Mainland Machinery Ltd

Exciting New Partnership with Zeroday Enterprises

/in , , , , , /by

Announcing New Partnership with Zeroday Enterprises

Mainland Machinery Ltd and Zeroday Enterprises LLC are pleased to announce a partnership to advance Zeroday’s chemical mixing and feeding technology. As of August 9, 2016 Mainland has been named the exclusive distributor and manufacturer of Zeroday’s Z ChemGear product line of flocculant, chemical and regeant mixing and feeding systems!

Mainland and Zeroday Partnership

Zeroday is an industry technology leader in process, water and wastewater treatment, and brings extensive chemical knowledge and experience used in designing quality, effective and robust chemical mixing-feeding systems. Mainland has over 45 years of value added manufacturing and engineering experience with involvement in diverse industries such as mining, oil & gas, municipal infrastructure, industrial agriculture and ports & terminals. The mutually supportive skills and core capabilities of each partner will enhance business competitiveness, capabilities and product line strength.

Mainland and Zeroday Partnership

With locations in Wilsonville, Oregon and Abbotsford, B.C., we will continue to sell and support systems globally through EPCM, third party vendors and directly to customers. Canadian sourcing is expected to make the mix-feed systems much more competitive.

Zeroday’s Principal, Bill Hancock, is internationally recognized for his expertise in mineral processing technology and water treatment, and holds patents in flocculation and flotation applications. Bill will be involved in product line, sales and technical support, as well as independently promoting product line sales.

Mainland is pleased to be working alongside Zeroday Enterprises to produce innovative and cutting edge technologies! And Zeroday is excited about partnering with Mainland who will provide greater engineering and fabrication resources and expertise.

To inquire about products to meet your floc system neeeds, please contact sales@mainlandmachinery.com

To learn more about Zeroday, see their website

Mainland Machinery Ltd

Top Trends for the Storage Tank Industry for 2015

/in , /by

storage tanksTop Trends for the Storage Tank Industry for 2015

The industrial storage tank industry has grown exponentially over the last few years and 2015 is set to be no exception. Here are some of the top trends that will affect the industry this year.

Cleaner, Lighter Fuels

Storing fuel is a major part of the storage tank industry. Cleaner, lighter and alternative fuels are now in greater demand than products such as crude oil, which previously ruled the storage tank industry.

The shift towards more refined fuels has been in large part spurred by increasing government regulation of heavier fuels and more stringent environmental protection legislation. Consumer demand for lighter fuels has also increased and created more of a need for storage solutions.

Now more than ever, there is a greater demand for storage tanks of varying capacities and sizes to fulfill these consumer preferences.

More Flexibility for Storage Needs

The increased demand for cleaner fuels means that there are a greater variety of products in need of storage solutions. As a result, industrial storage tank owners are becoming more flexible with the products they store.

Because the demand for commodities can change rapidly, storage tank owners cannot restrict themselves to specific products. In order to maximize their profits, owners must be able to utilize all of their assets by being flexible with what products they can store.

Increased Investment in Storage Capacity

Recent trends indicate that traders are more interested in investing in storage capacity, with particular attention being paid to independent tank owners. Storage capacity offers a more stable revenue stream than buying directly into more volatile commodity streams, which are typically more susceptible to market fluctuations.

The heightened interest in investing in storage capacity can be attributed to the increasing flexibility that industrial storage tank owners are now utilizing to make their revenue more stable.

Terminal Growth

Despite concerns about hydrocarbon production and consumption, the demand for fossil fuels is increasing. In turn, the demand for industrial storage solutions for these fuels is also on the rise. As a result, storage facilities are becoming larger and more numerous.

The increased demand for storage capacity has been facilitated by several factors. There is an imbalance between global supply and demand for petroleum products. This means that there has been a subsequent increase in demand for storage solutions to help accommodate this disparity.

Furthermore, increasing government regulation of international trade has slowed down the transportation of petroleum products across national borders and as a result, there is a greater need for storage tanks at international ports and crossings.

Growth in Africa

Although there has been an industrial storage tank industry in Africa for several decades, it has seen explosive growth over the past few years. Increasing political stability in many nations, as well as the discovery of sizable hydrocarbon deposits, has meant that the supply of petroleum products to the international market has greatly increased. Booming populations across the continent have also increased demand for these products within Africa.

In turn, there has been a heightened demand for storage solutions. For example, the east coast of Africa, which offers the most direct ocean-based trade routes to Europe and the Americas, saw a number of new storage facilities become operational in 2014.

A Big Year for Industrial Storage

These trends show that 2015 will be a big year for industrial storage tank owners. With many indicators suggesting that the storage tank industry will continue to grow in 2015 and beyond, storage tank manufacturers, as well as those looking to invest in the industry, have much look forward to.

 

Mainland Machinery Ltd

Robotic Mining Equipment: Are We Ready for Automation?

/in , , , , /by

mine operator safetyIs The World Ready For a Fully Automated Mine? 

In the last few years, mining operations have taken advantage of robotic mining equipment to perform some of the more dangerous and repetitive tasks the industry requires. However, despite their high costs, is it possible that a fully automated mine is on the horizon?

There are three reasons why it might be.

Safety

Mining is an inherently dangerous industry. After all, it entails using large machines to drill holes in the Earth, pack them with explosives, and blow them up. Even with the most stringent safety protocols in place, the rate of workplace injuries is higher than most other industries.

However, there are other reasons why safety is compromised in the mining industry. Many of the less dangerous tasks are repetitive and mind numbing, a good example being driving haulage trucks. The job consists of driving from point A to point B and back again. Human drivers are susceptible to boredom and attention drift. That lack of attention is what makes a safe, routine task one where two people are killed every year.

In the mines, robotized mining industry equipment can perform the routine and repetitive tasks, in order to save employees for important tasks.

Efficiency

Robotic mining industry equipment doesn’t need the same kind of breaks that people do. To be sure, they are subject to maintenance, but that can often be done on a predictable schedule, which isn’t true of human labor.

It goes beyond that, of course. Automation allows operations to get closer to the text book optimums for load size and frequency while also allowing for shifts in load sizes due to potential short-term fluctuations.

The use of robotics in scouting for locations offers another opportunity for efficiency. While a manned helicopter could cost as much as $2000 per hour to operate, a drone with a camera costs a mere $500 per hour, meaning drones can cover four times as much territory for the same cost in the same time frame.

Productivity

Robotic mining industry equipment can operate in more dangerous locations, perform repetitive tasks with less loss of efficiency, and aren’t subject to the same workplace laws that humans are. But these are only the most obvious ways they are more productive.

Mining is not an industry that can pick and choose where the job gets done. The job goes where the raw materials are, and if there is a sizeable population of experienced miners, it will be more successful. However, if the area is remote, the operation is faced with either shutting down at times because there are not enough able workers to do the job on a full time basis, or bringing in workers from outside the region. Bringing in workers helps to keep the mine open, but comes at a substantial additional cost.

By performing many of the most repetitive and dangerous tasks, robotic mining industry equipment might actually lower the number of human employees necessary for an operation. Where this is not the case, robotic mining industry equipment will allow organizations to shift their workforce to safer jobs that require a less specific skillset.

In addition, automation would eliminate the need for all workers to be on site, which would allow an organization to place its workforce closer to a population center to eliminate or reduce the need to bring in workers from elsewhere.

A fully automated mining operation is not yet a reality, but with an increasing number of mining tasks being automated every day, it’s only a matter of time before a fully automated operation is possible.

 

Mainland Machinery Ltd

Arctic Subsea Technology

/in , , /by

arctic subsea technologyArctic Subsea Technology: Oil and Gas Drilling in the Arctic

Offshore drilling is a complicated and challenging process, and even more so in the Arctic. However, growing industry interest in offshore oil in the Canadian Arctic means oil companies need to prepare for subsea drilling in the far north.

As existing oil sources run their course, new regions and resources are gaining the interest of energy companies. Currently, it is estimated that about 30% of the world’s undiscovered natural gas and 13% of undiscovered oil is in the Arctic. Moreover, subsea drilling would cut out the pipeline middlemen, and producers could transport their oil on tankers directly to their clients.

Mobile Drilling Rigs

Out at sea, mobile drilling rigs are the common denominator. In the Arctic, rigs need to deal with dangerous sheets of floating ice. This takes a great deal of specialized oilfield support equipment. Rigs must be smaller and lighter than normal drill ships to avoid obstacles. It’s also important that they have built-in ice protection, so hulls are carefully reinforced.

In order to avoid ice, rigs have to be able to predict it. Ice monitoring centres throughout the arctic combine radar and satellite data to observe and predict sea ice in real time. With the help of scientists and meteorologists, it is possible to plan for the best ice-evading drilling plans.

Subsea Processing

A huge area for growth is in subsea processing. There is a lack of sufficient pressure to pump oil out from the deepest depths of the arctic, so contingencies need to be designed to work with the oil at the ocean floor. In the next few decades, the industry will work to increase oil recovery through full well-stream boosting and water flooding, to create incremental capacity through separation, and to improve the economics of gas production through compression.

Some of these technologies are already under development or application. For example, there is already a subsea compression station in Norway, addressing natural gas needs. This vastly increases the production capacity from the well, as the closer the compression is to the field, the better.

Moving off the Platform

Moving towards undersea production means cutting out expensive platforms and replacing them with underwater equipment. However, just like on land, subsea oil equipment needs care and maintenance, and that requires communication. Beyond pressure levels that human divers can attain, remote-operated vehicles carry out maintenance and operational tasks, attached to platforms by electrical cords. The next generation of remote operated vehicles need to be more independent, so that they can address problems without direct human interaction. Such a robot would be ideal for harsh environments such as the Arctic, where ice would sometimes prevent cord-communications.

Managing Information

The other key for autonomous undersea robots is for them to be able to interpret and use huge swaths of data. As the oil industry becomes more and more digitized, greater amounts of information are available to guide autonomous vehicles in all kinds of environments. But in the Arctic, robots must be truly autonomous, and won’t be able to rely on teams of experts to determine what is and is not important. Integrating data into a comprehensible form will be the key to developing effective subsea technologies.

Mainland Machinery Ltd

Utilizing Drones in Oil and Gas Industry

/in , , /by

drones in oil and gasUtilizing Drones in Oil and Gas Industry

Drones in the oil industry? They have made their way into mail delivery and hurricane hunting, so it seems natural that there would be a place for drones in the oil and gas industry. In fact, a number of big names in the industry have already jumped on board, launching aerial tests in remote parts of North America.

These unmanned aerial machines made their first real appearances in the industry in 2013, with new experiments and tests shifting the way we understand extraction technology. Smaller than conventional tools like helicopters, drones can reach areas that have historically troubled mapping efforts. And since no humans actually have to be along for the ride, drones can achieve mapping and monitoring at a fraction of the cost of human employees.

Worldwide, new applications are emerging. Recently, geologists in Norway demonstrated that they could use drones, equipped with laser scanners, infrared sensors, and digital cameras to model an area’s minerals and rocks, making it much easier to find oil. As we move closer to having drones approved for use in conventional airspaces the pursuit to use this technology in the oil and gas industry isn’t so far off.

The First Oil Company Drone

ConocoPhillips is using the Boeing ScanEagle drone in trials in the Chukchi Sea near Point Barrow, Alaska. The company began trial flights on September 25, 2013, marking the first-ever commercial drone flight in American airspace.

Its maiden voyage took 36 minutes, just enough time to test its sensors and navigation systems for the approval of American regulators. Since then, several other companies have been approved for tests, mostly in Alaska and Arctic regions.

Terrain Mapping

Using drones to complete land surveys is more affordable than manned efforts, making the process quick and efficient. The Norwegian team of researchers mentioned previously use their drones to generate 3D terrain maps that can be integrated with geological and seismological data to produce images of the interior of the Earth’s crust.

All of this data allows experts to predict the likelihood of finding oil both on land and underneath the seabed, at a fraction of the cost of manned helicopters and other conventional techniques.

Monitoring Oil Fields and Pipelines

In June, BP became the first American company approved to use drones to survey its properties. Their drones come from AeroEnvironment Inc, the same company that provides 80% of the Pentagon’s drone fleet.

Their Puma drone, a hand-launched craft about 4.5 feet long and 9 feet wide, will perform flyovers of their Prudhoe Bay oil field to monitor maintenance activities on roads, oil pipelines, and infrastructure. The tool can also aggregate data to create three- dimensional models of roads, pipelines, and topography. And, like other drones, the Puma’s tiny size means that it will be able to reach and map areas out of the range of conventional techniques.

Oil Spill Detection

Thermal infrared and multi-spectral imaging capabilities enable the unmanned aircraft to detect leaks that would otherwise not be visible. Not only will this help crews respond rapidly to potential problems and provide additional information to first responders, but it will also help make decision-making simpler and more straightforward.

It is even possible that as technology develops, drones using advanced imaging techniques could detect toxic particles in the air from defective pipelines, taking safety to a whole new level.

Mainland Machinery Ltd

Oil and Gas Greenhouse Emissions: Turning to Science to Reduce C02 Emissions

/in , , , /by

Oil and Gas Greenhouse EmissionsThe Oil and Gas Industry Turns To Science to Reduce CO2 Emissions

There’s no doubt that greenhouse gas (GHG) emissions are a global challenge.  It’s estimated that natural gas flares emit as much carbon dioxide as a million cars a year.

According to a publication released by Statistics Canada in 2008, even though Canada is only 0.5 percent of the world’s population, we are the highest per capital emitters by contributing about 2 percent of the total global GHG. This is largely due to the size of our country, our low population density and our climate, which generates high demands of energy. Furthermore, natural gas flaring causes approximately 0.5 percent of all CO2 fossil fuel emissions in Canada.

To find viable solutions to the GHG emissions, initiatives are being spearheaded from around the world to encourage leaders in the oil and gas industry to think outside the box.

For example, Alberta’s Climate Change and Emissions Management Corporation (CCEMC) has turned to science. CCEMC is using part of the per-tonne charge imposed on large CO2 emitters to fund a global competition to find new ways to turn wasteful carbon emissions into valuable resources.

So far, the $230 million dollars invested seems to be money well spent.  Last year, the CCEMC received 344 submissions from 37 countries using a variety of technologies and winning entries that received $500,000 have the means to further advance their technology. According to the CCEMC, to date, there are 90 projects being adopted that are expected to reduce 20 million tones of CO2 by the 2020.

Other initiatives are also underway.  In North Dakota, Mark Wald of Blaise Energy (and his team of engineers) has come up with an idea to convert natural gas flares into electricity. With the development of fracking, new wells are popping up in North Dakota at lightning speed.  In the last five years, North Dakota has seen a 600 percent rise in oil production, leaving dozens of natural gas flares to light up the skies. Blaise Energy is able to use a mobile generator at each oil well site to capture natural gas, convert it to electricity and sell the electricity back to the power grid.  The downside is that most drilling rigs are powered by diesel, and the cost of running the generator is quite expensive.

Blaise Energy has also figured out how to pull out the heavier propane and butane from lighter gases.  Today, oil companies are able to reduce the size of the flare and are able to sell part of the gas. The next step is to make the entire process more economically feasible. Blaise Energy is using the $375,000 grant received by the North Dakota Industrial Commission to continue its scientific exploration.

Compact GTL and Velocys are also among those who are trying to turn natural gas into a synthetic fuel oil.  Using catalytic reactions, natural gas is combined with steam to create a waxy synthetic mixture of carbon monoxide and hydrogen. At this point the chemical process created by Compact GTL and Velocys are only available on a large scale. The challenge is to scale down the technology so it can fit on offshore platforms or floating barges.

Carbon utilization seems to be an underdeveloped area of science, as many technologies are still in their infant stages. It’s hard to predict how long the natural gas flames with shoot across the sky, but with CCEMC’s initiative and the global community putting their scientific minds together, viable ways to capture and recycle natural gas may be closer than we think.

Mainland Machinery Ltd

How the Russian/Ukraine War Will Affect Canada’s Oil and Gas Industry

/in , , /by

russia war oilHow the Russian Ukraine War Will Affect Canada’s Oil and Gas Industry

Months after Russia cut off Ukraine’s natural gas supply, no pricing resolution has been achieved.  During Ukraine’s summer months the effects of the cut off were minimal; however with winter fast approaching, unless there’s an agreed upon price, the impact of the Russia / Ukraine war is expected to take its toll on Canada’s oil and gas industry.

As the intensity of the ground fighting in Russia and the Ukraine increases, so does the conflict over energy. Russia, Ukraine and the European Union are scrambling to come up with a last-minute proposal; however the price Russia wants to charge the Ukraine seems to be a major roadblock.

The European Union is concerned that lasting disruptions in gas shipments could expand into the European nations.  Since approximately 15 percent of gas exported to the EU runs through the Russian pipeline, if the pipes remain closed, the financial pressure felt throughout the world is imminent.

According to EIA (U.S. Energy Information Administration) about half of Russian federal revenue comes from oil and gas.  Germany, Netherlands, China, Poland and Belarus are among Russia’s largest oil customers.  Stiff economic measures for the EU-27 are not predicted. In fact, the EU is being forced to show restraint as an interruption in oil supply would cause economic turmoil for many countries.

In Canada, the impact can be expected in three major ways:

  • Higher Gas Prices – Pressure is being felt on oil prices around the world. Investors are turning to the USD as a safe haven, which is weakening the Canadian dollar against the US dollar. As a result, energy import costs are on the rise and Canadians are expected to feel the blow on rising oil prices at the pumps.
  • Stock Market Fluctuations – Typically, geopolitical risk and the pause of economic growth tends to wreak havoc on investor confidence. The Russia / Ukraine gas and oil conflict has many investors rattled, which in turn affects everything from pension funds to RRSPs. As oil prices rise, Canadian small-cap oil stocks could do well. However, Ed Devlin, who develops Pimco’s Canadian economic strategies and outlook, argues that the Canadian economy is at a tipping point.
  • Higher Food Prices – As gas prices rise, so will the price of food and food exports. It’s predicted that grain prices will rise and the increase in European food prices could trickle into Canada.

On the bright side, three substantial energy deals have been negotiated with Canada.

  • The Lama Energy Group headquartered in the Czech Republic have partnered with a privately held Prosper Petroleum Ltd to build a multimillion steam-assisted gravity drainage oil sands facility near Fort McMurray, Alberta.
  • In November 2013, Polish firm PKN Orlen S.A. acquired Cardium-focused light oil producer TriOil Resoucres Ltd in Calgary
  • Polish billionaire Jan Kulczyk acquired Windstar Resources Ltd.

Perhaps investing in Canadian light oil producers may be a viable answer.  If the pipeline in Ukraine remains closed, the US could decide to export oil to Europe. If that happens, the US will have a shortfall of oil and will need to turn to Canada for light oil production. This should benefit Canadian oil and gas companies and those who invest in them.

All in all, the oil and gas industry is bound to see some interesting turn of events in the months ahead.

Mainland Machinery Ltd

Economic Impact of Unconventional Oil and Gas Production

/in , , /by

Economic Impact of Unconventional Oil and Gas Production

It has taken millions of years for the ancient organic matter trapped within North America’s geological formations to become the crude oil and natural gas used today.

These naturally formed reservoirs of carbon and hydrogen are easy to extract with minimal damage to the environment.  They can be extracted using “conventional” drilling and extracting methods that use natural pressure.

However, many of these oil and gas reservoirs are in decline. Thirty years ago finding oil in North America was not difficult; it was abundant. Nowadays, on the other hand, oil is hard to locate and more costly to extract.

To meet the rising demands, the world has turned to unconventional methods of oil and gas production. All of these strategies impact our world today.

The Growing Demand For Oil and Gas

In 2011, Canada produced more than 2.1 million barrels of oil per day. Even that large amount is not sufficient to meet the country’s demands.

Over the past 20 years, the demand for oil has dramatically risen; making crude oil one of the most sought after, actively traded, commodities in the world.

In fact, it is predicted that the global demand for oil will rise by 14 million barrels per day and will reach a demand for 101 million barrels a day in 2035.

With the decline of conventional resources, to bridge the gap between supply and demand, Canada and the US are exploring and developing unconventional production methods.

Unconventional Oil and Gas Production

Canada is fortunate to have the oil sands of Northern Alberta. And although Alberta’s oil sands are the world’s second-largest source of unconventional oil, this vast unconventional source of oil has many benefits and downfalls.

For one, extracting oil from sand is an expensive process. The sands are located in a remote area of Canada that is difficult to access.  Skilled workers must be brought in from other areas of Canada, which also adds to the productions costs.

The oil sands continue to be a source of controversy.  Environmental activists such as Greenpeace and Pembina Institute have increasing concerns of ecological harm, as well as the effects of global warming because of the greenhouse gases emitted during the process.

In the United States, the resurgence in oil and gas production is beginning to redraw the global energy map.  For one thing, fracking has become an “energy game changer”.

New emerging technologies are unlocking access to light, tight oil and shale gas resources.  As a result, this unconventional form of oil and gas production is changing the role of North America in global energy trade, and influencing the prices of gas and electricity in the US.  Prices have dropped substantially, giving the industry a competitive edge.

This unprecedented growth of shale production makes the US the largest liquids producer worldwide.  In 2012, of all natural gas production, shale production was 39% in the US and 15% in Canada.

According to a joint US Energy Information Administration (EIA) and Advanced Resources International (ARI) study released in June of 2013 – although a dozen other countries have conducted exploratory test wells – Canada and the US are the only major producers of commercially viable natural gas from shale formations in the world.

Outside of North America, China has registered commercially viable productions of shale gas; however shale contributes to less than 1% of China’s total natural gas production.

Unconventional Oil and Gas Production

The ability to unlock new types of resources (such as light tight oil (LTO) and ultra-deepwater fields) and to improve recovery rates in existing fields shows promising signs. Each year, the amount of oil that remains to be produced is on the rise.

Are Our Oil Troubles Over?

New oil production methods and resources must be discovered. The level of success with LTO needs to be replicated and unconventional resources need to be discovered throughout the country.

For example, the Lorraine Formation in the St. Lawrence Lowlands is predominantly unconventional gas silt and is considered an available resource, but no estimates are available at this time.

Shale gas resources have also been identified in Western Canada, Quebec, the Maritimes and a very small area in Southern Ontario.  Extensive exploration is being conducted to quantify the potential of these resources however sustained production is only occurring from the Horn River Basin in northeast British Columbia and a small field of shallow shale gas in the Wildemere region of east central Alberta.

It is crucial to continue the exploration and advancement of technology in this industry, as the economic impact of unconventional oil and gas production is too beneficial to ignore.

Mainland Machinery Ltd

Climate Change Impacts Mining

/in , , /by

climate change impacts miningClimate Change Impacts Mining

Do you believe that the climate is changing?

Only 39% of mining businesses believe in climate change. A mere 19% have made plans to adapt to it. Whether you believe it or not, climate change is real and it is happening. Temperatures are higher than normal through all of the seasons. This is causing immediate problems, as well as other potential issues that may not been seen for years.

Are you prepared for climate change?

The climate changing is going to impact Canadian mining in big ways. Winter roads will be the first things to be affected by these changes. In fact, ice roads have already seen a difference. In 2006, the Diavik Diamond Mine, in the Northwest Territories, dramatically reduced the number of days their ice road was available. This decrease ranged from about 70 days down to 42 days. This reduction forced the company to have their shipments flown in, which increased their shipping cost to a little over $11 million dollars.

Elevated Temperatures in Ontario

Increasing temperatures in Ontario will likely result in less rainfall throughout their summers. This will directly affect the amount of water mines will get. In addition, this could result in exposed raw tailings, mine drainage and dust suppression. On the other hand, Northern Ontario may see an increase in rainfall, which can weaken dams and berms.

Studies show that mining companies’ executives may be the biggest challenge when planning for the effects of the climate change. The magnitude of the climate’s impact on mining operations is not always apparent, which is why they lack planning. Two surveys were conducted across Canada with samples of 100 people, which included mining industry workers, executives and engineer managers. These studies showed that those, who make the biggest decisions, do not see the need to plan for climate change impacts. However, it was found that the workers do see the need for cautionary plans.

The reason for this is due to several factors such as research gaps, uncertainty and costs. The mining industry’s biggest response to climate change, thus far, has been reducing greenhouse gas emissions. It is a good start and will immediately help. To create a secure future, miners should start planning for the long term climate changes.

Ways to Fix Pending Issues

To convince the executives, more effective communication about the problems that arise with the climate changing. By creating climate change models, and analysis, as they affect regional areas, it becomes easier to visualize potential problems, and their especially the long term negative effects. These models will help all mining companies see the need for planning for the adaptation to the changing climate.

Canada’s government can also ease the planning process by providing data and resources that can help miners plan ahead. They can also provide funds to help minimize the danger for high-risk areas. New technologies are needed to help the mining industry deal with climate change. This shows a demand for investors, innovators, contractors and suppliers. Additionally, this upcoming demand will create many more career opportunities for Canadians.

Mainland Machinery Ltd

The Geopolitics of Oil and Gas

/in , /by

The Geopolitics of Oil and Gas

An unsettling topic for some and a downright pariah for others – the combined form of geography and politics when associated with production and distribution of oil and gas leaves little room in the polarized debate over which country deserves to have their share of the world’s oil and gas reserves.

How Did We Get Here?

Around the onset of the Second World War, the US supplied about 63 per cent of the world’s oil, with a barrel of oil costing about a dollar (roughly $17 in 2014 dollars).  Many decades later, an important shift took place when the US reached its peak oil production in 1970; as the output was squeezed, oil shifted from a suppliers’ market to a demand market.

That is why the Organization of the Petroleum Exporting Countries (OPEC) oil embargo in conjunction with the Yom Kippur war in 1973 was such a game changer.  In the weeks before the Arab-Israeli conflict, oil was just $2.90 a barrel (in the same range as the pre-second world war price in today’s dollars). During that war, the oil producers’ cartel began flexing its economic muscles causing the price of oil to quadruple by the end of the year, it would never again return to pre-1973 levels.

A new dynamic emerged: energy exporters discovered their influence in global markets, the global balance of power in energy shifted and importing countries found themselves vulnerable as never before.

geopolitics of oil and gas

 

 

 

 

 

 

 


Source: Institute for the Analysis of Global Security

The Geopolitics of Natural Gas

In a study directed by Harvard University’s Geopolitics of Energy Project at the Kennedy School, the Center for Energy Studies at Rice University’s James A. Baker III Institute for Public Policy, and the University of California, Davis Graduate School of Management, it was concluded that some of the most dramatic energy developments of recent years have been in the realm of natural gas.

Large quantities of North American unconventional gas are now commercially viable, changing the strategic picture for the continent and raising the possibility that the United States could become an exporter of natural gas to Asian and European markets.

The modeling approach to global gas markets used in this project highlights the importance of economics and geology in determining the future of natural gas, but, importantly, the study pays particular heed to the geopolitical dimensions of natural gas.

The study recognizes that the interplay between international politics, security, and energy is multi-directional and therefore seeks to:

  1. Identify the political, economic, geopolitical trends and realities that could frustrate or facilitate increases in global gas consumption and production in the decades ahead;
  2. Anticipate the impact of these geopolitical realities, their implications for domestic or global gas consumption and production, and how they will affect global gas markets;
  3. Assess how these changes in the global gas market will influence global politics.

The Geopolitics of Oil
It’s a fact worth keeping in mind that many of the world’s leading oil producing countries are either politically unstable or at serious odds with the United States. Most of these countries are members of the Organization of the Petroleum Exporting Countries (OPEC). While OPEC countries produce about 40% of the world’s oil, they hold 80% of proven global reserves, and 85% of these global reserves are in the Middle East. The oil wealth of OPEC countries allows them to be the strategic pivot of world politics and economy, but their record on human rights, political stability and compliance with international law is, unfortunately, not positive.

It is important to have an understanding of the geopolitics of oil and gas when trying to comprehend current economic conditions surrounding these scarce resources. Western countries must bear in mind the fragility of political circumstances with the leading oil producing countries and make decisions that continue to decrease dependence on these unstable countries.