Autonomous Vehicle Consultant

My recent blog post (1) summarized the American-Russian Arctic oil deal. This post raises questions about this arrangement that are generally ignored by the mainline media.

1. Total recoverable oil reserves in the Arctic Kara Sea are estimated at 110 billion barrels of oil, four times more that ExxonMobil’s entire reserves. In a previous post (2), I wrote that national oil companies (e.g., Saudi Aramco, Rosneft, etc. ) own approximately 95 percent of the world’s oil reserves, in contrast to international oil companies (ExxonMobil, BP, etc.) that control the remaining 5 percent. Further, oil production in the United States has been declining for years (3). Does it really make sense for the United States and ExxonMobil to depend on Russian oil or is it too late to worry about that?
2. The Russian oil company, Rosneft, will receive equity in exploration projects located in Texas and the Gulf of Mexico. How much oil do the Russians expect to produce from these U.S. fields that are declining in production, especially when the United States is now importing 60 percent (4) of its crude oil  needs? Will the United States have to import even more oil due to Russian oil production in the United States?
3. Sixty percent (5) of the Russian export economy depends upon oil. Russian onshore oil fields in Siberia are declining. Further, Russia lacks deep water drilling technology that they expect to receive from ExxonMobil as part of that Arctic oil deal. What will happen to that American-Russia Arctic oil arrangement when technology transfer from ExxonMobil to Rosneft is completed?  At that point, Russia will have what they need, both technology and access to that Arctic oil. Will ExxonMobil then be expelled from Russia?
4. Under the Arctic oil arrangement, Russia will become the first non-ally to acquire U.S. oil fields. What if the President or Congress objects to this arrangement? If the United States balks, Russia might remind the United States that it receives 23 percent (6) of its uranium imports from Russia.

According to the German online news outlet, der Spiegel, Russia and the United States are starting a mega oil project in the Arctic. It is an agreement of historic dimensions involving ExxonMobil and the Russian firm, Rosneft. This agreement ($3.2B) envisions producing oil in the Arctic Kara Sea and also in the Black Sea. The entire investment could amount to $500B.

Experts suspect gigantic crude oil reserves that can be extracted due to climate change and melting ice. The Russian concern, Rosneft, does not possess technology for deep drilling and has been seeking a partner for oil production in the Arctic. Experts estimate that nearly 20 percent of the  remaining, world-wide crude oil could be produced from the Arctic see floor. As a counter move, Rosneft will be permitted to work in ExxonMobil fields located in Texas and the Gulf of Mexico. Participation by Rosneft in ExxonMobil third world countries is possible. The agreement foresees construction of a research center and mutual training.

After months of negotiations, BP ended talks with the Russians during May. BP wanted to structure a joint venture and in the process find compensation for the Gulf of Mexico disaster as part of the deal. A disadvantage of this Rosneft-ExxonMobil arrangement is that the Arctic presents enormous exploration and production challenges. In contrast, the advantage is that the Artic is politically stabile and far removed from Saudi Arabia.

Translated from German by Dr. Jeffrey Everson

August 30, 2011

Last week I was interviewed by Isa Cann on the radio program, The Long View, featured on Sustainable Radio, WUML 91.5 FM. Topics of this interview ranged from my renewable energy interests to my work as a consultant assisting clients with proposal research and writing. My interview is scheduled for broadcast at 10 AM, August 31, 2011.

The title of this radio program, The Long View, is encouraging because the U.S. economy is driven by short-term horizons extending no further than the current quarter. Such a myopic mindset limits the emergence of urgently needed solutions, particularly in the energy and sustainability space, which are important topics featured on The Long View program. This program addresses a compelling array of subjects, such as climate, agriculture, green life style, innovation, recycling, smart growth, and most importantly corporate responsibility.

In his blog post of August 11, 2011, Bob Ferrari noted that supply chain consolidation is underway in solar manufacturing. This consolidation is due to decreased government subsidies, excess investments in production that led to decreased demand and price, according to Bob. Further, “Industry events however now point to China and Taiwan as possibly being the global dominants for this industry, as cost-cutting becomes the dominant industry force.” This is an unfortunate turn of events for the United States because alternative energy technologies are important for energy security, job growth and the environment.

The U.S. government needs to make a strategic decision on becoming the leading developer of renewable energy technologies. This can be done given the political will to do so. For example, the U.S. government has achieved extraordinary success in many areas. These include a massive mobilization of personnel, technology and manufacturing during WWII. The United States developed a space program that led to a man on the moon, earth orbiting space station and the Hubble telescope. Other U.S. government led programs include the Internet, the Global Positioning System and Hoover Dam. Then came President Reagan, who opined that Government is the problem. Historically, there was never any basis in fact to make that declaration. With the seizure of Reagan’s dogma by the right wing, the U.S. government’s ability to mobilize national resources to resurrect the economy is quickly slipping away. The free market will not help since this group is myopically focused on the current quarter’s profits. Absent any counter prevailing forces, the United States is doomed to lose the renewable energy race.

Toyota is making every effort to preserve as much of its manufacturing base in Japan as possible in spite of unfavorable exchange  rates, unspeakable natural disasters, and discouraging government policies. As part of its commitment to the homeland, Toyota plans to manufacture  40 percent of its yearly global production in Japan. Unlike most American companies, whose time horizon extends no greater than the current quarter, Toyota envisions a more extensive period to accomplish its corporate objectives, as well as  providing a future for its employees and customers.

Much of Toyota’s success is to due its corporate culture and emphasis on a style of manufacturing called Monozukuri.  “In return, employees feel an enormous responsibility to Toyota, working long hours and pouring their very best into the work that they do.”

Almost no American corporation, including those involved in renewable energy technologies, has shown the slightest interest in preserving manufacturing jobs at home. For example, “The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.” It is time for the United States and its manufacturing industries to take a stand similar to Toyota. An impressive first step would be to fire Jeffrey Immelt, CEO of General Electric and Chairman of the Jobs and Competitiveness Council. “Under Immelt, GE has shipped tens of thousand of good jobs out of the United States.”