Sunday, March 11, 2007

Who are the Seven Sisters of Oil?

If you think any of them are American or even Western, you are thirty years out of date. Today they are, the Financial Times tell us, Saudi Aramco, Russia’s Gazprom, CNPC of China, NIOC of Iran, Venezuela’s PDVSA, Brazil’s Petrobras and Petronas of Malaysia.


Robin West, chairman of PFC Energy, an industry consultancy, says: “The reason the original seven sisters were so important was that they were the rule makers; they controlled the industry and the markets. Now, these new seven sisters are the rule makers and the international oil companies are the rule takers.”

The International Energy Agency, the developed world’s sectoral watchdog, calculates that 90 per cent of new supplies will come from developing countries in the next 40 years. That marks a big shift from the past 30 years, when 40 per cent of new production came from industrialised nations, most of it controlled by listed western energy groups.

Commentary

The fact that much of the world's energy will increasingly be controlled by the most unstable and despotic countries in the world must have serious implications for international security in the coming decades, made the more so by the fact that the new Seven Sisters are instruments of policy of these nations. What should the West do? Here's a news story which describes not simply how complacency and fads got helped create this situation, but how far there is to go. Nuclear Power Industry Wins First Site Approval in 30 Years:

The Nuclear Regulatory Commission Thursday approved the first Early Site Permit for a nuclear power plant - demonstrating a new and previously untested licensing process for locating new nuclear plants in the United States. Critics say new nuclear plants are not needed if energy conservation is implemented.

The approval - for Exelon Generation Company's Clinton site, in central Illinois - was hailed by U.S. Energy Secretary Samuel Bodman as "a major milestone" in the Bush administration's plan to expand the use of nuclear power. ...

The 20 year permit allows Exelon to "bank" the site for a possible power plant, said Kray, but it does not authorize construction of a new plant. Should the company decide to build a power plant, it would need to apply for a combined operating license. "Certain conditions would have to fall into place before Exelon would consider building a plant - a workable solution to the spent fuel disposal problem; community acceptance; the right reactor technology; and the economics must be favorable," Kray said. This Early Site Permit approval is the culmination of a four year, cost shared project between the Department of Energy and the Exelon Corporation, based in Chicago.

26 Comments:

Blogger Pierre Legrand said...

Perhaps we need to simply live up to the worlds fears and take all of the oil under our protective custody. That would take care of Islam and then Ralphey wouldnt have to be so upset with those of us who don't think much of it.

Ralph Peters on Islam

3/11/2007 07:35:00 PM  
Blogger Pyrthroes said...

Nuclear power has been called a synonym for hydrogen fuel-cell power plants. In light of recent electric battery advances, "stored-energy" used to power vehicles such as the Tesla Roadster --due for initial marketing this summer of 2007-- might acquire stimulating competition. In any case, fossil-fuel internal combustion transport seems on the wane.

We've even heard reports of broadcast-power sources pinpointing mobile antennae systems... high oil prices benefitting regimes of gruesome thuggery make such alternatives imperative.

In this respect, the so-called Green Lobby has long since forfeited respect. Despite (for example) France and Japan, eco-freaks for decades have irrationally opposed emission-free and safe nuclear plants, setting back development and use for a generation while defaulting monies to crypto-fascist Salafists with their death-cult Wahabi paymasters.

Not a day goes by without reports of vicious Muslim hate-and-rage at all peace and prosperity. These bigoted sectarian dogmatists rely solely on Western energy-needs to leverage their cowardly assaults. Since the mid-1970s, terrorists' major enablers have been precisely those responsible for thwarting technological advance at every turn.

3/11/2007 07:40:00 PM  
Blogger Buddy Larsen said...

related:

3/11/2007 07:52:00 PM  
Blogger Aristides said...

What should the West do?

This creates a very interesting dynamic. How much pain are we willing to absorb before we act? How much are they willing to inflict?

The Prisoner's Dilemma, eh Wretchard? Both parties would be better off coordinating and cooperating, and I think that will be our play--for now. If they start to bully, though -- I think we will enter a new, more dangerous phase, and then they will enter a new phase, and then we will...

3/11/2007 09:03:00 PM  
Blogger Al Reasin said...

The story mentions a new nulke plant. There will be 30 built; most on existing sites. One site was approved, if I remember correctly, for 15 units and only 3 were built. I believe that since the public hearings were concluded, the licensing process would be shorter in duration. One, at Calver Cliffs, will start construction shortly. These are of the pellet design which has a self shutdown feature

3/11/2007 09:11:00 PM  
Blogger blert said...

It would help to keep perspective:

The tributaries of the Amazon – in Peru alone – have enough hydro-potential to power the planet.

Yet there are no dams there.

Electrolysis of its headwaters could power the hydrogen economy.

The whole endeavor would be a design-build project, entirely conventional.

Alaska has staggering methane deposits whose only current use is to expedite Alaskan crude.

Yet we don't tap them. Indeed, their existence has fallen from the common memory.

Shifting our heat engines over to compressed natural gas is already economic. Honda has already released one model into regular production.

On the economics, CNG is going to kill the electric car – in most markets – forever.

.....

Of the 'companies' listed CNPC of China will never be an oil exporter, and they are all technology importers.

Of paramount importance is that none of these outfits is any kind of decision maker. They have third rate commodity skillsets – at best.

These are not 'oil companies' they are extraction-tariff engines. They exist to divert wealth into political hands – not produce it.

3/11/2007 09:44:00 PM  
Blogger starling said...

Concerning Buddy's "related" link. reuters is also reporting it:

Halliburton to move headquarters, CEO to Dubai

"U.S. oilfield services giant Halliburton Co. (HAL.N: Quote, Profile , Research) said on Sunday it will move its corporate headquarters and its chief executive to Dubai in the United Arab Emirates in an effort to expand overseas."

And get this:

The Dubai move drew immediate political reaction.

"This is an insult to the U.S. soldiers and taxpayers who paid the tab for their no-bid contracts and endured their overcharges for all these years," said judiciary committee chairman Sen. Patrick Leahy, a Vermont Democrat.


Amazing. First demonize the company, then complain when they set sail for (greener?) pastures.

Interestingly, with a little forethought, I might have seen this coming. Halliburton subsidiary KKR is here doing much of its resupply work for the military. The environment is supportive and Dubai is going all out to attract multinationals to operate here. The local papers are filled with announcements of big companies doing just that.

It will be interesting to see how the stock market reacts. I see no changes yet in Asian markets. Will check later.

3/11/2007 09:48:00 PM  
Blogger Cedarford said...

blert - It would help to keep perspective:

The tributaries of the Amazon – in Peru alone – have enough hydro-potential to power the planet.

Yet there are no dams there.


There are no dams there for many reasons. Anywhere you don't see a dam and envision free electricity is ready for the taking - remember the whole would was thoroughly surveyed for dam sites from 1910 to 1960, and "where the dams aren't" is because engineering couldn't get past geological problems, environmental problems existed, or they just wouldn't pay off.

Blert, be careful when you read some techologically clueless Greenie or some vendor hyping his miracle snakeoil solution for cheap energy, non-pollution, all the planet needs!! Be it oil from turkey guts and cooking grease replacing all global oil supplies or be it unlimited energy from some remote jungle. All you have on the Eastern slope of the Andes is enough untapped hydro to provide the electricity coming from only 18-30 nuke power plants depending on if sites are even of feasible geography - and allowing at present there is no easy way to get it sent the hundreds of miles to major population centers. (And losses from H2 electrolysis greatly exceed electric transmission losses).

Wish it wasn't so. Wish cold fusion worked. But for now, we have too many people chasing too few resources, it will be dramatically worse soon, including America as tens of millions pour in unchecked --and no prospect "exciting high technology" will bail us out.

3/11/2007 11:37:00 PM  
Blogger Robert said...

"Despite (for example) France and Japan, eco-freaks for decades have irrationally opposed emission-free and safe nuclear plants, setting back development and use for a generation while defaulting monies to crypto-fascist Salafists with their death-cult Wahabi paymasters."

Gramiscian Damage, My man, Gramisican Damage
.

3/11/2007 11:41:00 PM  
Blogger Doug said...

For those w/o wsj access:
---
Halliburton to Move Headquarters to Dubai
The energy services company will maintain a corporate office in Houston, but its chairman and chief executive will move.

3/12/2007 03:56:00 AM  
Blogger Pangloss said...

If Halliburton is moving to Dubai I would bet that the biggest factor in the move is Sarbanes-Oxley, which will by itself destroy the American markets if it is not repealed soon. Sarbanes-Oxley couldn't do a better job of damaging the American economy if Bin Laden had designed it himself.

3/12/2007 06:47:00 AM  
Blogger The Sanity Inspector said...

One thing I haven't seen anyone address is the issue of plastics. We can come up with all sorts of alternate energy sources, but with no petroleum, what are we going to use for tires, disposable medical supplies, and the like?

3/12/2007 07:19:00 AM  
Blogger BigLeeH said...

I did some order-of-magnitude calculations about the impact that the one-two punch of Jane Fonda's film, The China Syndrome, and the accident at Three Mile Island had on the nuclear power industry in the U.S.. My conclusion is that Ms. Fonda can take credit for twenty trillion pounds of CO2 (so far) released into the atmosphere generating electricity that would have come from nuclear sources.

For those wishing to critique my math, it is here.

3/12/2007 07:21:00 AM  
Blogger Harrison said...

aristides, if I'm not mistaken, the Prisoners' Dilemma rules out any chance of cooperation and coordination. Instead, both actors reside in an unstable equilibrium with certain incentives present to defect from their current positions.

Coordination might work if the situation was mutually and equally beneficial to both sides, and defection would be deterred then.

Of course, taking into account geopolitical realities, basic strategic game theory gets warped and distorted beyond usable measure. As wretchard has pointed out:

The fact that much of the world's energy will increasingly be controlled by the most unstable and despotic countries in the world must have serious implications for international security in the coming decades, made the more so by the fact that the new Seven Sisters are instruments of policy of these nations.

From that list, the first five are at least amenable to the idea of flexing economic muscle to bend/break the arms of other nations to shift foreign policy to suit their interests. Russia has put that into concrete action since. Cooperation means acquiescence with the current configuration of dependence - we must shift away from this equilibrium via alternative fuels.

What should the West do?

Anything other than allowing ourselves to be subject to the whims of foreign actors. If we cannot hope to compel them to change tack or resist the urge to exploit oil as a political tool, then perhaps we should compel our own leaders to advocate reform in energy policy.

3/12/2007 08:04:00 AM  
Blogger Ash said...

I would be curios to know what proportion of the oil contracts being divvied up in Iraq are going to these "seven sisters"?

3/12/2007 08:22:00 AM  
Blogger Aase's death said...

One thing I haven't seen anyone address is the issue of plastics.

Mr. McGuire: I want to say two words to you. Just two words.

Benjamin: Yes, sir.

Mr. McGuire: Are you listening?

Benjamin: Yes, I am.

Mr. McGuire: Plastic substitutes.

(This particular patent sounds inspired by my garden compost pile. Perhaps there are more elegant tech solutions to the problem you raise, [I type on my plastic keyboard].)

3/12/2007 08:22:00 AM  
Blogger Soldier's Dad said...

"Hydropower"

Sorry folks...it is not green. We have plenty of hydropower in the Pacific NorthWest...but it upsets the fish...and fish have rights.

No self-respecting enviro weanie would ever support hydro-power. They are firmly against anything that upsets the fish...

Nuclear Power needs cooling ponds...upsets the fish.

Coal causes Acid Rain...upsets the fish..

Hydro interfears with fishes constitutional right to spawn where they please...really upsets the fish..

The real problem with Global Warming is that the bears seem to like it...which means they eat more fish...which upsets the fish..

3/12/2007 08:43:00 AM  
Blogger Charles said...

imho in 5-7 years the USA won't be importing any oil at all.

People will be very shocked at how fast this will happen.

3/12/2007 09:19:00 AM  
Blogger Aristides said...

Harrison,

In the Prisoners' Dilemma, cooperation is the most rational strategy for both parties, so long as both parties choose it. The problem is the incentive for defection -- and the uncertainty of the other player's strategy -- that is built into the dynamics of the game.

However, when you iterate this dynamic -- and allow for memory -- defection strategies (greedy strategies) do much worse in the long run than cooperative strategies.

The dynamic we're in is even more interesting, since we are dealing with a finite resource, time, and known but unpredictable phase thresholds.

One phase threshold can be called the Canada-threshold: if the Seven Sisters push oil beyond a certain price, then outside parties can become big-time players. Push too hard, and high-cost-extraction and/or high-cost-conversion becomes the dominant strategy of the importers.

But this threshold can be passed, will be passed, simply by holding the system static over time. Sooner or later we will gravitate to a higher-trust environment, and these seven sisters will be left selling to poorer, less voracious consumers. So there might be an incentive to push now, to go all in early while the advantage is in their favor.

This would be a blackmail scenario, and that itself would skirt another threshold. And even if their price gouging was controlled and our response muted, they would only accomplish a short-term windfall while guaranteeing -- via their greed and our memory -- an inexorable trend in which they lose in the long-term.

But when you add in nukes, the game gets even more complex, because in the Chutes and Ladders game of geo-politics a nuke is the most obvious -- and most easily acquirable -- ladder. Nuclear weapons change the interplayer dynamic so much that it might be better for these countries to push the prices higher now so they can acquire them.

But we know that, and so it might be better for us to suffer a sharp spike in prices now so long as we eliminate -- or greatly retard -- the rogue's pursuit of nuclear weaponry. But they know that we know that, so they might...

The idea is all of this guessing -- and the inevitable miscalculation -- could be avoided if both simply cooperated for mutual benefit. But it won't happen. However, in the long run, we still win (all the long-term chips are in our hand), and they still lose.

Except for Europe, which will probably still lose for other reasons.

3/12/2007 09:19:00 AM  
Blogger Harrison said...

aristides, I momentarily forgot about the iterative strategic game. Thanks for correcting.

Europe is clearly advocating a less-than-convincing approach towards shifting dependence away from Russian oil and gas. Like you said, they might possibly lose big in other ways, but this particular protocol of theirs will merely allow Russia to manipulate Europe and squeeze every concession it can get from it.

Anyone who knows of a preemptive strategy such that cooperation becomes more obviously palatable to the Seven than heading down that path of nuclear armament and hand-wringing?

3/12/2007 09:44:00 AM  
Blogger Buddy Larsen said...

Starling--yes, Leahy's smear is indeed ironic (though he'll never figure it out). More so in that Leahy must recall that Halliburton's precursor got its big start building facilities in South Vietnam for LBJ.

Anyway, old stalinist fossils like him won't be happy until there is NO private sector left in the country and EVERYbody is a federal government vassal.

I think I'll buy me some more Halliburton. And another few shares of Toyota, which is building a monster plant in Mississippi. Strange world ain't it. The Japanese and Dubaians know how to do biz (psst--don't have any ancient leftists in your government trying to hurt everything non-union).

If I'm Halliburton, my last gesture after switching off the lights at HQ, is a Giant Fugyoo Finger to the Leahys and their raving moonbats.

3/12/2007 10:16:00 PM  
Blogger linearthinker said...

Halliburton's Cadillac

(Apologies to Michael Martin Murphy and "Geronimo's Cadillac")

Hey, Boys. Take me back.
I wanna ride in Halliburton's Cadillac.
Hey, Boys. Take me back.
I wanna ride in Halliburton's Cadillac.

Senator Clinton, ain't it a shame?
Their contract was started during Willy's fame.

Senator Schumer, isn't it strange?
There's no oil wells on the caribou range.

Al Gore, Al Gore, isn't it true?
We should be drillin' the Gulf Coast too.

Hey, Boys. Take me back.
I wanna ride in Halliburton's Cadillac.
Hey, Boys. Take me back.
I wanna ride in Halliburton's Cadillac.

Senator Leahy can snort and rale.
Congressman Waxman can fume and wail.

They think their target just avoided jail.
Sorry guys, Halliburton just set sail.

Hey, Boys. Take me back.
I wanna ride in Halliburton's Cadillac.
Hey, Boys. Take me back.
I wanna ride in Halliburton's Cadillac.

Iran's oil fields are fallin' down,
And there ain't no work around Houston town.

Ya took their market and ya won't give it back,
And ya bitch about Halliburton's Cadillac.

If the DoD'll get off the dime,
They'll be workin' in Persia in no time.

Hey, Boys. Take me back.
I wanna ride in Halliburton's Cadillac.
Hey, Boys. Take me back.
I wanna ride in Halliburton's Cadillac.

3/13/2007 12:29:00 AM  
Blogger Buddy Larsen said...

Dear Lin Earth Inker,

That was REALLY good! Enjoyed mucho--

3/13/2007 06:44:00 AM  
Blogger M. Simon said...

Easy Low Cost No Radiation Fusion might be the answer.

The reasearch will take 5 years and the end result will be a 100 MW power source about 10 feet across (a sphere). A 1,000 MW job would be only a little larger.

The fuel would be Boron. There is enough readily available Boron in borax deposits to full all of the world at American rates for at least 100,000 years.

Plus the reactors would be ideal for space propulsion.

3/13/2007 02:58:00 PM  
Blogger M. Simon said...

Did I mention that waste heat would be negligible?

The output is >95% DC electricity at 2 million volts. A 100 MW plant would deliver about 50 Amps of current.

A 1,000 MW plant comes in at 500 Amps. About 3X to 5X your typical house service.

3/13/2007 03:09:00 PM  
Blogger butlimous said...

Thanks for the nice post!

Free PS3

9/25/2007 04:33:00 PM  

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