What's In It for China?

According to the report, the intruders used widely available attack methods known as SQL injection and spear phishing to compromise their targets. Once they gained access to computers on internal company networks, they would install remote administration software that gave them complete control of those systems. That made it possible for the intruders to search for documents as well as stage attacks on other computers connected to corporate networks.

In addition to their parallels to the Google attacks of last year, the intrusions resembled a Chinese-based electronic espionage network that was found in 2009 and named GhostNet. In that case, researchers at the Munk Center for International Studies at the University of Toronto uncovered an elaborate network aimed at government computers as well as those of nongovernmental organizations like the office of the Dalai Lama. The researchers concluded that the control servers of the attack system were based on the island of Hainan, which is part of China. _NYT

It is bad enough that tin-pot oil dictatorships such as Venezuela and Russa systematically lure international oil&gas companies into partnerships -- only to nationalise all of the multinational's in-country assets. Over and over again. Now China has been caught red-handed attempting to use computer hacking tools to disrupt multinational oil & gas operations. What is in it for the Chinese?

At least five multinational oil and gas companies suffered computer network intrusions from a persistent group of computer hackers based in China, according to a report released Wednesday night by a Silicon Valley computer security firm.

...Operating from what was a base apparently in Beijing, the intruders established control servers in the United States and Netherlands to break into computers in Kazakhstan, Taiwan, Greece and the United States, according to a report, “Global Energy Cyberattacks: ‘Night Dragon.’ ”

The focus of the intrusions was on oil and gas field production systems as well as financial documents related to field exploration and bidding for new oil and gas leases, according to the report. The attackers also stole information related to industrial control systems, the researchers noted, but no efforts to tamper with these systems were observed.

McAfee executives declined to name the victim companies, citing nondisclosure agreements it signed before being hired to patch the vulnerabilities revealed by the intrusions. Last year, when Google announced that intellectual property had been stolen by Chinese intruders, it expressed frustration that while it had observed break-ins at a variety of other United States companies, virtually none of the other companies were willing to acknowledge that they had been compromised. _NYT

The opportunities for western oil&gas companies seem to be expanding almost exponentially, given new drilling and exploration techniques. Oil & gas production in the US and elsewhere around the world are set to rise as a result, with much growth in exploration and production sectors.

What can China expect to gain from disrupting western and multinational oil & gas enterprises? Is is nothing more than a show of force projection, far beyond Chinese borders? Is it a warning? Or is it rehearsal and preparation for a more integrated effort to disrupt western energy supplies and critical information systems?

China is known for its industrial sabotage, its product counterfeiting, its outright theft of technologies from partners, and its iron-fisted control over information sources and expression inside its borders. Is China experimenting with similar exertion of control over global information streamways, with a hoped-for domination over energy, financial, information, and political flow of data?

Clearly, with China one must never let down his guard.

Cross-posted to Al Fin Energy

More: Brian Wang looks at China's ambitious plans for innovative -- perhaps technologically revolutionary -- change over the next decade. According to Brian, "Special emphasis is on four key areas, namely space science, information technology, energy and health." In addition, China is looking at US$ 1.5 trillion in investments into other potentially disruptive technologies.

The western world runs on high-speed information. Were China to learn to tap into, control, or largely disrupt the massive flow of information which forms the foundation of modern western prosperity, the entire global future would be up for grabs.

Peak Oil Keeps Slipping, Slipping.....Into the Future...

Important Note 3 Feb 2011: The author of the article quoted below is Jeremy Bowden, a writer and analyst who specialises in energy and other topics.

“The estimates for how much oil there is in the world continue to increase,” according to William M Colton, Exxon Mobil’s vice president for corporate strategic planning. “There’s enough oil to supply the world’s needs as far as anyone can see.” Just as prices rose sharply and peak oil concerns re-emerged, huge deep water oil fields were found off the coasts of Brazil and Africa. Higher prices also stimulated “unconventional” oil production from massive Canadian oil sands projects, which now provide North America with more oil than Saudi Arabia. In 2009, the United States increased domestic oil production for the first time in decades. _Source

Image Source
Much of the fashionable panic surrounding "peak oil DOOM!" is reminiscent of the catastrophic circus that surrounded Y2K. While it is true that the Y2K problem required the attention and effort of thousands of professionals to solve, the same thing is obviously true for the problem of providing ongoing energy supplies in the face of rising global populations and expectations. Maintaining reliable energy supplies is an ongoing problem which is solvable as appropriate effort is applied.

...at least one positive development has resulted from the sharp rise in oil prices of recent years. The influx of capital to oil companies from high prices, combined with expectations that prices are unlikely to fall very far, has boosted investment in oil exploration and production, especially in what the industry terms “frontier” areas – namely enhanced oil recovery (more oil from existing fields), the deep (or ultra-deep) water and the Arctic. Massive new reserves have been identified, proven up, and brought to production – whilst reserves previously considered impossible to reach are now no more than a horizontal drilling or steam injection technique away. All this should help ensure supply can meet global demand for far longer than was expected just a few years ago – pushing back the oft-cited “peak oil” date by decades.

...most of this newly-discovered potential avoids the above-ground risks and cartel policies that constrain oil production in most of the world’s largest proven deposits – the bulk of which lie in Organisation of Petroleum Exporting Countries (OPEC), or are controlled by national oil companies in central Asia and Russia. It is the technical expertise and project management skills of the most dynamic multinational and independent oil companies that hold the key to these new hard-to-get-at reserves, rather than the whims of Arab dictators or the level of OPEC budget deficits. A similar, but even more dramatic change has taken place with gas, where new techniques mean huge “tight” gas deposits present in many rocks are now recoverable. The International Energy Agency (IEA) recently estimated that natural gas reserves could last twice as long as previously expected – up to 250 years.

...Some experts claim enhanced oil recovery (EOR) could potentially double the amount of oil that can be extracted globally. Most fields only recover just over a half of the original oil in place and sometimes less than a third. With modern techniques field development should be able to extract a far higher proportion of the oil, while more and more oil can be made recoverable from existing wells.

...Faced with falling reserves and barred from acquiring fresh production in areas such as the Middle East, international oil majors began to search for new large deposits in the deep waters of the Gulf of Mexico in the 1990s – on the back of a proven drilling record in shallower Gulf areas, and in the North Sea. Exploration and drilling below 10,000ft of water and through miles of hard rock, thick salt and tightly-packed sands required the development of supercomputers and three-dimensional imaging techniques as well as equipment that could withstand the heat and pressures common at such depths, not to mention submarine robots to make repairs.

That technology is now available to drill in other areas such as the Arctic and elsewhere...Similar advances in technology have opened up huge unconventional oil shale resources in Canada. ...the Bakken shale field is now the country’s fastest-growing major oil field [in the US]. Production has reached about 350,000bpd, from 100,000bpd a decade ago. In a recent report, consultancy firm PFC Energy projected production would climb to 450,000bpd by 2013. _Industrial Fuels and Power

Meanwhile, Exxon Mobil forecasts that by 2030, gas will surpass coal as an energy source.

Many analysts are expecting a lot of new oil supplies from multiple locations around the globe.

Clever technologists are finding ways to make every barrel of oil go that much further. This is true in many ways, not just in terms of improved efficiency at the consumer level.

The concept of "peak oil" is heavily dependent upon unknown factors which could change at any time. Only a fool would maintain a posture of predictive certainty in that atmosphere of uncertainy and rapid change.

This article is excerpted from an earlier article published at Al Fin Energy

Contrary to Peak Oil Orthodoxy, Oil Industry Reacts to Prices

Khaled Al Buraik, executive director of the government-controlled Saudi Aramco, announced that new technology could add as much as 2 trillion barrels of oil to global proved reserves.

Although the current global oil reserves in place are estimated at 14 trillion barrels, only about 1.2 trillion can be recovered, said Khaled Al Buraik, executive director of the government-controlled Saudi Aramco.

Speaking at a seminar in Riyadh, Buraik said the quantity of oil extracted so far worldwide does not exceed one trillion barrels.

"Advanced technology in hydrocarbon production could add around two trillion barrels to the existing proven crude reserves in the near future," he said in his address, published by Saudi newspapers on Monday.

"The real challenge for scientists and engineers is how to access to nearly 11.8 trillion barrels to meet the growing world needs of hydrocarbon in the future...what is needed now is more effort by scientists and specialists in this field to invent new methods and very advanced technology." _Zawya

Higher oil prices are spurring oil companies to increase their spending for exploration and production.

Brazil's rich offshore reserves keep growing larger

Brazil announces ambitious new underwater technologies to provide easier access to its vast undersea oil wealth

Liquified Natural Gas (LNG) is a growing component of national energy budgets from Britain to Japan, as a compensatory move against higher oil prices.

A new and ambitious approach to increasing the value of cheap, abundant natural gas, is being advanced by San Francisco startup Siluria Technologies.

Siluria has decided not to go after gasoline or diesel but instead to produce ethylene, a building block for plastics, fertilizers, pesticides, beverage bottles, tires and lots of other materials that are now made from oil. Ethylene can also be turned into alkanes, a class of hydrocarbons that are a component of gasoline.

A more important difference, though, could be the energy needed for conversion from the natural hydrocarbon molecule, methane, to the synthetic one, ethylene. In Siluria’s process, using a new kind of catalyst, that conversion gives off heat instead of requiring it. _NYT

I will present more information on Siluria in the future.

As you can see, advancing technologies will bring about both new proved oil reserves and production, AND new substitutes for crude oil in both fuels and chemical uses. Gas to liquids and LNG are certain to achieve traction for significant scaleup within the next 2 years.

It will take about 20 years for advanced biofuels and small modular fission reactors to get approved, licensed, and scaled up to provide significant quantities of energy and fuels. In the meantime, unconventional hydrocarbons such as shale gas, oil sands, coal to liquids, and heavy oils will scale up to ease the transition. If needed, oil shales and methane clathrates can provide more hydrocarbon energy than all other resources put together.

Taken from an earlier posting at Al Fin Energy

US Oil Production Gearing Up

WSJ
The de facto Obama moratorium on oil well drilling in the Gulf of Mexico has spurred new exploration and production on the US mainland. Local economies are beginning to experience boom times never experienced before. It is a phenomenon that may well spread across the US, as the oil & gas mania locates useful hydrocarbons wherever they are to be found.

For much of this decade, energy companies pioneered new drilling technologies that allowed them to recover natural gas from a subterranean rock called shale. By drilling down and then out laterally, companies were able to exploit greater areas of the shale. And by injecting massive doses of water, sand and chemicals into the ground, they could crack open the gas-bearing rocks, allowing gas to flow to the surface.

...The shale boom won't begin to end American dependence on imported oil, but industry experts say it is driving a significant and potentially enduring shift in the way oil is produced domestically.

"It's a game-changer for U.S. oil production," said Bill Durbin, head of global markets research at Wood Mackenzie. "The U.S. has always been perceived to be a very mature oil province with relatively little prospect for growth. Now we're seeing the declines in production being arrested by the increase in unconventional oil."

Nationally, the balance between oil and gas exploration onshore has tilted heavily toward oil. The number of oil-seeking rigs has nearly tripled since June 2009, and now makes up 42% of all rigs in use, a prevalence not seen since 1997, according to data compiled by oilfield-services company Baker Hughes Inc.

Among states, Texas has seen the greatest increase of rigs in the past year, adding 300, a 73% increase. North Dakota added 83 rigs in the last year, Oklahoma gained 71, and Colorado picked up 30. Analysts at IHS Cambridge Energy Research Associates have identified 20 significant shale prospects across North America.

Industry executives and analysts say the growth is likely to continue, at least as long as oil prices remain over $70 a barrel. _WSJ

Yes, this boom is likely to continue for as long as oil prices remain over $70 a barrel. In other words, as long as demand continues, the supplies will be located -- sometimes where you least expect them.

The Obama - Holdren - Salazar - Boxer coalition of energy starvation will not control the US government indefinitely. When the left-Luddite Malthusians are finally swept from power, a wider array of energy options will be placed upon the table for consideration.

When the energy markets are opened up, it is possible that demand will be insufficient to maintain oil prices at current inflated levels. Sure, the value of the dollar will continue to decline as long as US debt expands exponentially -- which drives the price of commodities higher, when priced in US dollars.

But other, more stable measures of value will come into more widespread use. When priced in more stable currencies, the price of oil is likely to fall in the long run, rather than rise.

Cross published to Al Fin Energy

Brian Wang has more on North Dakota, Alberta, and large global shale energy plays

More 14Nov10: Tim Worstall makes a very good point about the proliferation and expansion of new production technologies.   The same type of rapid expansion of exploitability of resources occurs on many levels -- from the most rarified and abstract theory to the most rudimentary and basic in-the-field innovation. Between those extremes lies a multitude of fertile levels for innovative change.  Here is an interesting article that Tim points to, reinforcing Brain Wang's point above.

Reporting in the journal Nature, scientists from Royal Holloway, University of London and the Institut de Ciencies del Mar (Spanish Research Council) have revealed a new model that explains how continents thin as well as helping to more accurately predict the location of hydrocarbons such as oil and gas. _SD

via New Energy and Fuel
A new model of continental thinning, faulting, and re-forming, promises to provide new ways to locate vast new petroleum reserves. Scientists at institutions in the UK and Spain hopes to provide petroleum prospectors with new conceptual tools for determining the most likely areas to find the billions of years worth of hidden hydrocarbons.

The new model is based on high-resolution images of the tectonic structure of the crust at such margins. These images are obtained using elaborate seismic methods, which give a picture of the crust below the oceans, showing where faults and sediments are.

The new model has important implications for the formation of hydrocarbon resources, plus it offer a new view of the style of faulting during continental thinning, sediment deposition and potentially for the opening of oceanic gateways and oceanic circulation. _BrianWestenhaus

The geologic sciences are still quite young, sharpening their teeth on ideas that take into account the antiquity of the planet, the incessant nature of geologic processes, and of microbial and photosynthetic organisms which have thrust their way into the midst of epochal geologic upheaval.

Older geologic theories focused upon easily accessible sediments from relatively recent geologic regions -- areas laid down millions or dozens of millions of years ago as opposed to the billions of years that photosynthesis has been converting CO2 to organic carbon. Exceptions to conventional theory have popped up from time to time, but have been largely ignored as anomalous.

As large international companies get shut out of the richest oil reserves of OPEC nations and corrupt, unreliable nations such as Russia, they are forced to look for oil wherever it may be found. Continental shelves off large rivers such as the Mississippi and the Amazon are likely places for grabbing oil dozens of millions of years old. But to find the truly old oil and hydrocarbon, some new ideas will be necessary -- and will require testing. All of that takes time, which the big international oil companies are running out of, caught between political peak oil (Obama, Boxer, Salazar, etc.) and sovereign oil companies that nationalise the valuable assets and work of multi-nationals at the least opportunity.

Oil From Ancient Seas: Where Ahoy?

Oil was formed in warm, ancient seas, from microscopic organisms which thrived in a high CO2 environment. The first photosynthetic micro-organisms evolved around 3.5 billion years ago, which provides a great deal of time for hydrocarbon formation through the eons. Modern oil companies are scooping up the most recently formed crude oil, from deposits formed just a few dozens or hundreds of millions of years ago -- from the ancient sea-beds and former sea-beds which were easy to locate. But where will we find the multi-billion year ancient seabeds -- the really big oil fields? It will require a great deal of patience, detective work, and advanced technological tools -- some of which have not been invented yet.

If you want to go prospecting in history for likely locations of super-giant oil deposits, look for the ancient sea-beds. The Wikipedia reconstruction of Earth's tectonic history should give you a rough idea of where the ancient seas may have been. The YouTube video below provides another look at the dynamic ballet of continents and plates. Pay careful attention, insert a bit of creative extrapolation and interpolation, and draw your own conclusions.

If you look down below at the Wikipedia clock representation of Earth's time scale -- far back into the pink -- you will see where photosynthesis begins, around 3.5 billion years ago. Then travel clockwise all the way through the pink and yellow to get to the blue and green, where the seabed locations of modern oil formation opened up to provide ideal environments for oil formation. What happened to all of the oil from the roughly 3 billion years between the start of photosynthesis and the generation of modern oil, originating from all of those wildly reproducing photosynthetic microbes?

If you watch the undulations of the tectonic plates, and the constantly opening and closing of sea basins over the 600 million years pictured in the YouTube video, you can see that the perfect windows for oil formation were constantly opening and closing. No sooner would a perfect warm sea open up for oil production, than the tectonic plates would shift and cover it up.

All the while massive vulcanisation was taking place within and around the sedimentary basins where rich oil deposits from past ancient seas were sitting in the boiling heat deep underground. What happened to all of those billions of years of deposits?

Some must have escaped as gas or volatile hydrocarbon, migrating to upper layers of the crust, or into the atmosphere. Some of the oil would have likewise found its way to upper layers of crust, trapped by impermeable layers -- or escaping as seeps to be metabolised by oil-munching microbes.

But some of it -- perhaps a huge part of it -- is still trapped beneath volcanic rock, beneath moving tectonic plates, beneath billions of years of sediment. Waiting for clever boys and girls to track it down.

More: Recent study of a massive rotational shift of the super-continent Gondwana approx. 525 mya

Growing awareness of rich variety of life beneath the seafloor

Deep open ocean most unexplored part of planet

It should be clear that since 70% of Earth is covered by ocean, most of the planet's treasure trove of petroleum and other fossil fuels is likely to lie beneath the seas. Both polar regions are relatively unexplored in terms of mineral wealth, but the same is true for the open oceans. Although it does not take a genius to suppose that large deposits of oil may lie in the Gulf of Mexico or under the ancient Tethys Sea, it may take a great deal of clever detective work to find earlier versions of these nutrient-fed warm water shallow seas -- and where the sediments may have migrated over the past hundreds of millions of years.

Ancient Geologic Upheaval Still Hides Most of Earth's Oil

NYTScientists have known for quite a while that most of Earth's oil came from vast numbers of oceanic microscopic organisms -- rather than from dead dinosaurs. From diatoms to micro-algae to cyanobacteria and more, these microscopic life forms thrived on warmer seas and higher levels of atmospheric CO2 than are presently available to sea life. Many of these sea creatures are capable of converting gaseous or dissolved CO2 directly into oils and hydrocarbons of various types, and would cheerfully welcome much higher levels of CO2 in the atmosphere and in the oceans, if only they could get it.

Geologists scour the planet for the sedimentary basins of ancient seas, in order to find the vast deposits of oil, gas, and other hydrocarbons still waiting to be discovered. Humans may have used perhaps one tenth of exploitable oil deposits, but Al Fin engineers reckon we have used only about one one hundredth. Not that oil is an ideal energy source. Far from it. But we should know that we are quite far from running out -- even while we are discovering how to grow these tiny organisms for ourselves, to produce a wide range of materials, feeds, and fuels at the time and place of our own choosing.

Some of the ancestral waters that made the planet’s oil still exist, like the Gulf of Mexico, while others have long vanished, like the ocean that produced the massive oil fields of the Middle East. The bodies come and go because the earth’s crust, through seemingly rigid, actually moves a great deal over geologic time, tearing apart continents and ocean basins and rearranging them like pieces of a giant jigsaw puzzle.

The secret of the oil story turned out to be understanding how the bygone oceans, ancient seas and smaller bodies of water produced complex environmental conditions that raised the prevalence of microscopic life and ensured its deep burial, producing what eventually became the earth’s main oil reservoirs.

The clues accumulated over more than a century and included discoveries from geology, chemistry and paleontology. An early indication was that petroleum discoveries were always associated with ancient beds of sedimentary rock — the kind that forms when debris rains down through water for ages and slowly grows into thick seabed layers.

...The process typically starts in warm seas ideal for the incubation of microscopic life. The sheer mass is hard to imagine. But scientists note that every drop of seawater contains more than a million tiny organisms.

Oil production begins when surface waters become so rich in microscopic life that the rain of debris outpaces decay on the seabed. The result is thickening accumulations of biologic sludge.

...“The organics got buried quickly because of the heavy sediment flow,” Dr. Tinker said. “So they didn’t get biodegraded as quickly. You preserved the organic richness.”

He said the flow was so heavy that the growing accumulations keep pressing the lower sediment layers deeper into the earth, forcing them into hot zones where the organic material got transformed into oil. The process involves a long series of chemical reactions that slowly turn life molecules into inanimate crude.

“The gulf has miles and miles of sediments,” he said. “So that gets the source rocks down into the kitchen where they cook.”

The standard temperature for oil formation is between 120 and 210 degrees Fahrenheit.

...Many countries and oil companies are now racing to exploit the geological happenstance of deep coastal waters. Hot spots include offshore areas of Angola, Azerbaijan, Congo, Cuba, Egypt, Libya and Tanzania, while countries like Canada and Norway, which have long pursued offshore drilling, are pushing ahead with new plans. Cambridge Energy Research Associates, a consulting firm, estimates that global deepwater extraction could roughly double by 2015, the output rivaling what Saudi Arabia produces on land. _NYT

The new offshore oil fields coming on line will rival Saudi Arabian production -- even if the Saudis decide to ramp up their production even higher than at present.

But many more giant fields await discovery until geologists develop better tools to find ancient ocean basins lying beneath subsequent overlaying deposits of seismic and volcanic upheaval. Earth's warm water sea floors have been turned around a great deal over the past billions of years. It is likely that we have not yet found the richest fossil fuel fields.

For most of the planet, geologists simply do not have a clue what lies beneath. They will need far better tools than the primitive seismic, electromagnetic, and other tools which currently limit their vision. But those tools are coming. And those vast unknown deposits will be found, if they are ever needed.

Previously published at Al Fin Energy