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Luft: Heavy Fuel

Thursday, 29 November 2012 15:15 administrator

While Russia is certainly a challenge for Europe’s energy security, Moscow’s energy strategy is not necessarily entirely detrimental to U.S. vital interests. The strong Trans-Atlantic relations between Europe and the United States should not dictate blind American support for the EU’s energy security interests. Neither should they mask the benefits and opportunities that some of the components of Russia’s strategy hold for Washington.
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The Impact of a Cyber Pearl Harbor

Monday, 15 October 2012 11:15 Yaron Vorona

At the close of 2011, the Council on Foreign Relations Center for Preventive Action released its analysis of the top global hot spots in 2012. One of the top threats highlighted was “a highly disruptive cyberattack on U.S. critical infrastructure (e.g., telecommunications, electrical power grid, gas and oil reserves, water supply, banking and finance, transportation, and emergency services)”

In August, the Shamoon virus illustrated CFR’s prescience. It reportedly destroyed the hard drives of at least 30,000 computers at Saudi Aramco, which Forbes listed as the largest oil company just the month before, with revenues of $1 billion per day. Qatar-based RasGas, the world’s second largest LNG producer was also targeted.

On August 16 at 11:08 am, a person with privileged access to the Saudi state-owned oil company’s computers, unleashed Shamoon. The virus had a component called Wiper, which had apparently been copied from the Flame virus.

Energy is an enticing target for both cyber and traditional threat actors. Defense Secretary Leon Panetta warned last week about a “cyber-Pearl Harbor that would cause physical destruction and the loss of life, an attack that would paralyze and shock the nation and create a profound new sense of vulnerability”.

At the GFIRST Conference last August in Atlanta, Steve Winterfeld, Cyber Technical Director and Senior CyberWarrior Instructor at US government contractor TASC breaks the threat actors into five categories: Script Kiddies, or amateurs; Hacktivists; Insiders, whether disgruntled, financially motivated, or unintentional; Organized Crime; and Advanced Persistent Threats from state actors.

Panetta drew attention to both state actors, and the energy sector. "An aggressor nation or extremist group could use these kinds of cyber tools to gain control of critical switches," Panetta said. “They could contaminate the water supply in major cities, or shut down the power grid across large parts of the country."

Already, in a Wall Street Journal article last year, the Department of Defense confirmed that a cyber-attack could be considered an act of war. One military official was quote as saying, "If you shut down our power grid, maybe we will put a missile down one of your smokestacks.”

The North Atlantic Treaty Organization decided in 2010 that, in the event of a cyber-attack on an ally, it would convene a group to "consult together" on the attacks, but they wouldn't be required to help each other respond.

Panetta’s reference to the December 7, 1941 morning attack by the Japanese on the US naval base at Pearl Harbor is sobering. This attack was directly responsible for the US joining the Second World War, and culminated in the devastating nuclear attacks on Hiroshima and Nagasaki.

Albert Einstein cynically said, “I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones.” Cyber-warfare will certainly play a role in coming conflicts.

NATO, Post-2014 Afghanistan, and the Energy Dimensions of Security

Tuesday, 07 August 2012 00:00 Editor

By the snail’s pace at which change happens in most international organizations, the North Atlantic Treaty Organization has been on a tear. In May, Chicago hosted the 2012 NATO Summit where the future of Afghanistan and NATO’s role in it took top billing. Also, if one scrolls down through the Summit Declaration one finds some indication of the direction that energy security will take within an Alliance context in the future.

Afghanistan

History is waiting to be made in a post-2014 Afghanistan. As the Alliance’s 2012 Chicago Summit Declaration points out, NATO’s role will soon undertake a historic shift from a combatant role to a large-scale training mission designed to train and support a professional Afghan National Security Force (ANSF) to defend the national government and the nation from permanent partition into both large and small swaths of territory ruled over by tribal war-lords.

By any measure, Afghanistan’s future as a consolidated state will rest not only on the national government’s ability to build and maintain national cohesion--where little exists today-- but also in providing a framework for facilitating the development of network systems that can provide the economic backbone to support and empower the country’s economy for the welfare of the Afghan people. At the heart of development and the nation’s security and sustainability will be the availability of electric power, or lack thereof, as a network industry determinant for human development.

A second scenario for a post-2014 Afghanistan is that it will revert to a more-or-less feudal collection of fiefdoms that will resist efforts to collectivize (national) problem solving dismissing the probability of economies of scale in power generation and distribution. On the energy-only side of this equation, decentralized power generation and distribution may not be all bad but requires detailed and thoughtful consideration. It’s worth pointing out that many in the development community don’t like this option. Fashioning the country’s power map into separate, and independent micro-grids appears to many exactly what they don’t want the country to become, i.e. a morass of regions largely, from an electric power standpoint, independent from one another. To others, this option just looks bad. It might be suggested that a dialogue needs to take place in order to decide what configuration of power generation and distribution is best suited to the geography, ethnic diversity, topography, economy and existent disconnects and divisions present in Afghanistan today.

Afghanistan today

One could easily argue that Afghanistan doesn’t need economies of scale in power generation and distribution because it has no economy that demands it. According to the World Bank, the percentage of the population with access to electricity in Afghanistan is among the lowest in the world. The Ministry of Energy and Water estimates that about 30% of Afghans have access to electricity from grid-based power, micro-hydro or solar panel stations. The situation has improved in the major urban population centers along the critical North East corridor between Mazar-e-Sharif and Kabul, following the import of power from Uzbekistan and the rehabilitation of three hydro plants (Mahipar and Sarobi completed, and Naghlu ongoing). Increasing parts of some urban centers, for example Kabul, Herat, Mazar-e-Sharif, and Pul-e-Khumri, now have a theoretical 24-hour power supply but reliability remains allusive. This is of course particularly challenging for industry to contend with in the absence of a secondary, back-up power generating source.

A second important fact is that according to UNDP, over 70% of the Afghan population lives in rural areas (practicing agricultural and related rural activities that rely heavily on use of natural resources) and 85% of these residents have no access to electricity. The UN Common Country Assessment (CCA) in 2004 found that, agriculture, not including poppy cultivation, generates about 40% of the GDP and employs about 70% of the labor force and is the major source of livelihood in the country.

Based on population dispersion and concentrations, what the figures tell us is that there are only a few select corridors based on present population patterns that could feasibly support large scale industrial development from a simple demographic standpoint. Diversifying away from dependence on agriculture (subsistence versus commercial at present) into alternative industrial sector development is therefore limited by population constraints as well as by the absence of large-scale market demand for power outside of dense urban areas.

On the other hand, we know that if there is a lack of available power there will be a lack of development. It is simple as that. Nation building is not the Alliance’s traditional role but one that has been hoisted onto its shoulders by history. So it is the donor community in post-2014 Afghanistan that will shoulder this burden and which should carry out this dialogue regarding Afghanistan’s energy future and how it can contribute to future peace and security in this war-ravaged region.

Another real challenge to this country’s energy future is that in an age of seemingly unending economic misery (Afghanistan is near the misery epicenter with the world’s 214th lowest level of GDP/per capita) there is no real external appetite for nation-building in a nation, as it is often perceived, without a national desire and motivation to change. In short, providing the energy pathways for development is challenging but doable. Providing the market that can ultimately pay for these pathways, whether it be Afghan national transmission and distribution systems or smaller and more flexible micro-grids, is an even greater obstacle which will need to be overcome.

Yet a third energy dilemma deserves addressing. There is a direct correlation between per capita energy consumption and human development and unfortunately Afghanistan ranks low on both scales as well. According to the Human Development Index for 2010, Afghanistan is ranked 155th among 169 United Nations member states. Starting from such low departure points, improvements in both could be feasibly accelerated in the 2014 period. However major barriers, some obvious and others opaque, could undermine even the most modest development expectations for the state.

Foreign Money

One rather contentious challenge to Afghanistan’s future is the role of foreign money (donor or sovereign) will have on Afghan society as it filters (or is siphoned off) through the economy. It is ostensibly acknowledged that the country needs money from all available sources that wish it well. But there is growing evidence that available finance does not result in quid pro quo successful problem solving yet rather, in an Afghan system lacking among other things rule of law, good governance, accountability, corruption is being perpetuated. So as NATO nations have spent countless hundreds of billions of dollars, euros, and yen—in addition to the enormous human cost as measured by the loss of thousands of military and civilian lives in the struggle for this country—is a post-2014 Afghanistan to be lost to the next highest bidder as NATO nations and partners (and their money to a large extent) retract and others line up to profit from Afghan engagement?

The Role of the Turkmenistan-Afghanistan-Pakistan-India Pipeline (TAPI)

One possible solution to funding a future Afghan state is the development of the TAPI pipeline which has been covered (and is again addressed in this issue) of the Journal of Energy Security. On the upside, the pipeline could provide significant transit-fee revenue for a national government estimated at $300 million per annum. On the downside, the pipeline could provide significant transit-fee revenue to regional war-lords reinforcing the country’s fragmentation. In both cases, the pipeline as a money-spigot—if not channeled properly—could reinforce the country’s level of corruption in the absence of improved governance and an institutionalization of the rule of law both which appear even more remote and improbable than the construction of a $10 billion, 1680 kilometer pipeline passing directly through one of the most war-torn areas of the world.

Second, the TAPI pipeline is not the solution to Afghanistan’s energy woes as for Afghanistan itself it is not designed for gas-off take which could be used for gas fired power generation as an alternative to the country’s hydro-dependent energy infrastructure. While corrupt Afghan national officials, and local henchmen may benefit from ensuring the unencumbered transit of Turkmen gas to downstream Pakistani and Indian end-users, there exists the potential of a disconnect between regions of the country that economically benefit from protecting the pipeline and those that don’t. Whether this would set in motion additional forces for fragmentation is unknown but the likelihood of this evolving into an unintended impact of TAPI should also be addressed by its supporters among them ASEAN and the United States.

Finally, the last thing as post-2014 ISAF needs is to be drawn into the physical protection of a TAPI pipeline. While NATO has critical infrastructure protection as one of the issues to address within its energy security mandate NATO nations hardly envisioned experimenting with this across the mountains and deserts of Afghanistan. A real question worth asking is whether the construction of TAPI would provide an attractive target for multiple criminal, political, and other actors prone to using violence to undermine a future Afghan state?

Back to NATO

The Chicago Summit Declaration also included some invigorated language supporting a new (Lithuanian based) NATO Energy Security Center of Excellence (ENSEC COE) as well as a much more nuanced understanding in what direction NATO energy security activities will lead in the future. In short the declaration states that the Alliance will work towards significantly improving the energy efficiency of our military forces; develop our competence in supporting the protection of critical energy infrastructure; and further develop our outreach activities in consultation with partners, on a case-by-case basis. To this end, IAGS, the publisher of the Journal of Energy Security, participated in and supported two NATO events over the past several months. First, IAGS presented some initial findings on NATO Member State military oil use (operational energy) at the Supreme Allied Command Transformation Conference in Zagreb, Croatia in June. According to these findings NATO member state militaries combined consume some 625,000 barrels of oil a day at an annual cost of some $21 billion/annum. In an age of fiscal austerity, and significantly reduced military spending, it was recommended that a comprehensive study of military energy efficiency be carried out with an focus on oil use in order to highlight the strategic (and financial vulnerabilities) associated with a single-fuel (oil) dependent Alliance. Such a baseline study would provide the metrics for NATO operational energy use and would be very useful in charting the success or failure of a future strategy to reduce oil-only military energy use in the future.

Secondly, IAGS will provide a focus in its 2013 program of work on critical infrastructure protection (CIP) which will be covered extensively in the pages of the JES. This effort in part could help support and address the work of the new and pending NATO ENSEC COE over the coming years particularly in its outreach activities with private sector partners. Whether this hope comes to fruition remains to be seen, but there is no doubt that attacks against CIP do and shall remain a part of the global energy security landscape. Stay tuned.

Korin on Platts: Oil Imports Not the Problem

Monday, 02 July 2012 12:10 JES

The Folly of Energy Independence

Tuesday, 12 June 2012 09:36 AK

"The United States stands on the cusp of a global strategic advantage of huge significance. It is now within our grasp to cut the Gordian knot of energy policy, transforming our economic prospects in a fairly short period. Seizing this advantage does not require or depend on an esoteric technological breakthrough. It does not require allied assistance. It does not require a great deal of citizen sacrifice, discipline or patience. It does not require new taxes or convoluted cap-and-trade schemes. It merely requires that the Administration and the U.S. Congress get their collective head straight for once about a policy area in which politically ecumenical futility has been the norm for nearly forty years."

Click here to read more, in the summer issue of The American Interest Magazine.

Pipeline blasts roundup

Monday, 04 June 2012 18:26 AK

May 13: Blast on Yemeni natural gas pipeline supplying the Balhaf Export terminal in the Gulf of Aden, near Mayfaa in Shabwa province. Prior attack on April 26. Both apparently Al Qaeda.

May 30: Blast on 12in Syrian oil pipeline in Deir al-Zor province, connecting Abu Hamam and Gharaneej. Prior attacks: April 21, same pipeline; April 30, oil pipeline between the villages of Mahkan and al-Qouriya in Deri Ezzor, valve damaged and large amounts of oil leaked; March 26, blast on diesel pipeline between Hama and Homs at Taldao; February 15, diesel pipeline connecting Homs refinery with fuel tanks in Arda. There's also a report of a May 15 blast near al-Mayadeen on the oil pipeline to Banias refinery.

May 30: Blast on Azerbaijan-Turkey natural gas pipeline near Sarikamis.

Did the House bar the Dept. of Defense from purchasing biofuels? Not quite.

Thursday, 31 May 2012 17:20 AK

A number of recent articles regarding the provision restricting spending on non-petroleum fuels in the recent National Defense Authorization bill passed by the U.S. House of Representatives appear to have gotten the story wrong. It's a pretty confusing story to follow so that's not surprising.

For example, Fred Kaplan writes in Slate: "Republican leaders passed an amendment barring the entire Defense Department from using any alternative fuels, for any purpose, if they’re more expensive than oil. But then, in a shameless disclosure of who’s paying the tiller, they tacked on a provision exempting coal and natural gas from this prohibition." (emphasis added) Noah Shachtman wrote in Wired: "House Republicans...last Wednesday voted to impose its ban on alt-fuels that cost more than the traditional stuff....But the armed services committee didn’t put limits on all alternative fuels — just the ones with environmental benefits." These quotes imply that the cost restriction measures apply only to particular types of non-petroleum fuels.

This is not correct. Let's go down the legislative rabbit hole to untangle the confusion:

The relevant parts of the National Defense Authorization Act for Fiscal Year 2013 reported in the House are sections 313 and 314.Both are copied below, with the legislative text followed by the associated report language, followed by my comment.

Legislative text:

SEC. 313. EXEMPTION OF DEPARTMENT OF DEFENSE FROM ALTERNATIVE FUEL PROCUREMENT REQUIREMENT.
Section 526 of the Energy Independence and Security Act of 2007 (Public Law 110-140; 42 U.S.C. 17142) is amended by adding at the end the following: `This section shall not apply to the Department of Defense.'.

Report language:

SECTION 313--EXEMPTION OF DEPARTMENT OF DEFENSE FROM ALTERNATIVE FUEL PROCUREMENT REQUIREMENT
This section would amend section 526 of the Energy Independence and Security Act (42 U.S.C. 17142) to exempt the Department of Defense from the requirements related to contracts for alternative or synthetic fuel in that section.

Comment:
Below follows the text of section 526 of the Energy Independence and Security Act (EISA) - 42 U.S.C 17142 - which Section 313 would make inapplicable to the DOD:

42 USC § 17142 - Procurement and acquisition of alternative fuels
No Federal agency shall enter into a contract for procurement of an alternative or synthetic fuel, including a fuel produced from nonconventional petroleum sources, for any mobility-related use, other than for research or testing, unless the contract specifies that the lifecycle greenhouse gas emissions associated with the production and combustion of the fuel supplied under the contract must, on an ongoing basis, be less than or equal to such emissions from the equivalent conventional fuel produced from conventional petroleum sources.

Explanation: 42 U.S.C 17142 barred federal purchase of any non-petroleum fuel with higher greenhouse gas emissions than fuel made from conventional oil, which means it barred coal based fuels, fuels produced from unconventional oil such as tar sands, and potentially other types of fuels depending on how exactly lifecycle greenhouse gas emissions are measured (the measurement question is an issue well beyond the scope of this post.) While it would serve to limit greenhouse gas emissions of federally purchased fuels, by its very nature 42 U.S.C 17142 is an option limiting, and thus by definition energy security limiting, measure. (In case you're not clear on why I wrote by definition, let me quote myself: "When the British Navy made the shift from coal to oil, then Lord of the Admiralty Winston Churchill famously remarked, “safety and certainty in oil lies in variety and variety alone.” To diminish the strategic importance of oil to the international system it is now critical to expand the Churchillian doctrine beyond geographical variety to a variety of fuels and feedstocks.") Bottom line, Section 313 would serve to undo a limitation on fuel types, at least for the DOD, increasing its spectrum of allowable fuel options.

Forging ahead to Section 314:

Legislative text:

SEC. 314. LIMITATION ON AVAILABILITY OF FUNDS FOR PROCUREMENT OF ALTERNATIVE FUEL.

(a) Limitation- Except as provided in subsection (b), none of the funds authorized to be appropriated by this Act or otherwise made available during fiscal year 2013 for the Department of Defense may be obligated or expended for the production or purchase of any alternative fuel if the cost of producing or purchasing the alternative fuel exceeds the cost of producing or purchasing a traditional fossil fuel that would be used for the same purpose as the alternative fuel.

(b) Exception- Notwithstanding subsection (a), the Secretary of Defense may purchase such limited quantities of alternative fuels as are necessary to complete fleet certification for 50/50 blends. In such instances, the Secretary shall purchase such alternative fuel using competitive procedures and ensure the best purchase price for the fuel.

Report language:

SECTION 314--LIMITATION ON AVAILABILITY OF FUNDS FOR PROCUREMENT OF ALTERNATIVE FUEL
This section would prohibit the use of funds for the production or purchase of any alternative fuel if the cost of producing or purchasing the alternative fuel exceeds the cost of producing or purchasing a traditional fossil fuel. This section would also provide an exception for the Secretary of Defense to purchase limited quantities of alternative fuels to complete fleet certification of 50/50 alternative fuel blends. (emphasis added)

Comment: It seems the exception bolded above is what Fred Kaplan was referring to when writing "they tacked on a provision exempting coal and natural gas from [the prohibition to buy non-petroleum fuels that are more expensive than petroleum based fuels.]" However, 50/50 blends means blends of 50% non-petroleum fuel (of fossil or renewable origin) and 50% petroleum fuel. See many examples of DOD 50/50 blends, listed in the several page Table A-1 (starting on p. 149 at this link.) So, for example, the exemption would apply to a 50/50 blend of bio-SPK and diesel fuel, whether the origin of the bio-SPK is fats, grease, food oil crops, energy crops, algae, and so on and so forth. The exemption would also apply to a 50/50 blend of bio-SPK and jet fuel, whether the origin of the bio-SPK is fats, grease, food oil crops, energy crops, algae, and so on and so forth. It would apply to a 50/50 blend of PRJ and jet fuel, whether the origin of PRJ is agricultural or forestry residue, energy crops, urban wood/mill waste, and so forth. It would also apply to 50/50 blends where the non-petroleum part is natural gas based, or coal based. I could go on but you get the picture. It's not correct to say there is a restriction in Section 314 that applies only to biofuels nor is it correct to say that the exemption in Section 314 applies only to natural gas or coal based fuels. Both parts of 314 apply to non-petroleum fuels regardless of whether their origin is fossil or renewable.

Hope this clarifies the morass a bit for those interested in this issue.

India: calls to end government coal monopoly

Tuesday, 08 May 2012 07:55 AK

Federation of Indian Chambers of Commerce and Industry (FICCI) called on the Indian government to reduce its stake in PSUs [public sector units, of which Coal India Limited (CIL) is one] "to less than 50 per cent which would be sufficient enough for it to be part of all major decision making processes in the company but at the same time would help make PSUs observe basic market discipline." (Source: Economic Times.)

FICCI also urged reduction of energy subsidies: "Cross-subsidies prevail among consumer categories due to populism which leads to virtually giving free power for the agricultural sector. Revision of tariff is often guided by political pressures than economic reasons. Rationalisation of tariff for industry by reducing the gap between industry and domestic tariff is necessary"

Balochistan: attacks on gas pipelines and transmission pylon

Wednesday, 25 April 2012 20:48 AK

Cluster of attacks on gas pipelines in the Dera Bugti region. Early Tuesday: "explosive device was planted along the eight inch diameter gas pipeline in Dera Bugti. The detonation caused a big blast, disrupting the gas supply from Well No. 29 to the gas purification plant." Wednesday: a blast on an 18-inch diameter gas pipeline in Pir Koh area supplying gas from wells no 15, 21 and 19 to the Sui gas plant. This is ongoing.

Also Tuesday: "a 132 kV transmission pylon was blown up near Barkhan and Kholu suspending power supply to most of the villages of these districts."

This doesn't exactly improve the prospects of TAPI. Final round of talks on TAPI transit fees -- as of last discussions 49.5 cents per million cubic feet of gas per day from India to Pakistan and from Pakistan to Afghanistan -- supposed to be held next month.

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Page 8 of 41

Journal of Energy Security