International_Energy_Geopolitics_v2.pptx

International Energy Geopolitics

1. International Energy Geopolitics Professor Bert Chapman Purdue University Libraries Duke Energy Academy June 19, 2018 Graphic design contributions by Aly Edmondson, Purdue University Libraries

2. Geopolitics Defined Describing geographical settings and their relationships to political power and setting out spatial frameworks embracing political power units such as hemispheres, oceans, land and maritime boundaries, natural resources , and culture. (Bert Chapman, Geopolitics: A Guide to the Issues , (Santa Barbara: Praeger , 2011). Interdisciplinary topic can cover anthropology, cartography, economics, geography , history, international security, military policy, natural resources policy , political science etc.

3. Energy Supply Lines-Esp. Oil & Natural Gas-Source: U.S. Energy Information Administration

4. Persian Gulf-Strait of Hormuz World’s most important energy chokepoint. 18.5 million barrels daily flow through its waters to countries around the world. 21 miles wide at narrowest point. Shipping land width is only 2 miles wide in either direction separated by a 2 mile buffer zone Only Saudi Arabia and United Arab Emirates have pipelines capable of shipping oil outside of Persian Gulf. There is also a Suez Oil & Mediterranean (SUMED) pipeline. More than 30% of global liquefied natural gas transits Strait of Hormuz. Source: Energy Information Administration

5. Region featuring Chinese efforts to claim these waters by reclaiming land and building military bases. China has also tried restricting international freedom of navigation and built military installations on reclaimed lands. China has built runways capable of supporting bombers with the ability to carry nuclear weapons . International legal courts have rejected Chinese claims to these waters . Other area countries claim access to these waters energy resources and fishing privileges. South China Sea has significant oil and natural gas reserves. U.S. and its allies are determined to keep these waters open for international freedom of navigation. Key international trade artery affecting countries as far away as the Mideast, Australia, India, Europe, U.S, South America, Africa. Potential arena of international military conflict. $3.37 trillion in annual foreign trade passes through South China Sea. $208 billion in U.S. trade. 11 billion barrels of oil in proven and probable reserves and 190 trillion cubic feet of natural gas in proven and probable reserves. U.S. has defense treaty with Philippines. Sources: Center for Strategic and International Studies, Energy Information Administration, U.S. Geological Survey SOUTH CHINA SEA

6. Source: Asian Maritime Transparency Initiative, Center for Strategic & International Studies Source: Asian Maritime Transparency Initiative, Center for Strategic & International Studies

7. East China Sea Source: EIA

8. Importance of East China Sea Believed to contain significant oil and natural gas resources. 200 millions barrels of oil in proven and probable reserves. 1-2 trillion cubic feet of proven and probable natural gas reserves Japan owns Senkaku Islands-Claimed by China Located near China, Japan, and the Korean Peninsula These countries are all increasing their military spending and capabilities. U.S. has defense treaty alliances with Japan and South Korea. Key international trade artery. Closure or restrictions on trade and shipping with have enormous international economic & military implications. U.S. determined to keep China from dominating these waters. Sources: Energy Information Administration, Defense Dept., U.S. Geological Survey, IISS Military Balance

9. Russia: Another Major Energy Powerhouse

10. Major producer and exporter of oil, natural gas. Significant nuclear power producer. Oil and natural gas revenues accounted for 36% of Russia's federal budget revenues in 2016. Russia was the world’s largest producer of crude oil including lease condensate and the third-largest producer of petroleum and other liquids (after Saudi Arabia and the United States) in 2016, with average liquids production of 11.2 million barrels per day (b/d). Russia was the second-largest producer of dry natural gas in 2016 (second to the United States), producing an estimated 21 trillion cubic feet ( Tcf ). Europe is dependent on Russia as a source of supply for both oil and natural gas. More than one-third of crude oil imports to European countries in the Organization for Economic Cooperation and Development (OECD) in 2016 came from Russia. More than 70% of natural gas imports to those countries also came from Russia in 2016. Russia is dependent on Europe as a market for its oil and natural gas and the revenues those exports generate. In 2016, nearly 60% of Russia’s crude oil exports and more than 75% of Russia’s natural gas exports went to OECD Europe. Russia and other countries are also interested in exploring developing Arctic Ocean energy resources including oil and natural gas . International economic sanctions against Russia due to its aggression in Crimea, Ukraine, and elsewhere have slowed Russian energy development . Russia can threaten energy supplies to many European countries. Key problem for these countries is decreasing their vulnerability to Russian energy coercion. Russian energy companies such as Gazprom and Rosneft are primarily owned by Russian Government . Source: EIA

11. Source: The Economist

12. U.S. May Use its Increasing Oil and Natural Gas Reserves to Lessen European Dependence on Russia

13. Potential Arctic Energy Reserves

14. D. Employees expect higher wages and salaries to work in inhospitable regions. E. Natural gas hydrates can pose operational problems for well drilling in onshore and offshore regions. F. Overlapping and disputed claims of economic sovereignty between neighboring jurisdictions also could be an obstacle to developing Arctic resources. The area north of the Arctic Circle is apportioned among eight countries—Canada, Denmark (Greenland), Finland, Iceland, Norway, Russia, Sweden, and the United States. Under current international practice, countries have exclusive rights to seabed resources up to 200 miles beyond their coast, an area called an Exclusive Economic Zone (EEZ). Beyond the EEZ, assessments of "natural prolongation" of the continental shelf may influence countries' seabed boundaries. G. Environmental challenges include preserving unique animal and plant species, wildlife and other sea life, and whether existing technology can manage oil spills. Nevertheless, development and extraction of Arctic resources is likely to increase in the future. Arctic holds an estimated 13% (90 billion barrels) of world’s undiscovered conventional oil sources according to U.S. Geological Survey (USGS) *Considering these resources as commercially viable is relatively recent due to developmental difficulty and costs. Alaskan onshore oil and natural gas development costs are estimated to be 50-100% higher than costs for Texas. Profitable development of Arctic oil and natural gas resources challenging because: Equipment must be designed to withstand frigid temperatures. Poor soil conditions require additional site preparation to prevent equipment & structures from sinking. Long supply lines & limited transportation access to global manufacturing centers require equipment redundancy and more spare parts to ensure reliability while increasing transportation costs.

15. Findings from 2018 BP Energy Outlook CO2 emissions increased in 2017 and will increase 10% by 2040. Renewable energy has failed to impact fossil fuels share of power generation. Nuclear and hydro power output will increase. U.S. remains largest consumer of gas and 2 nd largest consumer of oil. U.S. will lose its position as largest producer of renewable energy with its share of global production declining from 24% currently to around 15% by 2040. China’s share of renewables will increase to around 30%. U.S. share of global crude oil production (including natural gas liquids) increase from 12% to 18% by 2040 compared to 13% for Saudi Arabia. U.S. natural gas production will be 24% of global total in 2040 compared to 14% for Russia that year. India will emerge as the largest growth market for global energy with coal playing a key role as it seeks to provide electricity access to its entire population. Coal will still account for 30% of global power provision in 2040. China is world’s largest energy consumer but its demand will slow out to 2040. Africa will account for 1/5 of global energy demand between 2035-2040. Almost 70% of energy consumption increase goes to electricity sector.

16. Conclusions International energy consumption will continue increasing. This consumption increase will include renewables and fossil fuels. EIA says fossil fuels will still account for 77% of energy consumption in 2040. Coal’s share of world energy consumption goes from 27% in 2015 to 22% in 2040. Strongest growth in electricity generation projected among developing countries not part of the Organization for Economic Cooperation & Development (OECD)-World’s most advanced economies. China passed U.S. as world’s largest oil importer in 2017. This increased dependence on imported oil is causing China to increase its military power projection capability to protect its supply lines. The U.S. is shifting its military emphasis from counterinsurgency warfare to counteracting Chinese and Russian geopolitical assertiveness. U.S. will continue prompting its allies to increase their military spending to counter China and Russia. China and Russia will use their Anti-Access/Aerial Denial (A2/AD) military capabilities to attempt keep the U.S. and its allies from being able to retaliate against their energy and other critical infrastructures. Military Conflict over competition for energy resources could be a future international security trend . Military planners from U.S. and other countries include climate change and resource scarcity in their warfighting scenarios.

17. What Will the Future of Energy Geopolitics Hold? Increasing international cooperation Increasing international conflict Somewhere in between these extremes? How will climatic changes affect future energy use, consumption, and conservation trends and practices? How will individual, community, and national energy use, consumption, and conservation be affected by international geopolitics? How will emerging generation of energy and political leaders confront these problems? Other questions?