Possible New Energy Paradigm

[Serenity]

 

Strategic Forecasting, Inc.

---------------------------

 

GEOPOLITICAL DIARY: 'BLUE SKYING' BRAZIL

 

Brazil is a rising power politically, economically and militarily. Not only is it South America’s largest country in terms of population, economic heft, military strength and land area, its geopolitical power is expanding while most of its traditional competitors -- namely Argentina and Venezuela -- are contracting. But while Brazil is almost certain to evolve in a few years from the region’s most powerful state into a regional hegemon, it is still difficult to see Brazil doing more. South America's geography is too fractured for any power to control the whole space, and the continent is too remote from the world’s power centers -- 7,000 miles from Buenos Aires to Brussels, more than 10,000 miles from Santiago to Singapore -- for any of its powers ever to be a player on a global stage.

 

Unless, that is, something changes. And for a few hours on April 14, it briefly appeared that that something had indeed changed.

 

Initial reports from the Brazilian government asserted that a new oil find in the Carioca offshore block contain 33 billion barrels of crude. By nightfall Petroleo Brasileiro SA -- the state-influenced (and quite competent) national oil firm had formally denied that test drilling had even reached the depth necessary to confirm or deny the presence of oil -- much less a mammoth find.

 

Even if this specific announcement has not played out, Brazil only began exploring the region in question in 2007, and it already has generated probable finds of at least 13 billion barrels of oil equivalent. Many, many more discoveries not only are possible, they are likely, and what has been found to date already has doubled Brazil’s reserves.

 

This crude will not come online cheaply or quickly, and much uncertainty remains in these heady early days of exploration in Brazil’s ultradeep. But with potential discoveries of this size it is worth exploring a possible future.

 

Brazil has recently become self-sufficient in oil production -- and that is without the recent (and likely future) finds. And that got our analytical team thinking.

 

What would a world look like with a Latin American Saudi Arabia? How would things change on the global scene? At Stratfor we undertake what we term "blue sky" exercises from time to time, albeit typically in a much more compact geography and on a much shorter timeline. These exercises help us think outside the tactical minutiae of day-to-day events, and prevent us from becoming too wed to our own predictions. It is not every day that something happens that can change global economic and political interactions on such a grand scale. So rather than tightly edit our analysts’ responses to this question, here are some of their responses in the raw:

 

Should Brazil become a significant oil producer, global interest in Latin America will increase in proportion -- not only from the United States, but also China, Russia, Europe and others. Competition for access to -- and potentially control of -- the resources, for security of the shipping routes, and for influence over the Brazilian government and energy companies also would rise. A resource-powerful Brazil, coupled with China's labor, India's tech and labor pool, and Russia's energy and arms could also revive the BRIC (Brazil, Russia, India, and China) concept, perhaps making it a more viable bloc of formerly second-tier players, and bringing some counterbalance to U.S. global hegemony.

Brazil is too far away from energy consumers like India and China to tap without great cost and competition with the United States, a much closer consumer. In time this would lessen U.S. energy dependence on the Middle East, especially Saudi Arabia -- leaving that region for other energy consumers, like the aforementioned India and China. Such a shift largely would regionalize energy routes, leaving the United States looking at its own hemisphere for energy supplies, Europe to the former Soviet Union, and Asia to the Middle East (leaving Africa as a swing player). Though this may look like a more peaceable reality, it would be far from it, and could actually lead to more instability as no power would have much of an interest in stabilizing energy supplies going to other regions.

Canada’s tar sands hold anywhere from 800 billion to 1.2 trillion barrels of oil. Oil shale deposits in the U.S. Rocky Mountains are estimated at around 800 billion barrels. The success of these industries is not certain, and technological and economic factors must play out, but in 15-20 years, substantial flows of oil flowing from Brazil coupled with these potential new sources of North American oil (though more difficult to extract and expensive) and only moderate efficiency gains could guarantee almost complete energy independence for the entire Western Hemisphere.

A legitimate and proximate alternative oil source means the primary geopolitical motivation for immense U.S. investment in military operations in the Middle East begins to slowly evaporate. Though mastery of the world's oceans remains a core geopolitical imperative for Washington, the disproportionate focus of the U.S. Navy on the Persian Gulf and the maintenance of the Strait of Hormuz becomes far less critical. Suddenly freeing the energy and capability the Pentagon has cultivated to make a sustained presence possible on the other side of the world from that imperative would lead to a very robust and flexible -- but far more evenly distributed -- global U.S. naval presence. This could also be just the opening for the Navy, which in many ways has failed to re-evaluate its post-Cold War stance, to fundamentally remake itself for the 21st Century.

The region with most to worry about from this development is the Middle East. From Washington's view, getting oil from a relatively friendly and stable country to its south is far, far preferable than dealing with the chaos of the distant Middle East. Saudi Arabia and the other major Gulf powers will become distant not only from their biggest energy customer, but also from their biggest security guarantor. With a diminished U.S. interest in the Middle East, regional fault lines are more likely to erupt, spelling more instability for this already largely volatile region. Israel in particular has much to lose as it sees its regional security framework --which is built around having the United States deeply involved in the Middle East -- weaken, and its alliance with the United States strained as a result.

 

 

 

Copyright 2008 Strategic Forecasting, Inc.

 

 

[billcoe]

Love it. Still need to work on reducing our consumption. Thanks Mike.

[tvashtarkatena]

Brazil has another large advantage in energy resources; it's ability to produce ethanol profitably from cane due to it's equatorial location and huge land area.

[ivan]

the bottom line is still that the era of discovering new, easily developed oil "elephants" is over - its great of course that the spice won't stop flowing overnight, but even this new brazilian find won't last forever, and we're now into the era of having to look into more and more difficult places to get oil

[G-spotter]

http://www.pnas.org/cgi/content/full/104/36/14260

[ivan]

http://www.pnas.org/cgi/content/full/104/36/14260

uh, is there an english version?

[G-spotter]

Oil is dead Archaea.

[ivan]

i thought oil was god?

[Bug]

I bought SDA a long time ago.

Yeah I'm smart.

Unfortunately, not smart enough to buy a lot.

[Fairweather]

the bottom line is still that the era of discovering new, easily developed oil "elephants" is over - its great of course that the spice won't stop flowing overnight, but even this new brazilian find won't last forever, and we're now into the era of having to look into more and more difficult places to get oil

 

THE SPICE MUST FLOW, bitch!

 

[ivan]

the bottom line is still that the era of discovering new, easily developed oil "elephants" is over - its great of course that the spice won't stop flowing overnight, but even this new brazilian find won't last forever, and we're now into the era of having to look into more and more difficult places to get oil

 

THE SPICE MUST FLOW, bitch!

 

republicans come w/ heart-plugs installed standard!

[Fairweather]

Democrat pacifism will allow the Fremen to spread jihad around the universe. The Sardukar should have crushed them when they had the chance.

[ivan]

can you think of a democratic president who never used violence or force in international affairs on occasion? they're hardly pacifists...

[Fairweather]

can you think of a democratic president who never used violence or force in international affairs on occasion? they're hardly pacifists...

 

...and Republicans are hardly The Barron Vladimir Harkonnen either...

[ivan]

can you think of a democratic president who never used violence or force in international affairs on occasion? they're hardly pacifists...

 

...and Republicans are hardly The Barron Vladimir Harkonnen either...

maybe, but karl rove is definitely as bad as this guy:

[Fairweather]

Yea - but he later felt bad about what he did. ...And Karl Rove was loyal to the end.

[tvashtarkatena]

Democrat pacifism will allow the Fremen to spread jihad around the universe. The Sardukar should have crushed them when they had the chance.

 

suk my sand worm, m'fuckah

[STP]

Brazil's other contribution-- ayahuasca