Monday, May 10, 2010

Peak Oil and Lithium: Joint Operating Environment 2010: Oil Supply Concerns TNR.v, CZX.v, RM.v, LMR.v, LI.v, WLC.v, CLQ.v, SQM, FMC, ROC, FCX, FXI,

Chinese oil consumption growth from 1965
What will happen if there is not enough Oil for all?
Race for Strategic Materials is on and U.S. is not in the front seats now: China controls 97% of REE market and lithium mostly produced in Chile, Argentina and Australia at the moment. Bolivia - named the Saudi Arabia of lithium by some, has its own mind about its vast undeveloped resources of lithium. Japanese companies are buying into Canadian and Australian junior mining companies to secure lithium supply and Chinese are very active in Australia. When U.S. will look at domestic lithium development in Nevada? Government sponsored enterprise in U.S. Strategic Metals Development Corp. like a Japanese JOGMEC can do the trick and finance juniors like International Lithium, Western Lithium and Rodinia Minerals on J/V basis: otherwise it will be 80s with Japanese Fever all over again. This time Japanese conglomerates will control not only movie studious, but something little bit more essential in the time of peak oil - lithium supply for the Electric Mobility Revolution. Recent deal in Nevada by JOGMEC with Lomico Metals is the first step in that direction, properties are still under DD review, but appetite to be engage in lithium exploration and development in Nevada by Japanese is there. Who will be gone next? When GM, Ford, GE, Dow, Rio Tinto, Boeing and DOE will wake up?"

"We are running Gold Bull for nearly ten years now: Gold first, than Majors and follow up on Junior side. We were always wondering about Future of Energy and have collected some great memories on Uranium Run, Solar and Water plays. Gold Bull has years to run, but we are searching constantly for new Macro trends - it is very interesting to find out what will be the next Bull which will come out of these rubbles in case we are right and Inflation will be the answer to deflation war scenario. It is time for Lithium to come into picture.
Lithium is the leveraged play on Peak Oil and rising Oil price with coming Inflation.
Sector is very small and market is even more smaller - everything is ready for the parabolic move in case of supporting fundamentals."

Please pay attention, this report is written by those who knows the Real Price of Oil. If you account all military needed to protect Oil supply lines and cost of wars to get more oil, price will be well above 150 USD/barrel already. Now we all have another problem: there is simply no more oil enough for all. Will future wars for oil be the only answer?


Joint Operating Environment 2010: Oil Supply Concerns (review)
by Rick Munroe
The United States Joint Forces Command regularly (about every two years) issues its “perspective on future trends, shocks, contexts and implications for… the national security field.” The newly released version of the Joint Operating Environment (JOE) is fundamentally similar to its predecessor, which was released in 2008. Its overall structure is only slightly altered, much of the text is identical, and the time-frame under consideration is the same (to 2030).
Amid the multitude of security threats, energy has moved rapidly to the forefront, and it is the oil supply issue which is the focus of this review. The main oil supply vulnerabilities which were cited in 2008 are reiterated, thus indicating that there has been no amelioration. It restates that “oil and coal will continue to drive the energy train” until 2030, though it warns that in order to do so, “the world would need to add roughly the equivalent of Saudi Arabia’s current production every seven years” (p. 24).
Significantly, a text box has been added on Peak Oil which states in part:“… Assuming the most optimistic scenario for improved petroleum production … [it] will be hard pressed to meet the expected demand of 118 million barrels per day [in 2030]” (emphasis added).
However, the JOE also states, “The central problem for the coming decade will not be a lack of petroleum reserves, but rather a shortage of drilling platforms, engineers and refining capacity” (p. 24).
Many peak oil analysts, including this reviewer, would agree with that statement. There is enough oil to get us through this decade, but ten years is a brief period in time, and the following decade could be a very different story. Drilling platforms and experienced engineers will indeed be at a premium, since land-based and shallow-water options seem be waning. As for refining capacity, we seem to be going the other way, with refiners struggling and numerous closures world-wide.
A graph at the bottom of page 25 illustrates the precipitous drop in production from existing wells and the relatively small flow which can be obtained from non-conventional oil. Given the use of natural gas to produce bitumen, the contribution of non-conventional oil would be even less significant if “net energy” were properly factored in.
The text box on Possible Future Energy Resources is similar to its 2008 predecessor, and again highlights the fact that despite intensive research and improved efficiencies, the contributions of oil sands and shale, biofuels, wind and solar will be minimal.
The JOE then warns, “A severe energy crunch is inevitable without a massive expansion of production and refining capacity” (p. 28). To add to the urgency, it restates its 2008 warning, “By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD” (p. 29). This warning is consistent with others which have been issued during the past 18 months (eg. the repeated verbal statements made by IEA chief economist Fatih Birol, the 2008 WEO, Paul Stevens of Chatham House, ITPOES, etc.).
However, while it warns in general terms of “the dangerous vulnerabilities the growing energy crisis presents” (p. 24), the JOE fails to mention two “next questions” which are as obvious as they are vital:- How might a global supply crunch affect oil exports? and- How can governments best prepare for and administer a liquid fuel emergency?Both issues require immediate and thorough examination, regardless of how close we are to peak oil.
While the JOE warns, “The implications for future conflict are ominous,” it fails to mention the strains which a severe oil supply crunch could place on civil order at home. It acknowledges the resulting potential for a prolonged US recession, deep cuts to defense spending, and diminished capabilities “at the moment they may have to undertake increasingly dangerous missions” (p. 28). However, the JOE makes no mention of the serious and predictable strains on the North American social fabric.
The difficulty of maintaining the domestic food supply chain and other essential services in the face of unprecedented energy prices needs to be considered as a reasonably probable piece of the future operating environment, given that the JOE’s own evidence points to a high probability of the very circumstances which would trigger such conditions.
The JOE’s Energy Summary is not optimistic. It does not mention peak oil a second time, but reiterates its prior warning that “production could reach a prolonged plateau. By 2030, the world will require production of 118 MBD, but energy producers may only be producing 100 MBD unless there are major changes in current investment and drilling capacity” (p. 29).
In short, elevating the profile of energy security within the JOE is a helpful step.Perhaps civilian as well as military planners will take note. The entire document is an interesting mix of philosophical quotes, a realistic assessment of intractable and formidable issues, and some very astute lessons from history.
Petroleum is something which we take for granted, with little consideration of its unique properties or its finite nature. Suddenly, concerns about its future availability are rocketing to the forefront. If nothing else, those lessons from history should warn us of our timeless tendency to see what we prefer to see. What many of us see is an endless supply of cheap oil for our grandchildren. This document prudently encourages us to look again….
Here is the link:
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