Energy and Natural Resources

Energy and Natural ResourcesEnergy transitions and energy interdependenceEnergy transitions

Beginning with the industrial revolution, a trend emerged toward the greater consumption of higher quality fossil fuels and relative reduced use of renewable forms, such as wood and water, as an energy source.

These non renewable energy forms produced more energy per unit of weight, needed less upgrading and burned cleaner. The progression from the use of wood to coal, then oil and natural gas to uranium.In recent years we have entered yet another era, the beginning of a conversion back to renewable forms.

This transition that has just began may take a hundred years to complete.

During this period many short term aberrations in the use of various energy forms will occur ,depending on prices , government policy, international trade relations, domestic supplies and short falls, to name a few .

Whereas some areas, including the soviet union, are largely self-sufficient energy resources, many areas are notoriously deficient including Japan and western Europe.

This situation has created considerable tension in recent years as energy consumption level zoomed upward, prices increased, and nations began rethinking their energy priorities .Among the changes occurring has been the second coming of coal, in recognition of its relative abundance and flexible both for generating electricity and as a source of steam power.

Energy interdependenceThe interrelatedness of the present world system is well illustrated in the case of energy .Dependency relationship cut across planned, developed and developing nations .Disparities in energy consumption have already been mentioned. Because developing countries depend more than the world as a whole on high quality energy. (petroleum), and because most do not have their own supplies or the means to pay for them , they are very vulnerable to world energy supply and price changes .The growing debt burden facing third world countries in the early 1980s occurred largely because of energy price increases and associated problem related to higher interest rates .Third world countries originally shifted from wood to oil and gas consumption rather than evolving through on intermediate stage of dependence on coal because petroleum was relatively inexpensive ,transportation was easier and environmental problem could be avoided.But this shift became enormously expensive the price jumps of the late 1970s and foreign aid assistance could no longer be guaranteed to fill the gap.

Energy Production and ConsumptionEnergy production refers to forms of primary energy--petroleum (crude oil, natural gas liquids, and oil from nonconventional sources), natural gas, solid fuels (coal, and other derived fuels), and combustible renewable and waste and primary electricity, all converted into oil equivalents.On the other hand energy production means making utility suitable for human activities. Such as, Extraction of resources, modifying resources, refining oil, gasification of natural gas and coal etc.

Energy ConsumptionAmount of energy consumed in a process or systems or by an organization or society.

Energy consumption means using natural resources by human for many purposes.such as; using coal to make fire and electricity, natural gas using transportation and making electricity.

Energy Production and Consumption LevelWorld energy production nearly quadrupled in the 30 years between 1950 and 1980. Per capita consumption is another matter. Although consumption doubled in this time period in the world scale a low level 1950 that they still lag behind the developed world dramatically. Developed areas consumed 15 times as much energy on a per capita basis in 1980 than did the third world . Planned economics operate at a consumption level one third that of the developed world.

In the relatively affluent nations of Europe, Australia, New Zealand and Japan, each person consumes equivalent of 5 tons or more of coal a year.Americans and Canadians consume more than twice this amount, about 11 tons of coal equivalent annually. In most developing countries consumption of conventional commercial fuels, such as oil, natural gas, coal and electricity, is barely a quarter ton of coal equivalent annually.In 1980, 86 percent of energy production in the developing nations occurred.The problem with this one sided output is that it is very expensive fuel and not evenly distributed.Most is found in the middle east and it is not readily available to other third-world countries, owing to financial constraints.

Petroleum produced in the developing countries is primarily exported to the developed world.

By comparison, the developed world consumes far more energy and has a more balanced production spread among solid, liquid and gas energy sources, with each type contributing nearly equal shares.Moreover, the developed world has excellent reserves of solid fuels(particularly coal) which will become increasingly important in the near term.

The planned economics are also better positioned for the future than are the developing countries.

Coal TradeCoal is one of the worlds most important source of energy. It has been the worlds fastest growing energy source. The world today depends on the coal trade and use. Actually , world production level of coal have grown consistently since the early nineteenth century. The world coal market is a global industry with coal produced in more than 50 countries and consumed in over 70 countries.Coal is traded all over the world, with coal shipped huge distances by sea to reach markets.Over the last twenty years:seaborne trade in steam coal has increased on average by about 7% each yearseaborne coking coal trade has increased by 1.6% a year.Overall international trade in coal reached 1142Mt in 2011; while this is a significant amount of coal it still only accounts for about 16% of total coal consumed. Most coal is used in the country in which it is produced.Transportation costs account for a large share of the total delivered price of coal, therefore international trade in steam coal is effectively divided into two regional markets

1. The Atlantic market, made up of importing countries in Western Europe, notably the UK, Germany and Spain.2. The Pacific market, which consists of developing and OECD Asian importers, notably Japan, Korea and Chinese Taipei. The Pacific market currently accounts for about 57% of world seaborne steam coal trade.Indonesia has overtaken Australia as worlds largest coal exporter. It exported over 300Mt of coal in 2011.Australia remains the world's largest supplier of coking coal, accounting for roughly 50% of world exports.

Total of whichSteamCokingIndonesia383Mt380Mt3MtAustralia301Mt159Mt142MtRussia134Mt116Mt18MtUSA114Mt51Mt63MtColombia82Mt82Mt0MtSouth Africa74Mt74Mt0MtCanada35Mt4Mt31MtTop Coal Exporters (2012e)Total of whichSteamCokingPR China289Mt218Mt71MtJapan184Mt132Mt52MtIndia160Mt123Mt37MtSouth Korea125Mt94Mt31MtChinese Tapei64Mt56Mt8MtGermany45Mt36Mt9MtUK45Mt40Mt5MtTop Coal Importers (2012e)Sources: BP, IEA, World Steel Association, WEC(e = estimated) (Mt = Million tonnes)The coal trading association (CTA) is the only trade association dedicated exclusively to the needs of trading. International coal trade with traditional , domestic coal markets with the imports increasing in many coal producing. The world biggest coal consumer China , The king of coal trade John Buddle. Europe is the largest and most liquid of the global coal trading markets said by Peabody president chief executive . The United States and several other nations began exporting coal in the late 1800s.Presently the largest share of coal consumption goes to electrical power generation . Over one third of world coal imports flow to western Europe . Western Europe , Japan and Canada together import over half the coal involved in world trade .

Growth in the demand for coal by the residential and commercial markets will be marginal in the future . One bright spot in this area relates to the trend in some parts of Europe .It is more popular trend toward the use of electric heat provided by heat pumps for which the electricity will be provided by coal . Solar applications for home heating particularly passive solar water heating will also increase.

Water resourcesWater resources are sources of water that are useful or potentially useful. Uses of water include agricultural, industrial, household, recreational and environmental activities. The majority of human uses require fresh water.97 percent of the water on the Earth is salt water and only three percent is fresh water; slightly over two thirds of this is frozen in glaciers and polar ice caps. The remaining unfrozen freshwater is found mainly as groundwater, with only a small fraction present above ground or in the air.

Fresh water is a renewable resource, yet the world's supply of groundwater is steadily decreasing, with depletion occurring most prominently in Asia and North America, although it is still unclear how much natural renewal balances this usage, and whether ecosystems are threatened.

The framework for allocating water resources to water users (where such a framework exists) is known as water rights.

A graphical distribution of the locations of water on Earth. Only 3% of the earth's water is fresh water. Most of it in icecaps and glaciers (69%) and groundwater (30%), while all lakes, rivers and swamps combined only account for a small fraction of 0.3% of the Earth's total freshwater reserves.Water Power

Water power mechanical energy derived from falling or flowing water. e.g. rivers, streams and overflow of dams. Water has no capacity to power by its motion usually by falling vertically.1. The power latent in a dynamic on static head of water as used to drive machinery, especially for generating electricity.2. A source of such power, such as a drop in the level of a river etc.3. The night to the use of water for such a purpose as possessed by a water mill.

Source of fresh water:

Surface water

Under river flow

Ground water

Frozen water

Desalination

Uses of water

AgriculturalIt is estimated that 70% of worldwide water is used for irrigationIndustrialIt is estimated that 22% of worldwide water is used in industryHousehold It is estimated that 8% of worldwide water use is for household purposes

Recreation Recreational water use is usually a very small but growing percentage of total water use.

EnvironmentalExplicit environment water use is also a very small but growing percentage of total water use

Oil production regions According to International Energy Agency (IEA), in 2011 the top ten oil-producing countries accounted for over 63% of the world's oil production.In 2011 the world oil production was 4,011 Mt demonstrating an annually rising trend in oil productionAs of November 2012, Russia produced 10.9 million barrels of crude per day, while Saudi Arabia produced 9.9 million barrels.

Top oil producers: According to IEA top 10 oil producer countries produced over 64% of the world oil production in 2012. The top 10 oil producers in 2012Russia 544 Mt (13%), Saudi Arabia 520 Mt (13%), United States 387 Mt (9%), China 206 Mt (5%), Iran 186 Mt (4%), Canada 182 Mt (4%), United Arab Emirates 163 Mt (4%), Venezuela 162 Mt (4%), Kuwait 152 Mt (4%) and Iraq 148 Mt (4%). In 2012 total oil production was 4,142 Mt.

Oil trade movements

Global oil trade in 2013 grew by 1.7% or 0.9 million b/d - among importers, growth in Europe and emerging economies more than offset declines in the US and JapanAt 55.7 million b/d, trade accounted for 61.0% of global consumption, up from 58.3% a decade ago. US net imports fell by 1.4 million b/d to 6.5 million b/d just over half the level of net imports seen in 2005 and the lowest level since 1988.

OPEC

Organization of the Petroleum Exporting Countries (OPEC) It is a permanent, international organization headquartered in Vienna, Austria, was established in Baghdad, Iraq on 1014 September 1960.Its mandate is to "coordinate and unify the petroleum policies" of its members and to "ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry.In 2014 OPEC comprised twelve members: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. According to the United States Energy Information Administration (EIA), OPEC crude oil production is an important factor affecting global oil prices. OPEC sets production targets for its member nations and generally, when OPEC production targets are reduced, oil prices increase. Projections of changes in Saudi production result in changes in the price of benchmark crude oilsOPEC was formed in 1960 when the international oil market was largely dominated by a group of multinational companies known as the 'seven sisters'. The formation of OPEC represented a collective act of sovereignty by oil exporting nations, and marked a turning point in state control over natural resources.In the 1960s OPEC ensured that oil companies could not unilaterally cut prices.In December 2014, OPEC and the oil men were named in the top 10 most influential people in the shipping industry by Lloyds.

Seven sisters(oil companies)

The group comprised

Anglo-Persian Oil Company (now BP); Gulf Oil, Standard Oil of California (SoCal), Texaco (now Chevron); Royal Dutch Shell; Standard Oil of New Jersey (Esso) and Standard Oil Company of New York (Socony) (now ExxonMobil).

CartelIn economics, a cartel is an agreement between competing firms to control prices or exclude entry of a new competitor in a market.

It is a formal organization of sellers or buyers that agree to fix selling prices, purchase prices, or reduce production using a variety of tactics.Cartels usually arise in an oligopolistic industry, where the number of sellers is small or sales are highly concentrated and the products being traded are usually commodities. Cartel members may agree on such matters as setting minimum or target prices (price fixing), reducing total industry output, fixing market shares, allocating customers, allocating territories, bid rigging, establishment of common sales agencies, altering the conditions of sale, or combination of these. The aim of such collusion (also called the cartel agreement) is to increase individual members profits by reducing competition. If the cartelists do not agree on market shares, they must have a plan to share the extra monopoly profits generated by the cartel.Price shocks and recessionUntil the early 1970s the price of crude oil had remained relatively stable since the 1920s in 1929, for example , the U.S. price was $1.53 a barrel .

The price fell during the depression to $0.99 a barrel, where it remained during the 1930s . Price did not strengthen again until the 1950s. Price discounting soon returned as production and surpluses mounted. Prices remained stable again from 1960 through 1971 .In the early 1970s OPEC nations becomes the source for over 85 percent of petroleum exports .This situation provided the basis for extracting higher prices.

In 1971 OPEC raised the crude price 30 percent from the previous base of about $1.50. The price used here are for so-called Arab light crude. Sometimes called maker oil because of its use as a benchmark price. The Tehran Agreement which established this raise also provided for future price hikes . Even bolder action followed when OPEC countries raised fourfold in the October 1973- January 1974 period. Later in 1974 OPEC nations raised tax and royalty rates. Other increases followed.A 10 percent increase came in October 1975, and in 1977 OPEC introduced a two-tier pricing system . At that point the price was $11.51 a barrel. Following more small hikes in 1976 and 1977 , a 15 percent increase for 1979 was announced in December 1978 . In April 1979 the price jump raised the price to $14.55 . By June a barrel of crude sold for $18.00, followed by another jump to $24.00 later in 1979.The dramatic price increase initiatives for OPEC crude caused retail prices to sky rocked world wide . The increases continued . By May 1980 the price was increased to $28.00 .But breaks in OPEC unity also began to occur at that time . Unified pricing became difficult to enforce and discounting increased as intra-OPEC rivalries mounted .Attempts to overcome this problem include establishing production ceiling quotes among OPEC nations . This last round of increase developed at the time of the Iranian revolution in 1978-1979, which led to export stoppages by the end of 1978. Those interruption led to shortages around the world even though shipments began again in the spring of 1979 when a new Iranian government came to power . This situation encouraged OPEC member countries again to accelerate price increase.

Oil price in many countries where higher in 1980 than the middle east prices.Western Europe had the highest retained oil prices due to heavy government taxation. Prices of $74.00 a barrel occurred in Europe . Where a tax rate of up to 39 percent also resulted in the highest retail prices in the world . In Japan , refined crude sold for $55.00 a barrel . also due to heavy taxation. In the United States controls traditionally kept the price of domestic crude lower than world prices , giving the country lower retail pricesMexico also experienced serious setbacks as a result of the worldwide recession in the early 1980s. High interest rates and the largest public and private debt in the world created a serious strain on the economy. High interest rates nearly bankrupted the country. This problem together with a 60 percent inflation rate and a 40 percent unemployed level led to a severe crisis. A devaluation of 45 percent occurred in February 1982 followed by another smaller devaluation later that summer.

Natural gas

Natural gas is a fossil fuel formed when layers of buried plants, gases, and animals are exposed to intense heat and pressure over thousands of years.

The energy that the plants originally obtained from the sun is stored in the form of chemical bonds in natural gas.

Natural gas is a nonrenewable resource because it cannot be replenished on a human time frame.

Natural gas is a hydrocarbon gas mixture consisting primarily of methane, but commonly includes varying amounts of other higher alkanes and sometimes a usually lesser percentage of carbon dioxide, nitrogen, and/or hydrogen sulfide. Natural gas is an energy source often used for heating, cooking, and electricity generation.

It is also used as fuel for vehicles and as a chemical feedstock in the manufacture of plastics and other commercially important organic chemicals.Top 10 Natural gas producers

The International Energy Agency top 10 natural gas producers in 2011 were (66.7% of total) (bcm): 1) Russia 677 (20.0%), 2) United States 651 (19.2%), 3) Canada 160 (4.7%), 4) Qatar 151 (4.5%), 5) Iran 149 (4.4%), 6) Norway 106 (3.1%), 7) China 103 (3.0%), 8) Saudi Arabia 92 (2.7%), 9) Indonesia 92 (2.7%), 10) Netherlands 81 (2.4%) and World 3 388 (100%)International trade of natural gasThe introduction of liquefied natural gas (LNG) as an option for international trade has created a market for natural gas where global prices may eventually be differentiated by the transportation costs between world regions. LNGs trade share in 2013 was only about 30 percent of the total global trade in natural gas, but use of LNG is on the rise with numerous projects in planning or construction stages.

Considering LNG projects that are under construction, planned, or proposed, we provide an analysis of LNG prospects for the next decade.

LNG has substantial unexploited potential in terms of reducing capital requirements (especially for liquefaction projects), expanding new technology frontiers (e.g. floating LNG), serving new markets, and establishing new pricing schemes that better reflect the fundamentals of supply and demand.

Trade volumes are projected to increase from about 240 Mt LNG in 2013 to about 340360 Mt LNG in 2021.

Despite potential challenges from weaker demand in Asia, longer-term projections show that LNG trade is bound to show substantial growth, partially due to geopolitical tensions that might increase LNG flows to Europe.

However, these perspectives largely depend on demand choices, the availability and evolution of alternative fuels (e.g. renewable energies), andmost importantlypolitical decisions framing economic behavior.