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IR 495

WORLD ENERGY POLITICS

MIDTERM EXAM I

SUBMITTED BY

MURAT ZGEN

20701451

SUBMITTED TO

NECDET PAMR


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Q-1) Write down (list) the renewable and non-renewable sources of energy. Why are

they called renewable or non-renewable sources? Give their current percentages in the

world primary energy consumption profile. According to the latest available reference

scenario by the IEA or EIA, what is the expected consumption profile (for the world) in

2030 by resources (Please support your answer with relevant diagrams).

Renewable resources can be replenished at a comparable rate to the rate of consumption.

Energy sources like hydroelectric power, solar energy, and wind power are considered

perpetual resources because they run no risk of depletion.

Hydropower (water) energy comes from the energy that is created through the turbines which

are turned by the flow of water.

Wind means the energy that is created through the turbines which are turned by the blowing

of the wind.

Geothermal: energy comes from the steam wells which are heated by the earths core however

it is debated if it is a renewable or non renewable energy.

Solar energy comes from photovoltaic (PV) cells that convert heat from the sun directly into

electricity.

Biomass is produced from vegetable oils, animal fats, recycled restaurant greases, and other

byproducts of plant, agricultural, and forestry processing or industrial and human waste

products.

Ocean, tide energy comes from the the turbines which are turned through the force of tides or

ocean waves.

Nonrenewable energy sources

Nonrenewable resources are energy sources like petroleum, propane, natural gas, coal, and

nuclear energy that take millions of years to form and cannot be regenerated in a short period

of time.

Nonrenewable energy sources come out of the ground as liquids, gases and solids

Liquid: Crude oil (petroleum), NGL

PETROLEUM is formed from animals and plants that lived

millions of years ago when heat and pressure turned decayed matter into crude oil.

Gas: Natural gas and propane

NATURAL GAS consists primarily of methane but includes significant quantities of ethane,

butane, propane, carbon dioxide, nitrogen, helium, and hydrogen sulfide.


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PROPANE is produced as a byproduct from natural gas processing and crude oil refining. It

burns hotter and more evenly than other fuels.

Solid: Coal

COAL is formed from trees and plants in vast primeval forests, when heat and pressure

turned decayed matter into coal. Coalis a part of the fossil fuels family.

Coal, petroleum, natural gas, and propane are all considered fossil fuels because they formed

from the buried remains of plants and animals that lived millions of years ago

Uranium ore, (solid) is mined and converted to a fuel. Uranium is not a fossil fuel. These

energy sources are considered nonrenewable because they can not be replenished (made

again) in a short period of time.

World Primary Energy Consumption Profile 2010 and expected profile by 2035:

Million Tons oil equivalent:


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Q-2) What do we understand from the concept: energy security?

What are the basic factors to consider for energy security?

Energy security means having: Adequate, affordable, reliable, timely, clean and uninterrupted supplies of energy.

Energy security matters because energy is essential to economic growth and humandevelopment.

No energy system can be entirely secure in the short term, because disruptions orshortages can arise unexpectedly, whether through sabotage, political intervention,

strikes, technical failures, accidents or natural disasters.


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In the longer term, under-investment in energy production ortransportation (andrefining) capacity can lead to shortages and consequently unacceptably high prices.

So energy security, in practice, is best seen as a problem of risk management (thatisreducingto an acceptable levelthe risks and consequences ofdisruptions and adverse

long-term markettrends).

Energy security does not stop at national borders and goes all the way to the finalconsumer (from the supplier, through transiter(s) to the consumer)

The external (geopolitics), internal (operations and investment) and temporal (shortand long term) components of energy security calls for a multidimensional (and

international) policy approach to protect against energy system disruptions

A typical example:

Attacks on Iraqi pipelines, oil installations, and oil personnel, (2003 March

2008):

Total # of incidents: 469 469. March 27, 2008:

Gunmen blew up an oil pipeline in Zubair area west of Basra.

Turkey have lost more than $ 1 billion from transit revenues. Pipeline capacity: 71

million tons/year

Basic Factors to Consider for Energy Security

Resource Base (are they adequate) Distribution ofthe Resources (geographic; whoowns?) Dominancy ofthefossilfuels Costofdevelopment, refining andtransportation Needofvastinvestment Geopolitical dimension, power struggles Choke points, dire straits Supply Diversity Supply DemandScenarios Alternative resources Cost/Price for new and renewable resources, new technologies Energy conservation, energy efficiency


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Energy policiesTurkey and Energy Security

High energy importdependency (% 70 +) R

ich indigenous energy resources; under-utilized

Over-dependency to gas,over-dependency to a single source (RF),over-dependencyto gasfor electricity generation

Insufficientgas storage capacity (2,1 bcm) (Imports: 37.8 bcm in 2008, 32 bcm in2009)

High rates oflosses and unpayments in electricity sub-sector Low energy efficiency (can be improved25%)

In conclusion:

The firststep should be understandingthe diverging interests andfacts for each partyand gathering information from objective sources.

Ifwe can globally be successfullon securing energy in its widerframework,the loadand risks on NATO could be minimised.

Military measures shouldthen be more realistically designed.

Q-3)Using BP Statistical Review of World Energy (June 2010), write down the following

with their units:

1. U.S. oil reserve (end 2009) (barrels): 28.4 billion barrels 2. US oil production: 7196 thousand barrels per day 3. US oil consumption: 18686 thousand barrels daily 4. Russias gas reserves (end 2009, trillion cubic meters): 44.38trillion cubic

meters

5. Chinas coal consumption (2009, million tons): 114500 million tons


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Q-4) Using the web site of the U.S. Department of Energy, select a country and

summarize its energy profile in alignment with the order that the website follows.

Summarize all the subtopics. (http://www.eia.doe.gov).

UNITED KINGDOM

When we talk about United Kingdom, the fact that they are the largest oil producer and

second largest natural gas producer in European Union plays a big role in their economy

domestically and externally. The country was not an importer before 2004 moreover after the

rise in production in 1990s the countrys production has been declining because of the

inability to open up newer fields. Due to these problems the UK government started new

policies such as increasing domestic production, establishing necessary import infrastructure

such as liquefied natural gas receiving terminals and transnational pipelines and investing in

energy conservation renewables.

Oil

According toOil andGas Journal(OGJ),the UK had 3.1 billion barrels of proven crude oil

reserves in 2010, the most of any EU member country. In 2009, the UK produced 1.5 million

barrels per day (bbl/d) and consumed 1.7 million bbl/d of oil

Exploration and Production The UK Continental Shelf (UKCS), contains the countries most of the oil reserves which are

located in North. There are also sizable reserves in the North Sea north and west of

the Shetland Islands. Besides these offshore assets, the UK also has the Wytch Farm field

located in the Wessex Basin, the largest onshore oil field in Europe, which has produced more

than 400 million barrels of oil over its 35-year life.

Total oil production (including condensates, natural gas liquids, and refinery gain) inthe UK was 1.5 million bbl/d in 2009, a 5-percent decline compared with the 2008 production

levels. The 2009 production was about one half of the peak annual production in 1999.The UK government expects oil production in the country to continue to decline, reaching

between 0.8 and 1.2 million bbl/d by 2015. Reasons for this decline include 1) the overallmaturity of the countrys oil fields, 2) the application of new crude oil extraction technologies

that accelerate field exhaustion, and 3) increasing costs as production shifts to more remoteand inhospitable regions.

ExportsJust like Libya, UK oil is light and sweet which makes it more attractive to foreign buyers

because of its quality. The UK was a net exporter of crude oil between 1981 and 2005 and has

since become a net importer. The imports most dominantly come from Norway which makes

69% of their total import. The UK also continues to export a significant amount of crude oil.

In 2009, the country exported 875,000 bbl/d, with crude oil going to the Netherlands (40

percent), United States (24 percent), and Germany (17 percent). The remaining 19 percent of

crude oil exports were sent to a number of other countries, including France, Spain, Canada,

and Chile.


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Pipelines: BP operates the 110-mile, 36-inch Forties-Cruden Bay pipeline, linking fields in

the Forties system to the oil terminal at Cruden Bay, Scotland also operates a 110-mile, 36-inch pipeline connecting the Ninnian system to the Sullom Voe oil terminal on Shetland

Island. Britoil Plc operates a 150-mile, 24-inch pipeline linking the Bruce and Forties fields toCruden Bay and Talisman operates a 130-mile, 30-inch pipeline connecting the Piper system

with Flotta on Orkney Island. Shell and Esso jointly operate a 93-mile, 36-inch connection

between the Cormorant oil field and Sullom Voe. UK does have a few onshore crude oilpipelines, including a 90-mile, underground pipeline operated by BP that links the WytchFarm field to the refinery at Fawley and the nearby oil export terminal at Southampton.

Sector OrganizationBP is the largest oil producer in the UK, with 23 fields producing a total of 247,000 bbl/d for

the 12 months ending April 2010, according to the British Department of Energy and Climate

Change (DECC). Other large oil producers in the UK include Nexen, Shell, and Total. The

Canada-based Nexen operates Buzzard, UKs largest oil field, which accounted for close to

15 percent of total UK.

Natural Gas

After the 15 percent decline in 2010 the natural gas reserves fort he UK was predicted about10.3 trillion cubic feet . They seem to ocur in associated fieldsin the UK continental shelf, nonassociated fields in the Southern Gas Basin, and in non-associated fields in the Irish Sea.

Instead of coal the governement encouraged the use of natural gas in industrial areas andelectricity production.

Exploration and Production

The UK produced 2.1 Tcf of natural gas in 2009, falling more than 16 percent compared with

the previous year, which was the largest year-on-year production decrease in at least 30 years.At 2.1 Tcf, UKs production reached the lowest level since 1993. While the country was one

of the largest producers of natural gas in the world only a few years ago, it has since slipped

to thirteenth place.

Pipelines

Domestic SystemThere are four main pipeline systems in the UK that carry natural gas from offshore platforms

to coastal landing terminals. The Shearwater-Elgin Line (SEAL), operated by Shell, transportsgas from the Shearwater-Elgin area to the landing terminal at Bacton, England. ExxonMobil

operates the 200-mile, 30-inch Scottish Area Gas Evacuation (SAGE), which transportsassociated natural gas from UKCS fields to the landing terminal at St. Fergus, Scotland. The

250-mile, 36-inch Central Area Transmission System (CATS), operated by BP, links fields inthe Central North Sea to Teesside. Finally, Shell operates the 283-mile Far North Liquids and

Gas System (FLAGS) linking associated gas deposits in the Brent oil system with St. Fergus.Once brought onshore, the responsibility for transporting natural gas throughout the country

belongs to the utilities operating in the UK, including National Grid and Scotia Gas Networks

InternationalPipelinesA consortium of companies operates the Interconnector pipeline between

Bacton, England and Zeebrugge, Belgium. The Interconnector, inaugurated in 1998, iscapable of bi-directional operation, meaning either it can export natural gas from the UK to

continental Europe (Forward Mode), or it can import natural gas into the UK (Reverse Mode).


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The UK also imports natural gas through the Frigg pipeline system, operated by Total. Frigg

connects the St. Fergus gas terminal with the Frigg gas field in the Norwegian sector ofthe North Sea. Finally, the UK-Eire Interconnector connects the UK with the Republic of

Ireland, running from Moffat, Scotland to Dublin

Liquefied Natural Gas (LNG)

Currently, the UK has four LNG import terminals and the country was the eighth-largestimporter of LNG in 2009. The longest-operating LNG terminal in the UK is National GridsGrain LNG terminal on the Isle of Grain.

Electricity

The countrys electricity sector has been privatized in which the largest producer happens to

be Electricit de France (EDF). EDF controls most of tge nuclear power capacity and

generates one sixth of the total electricity supply. Other important generating companies

include E.ON UK, RWE-npower, Scottish and Southern Energy (SSE), and ScottishPower

(SP). National Grid owns and operates the national transmission system

in England and Wales, whereas SSE and SP operate the grid in Scotland, and Northern Ireland

Electricity (NIE), operates the grid in Northern Ireland.The UK has slowly integrated theformally-separate electricity markets of its component parts (England, NorthernIreland, Scotland, and Wales). The British government formed the New Electricity Trading

Arrangements (NETA) in 2001 to integrate the electricity markets of England and Wales. In2005, the British government extended NETA to Scotland as the British Energy Transmission

and Trading Arrangements (BETTA).

Conventional ThermalConventional thermal plants continue to provide the bulk of the electricity supply in the UK.

According to the DECC, conventional thermal generation in 2009 consisted of natural gas (44percent), coal (28 percent), oil (1 percent), and other (1 percent). The long-term trend

in UK power generation has been a move from coal-fired plants to combined-cycle, gas-fired

turbines (CCGFT).

NuclearCurrently, there are 10 nuclear power plants in the UK, eight of which are operated by EDF

Energy, which acquired BE in September 2008. In 2008, the UK government announced its

support for additional nuclear power plants to meet projected energy needs. The government

issued a series of national policy statements (NPSs) in 2009, identifying potential sites for

new plants and outlining its policy that promotes building of new nuclear power plants by

2025. Following the announcement and the NPSs, a number of companies proposed nuclear

power plant projects. Among those, EDF proposed four new European pressurized reactors(EPR) totaling 6,400 MW, the first one of which would start up in 2017.

CoalThe UK had an estimated 171 million short tons (Mmst) of recoverable coal reserves in 2005.

The country produced 22 Mmst in 2005, remaining one of the top ten coal producers in the

EU. Coal production in the UK has declined steadily and dramatically since the early 1990s.

Decreasing domestic consumption and a surge of low-cost imports have been the principle

causes of the production decline. According to DECC, the UK imported 44 Mmst in 2005,

accounting for 71 percent of total coal supply in that year.


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RenewablesThe UK government has introduced regulations that require electricity distributors to source a

portion of their electricity supply from renewables (including hydroelectricity), which totaled25,222 GWh of electricity in 2009. Investments in wind power have increased substantially,

aiming to take advantage of the natural geographic advantage that the UK has in this regard.

Wind is the single-largest contributor of electric power generation among the renewable fuels,followed by hydroelectricity and biomass.


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Q-5) With the support of maps, give us an understanding of the geographical

distribution of the fossil fuels. On each region, write down the reserves in those regions

with their absolute values.

1. How many years of reserve life does each have?

Recoverable Coal reserves have 119 years, gas reserves have 62.8 years and oil reserves have

42 years of life.

2. Will the world be out of oil reserves in 42 years? If not, why? Support your view

with related diagrams and facts.

World will not be out of oil reserves in 42 years because there is a high chance that there will

be new technologies and searching for new areas. Modern renewable fuels wind, solar and

biofuels will expand significantly. Coal will decline sharply in OECD countries, but continue

to be the predominant fuel for power generation in Non OECD countries. Technology will

continue to evolve and play a key role in increasing efficiency, expanding supplies and

mitigating emissions. These three elements must be pursued with vigor and constancy of

purpose in order to meet our global energy and environmental challenges.

3. Why is the Middle East region so important for big energy consumers and mainly for

the U.S.?

Middle East region is very important to U.S because of its dependency to oil (about45% of whole world oil is consumed by U.S) and also to fosil fuels. Middle East has

the cheapest and largest oil reserves in the world so it is not hard to see why this

region is important to big energy consumers. Through out the time we can see policies

specifically fort his topic. The Carter Doctrine was a policy proclaimed by President

of the United States Jimmy Carter in his State of the Union Address on January 23

1980, which stated that the United States would use military force if necessary to

defend its national interests in the Persian Gulf region.

The doctrine was a response to the 1979 invasion ofAfghanistan by the Soviet Union,and was intended to deter the Soviet Unionthe Cold War adversary of the United

Statesfrom seeking hegemony in the Persian Gulf.


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After stating that Soviet troops in Afghanistan posed "a grave threat to the freemovement of Middle East oil," Carter proclaimed:

Let our position be absolutely clear: An attempt by any outside force to gain control ofthe Persian Gulf region will be regarded as an assault on the vital interests of the

United States of America, and such an assault will be repelled by any means

necessary, including military force.

Greenspan:

I am saddened that it is politically inconvenient to acknowledge what everyone knows:

The Iraq war is largely about oil

General Abizaid (retired Commander of CENTCOM):

Of course it is (Iraq war) about oil, we cant deny that.

Weve treated the Arab World as A Collection of Big Gas stations


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