Oman Sets Up Way for Arabian Gulf Oil Exporters to Avoid Strait of Hormuz

Oman Steps Up Plan for Middle East’s Biggest Oil-Tank Farm Bloomberg reports:

Oman’s ambitious goal of building the biggest oil-storage facility in the Middle East is finally progressing, more than seven years after the Gulf sultanate announced the plan.
Oman Tank Terminal Co. has almost finished constructing eight tanks to store crude for a new refinery near the town of Duqm on the Arabian Sea. It’s now pushing ahead with others that could be used by oil companies and traders, according to two people with knowledge of the project. That would eventually increase Duqm’s capacity to at least 25 million barrels, according to OTTCO’s website.
The Ras Markaz Crude Oil Park could provide an alternative for energy traders and exporters eager to avoid the Strait of Hormuz, a choke-point at the mouth of the Persian Gulf that’s seen numerous flareups in recent years, including Iranian seizures of tankers. The Omani facility lies roughly 600 miles (966 kilometers) from the waterway. The United Arab Emirates port of Fujairah, the region’s largest hub with 14 million barrels of commercial crude-storage capacity, is less than 100 miles from Hormuz.
“Crude storage that anybody can use outside the Strait of Hormuz, that can go either east or west, is probably a good thing,” said Alan Gelder, vice president for refining, chemicals and oil markets at consultant Wood Mackenzie Ltd. Iraq and Kuwait, a co-investor in the refinery, might see Duqm as an attractive place to park their crude outside the Gulf, he said.

Of course, Iran's fallback is to use its proxy Houit rebels in Yemen to clog up the Bab al Mandeb chokepoint and the lower end of the Red Sea to screw up shipping through the Suez Canal. OTTC info here:

Ras Markaz Crude Oil Park The first phase of the Ras Markaz Crude Oil Park will be operational in 2021, and will feature storage tanks of different sizes. The total capacity of Phase 01 will be up to 25 million barrels of crude oil of which Duqm Refinery will build and utilize approximately 6 million barrels. The tank storage terminal will feature offshore loading and unloading facilities to cater to Suezmax and VLCC tankers via Single Point Moorings. The terminal will be connected via a 70km pipeline to the Duqm Refinery and a potential of connecting to Oman's Main Oil Pipeline at Nahada 440km away.

Oil Prices

UPDATED: An interesting audio discussion of declining oil prices from the folks at The Economist at this link (autorun video replaced by link).

Are the Saudis trying to hurt others in the market? Russia? Iran? Venezuela? U.S. shale producers? Can they do it in the long run? Short term benefit to consumers, but it pushes the smaller oil producers toward a decline as prices drop below production costs. More analysis here:

The growing oil glut has already had reverberations around the world, as oil producing nations attempt to balance their books based on the gloomy new forecasts.

Reminds me of the early 1980s, which were not much fun in the oil patch, but good for the rest of the economy.

Baloney I get tired of: The President and His "2% Oil Reserves Myth"

Institute for Energy Research: "Exposing the 2 percent oil reserves myth":

According to President Obama, the United States contains only 2 percent of the planet’s proven oil reserves, Of course, he’s right — to a point. In classic fashion, he’s using a technicality to skirt the facts and keep the myth of energy scarcity alive. The reality is that the U.S. has enough recoverable oil for the next 200 years, despite only having 2 percent of the world’s current proven oil reserves.

Proven oil reserves are not all of our oil resources—not even close. In fact, proved reserves represent a tiny portion of our total oil resources. Proven (or proved) oil reserves are reserves that have already been discovered, typically through actual exploration or drilling, and which can be recovered economically. That estimate does not include oil that we know about, yet are unable to access because of regulatory barriers. For example, the billions of barrels of oil in ANWR are not included in our proved oil reserves. So let’s look at the facts.

Currently, the United States has 1,442 billion barrels of technically recoverable oil, but only about 20 billion barrels are considered proven oil reserves.[ii] That is partly because the federal government is denying access to hundreds of millions of acres oil-rich federal lands: the Alaskan National Wildlife Refuge, the Naval Petroleum Reserve-Alaska, federal waters off the Atlantic and Pacific coasts, at least 45 percent of the Gulf of Mexico, the Chukchi and Beaufort Seas, and oil shale on federal lands in Colorado, Utah, and Wyoming, to name a few. In the case of oil shale (an oil composed of kerogen), technology needs to be perfected to make its production viable, but this will not happen until the land is leased. Regrettably, the Department of Interior has stopped a leasing program Congress directed it to undertake.

Remember, some people predict a coming Golden Energy Era". And, remember, the strategic issue is not necessarily the use of oil, but rather the failure to develop infrastructure to insure we can be "energy independent" (within limits - Canada is our energy friend) - see here, where I wrote:

It is the importation of foreign oil that is a strategic issue, not their use. It's the long lines of commerce that bring oil to our shore that are vulnerable.

I guess this makes me a member of the "flat earth club" according to the President. UPDATE: Investors Business Daily sings from the same fact base:

The U.S. has 22.3 billion barrels of proved reserves, a little less than 2% of the entire world's proved reserves, according to the Energy Information Administration. But as the EIA explains, proved reserves "are a small subset of recoverable resources," because they only count oil that companies are currently drilling for in existing fields. When you look at the whole picture, it turns out that there are vast supplies of oil in the U.S., according to various government reports. Among them: At least 86 billion barrels of oil in the Outer Continental Shelf yet to be discovered, according to the government's Bureau of Ocean Energy Management. About 24 billion barrels in shale deposits in the lower 48 states, according to EIA. Up to 2 billion barrels of oil in shale deposits in Alaska's North Slope, says the U.S. Geological Survey. Up to 12 billion barrels in ANWR, according to the USGS. As much as 19 billion barrels in the Utah tar sands, according to the Bureau of Land Management. Then, there's the massive Green River Formation in Wyoming, which according to the USGS contains a stunning 1.4 trillion barrels of oil shale — a type of oil released from sedimentary rock after it's heated.

Algae Fuel "Investment" Baloney

Algae farm (claytonbodiecornell.greenoptions.com)

OK, in light of the "occupiers of Wall Street" complaining of - well, almost everything except labor unions and fire ant bites, here's a little addition to what they should be be concerned about - a government program to provide "venture capital" to a program that apparently has failed to find any real venture capitalists dumb enough to risk their own money in it. An example of "corporate welfare" if ever there was one.

Here,with a little highlighting from me, the "Algal Biomass Organization" offers up praise for an "investment" of $510 million from the USDA, DOE, and Navy (what does it matter whose budget the money comes from? It is all taxpayer money, extracted from the pockets of people who work for a living) into "biofuels" at "ABO Responds to USDA/DOE/Navy Biofuels Investment Promise" from Algae Industry Magazine:

The Algal Biomass Organization has voiced its opinion of the US government’s recently announced $510 million biofuels investment commitment over the next three years. Following is their statement: Late last month, three federal departments came together to launch an ambitious effort to commercialize next generation biofuels. The USDA, DOE and Navy announced an historic commitment to directly invest up to $510 million to retrofit and/or build facilities capable of producing drop-in replacement fuels. Funds from the private sector will be matched one-to-one, bringing the total potential available capital to more than $1 billion.

This announcement is a significant boon to our industry and comes at a time where several of our member companies are moving from lab to pilot, and from pilot to commercial production of algae-based drop-in fuels.

We’ve always praised the US military for its leadership in procuring and testing biofuels—their support has shown that domestic, sustainable fuels can perform at the highest levels of use. But until now, direct investment in companies or projects was not an option.

These three departments have rightly determined that it’s not going to be enough to just be a customer. They understand that the capital costs of facility construction are too high, and not the right model for venture capital, and the technologies still so new as to preclude traditional bank financing.

Let’s be clear – this is not a feel-good publicity stunt. This is an investment in the long-term national security and economic health of our country. As Navy Secretary Ray Mabus said: “America’s long-term national security depends on a commercially viable domestic biofuels market that will benefit taxpayers while simultaneously giving Sailors and Marines tactical and strategic advantages.”

What was most inspiring to me, however, was one aspect of the partnership that went under reported—where the funds were sourced. It turns out that no new authorizations are required (no surprise, given the current climate surrounding our national debt) because the funds have been pulled from elsewhere in the budget.

That means, for the first time in what seems like a long time, that advanced biofuels took precedence for limited funds. From the Obama administration to the departments of the Navy, Agriculture and Energy, the importance of accelerating commercialization of advanced biofuels is now a national priority.

It’s now up to our industry to take advantage of this opportunity and show what we can do.

Sincerely,
Mary Rosenthal

Let's take a look at the highlighted portions.

First, "three federal departments came together to launch an ambitious effort to commercialize next generation biofuels . . ." Uh, pumping federal taxpayer money into a project so iffy that its ". . . capital costs of facility construction are too high, and not the right model for venture capital, and the technologies still so new as to preclude traditional bank financing" means that taxpayers are at risk $510 million on something no rational commercial enterprise would fund (but for, apparently, the government decision to pony up money).

How does the government justify this? The Wall Street Journal editorial of 10 October 2011 has it just right, in describing the "Solyndra economy" mindset of this administration:

And there you have America's Solyndra economy, as the White House understands it: Washington allocates capital, and taxpayers pick up the tab if those choices go bust. Through this political lens, the August bankruptcy of the Fremont, Calif. company was a necessary casualty in the greater campaign to steer the U.S. economy toward Mr. Obama's noble goals. Private competition that winnows out losers is so yesterday.

Politics and a disdain of free markets triumphs economic sense. After all, throwing a big lump of government money at this project hardly seems capable of being described as an effort to "commercialize" anything. We might as well say we provide federal funding to "commercialize the next generation of grade schools." Ms. Rosenthal, I don't think that word means what you think it means.

Secondly, take a look at

What was most inspiring to me, however, was one aspect of the partnership that went under reported—where the funds were sourced. It turns out that no new authorizations are required (no surprise, given the current climate surrounding our national debt) because the funds have been pulled from elsewhere in the budget.

Are you kidding me? The Defense and Navy "budget" process is designed to put money on things that need money. Ship repair, aircraft repair, fuel, ammunition replacement, personnel costs and so forth, Stripping money from such allocations means something suffers. Yep, because "advanced biofuels took precedence for limited funds", something else, planned for as priority, suffered. Was it Seaman Johnny's advancement in rate? Did ships not get under way because they needed repair? Oh, those things are lower precedence, I suppose.

Further, as I have tried to say before, the issue here is not a shortage of domestic fuel that would help with "energy independence" but rather with an extreme "green" agenda that is distorting our economy and wasting taxpayer dollars (see Baloney at the Navy Top: "We use too much fossil fuel"). I am not opposed to the development of a biofuel that is self-funded and self-sustaining. I am opposed to this forced "create a market" by expending tax dollars approach.

If you think this is the wave of future, I invite you to invest your own hard-earned money into companies that produce this product, like Sapphire Energy (no, I don't own any stock, nor do I guarantee any financial results, and all private investments are subject to risk, just like investments in any other company and all the other disclaimers you can imagine) (UPDATE: Oh, wait, it's privately held.)(UPDATE2: Oh, wait, Sapphire Energy got a $50 million loan guarantee from the USDA as set out here to "to build an algae-based diesel biofuels plant in Columbus, New Mexico." - Hmmm.)

My previous rants against this "investment" can be found here, here, here and here.

Crude Oil Prices

Interesting chart from Chart of the Day:

Today's chart illustrates that most oil price spikes coincided with Middle East crises and often preceded or coincided with a US recession. The logic behind this is that a Middle East crisis can potentially disrupt an already tight oil supply and thereby drive crude oil prices higher. Also, rising oil / energy prices can, among other things, increase costs within the global economy's supply / distribution chain and thereby contribute to inflation which can in turn encourage governments to halt or reduce any plans to stimulate the economy.

 So, you'd think that a government sitting on some of the world's largest reserves of energy (see here) would be pushing development of that energy to ease the "tight oil supply" so as to unleash its plans to "stimulate the economy," wouldn't you?

Wouldn't you?

Baloney at the Navy Top: "We use too much fossil fuel"

I wish people would get it straight, despite what the Secretary of the Navy said at the 2011 Current Strategy Forum Focuses on Energy, U.S. National Security,
"We use too much fossil fuel . . .", thus,

. . .Secretary of the Navy Ray Mabus, described energy as the main vulnerability to U.S. national security in his keynote address.

No!   No!   No!

The problem is not that we use too much fossil fuel, the problem is that we have allowed ourselves to become dependent on imported fossil fuel, despite sitting on the world's largest deposits of "fossil fuels."

It is the importation of foreign oil that is a strategic issue, not their use. It's the long lines of commerce that bring oil to our shore that are vulnerable.

Lines that we can control or eliminate.

We import 51% of our oil, with 51% of that from the Western Hemisphere (thanks Canada (23.3%), Venezuela (10.7%)  and Mexico (9.2%)). Only 17% of our oil comes from the Persian Gulf states. What would it take to make it a national strategic priority to replace that 17% with domestic supplies? And then reduce the flow from Venezuela?

The solution is not all that exotic. Instead of looking for "alternative" fuels as our primary energy sources, the emphasis should be on developing our known internal energy resources so that we eliminate the energy "vulnerability" identified by Mr. Mabus as soon as possible.Then we can chase windmills and solar fields and the like.

It seems, however, that developing our own resources seems not to be the politically "in" thing right now, so we continue to squander money on half-baked projects that may actually be doing worse damage to both man and the environment than fossil fuels.For example, we continue to convert corn to ethanol despite knowing that it is both not as "green" as its proponents suggest and is helping to create food shortages that may stir civic strife in countries used to getting cheaper food. That strife I mentioned? Get ready for more humanitarian interventions and civil wars as this goes on.

In the mean time, as set out here, look at these charts based on the Congressional Research Service (which you can view or download here):

When we claim we're "hostages" to foreign energy, we're just being stupid. Politically correct, but stupid.

You want jet fuel (which also powers gas turbine war ships)? Try our vast amounts of oil shale:

How large is this resource? In the Piceance Basin, an area of 1,100 square miles, the oil shale is over 1 million barrels per acre, or roughly 750 billion barrels of recoverable oil. If you extend outward to Wyoming and to Utah, it is 1.3 trillion. This is why you hear shale next to trillions, not billions or millions, of barrels. The Air Force in the 1970s looked at shale, tested it, and found that it was a superior liquid for jet fuel. Roughly 65 percent of the oil shale is liquid, which could go into jet fuel. The J-8 engine can take shale oil as premium jet fuel.

Expensive? How much does it cost to have to defend sea lanes through which our imported oil flows? How many awful governments do we have to prop up to keep the foreign oil flowing. It's not the oil that's to blame, it's the lack of internal development of our known resources. It's not working to get a realistic balance of all the costs involved in our use of energy.

Natural gas - another fossil fuel - we have more than we ever thought. Some of this "new" gas is due to the development of horizontal fracking and horizontal drilling. Is there some reason why U.S. Navy trucks and cars don't run on natural gas?

Don't think it's safe to do horizontal fracking? Imagine if we put as much money into making it safer as we waste trying to convert switchgrass to ethanol. That may all work in some future, but the other supplies are here now and ready.

Coal -The EIA says:

The United States is home to the largest recoverable reserves of coal in the world. In fact, we have enough coal to last more than 200 years, based on current consumption levels. Coal is produced in 25 States spread across three coal-producing regions, but approximately 72% of current production originates in just five States: Wyoming, West Virginia, Kentucky, Pennsylvania, and Montana.

Right now we export coal in addition to our internal use. But we can convert coal to oil. South Africa does. China does. At one time, Barrack Obama thought we should, too:

For decades, scientists have known how to convert coal into a liquid that can be refined into gasoline or diesel fuel. But everyone thought the process was too expensive to be practical.
The lone exception was South Africa, a one-time pariah state that had huge reserves of coal and, thanks to anti-apartheid sanctions, limited access to foreign oil. Sasol Ltd., a partly state-owned company, built several coal-to-liquids plants, including the ones at Secunda, and became the world's leading purveyor of coal-to-liquids technology.
Now, oil prices are above $70 a barrel, and Sasol has emerged as the key player at the center of the world's latest alternative-energy boom.
China is building a coal-to-oil plant costing several billion dollars in Inner Mongolia and may add as many as 27 facilities -- including some with Sasol's help -- over the next several years, according to a recent tally by Credit Suisse.
In the U.S., the Defense Department is studying coal-to-oil technology as a way to reduce the American military's dependence on Middle Eastern crude oil. And the National Coal Council, an industry association, is pushing for government incentives to help generate some 2.6 million barrels of liquid fuel a day from coal by 2025. That would satisfy some 10 percent of America's expected oil demand that year. The plan would require 475 million tons of coal a year, which represents more than 40 percent of current annual U.S. production. Industry officials believe America's coal reserves are big enough to allow for the extra production.
Coal-to-liquids "is not going to replace oil," says Lean Strauss, a Sasol executive who directs the company's overseas energy business. "But it's an important substitute. It is one of the solutions to energy security."
In June, two senators from coal-producing states, Barack Obama of Illinois and Jim Bunning of Kentucky, introduced a bill to offer loan guarantees and tax incentives for U.S. coal-to-liquid plants.

It amazes me that the what used to be "can do" leadership in this country has become a bunch of "true believers" in what is provable nonsense.

I expect better from those who are concerned with our national security and especially from those tasked with maritime security, who should be arguing for reducing our energy sealines of communication through developing all of our resources, and not just those in favor with one administration or another.

It's not fossil fuel, but why are we not developing and encouraging the use of nuclear power?
Because Harry Reid says "no" to a viable storage location for spent fuel in his state?

You want to get people working? Get them working on this - developing our fossil fuels, nuclear power and, yes, alternatives.

Once weaned from imported oil, we can use our internal supplies as we develop the "alternative energy" sources.

While being less vulnerable in the process.

Or I guess we could rig sails and fly kites. Or build triremes. All the while sitting on huge energy reserves.

UPDATE: I probably should have caught this before, but here's hint at Secretary Mabus's agenda in which it is revealed he wants to use Navy money to drive the move to "renewable fuels":

The Navy’s goal is to shift half its energy usage from fossil fuels to renewable sources by 2020. Critics have cast doubts on these plans, and have questioned the Navy’s assumptions about the future cost of biofuels. Other experts have pointed out that the military, which accounts for less than 2 percent of all U.S. fossil fuel demand, cannot on its own drive the renewable energy market until the United States adopts a national strategy that would generate greater economies of scale.

Mabus disagrees. “I think the military can lead on that,” he told reporters April 27. “The  Navy can be a market … I’m absolutely convinced we can do it.”

Count me as one of those critics . . .

Adding to the Maritime Security Mix: First deepwater oil discovered off East Africa

Oil & Gas Journal reports "First deepwater oil discovered off East Africa" :

An exploratory well off Mozambique has penetrated 38 m of net oil and gas saturated sands in the upper of two Cretaceous fan lobes, signaling the first documented occurrence of liquids hydrocarbons in deep water off East Africa.

The Ironclad-1 well, operated by Anadarko Petroleum Corp. in Area 1 off Mozambique, is in the Rovuma basin 110 km south of the Windjammer dry gas discovery, drilled earlier in the same six-well exploratory program to 16,930 ft in 4,800 ft of water 30 miles off the coast ...

Map is from Anadarko, with my addition of a guesstimate as to the location of the Ironclad well site (yellow star). Click on them to enlarge images.

The Mozambique Channel is a chokepoint for shipping traffic off Africa. During WWII, the Japanese found it to be a "target-rich" environment as set out here:

Churchill telegraphed to Roosevelt: "A Japanese air, submarine, and/or cruiser base at Diego Suarez [on the northern tip of Madagascar, halfway between Cape Town and Colombo] would paralyse our whole convoy route both to the Middle East and to the Far East...."

Now, of course, there are pirates in the waters north of the entrance to the Channel. UPDATE: In November 2009, MV Delvina was captured at the northern end on the Mozambique Channel as shown on the nearby map. See here and here.

The map below shows the area with the red arrow pointing generally at the location of these wells.

Further, there are disputed territorial claims to areas that now may be worth a vigorous defense (see here):

At the northern entrances of the Mozambique Channel occur a number of islands, reefs and submarine banks. The largest land masses in this area are those of the Comoros Islands. With an area of 2,170 km² this volcanic group consists of 4 main islands: Ngazidja, Nzwani, Mwali, Mayotte and several smaller islets that lie off the main islands.

Farther in to the channel occur a trio of widely separated coral reefs and islands that form overseas possessions of France: Bassas da India, Juan de Nova and Île Europa. These islands are strategically important — their ownership is disputed between France and Madagascar. All are small, flat and uninhabited. The islets of Europa and Juan de Nova are important habitats for migrating landbirds and breeding seabirds.

Northwards, lying at the entrances in to the Channel, lie the French-owned Îles Glorieuses (Glorioso Islands) and the submerged reefs of Banc du Geyser and Banc du Leven (Banc du Zelee), both of which lie in international waters.

Could get to be an interesting area.

UPDATE: Info on the Rovuma Basin from the National Petroleum Institute of Mozambique (NIP) here.

Gulf Oil Mess: Huge Skimmer Gets Test Run

Earlier report here.

Giant oil skimmer being tested in Gulf of Mexico :

The Coast Guard says testing will take 48 hours.

Officials want to verify the ship can make good on its promise of sucking up as much as 21 million gallons of oil-fouled water per day.

Cameroon: Piracy and Oil

Reported as Cameroon piracy threatens oil investment:

Piracy in Cameroon has cut off some oil production, causing worries about future investments from overseas oil companies.

The African country has recently been embroiled in piracy in the Gulf of Guinea, which has led to insecurity in the oil industry.

As much as 95 percent of Cameroon's oil comes from a basin in the Gulf of Guinea, where attacks on commercial shipping have made the area increasingly dangerous.

Seven Chinese fishermen were kidnapped last month and a Nigerian boat was hijacked off the coast of Cameroon.

On each occasion, pirates demanded more than $1 million to release the ships.

Crude oil production in Cameroon has gone down to average just over 73,000 barrels a day with spending in the oil sector dropping by more than one-third.

See also this VOA report:

Gilpin says piracy threatens the profitability of new oil exploration off Cameroon, Equatorial Guinea, and Nigeria's Niger Delta. The interest in new sources of oil will always be there, but Gilpin says it is the quality of investment that will suffer.

"You are less likely to see oil majors who have the capacity and the deep-pockets for the sort of exploration that will be required go in first," he said. "You are more likely to see smaller concerns go in and test the waters. And what this does it costs the countries because when the oil majors come in later, the beneficiaries are the smaller companies that took the risk to go in in the first place, not the countries."

Gilpin says very few countries in the Gulf of Guinea have addressed what he calls vast gaps in maritime security from Nigeria to Angola. Pirate groups that withdrew after increased security in 2000 are now reemerging. But unlike the more-publicized piracy off the coast of Somalia, Gulf of Guinea pirates are less organized.

Nigeria: Militant Attack Reduce Oil Exports

Reported as Militant attacks to hit Nigerian March oil output :

Nigerian crude oil exports are expected to fall in March following oil pipeline attacks, traders said on Wednesday, suggesting a recent recovery in output has stalled.

The amnesty deal that the militants had seems up in the air with the president of Nigeria off in Saudi Arabia getting medical treatment and thus the attacks are back.





Update:


For those who don't remember, another referral to the EIA here:

The Nigerian economy is heavily dependent on the oil sector which, according to the World Bank, accounts for over 95 percent of export earnings and about 85 percent of government revenues. The oil industry is primarily located in the Niger Delta where it has been a source of conflict. The industry has been blamed for pollution that has damaged air, soil and water leading to losses in arable land and decreasing fish stocks. Local groups seeking a share of the oil wealth often attack the oil infrastructure and staff, forcing companies to declare force majeure on oil shipments. At the same time, oil theft, commonly referred to as “bunkering” leads to pipeline damage that is often severe, causing loss of production, pollution, and forcing companies to shut-in production.

Iraq Takes Over Control of Vital Oil Terminal

An important milestone: Iraq assumes control of offshore oil terminal:

The Iraqi Navy assumed control of the Khawr Al Amaya Oil Terminal (KAAOT) during a ceremony held today aboard the terminal in the North Arabian Gulf.

This turnover is the first step of a multi-step naval transition plan that will eventually transfer security responsibilities to the Iraqi Navy.

"The Iraqi Navy is ready and capable of assuming security responsibility for KAAOT," said Rear Adm. T.C. Cropper, Commander, Task Force Iraqi Maritime (CTF-IM). "This milestone represents another indication of increasing Iraqi operational independence. It's very important to the way ahead and the future of Iraq."

U.S. and Coalition forces have maintained a presence on KAAOT since April 2004, assisting the Iraqi Navy by helping provide security to their oil platforms, which account for approximately 70 to 85 percent of Iraq's gross domestic product.

Coalition forces have operated jointly with Iraqi Navy sailors and marines, training them in point-defense force protection and visit, board, search and seizure operations.

"Our Sailors have labored diligently to make this day possible, working by, with and through the Iraqi Navy in a very close partnership," said Capt. Karl Van Deusen, Commander, Combined Task Force (CTF) 55, which is responsible for providing security to the oil platforms. "They have brought great credit upon our Navy and our nation."

U.S. and British forces will continue to operate jointly with the Iraqi Navy to provide training and assistance in support of future security transfers in accordance with a security agreement, to include Iraq's other key oil platform, the Al Basrah Oil Platform.

"It's my duty to defend the oil terminal", said an Iraqi Marine aboard KAAOT. "It belongs to my country. It belongs to my people. Our economy is based on it. I take pride in doing so."

The U.S. Navy will continue to conduct Maritime Security Operations (MSO) in the North Arabian Gulf and provide assistance as requested. MSO help set the conditions for security, which promotes stability and prosperity in the North Arabian Gulf. These operations protect Iraq's sea-based infrastructure, which provides the Iraqi people the opportunity for self-determination. MSO complement the counterterrorism and security efforts of regional nations and seek to disrupt violent extremists' use of the maritime environment as a venue for attack or to transport personnel,weapons or other material.

Photo captions:

Top: Iraqi sailors raise the Iraqi flag at a ceremony on the Khawr Al Amaya Oil Terminal (KAAOT) in the North Arabian Gulf during which the Iraqi Navy assumed control of the terminal. This turnover is the first step of a multi-step naval transition plan that will eventually transfer security responsibilities to the Iraqi Navy. U.S. Navy photo by Mass Communication Specialist (AW) 2nd Class D. Keith Simmons. (Released)

Lower: U.S. and Iraqi Sailors march on the Khawr Al Amaya Oil Terminal (KAAOT) in the North Arabian Gulf during which the Iraqi Navy assumed control of the terminal. This turnover is the first step of a multi-step naval transition plan that will eventually transfer security responsibilities to the Iraqi Navy. U.S. Navy photo by Mass Communication Specialist (AW) 2nd Class D. Keith Simmons. (Released)

The U.S. sailors look like IUW guys to me. BZ!

An earlier post regarding the oil terminals.

Outgoing President Issues Arctic Policy Directive

The National and Homeland Security Directive pertaining to the Arctic can be found here:

III. POLICY

A. It is the policy of the United States to:

1. Meet national security and homeland security needs relevant to the Arctic region;
2. Protect the Arctic environment and conserve its biological resources;
3. Ensure that natural resource management and economic development in the region are environmentally sustainable;
4. Strengthen institutions for cooperation among the eight Arctic nations (the United States, Canada, Denmark, Finland, Iceland, Norway, the Russian Federation, and Sweden);
5. Involve the Arctic's indigenous communities in decisions that affect them; and
6. Enhance scientific monitoring and research into local, regional, and global environmental issues.

B. National Security and Homeland Security Interests in the Arctic

1. The United States has broad and fundamental national security interests in the Arctic region and is prepared to operate either independently or in conjunction with other states to safeguard these interests. These interests include such matters as missile defense and early warning; deployment of sea and air systems for strategic sealift, strategic deterrence, maritime presence, and maritime security operations; and ensuring freedom of navigation and overflight.
2. The United States also has fundamental homeland security interests in preventing terrorist attacks and mitigating those criminal or hostile acts that could increase the United States vulnerability to terrorism in the Arctic region.
3. The Arctic region is primarily a maritime domain; as such, existing policies and authorities relating to maritime areas continue to apply, including those relating to law enforcement.[1] Human activity in the Arctic region is increasing and is projected to increase further in coming years. This requires the United States to assert a more active and influential national presence to protect its Arctic interests and to project sea power throughout the region.
4. The United States exercises authority in accordance with lawful claims of United States sovereignty, sovereign rights, and jurisdiction in the Arctic region, including sovereignty within the territorial sea, sovereign rights and jurisdiction within the United States exclusive economic zone and on the continental shelf, and appropriate control in the United States contiguous zone.
5. Freedom of the seas is a top national priority. The Northwest Passage is a strait used for international navigation, and the Northern Sea Route includes straits used for international navigation; the regime of transit passage applies to passage through those straits. Preserving the rights and duties relating to navigation and overflight in the Arctic region supports our ability to exercise these rights throughout the world, including through strategic straits.
6. Implementation: In carrying out this policy as it relates to national security and homeland security interests in the Arctic, the Secretaries of State, Defense, and Homeland Security, in coordination with heads of other relevant executive departments and agencies, shall:
1. Develop greater capabilities and capacity, as necessary, to protect United States air, land, and sea borders in the Arctic region;
2. Increase Arctic maritime domain awareness in order to protect maritime commerce, critical infrastructure, and key resources;
3. Preserve the global mobility of United States military and civilian vessels and aircraft throughout the Arctic region;
4. Project a sovereign United States maritime presence in the Arctic in support of essential United States interests; and
5. Encourage the peaceful resolution of disputes in the Arctic region.
***
D. Extended Continental Shelf and Boundary Issues

1. Defining with certainty the area of the Arctic seabed and subsoil in which the United States may exercise its sovereign rights over natural resources such as oil, natural gas, methane hydrates, minerals, and living marine species is critical to our national interests in energy security, resource management, and environmental protection. The most effective way to achieve international recognition and legal certainty for our extended continental shelf is through the procedure available to States Parties to the U.N. Convention on the Law of the Sea.
2. The United States and Canada have an unresolved boundary in the Beaufort Sea. United States policy recognizes a boundary in this area based on equidistance. The United States recognizes that the boundary area may contain oil, natural gas, and other resources.
3. The United States and Russia are abiding by the terms of a maritime boundary treaty concluded in 1990, pending its entry into force. The United States is prepared to enter the agreement into force once ratified by the Russian Federation.

UPDATE: More news from Government Executive:

In her confirmation hearing Tuesday, Secretary of State designate Hillary Clinton said, "I believe that the issues of the Arctic are one of those long-term matters that will dramatically affect our commercial, our environmental, and our energy futures," according to an account by KTUU television, the CBS affiliate in Anchorage.

Clinton told Sen. Lisa Murkowski, R-Alaska, that resolving boundary disputes with other nations was critical. "We've got to figure out where our boundaries are if people start drilling in areas that are ice-free most of the year, and we don't know where they can and can't drill, and whether we can," Clinton said, according to the KTUU account.

The implications of the new policy are especially great for the Coast Guard, which is responsible for safeguarding U.S. waters. In an interview at the National Press Club early last year, Coast Guard Commandant Thad Allen declined to discuss his views about climate change, but said, "All I know is there's water where it didn't use to be, and it's my responsibility to deal with that."

The Coast Guard's aging fleet of icebreaking ships has long been a concern for the service. It has two 30-year-old icebreakers, one of which has been out of service for most of the last year. It also has one ship devoted to scientific research that has some ice-breaking capability.

Arctic Turf War

From the Heritage Foundation The New Cold War: Reviving the U.S. Presence in the Arctic:

As an Arctic nation, the United States has signif­icant geopolitical and geo-economic interests in the High North. The U.S. should not only have a place at the table, but also seek a leadership role in navi­gating the nascent challenges and opportunities, such as disputes over the Outer Continental Shelf, the navigation of Arctic sea-lanes, and commercial development of natural resources and fisheries.

To play this role and to vindicate its interests, the U.S. needs to continue swiftly mapping the Arctic, build a modern U.S. icebreaker fleet, and work with its Arctic partners in bilateral and multilateral ven­ues. The U.S. needs to revitalize its Arctic policy and commit the necessary resources to sustain America's leadership role in the High North.

Read the whole thing. Check earlier posts on this topic by clicking on labels below, especially "arctic", "polar sea routes."

Arctic Wealth Rush

US mission to Arctic will lay claim to gas reserves:

A US Coast Guard cutter will set out on Thursday on a three-week trip to map a relatively unexplored area known as the Chukchi borderland, about 600 miles north of Alaska.

The cutter Healy will then launch again on September 6 accompanied by Canadian scientists aboard an icebreaker, who will conduct further tests to help identify the extent of the continental shelf north of Alaska.

The US is attempting to prove the Alaskan continental shelf stretches far beyond the 200-mile limit where coastal countries have sovereign rights over natural resources.

The joint operation comes amid increasing international competition to tap the Arctic's unexplored energy stores, thought to include 90 billion barrels of oil, about 15 per cent of the world's undiscovered reserves, as well as a third of the world's undiscovered natural gas, according to the US Geological Survey.
***
Russia has claimed 460,000 square miles of Arctic waters and in a move marking the escalating rivalry, planted its flag on the ocean floor of the North Pole last summer.

Recent record oil prices have fuelled the race to exploit the polar territory's energy sources while melting ice floes have helped research crews gain access to the region.

More on the Chukchi borderland here.

Earlier reports on the Russians and the "great Arctic Sea land rush" here, here, here, here, and here.

Oil and Pirates...Can Big Oil Save Somalia?

The leader of the allegedly autonomous Puntland area seems to think oil development is a good thing -- even if the "devil" were involved:

The president of Somalia's semiautonomous Puntland State government has said that he will pursue all roads to achieve a successful oil exploration program, and has suggested that he will even sign "a deal with the Devil."

Gen. Adde Muse, the Puntland leader, told the BBC Somali Service during a Sunday interview that mounting a successful exploration program is linked to creating a stable security situation on the ground.

"We have found out that without security, there can be no success," President Muse said, while admitting for the first time that Puntland is undergoing "one year and a half of insecurity."

Describing the situation in Puntland, President Muse said that some of the people are "on the brink of starvation" and the government's security forces have "no salary."

He said that piracy has only worsened the situation, but added that the regional administration is taking steps to combat crime and piracy, saying: "We have destroyed places they [pirates] live and arrested others…as many as 15 men, some of them are commanders."

The Puntland leader said pirates had "bought more weapons and high-speed boats" with ransom payments collected in recent months. But President Muse expressed optimism in his security forces: "We are fully confident that we can stop them [pirates]."
***
In criticism of unnamed opponents of his ambitious exploration project, President Muse contradicted his prior admission about insecurity in Puntland, saying: "Many people oppose us…who spread lies about insecurity here [in Puntland]."

But Gen. Muse's most memorable remark during the interview came in response to unnamed critics: "They criticize us for making deals with 'thug companies'…forget thugs, I will make a deal with the Devil to explore my land. My people across Somalia are poor. We can fight poverty as a unified front who work together."

Thanks to Big Oil!

American Thinker: Thank you, Big Oil

WSJ Editorial on our "dysfunctional" energy policy

Read $4 Gasbags:

Amid $135 oil, it ought to be an easy, bipartisan victory to lift the political restrictions on energy exploration and production. Record-high fuel costs are hitting consumers and business like a huge tax increase. Yet the U.S. remains one of the only countries in the world that chooses as a matter of policy to lock up its natural resources. The Chinese think we're insane and self-destructive, while the Saudis laugh all the way to the bank.
***
Democrats are going to have to grow up. The oil-rich areas they want to leave untouched are accessible with minimal environmental disturbance, thanks to modern technology. Hurricanes Katrina and Rita flattened terminals across the Gulf of Mexico but didn't cause a single oil spill. As for anticarbon theology, oil will be indispensable over the next half-century and probably longer, like it or not. Airplanes will never fly on woodchips, and you won't be able to charge your car with a windmill for some time, if ever.

Public anger over fuel prices could hardly come at a worse time for the GOP, since voters tend to blame a flagging economy on the party that occupies the White House. But the opportunity is to offer a reform alternative to Barack Obama and the high-price energy status quo he embraces. It looks like the public is increasingly ready for . . . change. In a May Gallup poll, 57% favored "allowing drilling in U.S. coastal and wilderness areas now off limits." Just 20% blamed the increase in gas prices on Big Oil, like Mr. Obama does.

Recent weeks have seen some GOP stirrings on Capitol Hill, but John McCain has so far refused to jettison his green posturings, such as his belief in carbon caps and his animus against offshore development. A good reason for a rethink would be $4 gas. At present, it is charitable to call Mr. McCain's energy ideas incoherent, and it may cost him the election.

About Oil Shale

Just a primer for politicians from the government About Oil Shale:

"While oil shale is found in many places worldwide, by far the largest deposits in the world are found in the United States in the Green River Formation, which covers portions of Colorado, Utah, and Wyoming. Estimates of the oil resource in place within the Green River Formation range from 1.2 to 1.8 trillion barrels. Not all resources in place are recoverable; however, even a moderate estimate of 800 billion barrels of recoverable oil from oil shale in the Green River Formation is three times greater than the proven oil reserves of Saudi Arabia. Present U.S. demand for petroleum products is about 20 million barrels per day. If oil shale could be used to meet a quarter of that demand, the estimated 800 billion barrels of recoverable oil from the Green River Formation would last for more than 400 years."

Or, if the oil from this formation was used for 100% of demand, it would last 100 years.

Shell Oil's shale oil recovery project.

UPDATE: First comment points to this article which makes it clear who is mucking up the U.S.'s ability to exploit its own resources:

Last month, the U.S. Senate's Appropriations Committee voted 15-14 to kill a bill that would have ended a one-year moratorium on enacting rules for oil shale development on federal lands (which is where the best oil shale is located). Most maddening of all - at least to someone like myself not steeped in the wacky ways of Washington - the swing vote on the appropriations committee, U.S. Sen. Mary Landrieu, D-La., voted with the majority even though she actually opposes the moratorium.

"Sen. Salazar asked me to vote no. I did so at his request," Landrieu told The Rocky Mountain News. A Landrieu staffer contacted by Fortune doesn't dispute this, but notes that Landrieu did propose a compromise which Republicans rejected.
***
She was speaking of U.S. Sen. Ken Salazar, D-Colo., who has emerged as the Senate's leading oil shale opponent. Salazar inserted the aforementioned moratorium into an omnibus spending bill last December, and in May he proposed a new bill that would extend the moratorium another year.

Salazar's efforts have essentially pulled the rug out from under Shell (RDSA) and other oil companies which have invested many, many millions into oil shale research since the passage of the Energy Policy Act of 2005, which established the original framework for commercial leasing of oil shale lands. (Last year, oil shale represented Shell's single biggest R&D expenditure.)

Salazar says he's simply trying to slow things down in order to ensure environmental considerations don't get trampled in the rush to turn western Colorado into a new Prudhoe Bay. But, ironically, his bid to extend the moratorium comes at a time when his fellow Senate Democrats have been blasting Big Oil for not reinvesting enough of their profits into developing new sources of energy.
***
Fortune: Why do you consider developing oil shale such a high priority?

Sen. Hatch: We have as much oil in oil shale in Utah, Wyoming and Colorado as the rest of the world's oil combined. Liberals and environmentalists can talk all they want about wind, solar and geothermal - all of which I'm for - but last time I checked, planes, trains, trucks, ships and cars don't run on electricity. 98% of transportation fuel right now is oil. Ethanol is the only real alternative, and we're seeing that ethanol has major limitations.

It's pathetic. Environmentalists are very happy having us dependent on foreign oil. They're unhappy with us developing our own. What they forget to say is that shipping fuel all the way from the middle east has a big greenhouse gas footprint too.
***
Fortune: One of Sen. Salazar's environmental concerns involves water and the big draw on local water supplies required for oil shale production. Based on my reporting in western Colorado last year, this seems like a legitimate concern. What's your take on this?

Sen. Hatch: Let's compare it to ethanol. Corn needs about 1,000 barrels of water for the energy equivalent of a barrel of oil. That's a crazy amount of water, but it's worked out alright so far because corn is grown in rainy areas, for the most part. But if you want to increase the amount of ethanol, you're going to have to go to irrigation, and then there will be major water limits on how much we can afford to grow.

On the other hand, the Department of Energy estimates that oil shale will require three barrels of water for every barrel of oil.

Fortune: Of course, water is a lot scarcer in western Colorado than it is in Iowa.

Sen Hatch: It is, but remember the oil companies are going to use and recycle the water. And while we're on the environmental impact, let's talk about land use and wildlife habitat. One acre of corn produces the equivalent of 5 to 7 barrels of oil. One acre of oil shale produces 100,000 to 1 million barrels.

Fortune: With gasoline at $4, why this isn't this more of a front-and-center issue for consumers and voters?

Sen. Hatch: I'm generally the last guy to lambaste the media, but generally you do not hear these facts. We're sending $600 billion annually to enemies of our country. If one acre of oil shale produces 1 million barrels of oil, that's 1 million barrels that we would not be importing from Russia and the Middle East. People are going to go berserk when they find out that all along we had the capacity, within our own borders, to alleviate our dependency in an environmentally friendly way.

Ironically, the local governments in Colorado's oil shale areas do support oil shale development, but it's being stopped by the ski-resort elites. A couple months ago, an article came out about how the city of Aspen was being besieged with building applications equating to about $2 million in development a day. Now if those nice, rich people in Aspen really cared about the environment, they might save an acre or two of those beautiful forests they're building on and support some oil-shale development in the not-so-nearby and not-so-beautiful oil shale areas of Colorado.

Fortune: Has oil shale development always been a partisan issue or is this something new?

Sen. Allard: It is something new. The issue with the Democrats now is they want to cut off any source of carbon. And there are those in the Senate who believe the more expensive you make gasoline, the less driving people do and you force conservation by making driving so expensive people can't afford it. (emphasis added)

For $600 billion a year, we could build a pipeline from the Great Lakes to provide water for this project and that figure does not include the amount of money spent guarding the sea lines of communication that allow the oil from overseas to get to the U.S.

From Senator Salazar's Senate website, some words:

...Our national security is compromised by our alarming overdependence on foreign oil. Our economy is held hostage to other countries that control the oil reserves.
***
“Over the last eight years, we have only become more dependent on foreign oil. Today, we import more than 60% of our oil. Thanks to the failed energy policies of the past, we are at the mercy of OPEC.

“We must succeed in a sustained policy that kills our addiction to foreign oil.
***
“Oil shale deposits in Colorado, Wyoming, and Utah amount to somewhere between 500 billion and 1.1 trillion barrels of oil. That is more than double the proven reserves of oil in Saudi Arabia.

“The trouble is, the oil is locked up in rock and, even after $10 billion of research and development, nobody has figured out an economical way to get it out.

“If the technology were ripe, companies like Shell would already be developing oil shale today on their own lands. Shell and other companies already own nearly 200,000 acres of prime oil shale reserves in Utah and Colorado. Nobody – not the federal government, not the Congress, not the State – is stopping them from developing these tracts. But they are just not ready, and that’s what they have all told us in testimony. They are still struggling to overcome technological and economic barriers.

“We can help companies like Shell overcome these barriers through research and development incentives like the ones I helped put in the 2005 Energy Policy Act, but even under the most optimistic estimates, the technology won’t be ready for commercialization until 2015.

“So, let’s be honest about oil shale. Let’s not pretend there’s a magic wand that we can wave that will unlock the mystery of oil shale. Let’s be honest about our energy future. Let’s be honest with the American people.
***

Life Could Be a Dream, Shale boom, shale boom

There is that goldie oldie with the great lyrics:

Oh Life could be a dream, (Shaboom)
If I could take you up in paradise up above, (Shaboom)
If you tell me I'm the only one that you love (Shaboom)
Life would be a dream sweetheart

Shaboom, shaboom, yada da da da da
Shaboom, shaboom, yada da da da da
Shaboom, shaboom, yada da da da da
Shaboom

Now people are singing a slightly different tune - Shale boom, shale boom:

Although much of the industry's attention to future domestic supply has focused on coalbed methane and the deepwater Gulf, shale is making a huge comeback - as evidenced by the surge in activity in Texas' Barnett Shale, which has propelled Devon Energy to the Lone Star State's largest gas producer. And shale formations in other parts of the country, from Wyoming to Arkansas to Appalachia, are attracting millions of dollars of new investment.

Estimates of how much gas is sandwiched between shallow layers of prehistoric mud now as hard as a chalkboard change constantly as more exploration-and-production companies plunk their bets on those quirky, unconventional plays - and have more success coaxing commercial quantities of gas out of them.

In the 1980s, only tiny Mitchell Energy was pushing drill bits into shallow but tightly bound layers of Devonian-age "black" shale, hoping to get at the softer, gas-bearing layer of sedimentary rock, often cracking the surface with water or gelatins to open up its minute cracks and release its gas.

Now, Oklahoma City-based Devon, which bought Mitchell Energy in 2001, operates 1,700 of the more than 3,400 wells in the Barnett - wells that recently propelled Devon's gas production there past 1 Bcf/day.
***
According to the Energy Information Administration (EIA), one Barnett field, Newark East, is the sixth-largest gas field in the United States.

And as prolific as it is, the Barnett is just one part of what many E&P companies see as a nationwide shale drilling boom that will produce substantial volumes of gas to help meet growing demand even as conventional production flattens or declines.

While the Barnett is one of the youngest US shale discoveries, the granddaddy is the Appalachian Basin, which runs along the western edge of the Appalachian Mountains from New York to Ohio and Kentucky.

The Energy Information Administration estimated in 2000 that 23.4 trillion cubic feet (Tcf) of recoverable gas lay beneath that field, the largest amount of any shale field except the Barnett.

EIA's estimates seem to be too low. The Marcellus Shale, the part of the Appalachian Basin that lies 6,000 feet below the Appalachian Mountains and runs diagonally southwest from Canada, through New York state and Pennsylvania to West Virginia is now estimated to hold 50 Tcf of recoverable gas in Pennsylvania alone.

With 21,000 wells, the Appalachian Basin shale produces roughly 120 Bcf/year, according to the American Association of Petroleum Geologists.

When prices go up because of scarcity, innovation steps in...Shaboom.

High oil prices and the Democrats in Congress

With a hat tip tp American Thinker Blog: Dems and High Oil Prices, the best link is to Investors Business Daily's series, Breaking the Back of High Oil.

If you are concerned about national security and our energy supply, as you should be, read the series and get mad at the Democrats.

Me, I just stay mad at 'em.

UPDATE: Maybe I missed it, but the IBD series does not mention the high cost the U.S. pays to keep the oil sea lines of communication open with both our treasure and our blood. In addition, focusing about domestic environmental concerns means that our oil and refining abilities are much more expensive than those of lesser developed nations.