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Wednesday, 23 February 2011

Unrest in the Middle-East? Offshore oil drilling might be an ace in the hole!

Oil is the driving substance for the energy requirements of the Western World. That has been the truth for the last hundred years and will be the truth as long as alternative forces of energy, like charcoal, natural gas, biofuel, nuclear power, sun and wind energy don’t have critical mass as a replacement for oil. And as long as cars will depend on oil derivates as their main fuel source, this critical mass will not be there for the alternatives.

Especially bio fuel is no true replacement for gasoline or diesel oil (both oil derivates), as it often uses up important sources for food, like corn or sugar cane, creating artificial scarcity in the food market. This is the immoral side of biofuel.

Oil, however, has one very big disadvantage.The places where you find most of it are either:
-     Stable, but very undemocratic, or
-     Unstable and very undemocratic

Look at the list of countries were most oil is found:
-     The OPEC members: Saudi-Arabia, Iraq, Iran, Kuwait, UAE (Emirates), Venezuela, Libya, Nigeria, Algeria, Ecuador, Gabon and Angola.
-     The independent oil countries: Russia, Norway, Great Britain, The Netherlands and the USA

Of these countries only 4-5 are stable and strong democracies.

The rest of these countries are either plutocracies, that suffer from dictatorial leadership, nepotism and corruption or immature / failed states, being robbed from their natural resources by old and new colonizers, of which a corrupted elite profits. The cynical conclusion is that uptil now that hasn’t been a big disadvantage.  The countries in both categories kept the oil flow running and except from a number of wars in Iran, Iraq and Kuwait and internal problems in Nigeria and Venezuela, everything was cool.

But since the beginning of this year a different winds seems to be blowing through the whole Middle-East. It is the wind of:
-     equal rights for the people and an equal slice of the pie for everybody
-     more democracy, work and opportunities for everybody
-     against the corrupted and cruel leaders.
and it is not going to stop at Libya or Bahrein.

This wind might seem like a fresh breeze now from a democratic point-of-view. However, it can turn quickly into a bleak whirlwind, blowing away all oil contracts for the western world. Look at the facts: a lot of oil producing countries are deeply islamic and / or have hostile feelings against the western world among their people. The current battle against the leaders might deliver ‘winners’ that are not in favor of our countries. These winners might end current oil contracts and might exile the western (oil) companies that run the operations for the extraction of oil.

What can we do about it? The solution might be easier than it seems: increasing the number of oil rigs in the Mexican Gulf and the European seas and improving the techniques of extracting oil from tar sands and shale.

Already since the nineties the popularity of offshore drilling for oil waned:
-     The cost price per barrel for oil extracted from the sea was much higher than for oil coming from onshore resources
-     The quality of the sea oil in Europe deteriorated when the oil companies were reaching the bottom of some fields, making it much more expensive to refine the oil.
-     Every oil company had their own share of problems with oil rigs at sea. Some during the production life cycle of the rig (Deepwater Horizon of BP) and some after the lifecycle ended (Shell with the Brent Spar).

But now with the situation in the Middle East it might be of strategic importance again to revive your country's rigs and oil fields. It is much better to have oil that is now a little bit too expensive, than to have none at all.

Of course it is important to look at the environmental consequences, as a disaster like the Deepwater Horizon creates hostility against oil production at sea. But oil is too important for the western world to neglect the possibility of building new oil rigs

The Dutch government sees this problem clearly and is until 2013 reviving 14 of its 33 oil fields that are currently not in use. This might not be one second too early.


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