TRUTH, JUSTICE & WISDOM Part 3 Oil is runing out... War over OIL 1 comment

5 Nov 2002 @ 00:13, by Jenese James There are TWO articles here, both are on oil, the second is an interview with the world's formost expert on oil and the oil business. The Unseen Conflict War Plans, Backroom Deals, Leverage and Strategy -- Securing What's Left of the Planet's Oil Is and Has Always Been the Bottom Line by Michael C. Ruppert © COPYRIGHT 2002, Michael C. Ruppert and FTW Publications, www.copvcia.com all rights reserved. May be reprinted or distributed for non-profit purposes only.] Oct. 18, 2002, 17:00 PDT (FTW) -- What started out as a blitzkrieg, the Bush agenda for the invasion of Iraq is now producing a world picture that can only be described with one word -- confusing. It is becoming apparent that outraged world opinion, guided by shrewd public relations efforts of foreign governments (including Iraq), has thrown a curve ball to the ush military plan for a pre-election invasion and occupation But one curve ball is not a strikeout. The continuing military build up, more frequent air strikes, and the risky covert deployment of combat troops in supposedly neutral regions shows the degree of Washington's commitment to war. These troops are going to be used. Russia, France and hina are only stalling for time, hoping to cut the best backroom deals possible. They're perhaps also hoping that the American Empire will make a fatal mistake or a delay will break Bush's political, popular, and economic support. Wall Street's 500-plus point rally on the two days of shameless congressional votes authorizing the use of force last week clearly signaled what world leaders have known for some time, and what the American public is seriously beginning to grasp -- the whole thing is about Iraqi oil. The Associated Press ran a story yesterday indicating that the U.S. had been overwhelmed by global opposition to the invasion of a country second only to Saudi Arabia for its known oilreserves. Iraq is capable of quick production increases even if Saddam tries to destroy his oil fields, as former CIA director James Woolsey recently acknowledged. The story's lead sentence read, "Facing strong opposition from dozens of nations, the United States has backed down from its demandthat a new U.N. resolution must authorize military force if Baghdad fails to cooperate with weapons nspectors, diplomats told The Associated Press on Thursday." However, a Reuters story released hours later clearly indicated that the U.S. was playing hardball behind the scenes. "Iraq's main opposition group says a post-Saddam government would review existing oilfield development deals with French and Russian companies and could favour U.S. firms instead. "Sharif Ali Bin Al Hussein, spokesman for the main Iraqi opposition group the Iraqi National Congress (INC), told Reuters in an interview that his group would open the oil sector to all companies, including the U.S. majors. "'We would have to review all contracts which have been signed by this regime to make sure it is in the interest of the Iraqi people and not just for Saddam Hussein,' Hussein said." Nobody is asking who controls the INC. It's a given. The stakes are incredibly high for Russia. Major press organizations are now acknowledging what FTW has been saying for months. The Bush objective is to drive the price of oil down and simultaneously drive a stake through OPEC, forestalling a further and perhaps catastrophic crash in the U.S. economy. News analyses from Pravda to Fox News have foreseen that a successful U.S. invasion will result in crude oil prices of between $12 and $16 per barrel. Oil currently consts $30 per barrel. That would destroy Russia's economic recovery as it sells hand over fist its own diminishing reserves -- oil that is more expensive to produce and of a lesser quality than Mideast crude, while prices are at $30. Iraq owes Russia $7 billion in debt from the Soviet era. And on Aug. 19, Russia and Iraq signed a $40 billion infrastructure development deal, which, as reported in the Tehran Times, saw a team of Russian engineers on their way to what may soon be targets of U.S. bombing raids. Both Russia and France have development interests in major Iraqi oil fields. The Reuters story reported, "Although [France's] TotalFinaElf has no contract, it has been earmarked by Saddam's government to develop the Majnoon and Bin Umar fields with reserves totaling 26 billion barrels. [Russia's] Lukoil has signed a contract for the 15 billion-barrel WestQurna field." The back room deals and implied threats are getting hot and heavy. On Sept. 5, the Asia Times reported that Russia was considering an expensive trans-Siberian pipeline to service China. This would compete with post-9-11 pipeline deals that have been negotiated to send Caspian and Central Asian oil through Afghanistan for the Chinese market under U.S. control. As FTW noted last month, the World Bank has opened offices in Kabul to facilitate the financing of the U.S.-backed projects. Russia's move may not be much of a threat because Russian oil is inferior to Caspian oil. Also, Russia has long passed its peak of production, which means that as time passes it will be increasingly expensive to produce. The message is clear, however, and a coalition of nations opposed to U.S. Imperial behavior could pull it off. In the meantime Stratfor, a geopolitical analysis firm, reported that the U.S. is quietly offering a quid pro quo to Russia in the form of a trade off. If Russia will sanction the U.S. invasion, the U.S. will allow Russia a free hand in Georgia to deal with Chechen and Islamic rebels and presumably a piece of the profits from the new Baku-Tbilisi-Ceyhan pipeline project that just broke ground. It seems like a very little quid for a lot of pro quo. And in Saudi Arabia, Foreign Minister Prince Saud al-Faisal made a second about face on Monday and once again categorically withdrew any Saudi support for the U.S. war. the timing was possibly influenced by a Council on Foreign Relations (CFR) report released today that was exceptionally critical of the Bush Administration for not cracking down on Saudi Arabia's extensive financial ties to al Qaeda. The CFR investigation, directed by Maurice "Hank" Greenberg, CEO of American International Group (AIG), was chartered by the CFR to be an intelligence analysis of terrorist financing. Greenberg, a staunch Israeli supporter, is well qualified for this task. In 1996 Bill Clinton floated his name to replace John Deutch as the director of central intelligence. Greenberg and AIG have been connected by FTW in previous investigations to suspected money laundering through the Arkansas Development Financial Authority and to the drug trade. AIG's San Francisco legal office recently employed the wife of convicted Medellin Cartel co-founder Carlos Lehder. The CFR criticism of Bush is significant for many reasons. First, it signals that the CFR is anxious to pursue an agenda that will likely result in the demise of the Saudi kingdom and the division of that country, with the U.S. simultaneously occupying both Iraq and the oil producing regions of Saudi Arabia. FTW predicted this scenario last month. The significance of a move that would give the U.S. military control of 36 percent of the world's oil is not lost on the rest of the world and it suggests the presence of a much deeper reality. So flimsy are the Bush Administration's frequently changing justifications for war that the Atlanta Journal-Constitution's Jay Bookman wrote a Sept. 29 editorial called "Pax Americana," in which he openly called the U.S. an empire. "The official story on Iraq has never made sense," Bookman wrote. "The connection that the Bush administration has tried to draw between Iraq and al-Qaida has always seemed contrived and artificial. In fact, it was hard to believe that smart people in the Bush administration would start a major war based on such flimsy evidence." He continued to make the point that the administration had no Iraqi exit strategy because it didn't intend to leave. Period. His premise seemed to be, 'Hey, let's stop kidding ourselves. We are an empire and we should go out and act like it.' But perhaps the most critical element of the post-9-11 landscape, which is made clear by the CFR report, is a sense of urgency held by major financial players. As FTW has been saying for a year now, the only way both the urgency and the frenzy and the near desperation of these moves to carve up the world's oil can be explained is with one simple concept: the world is starting to run out of oil. Coming cataclysmic global oil and natural gas shortages are about to become very real, certainly within the next two years, to everyone on the planet. Those countries that have access to what oil remains will survive and dominate and those that do not will atrophy and disintegrate. This is a deadly game of musical chairs. It is the kind of unspoken crisis that would compel the U.S. Congress to worship Caligula's horse, forget the Constitution and international law, and sell out completely. Many have almost worshipped the progressive, seemingly unassailable credentials and leadership of Sen. John Kerry from Massachusetts, who is a possible 2004 Democratic nominee for the White House. However, many have charged him with being a privileged member of an elite ruling class. He was educated at Yale and belonged to the secretive Skull and Bones Society, of which both Bush presidents are members. What one believes about Kerry's background is not significant. What is significant is that he voted for the use of force resolution last week without even a whimper. That vote was noticed and so were many others. These are strange times. Yesterday's announcement by the State Department that North Korea has a nuclear weapons program is troubling for two reasons. First, it raises all of the obvious questions about whether, if the U.S. isn't really concerned about oil, it will now drop all Iraqi plans and go invade Korea instead. They seem to be closer to building a bomb than Iraq is. But secondly and perhaps most importantly is the fact that, as reported by Stratfor, Pyongyang told the Bush Administration about the nuclear program two weeks ago. Why didn't we hear about it then? Stratfor suggests that reason is a pending summit between the U.S. and China where one country might be traded for another. But instead it is likely the announcements earlier this year that the two Korea's might unite scares the White House infinitely more. What, then, would be the need for massive U.S. troop deployments in the former South Korea, right next to China? And isn't it also strange that a number of pipeline plans involving both U.S. and Russian companies that might go around China and make oil marketable to Japan and South Korea seem to pass through North Korea? Go figure. We are already being prepared for the Bush Administration's fallback position if it cannot get the war it wants, when it wants it. Yesterday, CIA director George Tenet sounded the clarion call in the last public hearing of the Joint House-Senate Intelligence Committee examining the 9-11 attacks. "Al Qaeda has reconstituted itself--It is capable of multi-theater operations." Tenet made no bones about the fact that another major attack -- one that will be very convenient for the White House -- is on the way. The Oct. 12 bombing of a nightclub in Bali that killed many Australians has not seemed to impact widespread anti-war sentiment among the people down under. That might well be an omen for the outcome of the next terrorist attack in the U.S. We now know that Bush et al knew enough about the last one to prevent it but did not. It has already been shown that CIA-linked members of the Pakistani intelligence service helped to fund it; that five of the hijackers received flight training at U.S. military installations; that no fighters were scrambled in time to do anything; and that President Bush lied when he said he had no idea that planes could be used as weapons. We know that it is a state secret as to whether the intelligence agencies told Bush what we now know that they knew. I hope that this government fully understands how numerous, well-informed, now-seasoned and capable citizens will be watching an attack this time, and how quickly the worldwide networks that have formed in the last year will expose the first scintilla of untruth in the government's actions. I hope this government understands that the "sleeping giant" of the American people is beginning to stir and unite with peoples all around the world who are already awake. But, as my dear friend Catherine Austin Fitts loves to say, "Those who win in a rigged game get stupid." And that is perhaps the most frightening thing of all. PART 2 OIL INTERVIEW------------------------------------------------------------------------------------------------------ FTW Exclusive Interview Colin Campbell on Oil Perhaps the World's Foremost Expert on Oil and the Oil Business Confirms the Ever More Apparent Reality of the Post-9-11 World by Michael C. Ruppert [© COPYRIGHT 2002, Michael C. Ruppert and FTW Publications, www.copvcia.com all rights reserved. May be reprinted or distributed for non-profit purposes only.] Oct. 23, 2002, 17:30 PDT (FTW) -- Colin Campbell is both an academic and a businessman. Educated at Oxford and holding a Masters degree he has served as a geologist for Oxford University, Texaco, British Petroleum and Amoco (prior to the BP Amoco merger). He has served in executive positions with Shenandoah Oil, Amoco, Fina and was Chairman of the Nordic American Oil Company. He has served as a consultant on oil for the Bulgarian government as well as for Statoil, Mobil, Amerada, Total, Shell, Esso and for the firm Petroconsultants in Geneva. He is the Convener and Editor of the Association for the Study of Peak Oil and a Trustee of the Oil Depletion Analysis Center in London. As a member of The American Society of Petroleum Geologists, The Geological Society of London, and the Petroleum Institute of London he has delivered more than 35 lectures on oil depletion on three continents. His hosts have included universities, governments, and auto manufacturers. He has been published more than 150 times in the field including the 1997 book "The Coming Oil Crisis" (Multi-Science Publishing Co. & Petroconsultants). Before beginning this interview it is necessary for the reader to understand several critical factors about oil and oil production. All of these factors affect how much you or industry pays for oil, how much is available, and what this life-essential commodity can do. Almost every current human endeavor from transportation, to manufacturing, to plastics, and especially food production is inextricably intertwined with oil and natural gas supplies. Commercial food production is oil powered. All pesticides are petroleum based, and all commercial fertilizers are ammonia based. Ammonia is produced from natural gas. All oil production follows a bell curve, whether in an individual field or on the planet as a whole. On the upslope of the curve production costs are significantly lower than on the downslope when extra effort (expense) is required to extract oil from reservoirs that are emptying out. The best and easiest to produce oil is always extracted first to maximize profits. In 100 years mankind has used half of all the oil on the planet, oil that took billions of years to produce and is the result of climactic conditions that have existed at only one time in the earth's 4.5 billion- year history. Oil is a non-renewable resource. The key event in the Petroleum Era is not when the oil runs out, but when oil production peaks, especially as demand and population are rising. World per capita oil production peaked in 1979 and has been in decline since. The peak in volume of total world oil production is upon us right now, even as the demand or better said -- the need -- for oil is increasing rapidly. Several things are a given. First the total remaining conventional oil on the planet is estimated to be around 1 trillion barrels. Second, at present rates (not those of five or 10 years from now), the world is using close to 80 million barrels per day. At the current rate there would be only enough oil to sustain the planet for another 35 years under the best of scenarios. But the oil that remains is going to be increasingly expensive to produce and it will tend to be of a lesser quality, necessitating higher refining costs, than what has already been used. All of those costs will have to be passed on in the form of price hikes or -- in some cases -- spikes. Oil price spikes invariably lead to recession. The world's economy is based upon the sale of products that are either made from oil or which need hydrocarbon energy (including natural gas) to operate, either via internal combustion or via electricity. Different regions of the world peak in oil production at different times. The U.S. peaked in the early-1970s. Europe, Russia and the North Sea have also peaked. However the OPEC nations of the Middle East peak last. Within a few years they -- or whoever controls them -- will be in effective control of the world oil economy, and, in essence, of human civilization as a whole. Two of the nations that will peak last are Saudi Arabia and Iraq, both of which will not peak until the middle of the next decade. Saudi Arabia contains 25 percent of all the oil on the planet. Iraq contains 11 percent of all the oil on the planet. Science and the oil industry have confirmed that there is very little oil left to be found, certainly not enough to make a difference in this grim picture, a picture which goes a long way toward explaining the events of 9-11 and since. --------------------------- FTW: What will be the likely effects of hitting the downslope of production? Campbell: Big question. Simply stated: war, starvation, economic recession, possibly even the extinction of homo sapiens, insofar as the evolution of life on earth has always been accomplished by the extinction of over-adapted species (when their environmental niche changed for geologic or climatic reasons) leaving simpler forms to continue, and eventually giving rise new more adapted species. If Homo sapiens figures out how to move back to simplicity, he will be the first to do so. FTW: How soon before we start to feel the effects of dwindling oil supplies? Campbell: We already are -- in the form of the threatened U.S. invasion of the Middle East. The U.S. would be importing 90 percent of its oil by 2020 to hold even current demand and access to foreign oil has long been officially declared a vital national interest justifying military intervention. Probable actual physical shortage of all liquid hydrocarbons worldwide won't appear for about 20 years, especially if deepening recession holds down demand. But people are coming to appreciate that peak is imminent and what it means. Some places like the U.S. will face shortage sooner than others. The price is likely to soar as shortage looms, which itself may delay peak. If the U.S. does invade there will likely be a repeat of Vietnam with many years of fruitless struggle in which the U.S. will be seen as a tyrant and an oppressor, killing all those Arabs. It can't hope to subjugate the place in perpetuity as the people don't surrender easily -- as the Palestinians have shown. So when the U.S. has finally gone, Russia and China will likely be welcomed there to produce whatever is left in the ruins. FTW: Are the major oil companies currently downsizing? If so why? Campbell: The majors are merging and downsizing and outsourcing and not investing in new refineries because they know full well that production is set to decline and that the exploration opportunities are getting less and less. Who would drill in 10,000 feet of water if there were anywhere else easier left? But the companies have to sing to the stock market, and merger hides the collapse of the weaker brethren. The staff is purged on merger and the combined budget ends up much less than the sum of the previous components. Besides, a lot of the executives and bankers make a lot of money from the merger. FTW: How much oil is really left? Campbell: You have to think of different categories of oil. Speaking of conventional, which is the easy cheap stuff that has supplied most uses to date and will dominate all supply far into the future, there is about 1 trillion barrels left. To this you have to add: A) Oil from coal, "shale," tar sands, heavy oil -- the resource is very large, but extraction rate is low and costly, sometimes giving negative net energy. B) Deepwater oil -- (from a depth of greater than 500 meters) about 60 billion bar C) Polar -- about 30 billion, maybe. D) Natural gas liquids -- about 300 billion barrels FTW: I take it that it is a given that in any particular oil field, or globally, costs of extraction increase as one progresses down the curve. What is the usual nature of these increased costs? Do they usually require additional investment of capital for infrastructure? Is there a chart which shows how costs increase as production declines? Campbell: Yes of course costs go up and every situation is different. In Texas they can still profitably use wells producing 5 b/d. But offshore the threshold is higher. It is more complex because they have the sunk costs of the platform and also face substantial abandonment costs. Furthermore tax distorts the picture, with most operating cost being written off against taxable income either in the host or home country or both. But reserves are defined as recoverable under current or foreseen economics, so non-economic tail-end theoretical production is not included anyway. I think the key issue is not so much the economic cut off but when production of even highly profitable oil heads into decline. The tail end, which is susceptible to economic constraints, is small and not very relevant. Oil has a polarity being either there in profitable abundance or not there at all -- mainly because it is a liquid that flows to accumulate somewhere, unlike coal where extraction is a matter of concentration in seam thickness and access. FTW: Is all oil in the ground recoverable? If not, why not? Campbell: Only a fraction of the oil in the reservoir is recoverable because it does not sit in one big cavern down there but in the very small pore spaces between the grains of sand. These grains are coated in water and when it coalesces, it blocks the pore spaces preventing the further movement of oil. Also there are many nooks and crannies in the rocks that are not in communication. Obviously light oil is easier to extract than heavy. You can pump in steam etc. to try and move it, which is now routinely done where feasible. It is said that recovery has increased from 30 percent to 40 percent thanks to technology and is set to rise from more technology in the future. But most of this improvement has nothing to do with technology. It is an artifact of reporting. The industry has always made conservative initial estimates (liking to build an inventory of unreported reserves to tide them over bad years and also reduce taxes) so reserves naturally grow over time. Besides, extracting a bit more has a minimal impact on peak, which is the critical turning point, much more important than eventually running [completely] out, which we may never do as the tail end can drag on. FTW: What would you say to the people who insist that oil is created from magma, or that there's really so much that we don't have to worry? Campbell: Oil sometimes does occur in fractured or weathered crystalline rocks, which may have led people to accept this theory, but in all cases there is an easy explanation of lateral migration from normal sources. Isotopic evidence provides a clear link to the organic origins. No one in the industry gives the slightest credence to these theories: after drilling for 150 years they know a bit about it. Another misleading idea is about oilfields being refilled. Some are, but the oil simply is leaking in from a deeper accumulation. FTW: Will Central Asian-Caspian pipelines have an impact on the crisis? How long will it take them to come on line? Campbell: There was talk of the place holding over 200 Gb [billion barrels] (I think emanating from the USGS [U.S. Geological Survey]), but the results after 10 years of work have been disappointing. The West came in with high hopes. The Soviets found Tengiz onshore in 1979 with about 6 Gb of very deep, high sulfur oil in a reef. Chevron took over and is not producing it with difficulty. But offshore they found a huge prospect called Kashagan in a similar geological setting to Tengiz. If it had been full, it could have contained 200 Gb, but they have now drilled three deep wells at huge cost, finding that instead of being a single reservoir it, like Tengiz, is made up of reefs. Reserves are now quoted at between 9 Gb and 13 Gb. BP-Statoil has pulled out. Caspian production won't make any material difference to world supply. There is however a lot of gas in the vicinity. To put it in perspective this would supply the world for a little over a year, but it is broadly the same as U.S. potential It is quite possible that the Afghan war was about securing a strong point in this area. But interest in it has now dwindled along with Caspian prospects as the U.S. turns to Iraq, which does have some oil. It is curious that these two U.S. military exercises had different pretexts A) Afghanistan was to find the supposed architect of Sept. 11 -- in which it failed; and B) Iraq is about a sudden and unexplained fear that it might develop some objectionable weapons that might pose a threat to someone in the future. North Korea, which already has nuclear weapons and long range missiles -- and isn't exactly a friendly place -- is not deemed a threat. The cynic can be forgiven for thinking there is some other motive for these military moves: could it be oil? FTW: When and how was it discovered that the Central Asian reserves were much smaller than anticipated? Campbell: I guess you could say over the past 24 months as the different pieces in the jigsaw fell into place. There is no single event or date, but rather an evolving picture FTW: What about replacement sources and alternative energy? Tar sands? Campbell: Of course there is a range of alternatives from wind, sun, tide, nuclear, etc. but today they contribute only a very small percentage, and do not come close to matching the oil of the past in terms of cost or convenience. No doubt production from tar sands and heavy oils can be stepped up in the future but it is painfully slow and expensive, carrying also environmental costs. It will help ameliorate the decline but has minimal impact on peak. The simple solution is to use less. We are extremely wasteful energy users. But it involves a fundamental change of attitude and the rejection of classical economic principles, which were built on endless growth in a world of limitless resources. Those days are over, exacerbated by the soaring population, itself now set to decline partly from energy shortage. FTW: Has anyone determined what percentage of oil is used for military purposes worldwide? If so, how much? Campbell: I don't know how much is used for military purposes, but it must be considerable. The U.S. has built a huge stockpile in the Middle East for the war. FTW: Is China the end game of competition for oil? Campbell: Yes, China is in desperate need of imports as its own supply depletes. It has been very thoroughly explored. It will be vying with the U.S. for access to foreign oil. It is already well established in Iraq. That is about how I see it. [A more detailed discussion of the world oil crisis, its connections to 9-11, and its implications for the future will be contained in FTW Editor Michael C. Ruppert's forthcoming book, "Across the Rubicon: 9-11 and the Last Empire," scheduled for release by Feral House in 2003 PLEASE DISTRIBUTE WIDELY

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