19/05/2011 - 00:00

Future liquid fuels problems solvable now

19/05/2011 - 00:00

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Australia must find an alternative to imported oil.

Future liquid fuels problems solvable now

THE Deepwater Horizon oil blow-out at BP’s facility on April 20 last year prompted me to look into where the US and Australia buy much of their oil.

Until the disaster, which resulted in the deaths of 11 men and long-term damage to the shoreline of several Gulf states, I’d assumed American oil imports were primarily from the Middle East.

Perhaps that’s due to the years of propaganda against former president George Bush and vice-president Dick Cheney, which claimed they’d ordered the invasion of Iraq to secure its oil.

Like most propaganda, that’s untrue.

America’s leading oil supplier is Canada followed by several other sources, not Iraq, as Bush-Cheney critics would like us to believe.

The latest monthly data showed oil imports in February 2011 were firstly from Canada, then Saudi Arabia – 2.83 million barrels per day (Mbbl/d) and 1.11 Mbbl/d, respectively.

Then came Mexico (0.99 Mbbl/d), Nigeria (0.95 Mbbl/d), and Venezuela (0.88 Mbbl/d).

Smaller, even if still sizeable, suppliers include Angola (0.36 Mbbl/d), Iraq (0.26 Mbbl/d), Ecuador (0.24 Mbbl/d, Brazil (0.18 Mbbl/d), and Colombia (0.18 Mbbl/d).

Only two of America’s top 10 oil suppliers were in the Middle East.

“Total crude oil imports averaged 8.00 Mbbl/d in February 2011,” according to the US Energy Information Administration.

If one costs that at, say, $US100/bbl we’re looking at a bill of $800 million a day. Multiply that by 365 for a calendar year and the cost is nearly $300 billion.

That’s not only an enormous quantity of oil but also lots of greenbacks annually to augment domestic output, so heavy haulage, farm machinery, automobiles and other transport moves in the nation that still ensures Western security.

Not only is the US thus debt-ridden – the primary reason for the emergence of the patriotic Tea Party Movement – but is also heavily, and ever increasingly, dependent on foreign-produced oil.

America is thus a nation facing energy insecurity, as Japan, now also an Australian ally, found itself in the late 1930s, and remains so to this day.

Joint chiefs of staff chairman, Admiral Michael Mullen, during a three-day ‘Conversations with the Country’ tour of the US Mid-West last August stressed the national debt was bad for the military, something high oil dependence contributes to.

“The most significant threat to our national security is our debt,” Admiral Mullen said.

“And the reason I say that is because the ability for our country to resource our military – and I have a pretty good feeling and understanding about what our national security requirements are – is going to be directly proportional over time, not next year or the year after, but over time, to help our economy.”

But is Australia’s situation any better, meaning more secure?

To answer that I went to the website of Australia’s leading one-man liquid fuels monitoring expert, Sydney engineer Matt Mushalik, who, unfortunately, isn’t well known.

But the way things are heading he’s destined to become Australia’s best-known Cassandra, or seer, and quite soon.

Although what Mr Mushalik analyses is far more important for our security and economic well-being than anything any Greens are capable of, the harsh reality is that their fantasies are more easily pedalled in our media than truth.

Here, briefly, is Australia’s equally parlous liquid fuels situation.

Mr Mushalik’s latest assessment shows our crude oil imports are sizeable indeed.

“Australia imported a record 519,000bbl/d of crude oil in the 12 months from March 2010 to February, 50,000bbl/d or 11 per cent higher than in the last boom period of 2007-2008,” he said.

“This is clearly unsustainable as crude oil exports from those countries which supply this crude to Australia have actually declined by 2.1 Mbbl/d from their peak in 2005.”

In other words, our oil intake has risen by just over 10 per cent from suppliers who together have experienced a slump – an ongoing one – in their output.

Think about the inevitable and imminent consequences of that.

Let’s also not forget that, apart from being so dependent upon overseas supplies, the daily outlay at $100/b on 519,000bbl/d means adding two zeroes, so nearly $52 million daily.

I repeat, daily, or about $20 billion a year.

So where does Australia’s imported crude come from?

Interestingly, we’re like the US, meaning not mainly from Middle Eastern suppliers.

Our major ones are what Mr Mushalik calls the ‘Asian group’, namely Brunei, Papua New Guinea, the Philippines, Indonesia, Thailand, Malaysia, and Vietnam.

“Australia’s main crude oil suppliers in 2005 peaked in the year in which Saudi exports peaked,” Mr Mushalik writes.

“Since then, imports from the United Arab Emirates have replaced those from Saudi Arabia, even exceeding them by around 10,000 bbl.

“Australia’s dependency on crude oil from the Persian Gulf has therefore not been reduced in absolute volumes and stands now at 12 per cent.

“The Asian group peaked in December, 2007, despite a recent rebound in Malaysia.

“New Zealand has come up strongly – from new fields.

“But Saudi Arabia, United Arab Emirates, the Asian group, and New Zealand were not enough to lift Australia’s crude imports above the 2007 peak.

“Who came to the rescue?

“Far away countries such as Russia and Azerbaijan, as well as African suppliers like Algeria, Libya, Nigeria, Congo Brazzaville and Gabon.

“The latter two contributed 12 per cent in December 2010 to February 2011.

“The high Australian dollar has definitely helped to get at that oil.”

And this obviously raises the unasked question: what happens if the dollar slumps towards US 80c, or 70 or even 60?

An unpleasant thought, because petrol at the bowser, if we could get it, would easily exceed $2.50/litre.

Australian refineries try to buy crude from many different countries, while petrol and diesel imports mainly come from three countries – Singapore, South Korea and Japan – which import that crude themselves.

“Nevertheless, increasing crude oil imports is unsustainable against a declining volume of crude exports from the group of countries supplying Australia,” Mr Mushalik says.

Embedded in Mr Mushalik’s cut-to-the-quick lines are some extremely worrying, just-over-the-horizon uncertainties, since Australian domestic oil output now stands at around 50 per cent of total requirement.

Oil suppliers are becoming ever more difficult to find since output all over is sliding.

The fact that Australian refineries have turned to such distant suppliers as Gabon, Congo Brazzaville, and Azerbaijan, certainly suggests this.

So, now for some good news, which, unfortunately, not one Australian state or federal politician cares about, meaning they’re like the equally negligent Obama administration.

Our current $20 billion annual outlay on an increasingly difficult-to-access, economically and strategically pivotal commodity could easily be done away with forever.

Australia’s coal reserves are so huge that we could, by constructing a network of coal-to-liquids plants, become fully self-sufficient in liquid fuels by 2020 and thereafter.

Three such plants are already operational in China.

Why not here?

Because Australia’s lazy and unimaginative political elite – Liberal and Labor MPs – are mesmerised by the much-maligned CO2 gas, an essential plant nutrient.

They’re terrified of the Greens, Greenpeace, United Nations, and Hollywood-driven global anti-CO2 scare campaign that is a huge hoax.

All are more focused on their electoral survival and pensions than continued Australian prosperity and security.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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