Oil, Gas and Coal: Geopolitics of Energy

• This text discusses the geopolitics of energy and technology, specifically focusing on oil, gas, and coal. It includes learning objectives, framing questions, information about hydrocarbons, and the geography of oil, gas, and coal, the actors of oil and gas.

Session 2: Learning Objectives

• Know what hydrocarbons are, their main uses, and global production and consumption patterns.
• Understand why hydrocarbons are strategically important, especially in developed countries.
• Identify the advantages and drawbacks of fossil fuels.
• Explain the market size and key players in the fossil fuel sector, the share of fossil fuels on the total primary energy consumption, and significant market trends.
• Discuss the environmental impact of fossil fuels, especially on climate.
• Analyze the main geopolitical issues related to the fossil fuel sector, including power, military, economic, transport, trade, social, land management, and environmental aspects, and their impact on international relations.
• Describe conflicts and cooperation within the fossil fuel sector.
• Discuss future prospects for fossil fuels from production to consumption.

Framing Questions

• These define geopolitics as the study of strategies and clashes of power and influence in a geographic space between state and non-state actors.
• What are the objectives and strategies of the key fossil fuel actors?
• Which geographic areas are most critical in the fossil fuel sector?
• What is the economic significance of fossil fuels and their effect on the economy?
• What are the major conflicts and collaborations related to fossil fuels?
• What prospective scenarios and major trends are foreseen?

Basics About Oil, Gas, and Coal

• These are hydrocarbons, compounds containing only hydrogen and carbon.

What are Hydrocarbons & Where Do They Come From?

• Hydrocarbons include methane, ethane, ethene, and ethene.
• Petroleum is a naturally occurring liquid mixture of hydrocarbons found in geological formations.
• A, B, and C, in a diagram show Water, Sedimentary rock, Impermeable rock, Dead and decaying organic matter, Trapped fossils, Oil, Natural gas
• The formation of hydrocarbons takes millions of years.

Conventional & Unconventional Oil & Gas

• Conventional oil and gas: Non-associated gas, Conventional Associated Gas
• Unconventional oil or gas well: Coalbed Methane, Tight Sand Gas, Oil and Gas-rich shale
• Components include seal & sandstone

What is Coal?

• A sedimentary deposit mainly composed of carbon that ignites easily.
• Coal is black or brownish-black, with more than 50% of its weight and 70% of its volume consisting of carbonaceous material.
• The substance it is formed when plant remains are compacted, hardened, altered chemically, and metamorphosed from heat and pressure over geologic time.

How Do We Produce Coal?

• Surface Mining Methods: Mountaintop mine, Contour mine, Highwall or Auger mine, and Area mine extraction processes.
• Underground Mining Methods: Shaft mine, Drift mine, Slope mine

The Types of Coal and Their Uses

• Types of coal: Lignite (17% world reserves), Brown coal (47%), Sub-bituminous (30%), Bituminous (52%), Anthracite (1%)
• Uses Steam coal: Electricity generation
• Coking coal: Used in boiler. Steel manufacturing
• Anthracite hard coal: "no fumes" domestic and industrial uses

Reason for Success: Energy Density!

• Fuels are compared based on their energy density (MJ/kg)
• The fuels include Lithium Battery, Wood, Ethanol, Ammonia, Coal, Methanol, Bunker C, Crude Oil, Jet A-1, Diesel, Gasoline, Kerosene, Natural Gas, Propane, LNG, Methane, and hydrogen.
• Hydrogen has much higher energy density

What Do We Obtain with a Barrel of Crude Oil?

• A 42-gallon barrel of crude oil yields about 45 gallons of petroleum products due to refinery processing gain.
• 20 gallons of gasoline can be extracted

What Do We Do with Natural Gas?

• Natural gas usage is distributed among electric power (36%), Industrial (28%), Residential (16%), and Commercial (11%)
• Natural gas can be used for electric power, industrial heating, residential use, and commercial use

What Do We Do With Coal?

• In 2007, usage was 68% for electricity generation.
• The amount of coal use for power generation almost quadrupled over the period.
• Other uses include Other industry, Steel manufacturing, and Cement plants

The Geography of Oil, Gas & Coal:

• The image depicts the final consumer to exploration

Crude Oil Production & Consumption – World

• World oil production in 2019 totaled 4439 Mt, with the USA, Saudi Arabia, and Russia as leading producers.
• Shows uneven distribution, production and consumption which raises issues

Oil Reserves – World

• Venezuela, Saudi Arabia, and Iran hold half of the world’s 1.55 trillion barrels. The world consumed 99.7 million barrels each day in 2019.
• Middle East, Latin America, and North America hold the largest proven reserves.

Oil Trading, Transport Routes & Chokepoints

• Key routes include the Danish Straits, Turkish Straits, Suez Canal, Strait of Hormuz, the route around the Cape of Good Hope, and the Strait of Malacca.
• The image shows routes of oil transport including Container Ship 'Ever Given' stuck in the Suez

Gas Production & Consumption – World

• World gas production in 2019 = 4089 Bcm
• The USA and Russia are top exporters, and China and Japan are top importers.
• Units are in billion cubic feet per day

Gas Reserves – World

• Russia, Iran, and Qatar possessed half of the world's natural gas reserves.
• Middle East and the CIS including Russia hold the most reserves.

Gas Trading & Transport Routes

• Transport happen vis gas Pipe lines (under 2000-3000km distance) and gas tankers (over 3000km distances)
• Main Trading routes are Russia to Europe, Russia/Middle East to Asia, Middle East to Europe, and the US to Europe & Asia

Coal Production – World

• China is the top producer, accounting for 50.9% of world production China with 729 Mt USA, followed by India (10.3%) and the US (8.3%).
• Advantages: Local energy source and competitive price and good energy density.

Coal Reserves – World

• 1069 Billion Tons of it with Asia Pacific holding 456 Bt, N. America with 257 Bt and CIS with 190 Bt.
• Disadvantages: High pollution and non-renewable sources

Coal Trading & Transport Routes

• Main trading routes are South-East Asia to China & India, Australia to Japan and China, and Russia to Europe. Maritime and also rail transport
• Trade accounts for 19% of total coal consumption in 2019

The Actors of Oil, Gas & Their Relationship

• Actors include Private, State-owned, and international organizations
• States consist of major exporters and consumers

States & Regions

• They manage the oil and gas firms, Finance R&D, subsidize new technologies, invest in land and manufacturing premises, Manage taxes, Define rules, regulations, and standards, Organise supply & distribution in case of shortages, and Even intervene militarily to secure oil supply & interests

Oil & Gas Diplomacy

• Includes relationships between US and Saudi Arabia
• US showing 12 billion worth of contracts to Saudi leader Mohammed bin Salman

The US - Saudi Arabia Partnership

• A mutual benefits cooperation with billions of dollars of investments and trade

Economic Reliance on Oil Exports

• Some countries suffer from Dutch Syndrome which is when rapid development precipitates decline in other sectors. Its often characterized by a substantial appreciation of the domestic currency.

Supply Vulnerability

• The EU has has historically been very reliant on imported oil and it produces very little. The EU has some natural gas, especially in the North Sea but the production has been decreasing steadily since the 1990s

Huge Fiscal Revenues for the States

• Petroleum taxes revenues for the French state: 18 BILLION € (2022)

Between Producers & Consumers

• Factors that determine power balance is Oil supply, Oil demand and geopolitical events
• Weapons of PRODUCERS (OPEC+): OIL production, Impact on OIL prices, embargoes..
• Weapons of CONSUMER STATES: all the rest (including war!) and active diplomacy!

Oil & Gas & Their Relationships

• The actors relationships include State-owned & Private firms like International Organisations (IGOS) and Non-Governmental Organisations (NGOS)

International Organizations

• International Energy Agency (IEA), and The Organization of the Petroleum Exporting Countries (OPEC)
• Mission of OPEC: coordinate and unify petroleum policies of its members. Ensure stabilization of oil markets.
• Goal, is for efficient, economic, & regular petroleum supply to consumers, a steady income to producers and a fair return on capital for petroleum industry investors.

Non-Governmental Organizations

• Includes Ecology Action Centre, Energy Action Scotland, etc
• These are active lobbying groups impacting public opinion and governments, mainly located in developed countries (EU, US)

Oil, Gas, Coal & The Environment

• Major constraint is Forcing a Deep Transformation

Impacts on Air, Soil, and Water

• Include Hazardous air pollution from DRILLING AND CONSTRUCTION WELL STIMULATION AND STORAGE AND PROCESSING AND IMPOUNDMENTS
• Risks of Poorly Managed Oil & Gas Wastewater, in all phases.

Impacts: Greenhouse Gases

• Emissions of CO₂ by source from 1970 thru 2015.
• Types are Combustion of coal, Combustion of petroleum, and Combustion of natural gas

Accidents & Coal Related Diseases

• Chart shows Total number of coal mine deaths in China between 2005-2018

World Oil Crises

• From 1973 - 2000
• OPEC and Islamic revolution impacted these issues the greatest

Prospect of Oil & Gas

• This is in the future

Technology: Carbon Capture & Storage (CCS)

• This is in the future

In Pairs, Imagine the Alternatives to Oil, Gas & Coal

• This is an exercise

Toplines: Oil

• Discovered a while ago, it till provides abt 30% of total shares. It has created a lot of wealth and helped hegemony.

Toplines: Gas

• After oil and the coal sector natural gas comes in at abt 23%. This resource helps provide energy needs. The industry expects it to be optimistic given the good level of the reserves.

Toplines: Coal

• This is the #2 energy resource and adds up to 25% of energy sector. A lot of negative effects on carbon impact climate negatively . A priority on national and global level should be energy and the fossil fuels.