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Guest Post: The Race for Energy Resources Just Got Hotter

Tyler Durden's picture


Submitted by Marin Katusa of Casey Research

The Race for Energy Resources Just Got Hotter

Malaysia's state-owned oil and gas company just made a multibillion-dollar bet that Canada will choose to export its shale gas riches. Even though the odds of securing permission to export liquefied natural gas (LNG) from the Canadian west coast are still pretty poor, the costs of such an endeavor immense, and the timeline in question very long, Petronas is putting $5.5 billion on the table – far more than it has ever spent on an acquisition before – to secure a large foothold in the British Columbia shale gas scene.

It's yet another sign that things are getting serious in the global race for resources.

The race for resources drives much of our thinking within the Casey Research energy group. It's more than a common theme – we believe that it is one of the strongest forces at work in our world today, and that it plays a role in determining the tone of many international relationships and domestic policies. Countries that have resources, from Russia to Australia, are altering fiscal structures and ownership rules so as to glean as much benefit as possible from their riches, while still reserving sufficient supplies to fuel their futures. Countries that lack natural-resource wealth, such as Japan and South Korea, are racing to lock up projects and partnerships abroad that can supply their future resource needs.

And a race it is, because they are not alone. There are few countries in this world with natural supplies of all the energy commodities they need – Australia, Russia, and Canada are among the few that do – and everyone else has to constantly wheel and deal to secure imports. Now the easy deposits of many energy resources are disappearing, but global demand continues to rise. The result: stiffer competition.

Petronas' deal is a perfect example. Petronas is buying Calgary-based Progress Energy Resources (T.PRQ) for C$4.8 billion in cash. Including convertible debt the deal is valued at about C$5.5 billion. In announcing the deal, Petronas also said it has chosen Prince Rupert, BC, as the home of its planned LNG export terminal.

So the company is spending billions of dollars to acquire 1.9 trillion cubic feet of proven and probable gas reserves… but there is no guarantee that they will be able to export any of that gas in the foreseeable future.

Pipelines have become a highly contentious issue in North America – just as US citizens are embroiled in a debate over the Keystone XL pipeline which would transport oil sands crude south, Canadians are arguing the merits and liabilities of the Northern Gateway pipeline, which would move oil sands crude to the west coast for transport to Asia. One of the big arguments against Northern Gateway is the danger of sending tanker traffic through the coastal waters of northern BC, where an oil spill would be near impossible to clean and would irreparably damage a pristine ecosystem.

The same arguments will surface with natural gas. The LNG terminal that Petronas envisions in Prince Rupert would send loaded tankers through those same sensitive waters, an idea that is far from accepted in the region at this point. The pipelines ferrying natural gas to that terminal would cross mountainous terrain burdened with heavy winter snowpack and dramatic summer melts that regularly cause hillsides to slide and rivers to swell their banks and take out bridges – all points that opponents will use to argue that the potential risks outweigh the benefits.

In short: Petronas and its peers face a steep, uphill battle in their quest to permit pipelines and LNG terminals on the west coast. But as we wrote last week, the potential for big profits will also play a role.

Remember, natural gas in its gaseous state is a landlocked commodity. Its low energy-to-volume ratio renders it uneconomic to ship, which means pipelines are the only option. To move natural gas over oceans it has to be condensed into LNG, increasing the energy-to-volume ratio dramatically and making it economic to load onto tankers and send around the world.

Many major global economies rely on LNG to meet their natural gas needs; and demand is on the rise. In 2011, global LNG trade grew by 9.4% compared to 2010, with Asia generating most of the demand increase. Japan is the world's top LNG importer, having bought 79.1 million tonnes in 2011; South Korea is in second place with imports near 36 million tonnes. India, China, and Taiwan are all also major LNG buyers, helping to lift Asia into top spot as a regional LNG import market: Asian LNG buyers accounted for 63.6% of the global market in 2011.

That level of demand from a part of the world fairly short on supply means high prices. LNG in Asia is currently worth between $17 and $18 per million British Thermal Units (MMBtu) – six to seven times the price of natural gas in North America.

That price difference is precisely why Petronas is maneuvering to buy reserves in North America. The gamble is simply worth its while – if Petronas is able to build pipelines and an LNG terminal on the west coast, the company will be able to take a commodity worth a few dollars here and sell it for many times more in Asia.

The lure of that payout has drawn many players to this expensive, drawn out, and highly uncertain game. With this deal, Petronas joins a growing list of international energy companies including PetroChina, Mitsubishi, and CNOOC that are spending billions on remote natural gas plays in Alberta and BC, all of which share the same dream of selling the gas in Asian markets.

While these Asian energy giants take on the risk, Canadian gas explorers pretty much get to just enjoy the benefits. Depressed North American gas prices have brought most gas explorers to a standstill – investors and banks alike are not interested in funding projects where the cost of production is almost the same as the value of the product. But being bought out or finding a partner with deep pockets is a perfect solution. As Progress' CEO said, "Our asset base requires extensive capital to develop its large potential and ultimately access international LNG markets. Petronas offers the size and scale that will enable our company to continue to grow and not be limited by the same cash flow challenges faced by many producers in the North American natural gas market today."

Since Canada's gas explorers are stuck in neutral, you might think that Asian energy firms would be making minimal offers, trying to acquire these resources on the cheap. Instead, Petronas offered C$22.45 a share for Progress, 77% more than Progress' closing price the previous day. Are they trying to earn goodwill with Canadians? Perhaps, but there's a more likely explanation for their generosity: pressure from behind. If they made a stink bid and Progress voiced displeasure, the dispute could draw attention from Petronas' peers, which are also on the lookout for good natural gas deals. One of these peers might then swoop in and make a better offer, leaving Petronas empty-handed.

This is the impact of the race for resources. These Asian energy giants are racing with each other to secure resources for the future. The constant pressure to stay ahead in the race means companies will offer whatever it takes to secure a deal quickly, before anyone else trips up their efforts.

Shale gas riches have positioned North Americans as beneficiaries in the global race to secure natural gas supplies. However, complacency is a dangerous thing. Just because North America has gas doesn't mean it has all of the energy resources it needs for the future. President Obama's recent executive order on Russian uranium was a reminder that the US relies on imports to feed its nuclear reactors, and with the Megatons deal coming to an end, the United States is being thrust into the global race for uranium just as that race is heating up.

Scarcity is a powerful force and it leaves those in control of limited resources wielding great power. We think a scarcity of uranium will increase Russia's power; control over some of the last big, easy oil deposits has earned Saudi Arabia great global influence. Petronas' deal with Progress is a sign that shale gas could generate similar prowess for North America, and is a strong reminder that the global race for resources will provide some with money and power while leaving others in the dust.


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Thu, 07/12/2012 - 15:43 | 2610845 silvermaister
silvermaister's picture

Buy SILVER !!!!!!!!

Thu, 07/12/2012 - 15:48 | 2610860 MillionDollarBoner_
MillionDollarBoner_'s picture

too late...Sprott just bought it all ;o)

Thu, 07/12/2012 - 15:59 | 2610900 silvermaister
silvermaister's picture

There is still some physical Silver around, but not much so HURRY

Thu, 07/12/2012 - 16:10 | 2610939 Herd Redirectio...
Herd Redirection Committee's picture

Good luck with that LNG port in BC.  You might be able to bribe all of Prince Rupert with promises of jobs and pay outs, but the rest of the province will kibosh it.  Its a rocky coast, and until they can convince us they can actually PREVENT spills AND clean them up in a worst case scenario it just AIN'T happening.  We smoke some good stuff up here, but it ain't THAT good!

Thu, 07/12/2012 - 16:31 | 2611014 Matt
Matt's picture

An LNG spill is nothing like a crude oil spill. The LNG will just turn into NG and float away on the wind. Fire hazard, for sure, but nothing like an Exxon Valdez incident.

Also, not certain, but I suspect Prince Rupert is a much better port than Kitimat, since the terminal could be built right on the ocean, without having to navigate through any fjords. 

Thu, 07/12/2012 - 16:47 | 2611069 LFMayor
LFMayor's picture

+1.  Never use a Greenpeace pamphlet for technical or chemistry footnote sources.

Thu, 07/12/2012 - 16:59 | 2611101 Popo
Popo's picture

The Canucks should take the money and run.  Shale gas is an absolutely awful investment.   $1 in $1 out.  And every equation to the contrary is so heavily doctored it's meaningless.

The only scenario under which this investment pans out is a massive (massive!) war in the Mideast.  Oh ... wait a minute ...



Thu, 07/12/2012 - 18:44 | 2611307 prains
prains's picture

The article didn't mention Enbridge just got their shit handed to them after their lastest spill into the Kalamazoo meaning there will be a greater deal of skepticism about them being able to run a pipline to the west coast the malay's should have waited

Fri, 07/13/2012 - 01:30 | 2611994 Cadavre
Cadavre's picture

Aren't these the same enegy scarcity fears the repugs have been sharting to sanction genocide, with "not to be excluded" partners in treason and graft,  the podeophileic-phalanx-less-genocidiacs self grope & tug social club, or demoncraps, have been using for Al Gore-za-Bore perfectly timed to the solar cycle carbon tax ponzi- and then - when he couldn't deliver the pig `n a poke to the banker toads, had hisself and daughter excommunicated, by decree of divorce from the Schiff family (what kine-a girl did dat man raise - imagine tugging a Schiff wiener ...).

This article is unadulterated talking point bull shit written for an audience with fifth grade reading skills.

We''re in an energy f*cking glut - have been for decades.

First the cover picture for the article, Either is, or a near `nuff facsimile, of the same BS "you're a UFO sucking moron if you believe in cold fusion". A note for history buffs, Steve Jones, the very same guy that demonstrated mil speced nanothermite in the WTC dust and stood his ground on Fox CNN an others, well he was also one of the "cold fusion" detractors. Chemical reactions are not quantum effects - but anyway - the MIB and BIGOIL and BIGNUKES trotskydytes  pitched the "cold fusion is bull sh*t" during the last few decades of the big dumbdown, we all set it aside - we were too smart to get taken in by a pair of UK sissy academcs and their cold-fusion balony. The dream of a brief case that will safe power a home. Looks folks - if it threatens the central power grid tug boys - then it has got to be lost. Sh*t, got a white elephant gift once - it was a box with a scientific kit called "Cold Confusion". Remember the nano "antennas" IR "just spray on the roof" solar collector developed in Canada that was 8x more efficient than the standard photon solar technology - what happened.

They need time to figure how to centralize as a service products that were designed for distributed applications.

ANYWAY: As it turns, Japanese have been working on the "cold fusion" process almost since it became public. And the US's very own department of energy has applied for cold fusion patents (PDF).

That takes care of the "if you don't beleive me your a moron" for the article's cover. Now for content ...

First the fear shag hook:

It's yet another sign that things are getting serious in the global race for resources.

It wouldn't have the same dramatic effect with the impending doom insertion of the word "yet" in this fuck pretense sentence!

Now we scared. So how many zillions more do we need to spend to kill zillions more to win dis here race?

Now, for a testimonial ...

... we believe that it is one of the strongest forces at work in our world today ..

Like he wishes. The bullsh*t over the top zealousness to protect, continue and enhance the War Usury's energy inflation story-up pricing ponzi is one of the strongest forces in the world today.

And a race it is

I guess this "guessing" aurthor guy is Casey's Custom Pig `n a Poke Shtick paly by play color master of ceremonies.

Then "guessing" author used old school news speak so he could burn several syllables to say more of "nothing" ...

Pipelines have become a highly contentious issue in North America

He's right. With all the US energy sanctions in place - the wars - the scams (like restocking the domestic strategic supply when the market is at it's peak). To keep the ROBO gas hig means more sanctions more wars and more pipelines for US refiners to export more than the + 50% of gasoline they already send overseas (in the middle of an energy glut and drop in demand, mind you), means more pipelines until price succumbs to the reality of value.

Some polite xenophobia as cherry on top ...

This is the impact of the race for resources. These Asian energy giants are racing with each other to secure resources for the future.

Yeah - them Asians want nothing more than to fondle some thick thighed plas-ticked eyelash-ed shabby shiek WalMart elite in Dead Zone USA - there's an Asian under every bed wanting to pork uncle Tony's fat wife because they hate us for our freedom - the race is on - yahooo!

OMG ...

However, complacency is a dangerous thing.

For the ziod-customer's this author sells "shopped research" to, complacency is the fools belief this re-rolled 3rd grade talking point shill paste together is some kine of "assurance" or "protection", complacency can be lethal. Ask Mussolini ghost about getting complacent.

Refreshing to refresh on a little lame stream pablum once in a while.

Thu, 07/12/2012 - 17:21 | 2611154 mr1963
mr1963's picture

There's tons of it by me, all at spot. Don't know where you shop, I can walk into 10 different places and buy $10000 worth at each one.

Thu, 07/12/2012 - 16:04 | 2610919 Overfed
Overfed's picture

Not all of it. I just added to the stack today. ;-)

Thu, 07/12/2012 - 16:00 | 2610878 Ahmeexnal
Ahmeexnal's picture

Yep, and go long H2O2.

Secret NASA X37 spacecraft has been running over a year on hydrogen peroxide propellant.



Thu, 07/12/2012 - 16:11 | 2610945 gorillaonyourback
gorillaonyourback's picture

its either disinformation or not a secret

Thu, 07/12/2012 - 16:15 | 2610963 Flakmeister
Flakmeister's picture

Check out some of the propellants the Nazi's used....

Peroxide powered V-1s.....

Thu, 07/12/2012 - 16:31 | 2611021 Dr. Richard Head
Dr. Richard Head's picture
Recent developments at the Keshe Foundation could change much of the battle for energy - or this is all a rouse.
  1. The world peace invitation and release of technology? – Keshe Foundation
    Pipe Dream? Disinformation? Who knows?
    As your Excellencies have been aware, we invited representatives of every country to the first presentation of our technology on 21 April 2012. The ambassadors of some nations attended this meeting and others chose to ignore the call, due to pressure from other nations, and decided not to attend or withdrew at the last moment.
  3. With this second invitation we directly and unequivocally invite the leaders of your nation to appoint qualified individuals who can take part in the upcoming meeting at the Foundation on 6 September on behalf of their governments.
  4. The reasons for this invitation and the meeting are as follows:
  5. 1.On 21 September 2012 the Keshe Foundation will release the first phase of its space technology and the gravitational and magnetic (Magravs) systems it has developed, to all scientists around the world simultaneously, for production and duplication.
  6. From that point on, international borders will cease to have any real significance. This is because, once the first flight system has been built and put into operation for the public, the time of travel for example from Tehran to New York will be about 10 minutes maximum.
  7. The new airborne systems will enable every individual to make the same length of journey in the same time and at hardly any cost from any point on this planet. The craft will not be detectable with present radar technology.
  8. 2.The energy crisis will be resolved at a stroke, and once the technology is put into practice the powers that control energy supplies and through them the present financial structures will find their hands empty.
  9. 3.The world water shortage will be addressed and resolved by presenting this technology to the public soon after the release of our energy and space technology.
Thu, 07/12/2012 - 16:45 | 2611066 LFMayor
LFMayor's picture

The He-She foundation?   I dunno man, I would consider passing on that conference, especially if it's being held at Pleasure Island or Sandals resorts.

Thu, 07/12/2012 - 17:14 | 2611141 Citxmech
Citxmech's picture

Lemme guess - there's a charge to RSVP and be first in line to invest in this great opportunity - payable to a bank in Nigeria of course. . .

Tehran to NY in 10 minutes?  Seriously?


Thu, 07/12/2012 - 17:36 | 2611188 Dr. Richard Head
Dr. Richard Head's picture

Actually the technology is touted to given away for free. I don't know though. Just passing it along.

Thu, 07/12/2012 - 22:25 | 2611771 Unique Snowflake
Unique Snowflake's picture

What, so not one single person saw the big glossy bold introduction from Phaque Orf TV......Fuck off TV....get it? It's a massive yank of your chain.

Fri, 07/13/2012 - 00:17 | 2611919 Cosimo de Medici
Cosimo de Medici's picture

Is this the symposium where ORI is the keynote speaker?  Just my luck there's probably not any tickets left.

I also heard the Keshe Foundation has developed really really really long handled Swiffers that wipe away chemtrails and leave no unsightly residue behind.

Fri, 07/13/2012 - 01:34 | 2612003 Machination
Machination's picture

Keshe Foundation is either 1) a total quack/whack job or 2) joke/hoax or 3) scam 

If you actually read some of the technical pages it is complete bologna.  The other content and claims are comical at minimum, and garbage the rest.  

Fri, 07/13/2012 - 01:57 | 2612022 Machination
Machination's picture

You know, sometimes a gem of stupidity comes along that is just too fun to continue researching and laughing about.  Keshe is one of these.  Here is a post I found from 2009:

Dear Mr Sanmugathasan

You can pay through bank transfer, the cost of book and delivery will be about 45 euros. If you do so please let me know. You have to make sure that we receive 45 euros or use the western union payment, let me know which way is convent for you.

If you would like to know more about the contents of the book, please refer to youtub section of the KesheFoundation in the links given below. Please view these videos from the No 1 to the No 5, as the explanations in these short movies are interconnected.

In the next few days we will announce the first lift and flight presentation of the system for public. These presentations will be held in one city in each continent over 5 month.

The First Presentation: you can attend the first Magnetic and gravitational field force (Magravs) lift demonstration of these systems and may be you would be able to participate in these presentations personally.

The first "Bright light in the sky"presentation for the lift and the flight capability of these systems will be held somewhere in Asia on 21.3. 2010. Number of seats for each presentation will be about 10 000 seats per city.

Early next week (the week of 20.7.2009) details in respect to five presentation in five continents will be released on the site and all conditions which applies to these presentations and lifts will be explained.

The First Flight : The initial charges and booking for 10 hours of flight in space and for the booking for the first space lift by public through Keshe Foundation before December 2014 will be announced next week.

The cost for these flights will be 19000 (nineteen thousand) euros per person, this will include 9 hours of flight at about 60km distance from the surface of the Earth.

There will be additional charges to experience the weightlessness condition in these space trips. The number of seats available for the first year will about 5000 seats (announcements about these will be given on theKeshe Foundation

The First Flight to the Moon: We will announce for landing on the Moon by December of 2016, for round trip at the cost of 50 000 euros per person. There will be no disembarkations in these early flights. Number of seats available for the first year about 1000 seats (announcements about these will be given on the KesheFoundation

There will be no need for space training, as the condition within these flight systems will be atmospheric condition as the present days jetliner flight conditions.

I hope you enjoy the new science and may be you can bring this new knowledge to new generations.

Yours faithfully
M T Keshe
on behalf of the Keshe foundation

Thu, 07/12/2012 - 16:36 | 2611038 Marginal Call
Marginal Call's picture


"This engine used ammonia and liquid oxygen for propellant and hydrogen peroxide to drive the high-speed turbopump that delivered fuel to the engine"

Thu, 07/12/2012 - 16:43 | 2611058 LFMayor
LFMayor's picture

aye, the russky's too, with peroxide/kerosene or nitric acid/kerosene systems. Touchy shit, both to just plain store and then load into a weapon system that pulls how many G's on ingnition?.    Makes for some epic film on History Channel.     

I heard that they run that top secret Aurora on this new top secret axial steam turbine tecnology, too. 
(that last was /sarc for all you conspiracy nuts).

Thu, 07/12/2012 - 19:31 | 2611419 BigInJapan
BigInJapan's picture

Not such a secret now, is it?

Thu, 07/12/2012 - 17:35 | 2611184 sjamesje
sjamesje's picture

I would LOVE to buy silver!  But the CFTC just shut down PFG (who my broker used) and confiscated my silver options, as well as the money within my account!  So I can't do jack squat!!!

Thu, 07/12/2012 - 20:02 | 2611499 Buck Johnson
Buck Johnson's picture

Your totally correct, I think people should be buying silver and now.  Because the economies of the world are slowing and that is from manipulated data so it must be alot worse.  And once the EU implodes it will take the US with it.

Thu, 07/12/2012 - 15:59 | 2610847 ZerOhead
ZerOhead's picture

Ironic isn't it?

The Canadian government (free trading globalists that they are) got rid of it's own state interests in the Canadian oil/gas sector saying that governments have no place in owning national energy resources on behalf of the citizens, only private corporations.  Now we see the Royal Harper Government pitching these same resources to first the Chinese (Sinopec) and now Malasian state owned companies.

What gives?

Thu, 07/12/2012 - 16:01 | 2610908 ParkAveFlasher
ParkAveFlasher's picture

I say bully for Canada. The only pipelines Washington supports pump liquified bullshit. 

Thu, 07/12/2012 - 16:14 | 2610941 ZerOhead
ZerOhead's picture

But if the Canadian government is assisting a communist superpower enemy of the United States (China) and a totalitarian dictatorial regime (Malaysia) to achieve access to North American energy... I mean doesn't that make Canada a potential enemy of the United States like Iran?

Thu, 07/12/2012 - 16:21 | 2610982 Overfed
Overfed's picture

Don't worry, O'bomb-a has plenty of drones for our Canadian friends. :-)

Thu, 07/12/2012 - 16:26 | 2611001 Matt
Matt's picture

So, if America won't allow the pipelines for us to sell to them, we are supposed to just not sell at all?

Thu, 07/12/2012 - 17:09 | 2611129 Pure Evil
Pure Evil's picture

You just don't get it. Until your state, city, town, or neighborhood looks like Detroit, Obomb-a won't be happy.

Thu, 07/12/2012 - 17:31 | 2611179 FeralSerf
FeralSerf's picture

It's in the fine print of the North American Free Trade Agreement.  You didn't really believe that "Free Trade" shit, did you?

Thu, 07/12/2012 - 17:33 | 2611180 FeralSerf
FeralSerf's picture


Thu, 07/12/2012 - 16:21 | 2610984 CrimsonAvenger
CrimsonAvenger's picture

Next thing you know they'll want us to release Terrance and Phillip -

We should bomb them just to be on the safe side.

Thu, 07/12/2012 - 16:52 | 2611086 GeezerGeek
Thu, 07/12/2012 - 16:28 | 2611007 Marginal Call
Marginal Call's picture

No, Canada takes their moeny.  Then the shit hits the fan and we tell Canada to shut it down.  Now we have their money and their gas and they are welcome to try coming and getting it.  

Thu, 07/12/2012 - 17:11 | 2611132 Pure Evil
Pure Evil's picture

A la, Corzine, PFG and MFG. Nice!

Thu, 07/12/2012 - 17:02 | 2611112 falak pema
falak pema's picture

gee that smells of blatant american citizenism. R u sure you are ZH minded folks who hate imperial play and vote Ron Pauuuuul?

Canada does what it does as new land of free and new home of  brave.

On the issue of lost american heritage which was discussed here on ZH, here is a good movie on the issue of western minded, texas branded, individual values and fenced in encroachment by big city, eastern dude civilization:

 Seuls sont les indomptés (1962) - IMDb   "Lonely are the brave", with Gena Rowlands and Kirk D. Awesome.

Thu, 07/12/2012 - 16:40 | 2611051 rete
rete's picture

...and you quote the Star...the closest thing approximating the former USSR's Pravda in the (we are told) "free world". The Star has not seen a venture it does not believe government or it's snivel servants would be better at than private industry.

Thu, 07/12/2012 - 19:33 | 2611426 BigInJapan
BigInJapan's picture

Take the money now.
When SHTF, nationalize it and kick the ferrners oot.
Harper does not equal Mulroonry/Chretien.

Thu, 07/12/2012 - 15:45 | 2610848 Temporalist
Temporalist's picture

Scarcest resource: Honest politicians

Thu, 07/12/2012 - 18:16 | 2611266 krispkritter
krispkritter's picture

So we can melt them into bars and bury them in the backyard? Please say yes...

Thu, 07/12/2012 - 15:44 | 2610850 surf0766
surf0766's picture

We said no thanks

Thu, 07/12/2012 - 15:46 | 2610851 LawsofPhysics
LawsofPhysics's picture

Lots of opportunity in this space, but corporations will still be about one thing and one thing only, profits.  If the capital and resource investment is too high relative to capital and energetic returns, the technology is dead, period.  Invest wisely.

Thu, 07/12/2012 - 15:51 | 2610872 MillionDollarBoner_
MillionDollarBoner_'s picture

"corporations will still be about one thing and one thing only, profits."

What should corporations be about, then? hugs? Kisses? Unicorns?

Thu, 07/12/2012 - 15:55 | 2610888 Toxicosis
Toxicosis's picture


Thu, 07/12/2012 - 16:06 | 2610926 LawsofPhysics
LawsofPhysics's picture

The point is to do your homework and evaluate the full balance sheet of the corporation.  This is a financial site moron, just in case you missed it.

Let, me guess, you probably also favor the continued socialization of private losses by companies the get fucking bailouts from the taxpayer.

Thu, 07/12/2012 - 15:48 | 2610861 SmackDaddy
SmackDaddy's picture

The Republicans just want to drill, drill, drill.  But we call those reserves 'strategic' for a reason.  Strategic as in when the fucking towel heads run out, we still have a little left.  Canada apparently, like the Republicans, need to wise the fuck up. 

Oil and coal make this economy go 'round.  And the American miliary is the grease on the wheel.

Thu, 07/12/2012 - 15:59 | 2610898 runlevel
runlevel's picture

have you ever seen chris martenson's research on peak oil and the speed at which we are running out of oil while needing it even more? i dont think our "strategic reserves" will do shit. its like have a cup of water on backup incase the ocean drys up. 

Thu, 07/12/2012 - 16:07 | 2610928 Coke and Hookers
Coke and Hookers's picture

I think he's referring to any untapped resources in NA as strategic, including Alaska north slope. Certainly this seems to be the thinking in some elite circles; keep the domestic stuff, suck the arabs dry and pay with worthless T-bills. And the US military greases the wheels and snuffs out people who refuse to use petrodollars.

Thu, 07/12/2012 - 16:12 | 2610955 Herd Redirectio...
Herd Redirection Committee's picture

Same play thats being run with Rare Earths.  We let China produce them all and said "Oh no, we can't produce them as cheaply as you can, we are shutting down, you will have a monopoly, oh dear"  Meanwhile we are letting them pollute their backyard massively, and when they have got all the low hanging fruit and demand for rare earths is even higher the North American projects will somehow, some way, come back online.

Fri, 07/13/2012 - 03:07 | 2612057 AnAnonymous
AnAnonymous's picture

US citizenism at work.

And suddenly centralization is no longer that bad:

draing progressively the resources inwards,from the periphery to the center, exhaust the most peripherical resources first.

US citizen nature is eternal and it does not take long before US citizens show it.

Thu, 07/12/2012 - 16:08 | 2610933 SmackDaddy
SmackDaddy's picture

having just a few months more oil than the next guy could determine who writes history from that point on....

Fri, 07/13/2012 - 06:07 | 2612103 blabam
blabam's picture

Yeah, for a few months... Try managing an empire without oil.

Thu, 07/12/2012 - 16:14 | 2610961 cougar_w
cougar_w's picture

The SPR is critical. We could conduct an entire 3 weeks of modern warfare on that reserve oil and still have enough left over to invade Canada and take what they have too.

See, you have to think these things through.

Thu, 07/12/2012 - 16:57 | 2611096 Flakmeister
Flakmeister's picture

Fully cranked up the US MIC uses ~2 mmbpd... so the SPR is good for 6 months or so...

Thu, 07/12/2012 - 17:03 | 2611113 GeezerGeek
GeezerGeek's picture

But I thought the Navy was switching to biofuels. If they can use cooking oil, during the next crisis they can nationalize all the fast food joints, confiscate the cooking oils, and sail around smelling like a french fry factory.

Thu, 07/12/2012 - 19:03 | 2611353 runlevel
runlevel's picture

we gota find reason to believe .ca has nukes or WMD's or better yet.. that they are trying to use GOLD! then i could see it 

Thu, 07/12/2012 - 16:43 | 2611059 LawsofPhysics
LawsofPhysics's picture

Not quite, fossil fuels may make things actually go, but the American military is what forces everyone to use DOLLARS when buying that oil or coal.

Now what's all this about the BRICs trading in something else other than dollars?  Sounds like you might want to wake up.

Thu, 07/12/2012 - 15:49 | 2610865 TrainWreck1
TrainWreck1's picture

Obama told us for every 1/2 pound we inflate our tires, we save 100 jillion gallons of oil.

Heeding his wise Harvard intellect, I inflated my tires to 200 PSI, to help save the planet.

Unfortunately, one of the tires suffered a colossal structural failure, and the resulting barometric EMP launched my mother in law clear into the next county.

"C'est terrible!" I exclaimed, then giggling went off to open another beer...


Thu, 07/12/2012 - 15:54 | 2610883 MillionDollarBoner_
MillionDollarBoner_'s picture

see..yo mamma got to the next county with zero carbon footprint

The POTUS knows his stuff ;o)

Thu, 07/12/2012 - 15:55 | 2610889 slackrabbit
slackrabbit's picture

 I inflated my tires to 200 PSI, to help save the planet. (maybe good, maybe bad) 

he resulting barometric EMP launched my mother in law clear into the next county. (so long as its not my county; Gold Bless You Sir!}


Thu, 07/12/2012 - 16:06 | 2610927 Mr. Fix
Mr. Fix's picture

I was laughing so hard when I read that, tears were streaming down my face.


 Thanks for brightening up my spirits today.

Thu, 07/12/2012 - 16:28 | 2611006 crawldaddy
crawldaddy's picture

you must be a real intellectual giant

Thu, 07/12/2012 - 16:35 | 2611036 TrainWreck1
TrainWreck1's picture

Junking posts again? :o)

Thu, 07/12/2012 - 16:26 | 2611002 crawldaddy
crawldaddy's picture

hey smart ass, the US waste over HALF our energy. If energy is so so valuable, why are we wasting half of it, and assholes like you come on here an act as if we dont?

Thu, 07/12/2012 - 18:21 | 2611274 krispkritter
krispkritter's picture

Definition of mixed emotions; watching your Mother-In-Law back off a cliff in your new Mercedes. "Ah, screw it. I got insurance."

Please, no one mention 'A-G-W' to 'C-R-A-W-L-D-A-D-D-Y'...

Thu, 07/12/2012 - 15:49 | 2610866 LongOfTooth
LongOfTooth's picture

There are rumblings from the LENR world which, if true, could change the energy picture completely.  

If they are true will the "big boys" allow it to happen?  Stay tuned.



Thu, 07/12/2012 - 15:53 | 2610875 slackrabbit
slackrabbit's picture

Interesting cover. 

Regardless of the Natural gas play (which I am invested in).

I'm more interested in the cold fusion - now names Low Energy Nuclear Reaction (LENR) stuff; via Rossi or Defkalion (no investment is possible of course, so I'll keep my mind open) 

US$70 billion so far (at least) spent on hot fusion - yet no energy has been produced - thanks GE - but the results on nikel-hydrogen reactions are now being investigated by NASA & MIT

Both famous 'debunkers' of cold fusion. In fact MIT is now giving a whole class / paper on it. 

If (and yes it is a bloody big IF) this works, Libor will be the least on anyone's worries...and if its a con?,,,,I'll put that in the high frequency trading and gold manipulation camp... ;-)


Just remember 'caveat emptor'

Thu, 07/12/2012 - 17:29 | 2611175 KK Tipton
KK Tipton's picture

LENR and Rossi? Do some digging.

Directory:Andrea A. Rossi Cold Fusion Generator (E-Cat) - PESWiki -

New Energy Times - Rossi's Italian Financial and Environmental Criminal History -

"Andrea Rossi Arrested in Monza: Tax Fraud and False Billing. Toxic Waste, Illegal Gold. Inventor of “Waste to Oil” Formula Jailed.” Recently Formed Trafficking Ring, A Successful Collaboration of International Accomplices."

"An index of more than 100 news reports of Rossi’s Italian criminal history as reported by major Italian newspapers. Rossi moved on and left the equivalent of two cargo ships worth of toxic waste, most of it liquid sludge, to poison the environment. He left the residents of the Milan area with the multi-million dollar cleanup bill."

Rossi Tells Florida Bureau He Has No U.S. Factory, No Nuclear Reactions -


Then the PES site goes on to say his stuff is credible. Psyop like everything these days?

Thu, 07/12/2012 - 21:27 | 2611679 sullymandias
sullymandias's picture

Dude Russia could be putting tens of billions into cold fusion research and we wouldn't hear a word about it. Any money spent on cold fusion research is USA is pure waste thanks to GE / big oil stranglehold on the federal government. Killed like they killed trolley systems across the country and multiple generations of electric cars.

Thu, 07/12/2012 - 15:55 | 2610879 CrashisOptimistic
CrashisOptimistic's picture

Tyler, I think you have misunderstood.

Most of these shale gas plays are "wet gas plays".  They are looking for associated oil or more usually NGLs (natural gas liquids, i.e., propane, ethane, butane).  NGLs are priced way over NG (methane).

It is the liquids that drive the money on these plays.  LNG for Asia (read Japan)is is focused mostly from Indonesia.  The motivation for almost all shale gas plays are crude+condensate and the NG associated NGLs. 

Thu, 07/12/2012 - 16:00 | 2610901 stateside
stateside's picture

I wrote about this Malaysia (Petronas) take-out in a report I published a few weeks ago.  Petronas took out Progress Energy for their Montney play.  Cumberland Oil is a tiny $2 million market cap company with land near Progress.  They just did a jv with Canadian Natural Resources Inc. (largest acreage owner in the Montney play up there) and are currently drilling a horizontal to prove the play.  Results are due in a few weeks.  I know US investors don't give a shit about these little Canadian junior plays but the report lays out the potential for those with a speculative bent.



Thu, 07/12/2012 - 16:04 | 2610915 Al Huxley
Al Huxley's picture

I thought we'd all agreed that the only race now is for USTs, and that resources and stuff we actually 'use' are passe, for dinosaurs and people who are living in the past instead of riding the paper wave of the future.

Thu, 07/12/2012 - 16:09 | 2610924 roccman
roccman's picture

ever wonder why the keystone pipeline does not interconnect with a domestic refinery?


oh - and do you think the super refineries being built in the far east are for their domestic supplies? riiiiight LOL!!!


naw- 'merica has been sold down the river...keep paying your taxes...supporting the troops...get that flag hoisted REALLY high (911 style!!) and shut the fuck up ...or get shot in the head.



Thu, 07/12/2012 - 17:46 | 2611207 KK Tipton
KK Tipton's picture

From *1870*, Bitchez!


The Constitution of No Authority, by Lysander Spooner -

Full version:


The ostensible supporters of the pretended "constitution," like the ostensible supporters of most terrocrats, are made up of three classes, viz.:

  1. Knaves, a numerous and active class, who see terrocrats as people they can use for their own aggrandizement or wealth.


  2. Dupes - a large class, no doubt - each of whom, because he is allowed one voice out of millions in deciding what he may do with his own person and his own property, and because he is permitted to have the same voice in enslaving, robbing, and murdering others, that others have in enslaving, robbing, and murdering himself, is stupid enough to imagine that he is a "free man," a "sovereign"; that this is "a free government," "a government of equal rights," "the best government on earth," and such like absurdities.


  3. A class who have some appreciation of the evils of terrocrats, but either do not see how to get rid of them, or do not choose to so far sacrifice their private interests as to give themselves seriously and earnestly to the work of making a change.



"All political power, as it is called, rests practically upon this matter of money. Any number of scoundrels, having money enough to start with, can establish themselves as a "government" (pretended); because, with money, they can hire soldiers, and with soldiers extort more money; and also compel general obedience to their will. It is with pretended "government," as Caesar said it was in war, that money and soldiers mutually supported each other; that with money he could hire soldiers, and with soldiers extort more money. So these villains, who call themselves "governments," well understand that their power rests primarily upon money. With money they can hire soldiers, and with soldiers extort money. And, when their "authority" or "jurisdiction" (pretended) are denied, the first use they always make of money, is to hire soldiers to kill or subdue all who refuse them more money. For this reason, whoever desires liberty, should understand these vital facts, viz.:

(a) That every man who puts money into the hands of terrocrats (who masquerade as "government"), puts into their hands a sword which will be used against himself, to extort more money from him, and also to keep him in subjection of their arbitrary will."

Fri, 07/13/2012 - 03:13 | 2612059 AnAnonymous
AnAnonymous's picture

US citizen nature is eternal.

You could write same stuff 142 year afterwards.

Aint life good in a US world order?

Thu, 07/12/2012 - 16:08 | 2610934 Beam Me Up Scotty
Beam Me Up Scotty's picture

Well, if WWIII happens and the population gets cut in half or more, then peak oil won't probably happen for a few hundred years.  If we get bombed into the stoneage, maybe a few thousand years.  Or, maybe we are all dead, and peak oil won't happen until the sun goes nova.

Thu, 07/12/2012 - 16:12 | 2610950 roccman
roccman's picture

i've always said - peak oil is temporary (temporarily)

Thu, 07/12/2012 - 16:16 | 2610971 MunX
MunX's picture

This is bad for king petrodollar. Got silver?

Thu, 07/12/2012 - 16:26 | 2610999 George Parr
George Parr's picture

Energy Game Changer

Peter Hegelstrein lecture, second video from the top: the juice begins at approx minute 12.

Thu, 07/12/2012 - 16:39 | 2611050 LawsofPhysics
LawsofPhysics's picture

Unfortunately, the amount of energy that goes into making those nano-fusion lattices is still prohibitive for any real-world application... for now.

The issue of fuel and waste still remains as well.  Wake me when just one city runs entirely on cold fusion.

Thu, 07/12/2012 - 16:27 | 2611003 orangegeek
orangegeek's picture

Nat gas is in the tank and oil is getting there.

Thu, 07/12/2012 - 16:35 | 2611035 John Bull
John Bull's picture




Thu, 07/12/2012 - 16:52 | 2611084 falak pema
falak pema's picture

LNG is now a known technology; expensive but known. With ErOEI going down and extraction costs going up, the game is to go long term on energy acquisition. Pacific rim is now where the action is. USA will have competition on its own continent for energy. Next will be venezuela oil and then CHile/Columbia for Lithium in the perspective of coming electrical battery age. 

Watch out USD hegemony, as Yuan zone will now go strong when Asia comes on to replace Europe as new growth zone. First world will be in doldrums under financial/energy/RM/ ecology/ demographic conundrum gun, for twenty more years until a new paradigm emerges for developed world. Meantime, its Asia calling! 

Thu, 07/12/2012 - 17:00 | 2611103 Flakmeister
Flakmeister's picture

The electricity that is required to liquify NG is about 10% of the NG energy....

So to export 1 unit of LNG requires roughly 1.1 units of NG with 0.1 units used to generate electricity...

Just a little perspective...

Thu, 07/12/2012 - 17:13 | 2611130 falak pema
falak pema's picture

well oil refining requires 2-5 % of inhouse energy to achieve usable commercial grade refined products, depending on refining product slate complexity. All industrial processes are energy expensive. 

For LNG you have additional energy depletion during transport and regasification at reception end, plus gas compression costs to cover distances to usage. Gas infrastructure is less energy efficient than liquid oil.

Thu, 07/12/2012 - 17:28 | 2611171 Flakmeister
Flakmeister's picture

Yep... something about cryogenic liquids needing to breathe....and that stuff is vented and ends up in the stratosphere where it is oxidized into C02 and H20....

Thu, 07/12/2012 - 17:37 | 2611189 falak pema
falak pema's picture

they've cut down the rain forests of Africa and Amazon and now the sea is left as the new global CO2 sink as the air is already spiking. The temp rise this century will be a bigger challenge to homo-dumb-sapiens than feeding gas guzzlers and air conditioners, if there is anybody that survives the 2° temp rise predicted from 2050+.

Thu, 07/12/2012 - 18:28 | 2611272 Flakmeister
Flakmeister's picture

Peak oil will limit us and when combined with AGW, will crash the system....

But we do have ~10-25 years before the SHTF unless someone gets real stupid in the interim....

I believe cooler heads will prevail in the China-Iran-USA oil embroglio, at least for now.... The North Koreans have demonstrated that nukes are a little harder in practice than in theory....

Thu, 07/12/2012 - 17:14 | 2611139 overmedicatedun...
overmedicatedundersexed's picture

LNG was a big profit center for MRO outta west africa, but then, it was LNG it or flare it . as the oil fields off beko island had high gas pressure. 

Thu, 07/12/2012 - 17:29 | 2611174 roccman
roccman's picture

^^^^^spot on^^^^^


the Great Levelization is underfoot - powerdown the west power up the east.


its been a global plan for a very long time...


delays "peak everything" because most in this world would gladly welcome even a small fraction of the quality of life western europeans and americans enjoy.


beats a kill-off, but americans are gonna learn a very hard lesson in conservation.


hell- wouldn't surprise me if china comes over here in US Warships and takes possession of all the unpaid mortgage think you got 25 years to pay it off...think again. 

Thu, 07/12/2012 - 18:01 | 2611243 Flakmeister
Flakmeister's picture

Globalization was never a plan.... it is the natural evolution of the free market capitalist system, i.e. identify value and exploit it... The only conspiracy is in how fast they dismantled the regulations that did not favor their aspect of the globalization process... Even then, the conspiracy was only due to the mutual natural interests, i.e. the pursuit of maximal ROE and profit....

Thu, 07/12/2012 - 18:42 | 2611302 roccman
roccman's picture



call it what you will...end game is the same ...


we live on tax farms

Thu, 07/12/2012 - 17:19 | 2611151 Let them eat iPads
Let them eat iPads's picture

Somebody needs to assassinate the Malaysian Prime Minister.


Preferably somebody who is ridiculously good looking.

Thu, 07/12/2012 - 19:45 | 2611457 Dr.Vannostrand
Dr.Vannostrand's picture

Thanks for the chuckle Mugatu!

Thu, 07/12/2012 - 17:51 | 2611225 Divine Wind
Divine Wind's picture




Thu, 07/12/2012 - 17:52 | 2611230 earleflorida
earleflorida's picture

The "WildCard" - Iran, 2nd largest natural gas reserves in world.       *[June/2013 new presidential elections? The newly elected president will be much 'more' obliging to the world community jmo]

suspended pipelines???   and this [dated?]

**again my answer is yes, with one caveat -     the notorious hideout territory for -


Ps.   Canada is in a bind geographically. You see, the revenues do nothing to improve the populous pocketbooks other than destroying their habitat forever if a spill does occur! Something a canadian hoosiers, such as Terrence and Phillip would never let happen no matter how much gold was placed at their feet.


Thu, 07/12/2012 - 18:30 | 2611288 beatus12
beatus12's picture

The entire energy industry is changing so fast around

the globe with shale. Shale will absolutely dominant

very quickly. The Asias are trying up the biggest fields

not because they need it, (actually China is exporting

n. gas this year) but because it's a money maker.

B.T.W. the biggest find of gas in n.east BC was just

recently announced by a US company.

Thu, 07/12/2012 - 18:40 | 2611299 Pairadimes
Pairadimes's picture

Bah! Nothing to worry about. We will burn our currency for warmth, and Government Motors will replace the Volt with a steam-powered car.

Thu, 07/12/2012 - 18:41 | 2611301 HungrySeagull
HungrySeagull's picture


The Dream which consumes many a Nuclear Scientist on a long enough time line.


Thu, 07/12/2012 - 18:45 | 2611309 Flakmeister
Thu, 07/12/2012 - 18:52 | 2611326 q99x2
q99x2's picture

If Germany that country in the upper latitudes generated 50% of its energy needs from solar a week or two ago then...why isn't the US using its desert states to power the country? Am I missing something or is this another conspiracy of facts.

Thu, 07/12/2012 - 19:48 | 2611461 Flakmeister
Flakmeister's picture

A conspiracy of fossil fuel interests is more like it...

BTW 50% sounds a tad high.... but your point is made....

Thu, 07/12/2012 - 18:54 | 2611330 tony wilson
tony wilson's picture

The Race for Energy Resources Just Got Hotter..

and poor oil  rich norway are getting sick of all the protection monies they are having to pay the brit and yank mob families.

gives us the money or more al cia da or brevik style big bang action.

iran has to be stopped because of oil and gas but also for the tesla technologies,cold fusion,plasma and hydrogen fuel cell developments.

the evil doers new technologies if released will ruin the oil ponzi scheme so like cold fusion and hydrogen cell 20 years ago will be made to dissapear.

poor iran

poor poor tesla fucked over by jpm 100 years ago and still fucked over by them today

Thu, 07/12/2012 - 19:40 | 2611447 Kina
Kina's picture

Japanese group INPEX just begining a $20bn+ LNG plant construction at Darwin in Australia's Northern Territory (they are piping the gas under ocean from Browse basin off Western Australia cost some 900km to Darwin, or thereabouts)

Statoil just bought into Candian company PFC 69c joint venture in the Georgina Basin - Central/Northern Australia, along with local minow Baraka (BKP 0.014c) 25% share - hot shale gas and oil, where possible oil reserves are estimated at something like 57bn barrels. So Statoil are in for a windfall if there wells produce (something they will have a good idea on within the next two months.)

Fri, 07/13/2012 - 11:19 | 2612994 beatus12
beatus12's picture

Another hugh story missed by alot was the 20B China

investment in N.Gas/Oil development  just approved

for N. Iran. Doesn't look like sanctions are slowing activity.

Thu, 07/12/2012 - 23:07 | 2611825 BlackHorsewithScales
BlackHorsewithScales's picture

That old magazine cover dates back to the sham discovery of "cold nuclear fusion".  These two ivy league PhDs tried to ramp up palladium by claiming a process that netted huge amounts of energy....reported back then on all the news shows and made that cover.  You needed some heavy water, a nine volt battery, some wire...and of course a palladium lattice.

It turned out to be BS, of course.  I only partly get the connection to the article.  The trip down memory lane is appreciated.

Fri, 07/13/2012 - 05:35 | 2612098 Shathawk
Shathawk's picture

"Australia, Russia, and Canada are among the few that do "


A.R.C. economies!

Can I have a Aurium$ucks bonus for this brilliant idea.

Or mabe.........

Oz-trailer, Rossiya & Can-aid-ya

ORC economies

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