went from producing no oil in 1976 to 2 million barrels a day in 1989."

That's a nice history lesson, but I understand that current production is less than 500k bbl/day, and that 93% of the estimated ultimate recovery has already occurred. At some point in the not too distant future, production will no longer be sufficient to allow operation of the pipeline.

At 5/28/2011 5:00 PM, Blogger Greg Turco said...

People have always thought they were about to run out of oil. That has happened for at least 60 years.

Steadily we have come to regard "non-traditional" oil as another fuel source. From off-shore oil, to secondary recovery, and many more. Now we have people on this comment thread talking about natural gas as if it were oil -- something no one would have done ten years ago.

Soon we will have tar sands, and deep sea methane.

I am confident that oil and oil substitutes will become increasingly expensive but they will be there when today's toddlers are old and wrinkled.

At 5/30/2011 11:03 AM, Blogger VangelV said...

The oil-autocracy link is one of the indirect costs of our "dependence on foreign oil" because we provide support to authoritarian states and inhibit the growth of democracy in those countries.

So? Why is the democratic tyranny of a majority race, tribe, or faction better than the rule of a tyrant?

The companies estimate that the boom will create more than two million new jobs, directly or indirectly, and bring tens of billions of dollars to the states where the fields are located, which include traditional oil sites like Texas and Oklahoma, industrial stalwarts like Ohio and Michigan and even farm states like Kansas.

If horizontal wells were such a great new thing why is the shale industry bleeding so much red ink? Why is Aubrey McClendon now positioning his company as a liquids play after half a decade of hyping it as a shale gas play?


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