By Eric Reguly, UK Globe and Mail

Russia’s adventure in Georgia has been described as a “warlet,” a contained firing spree that wound up and down within a week. But to Europe’s energy markets, it was the equivalent of wide-scale carpet bombing. With the North Sea oil and natural gas fields running out of puff, Europe, in particular the European Union, is more dependent than ever on imported energy. The biggest single supplier is Russia, whose pipelines snake across Ukraine, Belarus and Moldova before poking into central and western Europe.

Russia’s energy supplies are cherished. Germany, France and Italy have almost no oil and gas of their own. Russia’s Gazprom, the world’s biggest gas company, supplies 40 per cent or more of Europe’s gas imports. The company, controlled by the Russian state and led by Dmitry Medvedev before he became Russia’s President, is the equivalent of a one-country gas OPEC.

By 2020, Gazprom’s exports to the EU are expected to rise by more than 50 per cent. The company is unafraid to wield its mighty power. For four
days in 2006, it stopped supplying gas to the Ukrainian market because of a contract dispute. Since keeping the lights on is the minimum requirement to stay elected, Europe’s governments were doing two things. They were buying every molecule of Russian energy available and were working hard to ensure that Russia alone did not control the entire show.

Enter Georgia. The pro-Western country became a convenient bit of non-Russian real estate on which to plunk pipelines to funnel non-Russian (and non-OPEC) oil and gas to the outside world. No fewer than three pipelines originating in Azerbaijan cross Georgian territory. One of the trio, called BTE, was due for a massively enlarged role in the future. The BTE pipeline currently takes gas from Azerbaijan through Georgia and into central Turkey. An extension, known as the Nabucco project, would take the gas from there on to Austria, making it a hefty counterweight to Russian gas exports. Nabucco is backed by the EU and the United States and counts German power utility RWE among it biggest shareholders.

Thanks to Russia’s invasion of Georgia on Aug. 8, Georgia’s role as a secure energy transit point to Europe has been shattered. Russia has made clear it can make Georgia a puppet state if it wishes, and will almost certainly recognize the independence of the breakaway region of South Ossetia. Suddenly the risk premiums on oil and gas pipelines that pass through Georgian soil went through the roof. Some analysts are already predicting the death of the Nabucco project, whose construction was to begin in 2010. So much for Europe’s energy diversification plans. New, independent pipelines from Central Asia seem like a lost cause. With Georgia reined in, Moscow’s grip on energy supplies to Europe must be close to complete. You have to wonder whether a Kremlin filing cabinet contains a plan that had laid out this very scenario a decade ago. Read more here. See the timely book “Soviet to Putin and Back, The Dominance of Energy in Today’s Russia” here and attend suthor Michael economides talk here.

By Roy Innis and Newt Gingrich

Gasoline prices have doubled since Nancy Pelosi became Speaker of the House. Electricity and natural gas prices have skyrocketed. Energy lock-ups continue to anger Americans and put anti-drilling politicians on the defensive. The American public is increasingly demanding expanded domestic drilling - and disgusted by the Democrats and radical environmentalists’ immoral war on poor families. As Democrat leaders and environmentalists continue to block US energy development, their assertion that oil companies are “sitting on” 68 million acres of “idle” leases often leads their rhetoric.

Senator Jeff Bingaman, Congressman Nick Rahall, House Speaker Nancy Pelosi and other members of Congress who oppose producing more American oil are in a bind.  They know voters are hurting from high gas prices and overwhelmingly want the government to allow more American oil production. But they can’t side with the American people and risk upsetting their left-wing base. So they needed a way to make us think they support more drilling - while effectively preventing us from ever drilling a single new well.

They think they’ve found a solution: a proposed “use it or lose it” law on federal leases for energy exploration. Bingaman, Rahall and fellow drilling opponents accuse the oil industry of “sitting on” 68 million acres of “non-producing” leased land. They want to force energy companies to “use” this leased land within ten years - or lose all exploration and drilling rights.

America can only hope the proposed law is Bingaman and Rahall’s clumsy attempt at political jujitsu. The alternative is that the politicians in charge of committees that determine US energy policy are confused and ludicrously disconnected from reality. 

First, lease agreements already require that leased land be used in a timely manner. The 1992 Comprehensive Energy Policy Act requires energy companies to comply with lease provisions, and explore expeditiously, or risk forfeiture of the lease. So the Bingaman-Rahall “solution” effectively duplicates current law. Second, and more disturbingly, Bingaman and Rahall’s groundless accusation and proposed legislation rely on the absurd assumption that every acre of land leased by the government contains oil. Obviously, that’s not the case.

The truth is, finding oil is a long, complex, cumbersome, expensive process. It starts with an idea - about what kinds of geologic structures are likely to hold this vital resource. Based on that idea, companies purchase leases: agreements that allow them to test their ideas, and hopefully find and produce oil and gas from leased properties. Then geologists look at existing data and conduct seismic, magnetic and geophysical tests of the leased areas. They create detailed 3-D computer models of what subsurface rock formations look like, and whether there might be any “traps” that could hold petroleum.

Most of the time, all this painstaking, expensive initial analysis concludes that the likelihood is too small to justify drilling an exploratory well, since the cost of a single well can run $1-5 million onshore, and $25-100 million in deep offshore waters. Only one of three onshore wells finds oil or gas in sufficient quantities to produce it profitably; in deep water, only one in five wells is commercial. Thus, only a small percentage of the leased acres end up producing oil.

This is important because it means most of those 68 million acres Bingaman and Rahall want to force oil companies to drill actually don’t have enough oil to make it worth drilling. Either they know that, and are trying to deceive us; or they don’t know it, because they haven’t done their homework. Read more here how politicians and environmental groups are putting obstacles in the way of getting at the ready and ample sourcs of energy readily available to us here.

By Anthony Watts, Watts Up With That

Trend of atmospheric oxygen (O2) from Cape Grim, Tasmania. This looks serious, right? Read on.

FOREWORD: I had to chuckle at this. This is the sort of story I would expect in the supermarket tabloids next to a picture of Bat Boy. For the UK Guardian to say there is a “oxygen crisis”, is not only ignorant of the facts, but simple fear mongering riding on the coattails of the “CO2 crisis”. Read the article below, and then read the reasons why myself and others are saying this story is worry over nothing. Physicist Lubos Motl also takes this article and the author to task, here.

The article in question “Could the decline of oxygen in the atmosphere undermine our health and threaten human survival?” by Peter Tatchell guardian.co.uk, Wednesday August 13 2008 tells us “The rise in carbon dioxide emissions is big news. It is prompting action to reverse global warming. But little or no attention is being paid to the long-term fall in oxygen concentrations and its knock-on effects. Compared to prehistoric times, the level of oxygen in the earth’s atmosphere has declined by over a third and in polluted cities the decline may be more than 50%. This change in the makeup of the air we breathe has potentially serious implications for our health. Indeed, it could ultimately threaten the survival of human life on earth, according to Roddy Newman, who is drafting a new book, The Oxygen Crisis.”

Anthony notes: Predictably, once again mankind gets the blame in the article: “Much of this recent, accelerated change is down to human activity, notably the industrial revolution and the burning of fossil fuels.” From a mailing list I subscribe to, there’s been a number of comments made about this story. Read those responses here.

Anthony concludes with the remarks by Australia’s Ray Langenfelds from CSIRO Atmospheric Research who has this to say about the Cape Grim O2 measurement. “The changes we are measuring represent just a tiny fraction of the total amount of oxygen in our air - 20.95 percent by volume. The oxygen reduction is just 0.03 percent in the past 20 years and has no impact on our breathing,” Langenfelds. “Typical oxygen fluctuations indoors or in city air would be far greater than this.”

So there you have it. So much for the “oxygen crisis”. I really wish the media would do a better job of researching and reporting science stories. This example from the Guardian shows how bad science and bad reporting combine to create fear mongering.

See also Alan Caruba’s take on Inventing the Next Phony Environmental Crisis here.