|
2005 Apr, Nuclear Issues v27 04 |
|
|
|
|
Written by Nuclear Issues
|
|
Friday, 01 April 2005 |
Nuclear Issues is also available as a pdf download
Blood and oil
The alternative subtitle of this emotively entitled book (Penguin Books
2004) “The Dangers and Consequences of America’s Growing Petroleum
Dependency” – pins the blame on America. But we are all, in some part
extent guilty of pushing an over-reliance on oil beyond the point where
future demands will outstrip supply. The point is emphasised in the
conclusion that “Soon enough, the world will begin to suffer severe and
persistent shortages of conventional petroleum. It may not happen for
ten, fifteen, or twenty years – but it will happen.”
The strength of the book, by Michael Klare, Professor of Peace and
World Security Studies at Hampshire College in Amherst, is in its
detail; the comprehensive data on oil reserves, production and
distribution pipelines, and above all in the detailed 53 pages of
references to original documents and U.S. government policy statements.
With its growing dependence on foreign supplies U.S imports of oil and
gas, expected to rise to 70% of total consumption by 2025 –
increasingly from foreign powers that, in the words of vice-President
Cheney, “do not always have America’s interests at heart” – the U.S.
feels forced to take steps to protect its vital interest. As Energy
Secretary Abrahams said in 2002 “Energy security is national security”.
From the first discoveries in Pennsylvania in 1859 until World War 2,
the U.S. was the world’s leading oil producer meeting its own needs and
with a surplus for export. But oil reserves are finite and the
predictable, irreversible, decline in U.S. production which began in
1972 has required ever-greater imports to meet the everrising demand.
With 65% of world reserves estimated to lie in the Persian Gulf (Iran,
Iraq, Kuwait, Saudi Arabia, the UAE, Oman and Qatar) this area was an
obvious focus for U.S. attention. American companies first began
producing oil in Saudi Arabia in 1939 and by the end of World War 2 the
war the exploitation of Saudi Arabia’s vast reserves had become a major
foreign policy objective – first enunciated by President Roosevelt in
1943 - “the defense of Saudi Arabia is vital to the defense of the
U.S.” This policy of concern over the Gulf has been
maintained and hardened by all succeeding US presidents.
Truman clashed with the USSR over Iran in 1946. In 1957 Eisenhower was
authorized to use American combat forces to defend friendly Middle East
countries against Soviet-backed aggressors, supplying arms, extending
the lease on the Dhahran air base in Saudi Arabia. In 1958 he ordered
U.S. troops into Lebanon to support the prowestern government of
President Chamoun (is history about to repeat itself?). President Nixon
sought the indirect approach of strengthening friendly regimes -
encouraging and assisting any “nation directly threatened to assume the
primary responsibility of providing the manpower for its own defense.”
(1970). Billions of dollars of advanced weaponry, combat planes and
tanks, were transferred to the two chosen agents of this strategy Iran
and Saudi Arabia together with the support of up to 10 000 military
advisors and technicians. This policy however collapsed with the fall
of the Shah of Iran in 1979 and the nationalization of the U.S. Aramco
oil concession by Saudi Arabia. In both cases the growth of
anti-American opposition was in part attributed to Washington’s support
for Israel in the 1973 Arab-Israeli war, and the presence of U.S.
personnel which became a source of friction and unrest, with
accusations of bribery, and importing alcohol and pornography into the
Islamic countries.(‘Abd al- Rahman Munif’s novel “Cities of Salt” gives
a striking account of the tensions that arise.)
Following the fall of the Shah of Iran, President Carter reverted to
the earlier policy of military threats, declaring in 1980 that to
protect its vital national interest the U.S. would use “any means
necessary, including military force.”
And he set up the Rapid Deployment Joint Task Force, the Tampa–based
military command to take responsibility for managing U.S. combat
operations in the region. President Reagan followed both policies. He
stepped up the procurement of cargo planes, supply vessels etc to speed
the deployment of U.S. forces to the Gulf, and approved an $8.5 billion
arms package to Saudi Arabia. He also reaffirmed the pledge to support
the Saudi royal family (to avoid a repeat of the fall of the Shah)
“there is no way we would stand by and see Saudi Arabia taken over by
anyone who would shut off the oil” (1981). This policy prompted the
“tilt towards Iraq” during the Iran – Iraq war when the US assisted
Iraq with billions of dollars in so-called agricultural credits, and in
1987/88 reflagged Kuwaiti oil tankers as American ships to defend them
against Iranian attack and escorted them through the Gulf with American
warships.
After the Iraq/Iran war had ended through the stalemate of mutual
exhaustion Sadam Hussein sought to regain the initiative by the
invasion of Kuwait in August 1990. The immediate concern of the U.S.
was the safety of Saudi Arabia and the threat to American oil supply.
U.S. troops were quickly authorised for deployment in Saudi Arabia; the
air and ground offensive to liberate Kuwait came later. Following the
conclusion of ‘Desert Storm’ in 1991 the Bush and Clinton
administrations adopted a policy of “containment” to isolate Iraq and
also established a permanent military presence in the Gulf. But Saddam
Hussein continued to be seen as a destabilising influence in the
region, posing a threat to the huge international investments that
would be required to expand oil production to meet the ever-rising U.S.
and world demand.
At the same time doubts were begning to be expressed about the
stability of the Saudi regime with fears of increasing social,
economic, political and religious ferment. There was also growing
hostility to the presence of American troops in the country and
continued anger over the plight of the Palestinian people. The
possibility of bringing about ‘regime change’ in Iraq, to oust Saddam
and install a new regime friendly to U.S. interests then began to be
discussed seriously as a less drastic alternative to conniving at the
fall of the House of Saud. The invasion of Iraq also offered the
possibility of bringing Iraq’s large oil reserves and potential
production back into full and increasing output under direct U.S. or
friendly control. It has also allowed the U.S. to pull its troops from
Saudi Arabia to bases in nearby Qatar. The need for increased output
from the Gulf and to ensure that these supplies safely reach their
markets will require the continued deployment of American troops in the
region for as long as this policy continues.
This leaves Iran as the remaining Gulf oil producer to be brought under
U.S. control, where the ultimate goal of the Bush administration is
also regime change; to replace the present theocracy with a Western
oriented government that would open the country’s state-owned oil
industry to outside – especially American – investment. But despite
threatening statements opposing the Iranian plans for nuclear
development it seems that any direct military intervention is unlikely.
More reliance is being placed on encouraging moves (as in Georgia and
Ukraine) towards ‘democracy’, as expressed in student protests in
Tehran. Nearly 65% of Iranians are under 25 and experience high levels
of unemployment and limited opportunities. There are recent reports
that the U.S. has just allocated $3 million to promote democracy in
Iran.
Iran however, with borders on the Caspian Sea and with Turkmenistan, is
open to closer ties with Russia and China. There are reports of an
agreement for the export to China of some 10 million tons/year of
Iranian liquefied natural gas (LNG) for a 25-year period, as well as
the participation, by China’s state oil company, in such projects as
exploration and drilling, petrochemical and gas industries, pipelines,
and other services.
It is then significant that area of the Carter doctrine of “any means
necessary including military force” has been extended beyond the Gulf
to include the Caspian and other oil producing regions. “The US Central
Command – originally created expressly to implement the Carter doctrine
in the Gulf – was given command authority over the Central Asian states
of the Caspian Sea basin on October 1, 1999.” American energy firms
concluded major oil deals with the governments of Azerbaijan and
Kazakhstan. The Clinton administration promoted close military ties
(including participation in combat manoeuvres with Kazakh, Kyrgyz and
Uzbek forces) and provided military aid to these states and also to
Georgia. The US Department of Defense justification for this American
military involvement was the “presence of enormous energy resources”.
Georgia holds the central part of the BTC pipeline from Azerbaijan, to
Turkey to bring Caspian oil to the Mediterranean. It is routed to
bypass Russia and Iran, although it skirts the conflict zones of
Chechnya, Abkhazia, Adzharia and Nagorno- Karabakh. US assistance to
the Greater Caspian sea area was expected to exceed $1.5 billion in
2002-2004. The US now has military bases at Manas in Kyrgyzstan (only a
few miles away from a Russian air base) and at Khanabad in Uzbekistan
(again not far from three Russian bases in Tajikistan).
But Kazakhstan with its border with China is also an obvious source of
oil for China, which with its rapid industrial growth is already the
world’s second largest oil importer (after the US) with imports
expected to grow to meet 73% of consumption by 2025. China is now
investing in oil and gas production in Kazakhstan and constructing oil
and gas pipelines to supply central and coastal China. Kazakhstan also
provides a land bridge for pipelines between the Caspian Sea and East
Asia.
In addition to the developing relations with Iran, which is seen as
playing a major role in Beijing’s energy strategy, Chinese firms have
acquired development rights or part ownership of major fields in Sudan,
Indonesia Ecuador, and Venezuela. China also follows the US policy of
providing military equipment and support to its oil supply countries.
Most strikingly China has established formal security ties with the
states in the greater Gulf/Caspian area through the Shanghai
Cooperation Organisation – the “Shanghai Five” which also includes
Russia.
This leads Klare to foresee a “nightmare scenario “ – “a Sino Russian
alliance aimed at undermining American interests in the region. But it
is just as easy to envision an American-Russian alliance designed to
contain China, or an American-Chinese alliance against a reinvigorated
Russia. ... a constantly shifting set of alliances and antagonisms,
much like the three-way competition between Oceania, Eurasia, and
Eastasia that George Orwell portrayed in the novel 1984.”
The depressing but inevitable conclusion Klare draws from this is that
with the dependency on oil imports from overseas sources that are
unstable or unfriendly or both “we will continue to have to fight –
literally– to ensure access to oil. And unlike earlier wars, in which
we could withdraw our forces once the hostilities had come to an
end, these encounters will require the permanent presence of American
soldiers – for as long as we remain dependent on these sources for a
significant share of our energy.” And in a reference to the
biggest contingent of American forces now trapped in the Persian Gulf
area “... the occupation of Iraq has only initiated a new phase in the
decades old struggle to control the region.”
While there are arguments about the date at which world oil production
will peak, there can be no doubt that sooner or later it will arrive
and thereafter supplies will become increasingly scarce. Competition
for what remains will intensify, conflicts will multiply. Referring
back to the book’s title Klare writes, “ensuring a continued supply of
foreign petroleum will require an ever-increasing payment in American
blood.” (not to mention a very much larger loss of life for the
indigenous populations which he surprisingly ignores).
Finding a solution
To his own question, Is it worth it? Klare answers “no”. “A strategy
that relies on the use of military force to slake our thirst for cheap
petroleum is a strategy we cannot afford.” Instead of “gorging on
our own dwindling petroleum and fighting over what remains abroad” he
calls on the US to “work with other countries to develop alternative
energy systems and to devise contingency plans for allocating available
oil supply in the approaching era of crisis and scarcity. International
cooperation is thus a critical – an indispensable – component in the
strategy of autonomy and integrity.”
Any expectation that sense will prevail, and that international
cooperation to reduce dependence on oil will succeed is, for the time
being at least, unrealistic. A French proposal for increases in petrol
tax to reduce demand put to the G7 meeting of finance ministers in
Washington is expected to be strongly resisted by the US which is not
only the world’s largest consumer of oil but has some of the lowest tax
rates on fuel in the developed world. It believes the markets can be
left to respond to higher prices.
For some an enforced decline in the output of oil and gas is seen as an
advantage, reducing greenhouse gas emissions and eventually leading to
a reversal of technological advance and the return to a more ‘benign’
non-industrial society. Such societies, relying on renewable energies
could only support a small fraction of the present population. To avoid
the social chaos that would then ensue there is no other alternative
but to seek to increase the only largescale non-fossil energy now
available, nuclear energy, to offset to the extent possible the decline
in oil.
The decline in oil production from the peak will be slow and
consumption could be restricted by the higher prices that will ensue.
There should then be time for newer reactor systems and more advanced
fuel cycles to be introduced enabling a smooth transition to a more
electricity based, nuclear powered, economy. DTI statistics show that
over 60% of petroleum, for all final users, is taken by road transport.
Moves to reduce petrol consumption by promoting electric vehicles and
switching freight transport to rail would be an obvious step.
Liability or asset
Faced with the two impending (but mutually opposing) problems of oil
depletion and climate change it is inevitable that the world will, if
present levels of population and social conditions are to be maitained,
seek a wider utilisation of nuclear power, the only secure, available
and consistant alternative energy source to fossil fuels. Any large
reduction in world population (urged and indeed hoped for by the
extremes of the Green movement) is unlikely to be adopted volutarily –
who would volunteer first? – and could only come from some massive
natural catastrophe, war, famine, or disease. One detailed assessments
has suggested that, relying only on the renewable energies – wind, wave
biomass etc – the UK could support a population of only 2 million, a
30-fold reduction from present levels.
Any wider use of nuclear energy would, in the longer term, require a
greater utilisation of fissile materials, uranium and thorium. In
present reactors (generations 1 and 2) with once-through uranium fuel
cycles the reject spent fuel still contains, typically, about 96% of
the original uranium together with 1% of plutonium and 3% of other
fission products. Uranium utilisation is now being improved in some
present reactors with the introduction of plutonium-uranium mixed oxide
(MOX) fuel cycles. In France for example Electricité de France (EdF) is
now reprocessing 1 150 tonnes of used fuel from its nuclear stations to
produce 8.5 tonnes of plutonium, which is to be immediately recycled as
mixed oxide fuel (MOX). It also recovers 815 tonnes of reprocessed
uranium (RepU), of which 650 tonnes is converted into stable oxide form
for long term storage as a strategic reserve for perhaps up to 250
years. One tonne of plutonium used in MOX fuels contains the same
amount of energy as 2 million tonnes of coal.
MOX fuel, which will be more widely used in Generation 3 rectors now
being built – the advanced BWR and PWR systems and the European EPR
under construction in Finland – only goes a small way towards
increasing uranium utilisation. A much greater utilisation will come
with the development of Generation 4 reactor systems which could lead
to self-sustaining fuel cycles.
In a press release at the end of February the DTI proudly announced
that the UK is to take part in an international collaboration on the
research and development on Generation IV Nuclear Energy Systems
together with Canada, France, Japan, and United States to produce
“advanced nuclear reactor systems that will offer a carbon free
international energy option for the future.” This follows the UK
participation in the Generation IV International Forum (GIF) first
established by the US in January 2000. The active membership also
includes South Korea, South Africa, Switzerland and Euratom. The
concepts to be studied include a sodium liquid metalcooled fast
reactor, very high temperature reactor, supercritical water-cooled
reactor, lead-alloy-cooled reactor, gas cooled fast reactor, and molten
salt reactor.
The aim is to prepare for a full deployment of the most promising
systems from around 2030, although the more mature concepts, the sodium
cooled fast reactor and the VHTR, on which a considerable development
effort has been carried out in the past could be available earlier;
there is the experience of the OECD high temperature Dragon reactor at
Winfrith in the UK and the numerous fast reactor prototypes including
Dounreay and the French superPhoenix station as well as the fast
reactors now operating and under construction in the USSR. Fast
reactors are also under active development in Japan and, using thorium
fuels, in India.
As the DTI admits the successful deployment of these sytems would
“support other aspects of the UK nuclear agenda including legacy waste
management.” It should also bring to an end any question of the
disposal of plutonium and uranium as waste. These materials would
become valuable nuclear fuels, in widspread use from 2030 owards.
Reprocessing and recycling of spent fuel will become a central part of
future fuel cycles. Any intentions of the DTI to close down the THORP
reprocessing plant at Sellafield would have to be reconsidered. BNFL
would have to change back to being a nuclear fuel company rather than a
decommissioning agency. There could also be a change of plan in
countries such as Finland and Sweden, where construction of facilities
for the burial of spent nuclear fuel is in hand.
There could even be a different attitude to the socalled high level
nuclear waste – the mix of radioactive isotopes formed in the fuel.
These are only wastes in the sense that we do not at present have a use
for them. With the advance of future technologies this could change.
Technetium-90 the radioactive isotope, whose presence in the past in
discharges from Sellafield caused so much distress in Norway and
Denmark, is now used as a valuable medical diagnostic tool for example
in bone scans to identify the spread of a cancer.
Cause for concern
The surprising and unexpected announcement (last month?) that Mike
Alexander the chief executive of British Energy had in effect been
dismissed must raise doubts about the future of the company. The
parallels with the decline of Ontario Hydro in Canada are getting too
close to be ignored. In a statement the chairman Adrian Montague
thanked Mr Alexander for seeing the company through the “complex and
difficult restructuring” and added “Now that he has laid the groundwork
for the operational and cultural rebuilding of British Energy, he has
decided to seek a new challenge elsewhere.” But it is said that
Mr Alexander has no new job to go to. He will however receive a pay-off
of about £425,000.
Exactly what the “operational and cultural rebuilding” referred to
amounts to is not clear. Under the previous management BE was a
profitable company until brought low with the change from the pool
pricing system to the NETA (New Energy Trading Arrangement) which
forced electricity prices down to below BE’s operating cost, although
they have now recovered.
Mr Alexander (56) who was recruited two years ago from the gas and
electricity distribution company Centrica has however had a difficult
time. Unplanned outages have reduced the output and hence increased
costs. And although the market price for electricity has risen sharply,
(more than doubled) BE has not been able to take full advantage of this
increase as it had entered into a longterm supply contracts with
Centrica at prices well below the market rate. It was said that the
greater need was for market security to offset the uncertainties of
NETA where failure to match the contracted supply could result in
severe financial penalties. With hindsight this might be seen as a
costly mis-judgement.
It is also said that the BE board agreed that company needed a chief
executive with direct experience of operating nuclear power stations
Alexander’s previous experience was entirely within the gas industry.
He has now been replaced by William Coley (61) who had been appointed
as a non-executive director of BE in 2003. Coley an American does
however have a lifetime experience in the power industry. He joined
Duke Power, a US utility company, as an engineer in 1966 and rose to
become Group President in 1997 before retiring in 2003 and taking up
his non-executive directorship with BE. Duke Power based in the
Carolina’s operates three nuclear stations, Catwaba 2258 MWe, Mc Guire
2200 MWe, Oconee 2538 MWe; eight coal fired stations; twelve small
hydro electric plants; and two CCGT stations.
This appointment now means that the two senior nuclear posts in BE are
held by Americans whose nuclear experience is with water, not
gas/graphite reactor systems. BE’s Chief Nuclear Officer, Roy Anderson,
previously with the Florida Power corporation joined the company in
July 2004 and was appointed to the Board in September 2004 (as far as
we know the expected approval of Mr Anderson’s appointment by the NII
is still awaited). The previous Board member for Generation, David
Gilchrist, resigned on 5th August 2004 following Mr Anderson’s
appointment.
With this resignation, and if the report attributed to Mike Alexander
that 70% of senior executives have been replaced and 50% of station
mangers are new to their posts is correct it seems that a majority of
senior staff with experience of the gas/graphite system have gone, and
they have now been followed by the chief executive – an upheaval in the
running of the company which suggests desperation or even panic.
Further indications of turmoil are seen in a 2004 survey which found
that “on average most people in the company are not very satisfied with
the state of play at the moment”. Writing in the BE Magazine for March
Alexander focussed on human performance errors and the resulting
production losses “the high level of significant effects due to human
performance causes remains stubbornly high”.
There must then be growing doubts over the company’s future. The
optimistic view is that the new management will revitalise the company,
but a more pessimistic outcome could be that the slow decline in
performance will continue. With high fixed costs, reduced output will
lead to higher operational costs and reduced profitability. There is no
danger of an immediate collapse, (although one or more of the worst
performing stations may be shut down); the Government cannot afford the
loss of the essential nuclear output which would be difficult and
costly to replace with gas-fired plant at a time when gas prices are
soaring, gas imports increasing, and concern over climate change from
burning fossil fuels is rising up the political agenda. But the
Government would then be able to congratulate itself on the
far-sightedness of the reconstruction package which would, if the need
arose, enable BE to continue operating, even at a loss, with its
payments for the decommissioning of reactors and other liabilities
being met from the Nuclear Liabilities Fund.
|
|
Last Updated ( Thursday, 01 September 2005 )
|
|
|
|
