Poor Saudi Arabia. They don’t realize it yet but they have lost
their oil war. The war in its current phase began in September, 2014,
when the dying King Abdullah and his Minister of Petroleum, Ali
Al-Naimi, told US Secretary of State John Kerry they would gladly join
Washington in plunging world oil prices. It became clear the main Saudi
motive was to eliminate the new growing challenge to their control of
world oil markets by forcing prices so low that the US shale oil
industry would soon go bankrupt. For Kerry and Washington the focus, of
course, was to economically cripple Russia in the wake of new US
sanctions by damaging their revenues from export of oil. Neither
achieved their aim.
Now, however, it’s clear that Saudi Arabia, which along with Russia
is the world’s largest oil producer, is going down a dark road to ruin.
Washington seems more than happy to cheer them on.
The long-term Washington strategy since at least 1992, well before
September 11, 2001 and Washington’s declaration of its War on Terror,
has been by hook or by crook, by color revolution or outright invasion,
to directly, with US “boots-on-the-ground,” militarily control the vast
oil reserves and output of the major Arab OPEC oil countries. This is a
long-standing institutional consensus, regardless who is President.
Cheney: ‘Where the Prize Ultimately Lies’
To appreciate the long-term strategic planning behind today’s chaotic
wars in the Middle East there is no better person to look at than Dick
Cheney and his statements as CEO of the then-world largest oilfield
services company. In 1998, four years after becoming head of
Halliburton, Cheney gave a speech to a group of Texas oilmen. Cheney
told the annual meeting of the Panhandle Producers and Royalty Owners
Association in reference to finding oil abroad, “You’ve got to go where
the oil is. I don’t think about it [political volatility] very much.”
During his first five years as CEO of Halliburton, Cheney took the
company from annual revenues of $5.7 billion to $14.9 billion by 1999.
Halliburton foreign oilfield operations went from 51% to almost 70% of
revenues in that time. Dick Cheney clearly looked at the global oil picture back then more than most.
In September 1999 Cheney delivered a speech to the annual meeting of
an elite group of international oilmen in London. One section is worth
quoting at length:
“By some estimates there will be an average of two per
cent annual growth in global oil demand over the years ahead along with
conservatively a three per cent natural decline in production from
existing reserves. That means by 2010 we will need on the order of an
additional fifty million barrels a day. So where is the oil going to
come from?
Governments and the national oil companies are obviously controlling
about ninety per cent of the assets. Oil remains fundamentally a
government business. While many regions of the world offer great oil
opportunities, the Middle East with two thirds of the world’s oil and
the lowest cost, is still where the prize ultimately lies, even though
companies are anxious for greater access there, progress continues to
be slow.”
The PNAC Warplan
Now let’s follow that bouncing ball sometimes called Dick Cheney a
bit further. In September 2000 Cheney signed his name before his
selection as George W. Bush’s vice presidential running-mate, to an
unusual think-tank report that became the de facto blueprint of US
military and foreign policy to the present. Another signer of that
report was Don Rumsfeld, who would become Defense Secretary under the
Cheney-Bush presidency (the order reflects the reality–w.e.)
The think-tank, Project for a New American Century (PNAC), was
financed by the US military-industrial complex, supported by a gaggle of
other Washington neo-conservative think tanks such as RAND. The PNAC
board also included neo-conservative Paul Wolfowitz, later to be
Rumsfeld’s Deputy Secretary of Defense; ‘Scooter Libby,’ later Vice
President Cheney’s Chief of Staff. It included Victoria Nuland’s
husband, Robert Kagan. (Notably Victoria Nuland herself went on in 2001
to become Cheney’s principal deputy foreign policy adviser). It included
Cheney-Bush ambassador to US-occupied Afghanistan and Iraq, Zalmay
Khalilzad, and hapless presidential candidate Jeb Bush.
Cheney’s PNAC report explicitly called on the future US President to
remove Iraq’s Saddam Hussein and militarily take control of the Middle
East a full year before 911 gave the Cheney-Bush Administration the
excuse Cheney needed to invade Iraq.
The PNAC report stated that its recommendations were based on the
report in 1992 of then-Secretary of Defense, Dick Cheney: “In broad
terms, we saw the project as building upon the defense strategy outlined
by the Cheney Defense Department in the waning days of the Bush
Administration. The Defense Policy Guidance (DPG) drafted in the early
months of 1992 provided a blueprint for maintaining U.S. pre-eminence,
precluding the rise of a great power rival, and shaping the
international security order in line with American principles and interests.”
At a time when Iran as a putative nuclear “threat” was not even on
the map, PNAC advocated Ballistic Missile Defense: “DEVELOP AND DEPLOY
GLOBAL MISSILE DEFENSES to defend the American homeland and American
allies, and to provide a secure basis for US power projection around the world.
In the report Cheney’s cronies further noted that, “The military’s
job during the Cold War was to deter Soviet expansionism. Today its task
is to secure and expand the “zones of democratic peace; (sic)” to deter
the rise of a new great-power competitor; defend key regions of Europe,
East Asia and the Middle East; and to preserve American preeminence…”
The Cheney PNAC document of 2000 went on: “The United States
has for decades sought to play a more permanent role in Gulf regional
security. While the unresolved conflict with Iraq provides the immediate
justification, the need for a substantial American force presence in
the Gulf transcends the issue of the regime of Saddam Hussein.“
The quote is worth reading at least twice.A year after the PNAC report was issued, then-General Wesley Clark,
no peacenik to be sure, in a March 2007 speech before the Commonwealth
Club of California in San Francisco, told of a Pentagon discussion he
had had shortly after the strikes of September 11, 2001 at the World
Trade Center and Pentagon with someone he knew in Defense Secretary
Rumsfeld’s office.
Ten days after the 911 attacks, Clark was told by the former Pentagon
associate, a general, that the Pentagon planned to invade Iraq. This
was when Osama bin Laden, a bitter foe of the secular Baathist
Socialist, Saddam, was being blamed for the terror attacks, and there
was no 911 link to Iraq’s government. Clark related his conversation
that day with the general:
“We’ve made the decision we’re going to war with Iraq.”
This was on or about the 20th of September. I said, “We’re going to war
with Iraq? Why?” He said, “I don’t know.” He said, “I guess they don’t
know what else to do.” So I said, “Well, did they find some information
connecting Saddam to al-Qaeda?” He said, “No, no.” He says, “There’s
nothing new that way. They just made the decision to go to war with
Iraq.”
“I came back to see him a few weeks later, and by that time we were
bombing in Afghanistan. I said, “Are we still going to war with Iraq?”
And he said, “Oh, it’s worse than that.” He reached over on his desk. He
picked up a piece of paper. And he said, “I just got this down from
upstairs” — meaning the Secretary of Defense’s office — “today.” And he
said, “This is a memo that describes how we’re going to take out seven
countries in five years, starting with Iraq, and then Syria, Lebanon,
Libya, Somalia, Sudan and, finishing off, Iran.”
These were all wars, or attempted wars from the US for military
control of the most abundant proven oil regions of the world, what
Cheney in 1999 described as, “where the prize ultimately lies.”
Since that time, the US State Department and a host of
government-tied NGO’s such as National Endowment for Democracy, Freedom
House, Soros’ Open Society Foundations and others, along with the CIA,
have launched the US-orchestrated (“lead from behind” is the current
slogan) Arab Spring series of “democratic” regime coups across the
Middle East, including Hillary Clinton’s war against Qaddafi in Libya,
against Bashar al Assad in oil-and-gas-rich Syria, in Iraq yet again,
Egypt and other oil or gas states of the Middle East, including an
failed 2009 Color Revolution, the so-called “Green Revolution” in Iran.
US Agenda in the Mideast
The Washington Pentagon and US State Department agenda today in the
Middle East has not varied one bit from that described by General Clark
about his September 20 2001 Pentagon talk. It has expanded, but the aim
is the same: full US military control of the heart of world oil flows,
the Persian Gulf and beyond. As Henry Kissinger is alleged to have said
during the first oil shock of the arly 1970’s (which he was instrumental
in making happen), “If you control the oil, you control entire nations
or groups of nations.”
Here we come to the September, 2014 Kerry-Abdullah deal. Washington
ultimately has her eye on controlling the Saudi monarchy and its vast
oil reserves, along with those of Kuwait and other Gulf Cooperation
Council US “allies.” Britain, whom Charles de Gaulle referred to as
“perfidious Albion,” is not the only perfidious world power.
After major surprises in their 2014 strategy of killing Russia’s oil
revenue with Saudi help, when their own booming oil shale industry began
to face major company bankruptcies, Washington was forced to
recalculate. When Russia made its surprise entry into Syria on
invitation of her legitimately elected President, Assad, on September
30, 2015, Washington was forced again to recalculate. Now the new plan
seems to be to give Saudi Arabia “enough rope to hang herself” as that
Soviet hangman, V. I. Lenin, was fond of saying.
When Prince Salman, the de facto Saudi King, fired the architect of
Abdullah’s oil strategy to destroy US shale and regain world oil
hegemony earlier this year and replaced him by ARAMCO chairman, Khalid
Al-Falih, someone said to be more compliant with the 31-year-old erratic
Prince Salman, Khalid immediately announced no plan to alter the low
price high-production strategy of the Kingdom in order to kill the US
shale rivals. That, despite mounting evidence the world oil market had
undergone profound change since 2014.
It seems, however, that the US shale producers are far more resilient
than the wily Prince Salman has calculated. On April 26, in testimony
before the US Senate Energy and Natural Resources Committee’s “Hearing
to examine challenges and opportunities for oil and gas development in
different price environments,” Suzanne Minter, Manager, Oil and Gas
Consulting at Platts’ Analytics presented pretty interesting details
that help explain why the volume of US shale oil has not yet collapsed
despite a fall in global oil prices from around $103 a barrel in
September 2014 to a range of $40-50 a barrel today. Most shale projects
were to have gone under at prices below $65 or thereabouts.
In her testimony, Minter described extraordinary technology changes
that have allowed US shale oil producers to survive and more. She noted
that since 2012 US oil production grew by 57% from 6.1 million barrels
per day (mmb/d) to a peak of 9.7 MMB/d in April of 2015.
Almost all was due to new shale oil output. That’s 3.6 million barrels
of US shale oil a day, a huge volume for the world oil market, including
Saudi Arabia, to deal with.
Minter described the effects of huge technology improvements using
the Texas Eagle Ford Basin shale region as an example: “Currently the
Eagle Ford accounts for 13% of US crude production. In October, 2014 the
rig count in the Eagle Ford peaked at 209 rigs. At that time, the
average initial production (IP) rate for a well in the Eagle Ford was
436 barrels of crude per day and the average time it took to drill a
well was 15 days. At that time, those 209 rigs, should they have
remained in the basin, and continued to drill at that rate of one well
every 15 days, would have ultimately produced 3.3 MMB/d of crude in the
Eagle Ford by 2020.”
Then she describes the technology gains in production as well as time
to drill and how many wells needed to get the same shale oil output.
It’s impressive:
“In 2015 as producers cut their rig fleets, the rigs
remaining now sit on the best known acreage. Resultantly, the average IP
rate in the Eagle Ford increased by 50% to 662 barrels of crude per day
and average drill times have fallen by 25% to 11 days. As a result, the
current rig count of 49 in the Eagle Ford could theoretically hold
production flat at the current estimated level of 1 MMb/d, so long as
those 49 rigs stay in the basin through 2020 and continue to drill one
well each every 11 days with an IP rate of 662 barrels each. This also
means, that when recovery occurs, the Eagle Ford would only
require 125 rigs to create the 3.3 MMB/d previously projected by 2020
that had once required 209 rigs to produce.”
Minter continued, “The time and the rate in which this energy entered
the market appears to have stressed the system in ways unimagined”
making the US producer, “the marginal supplier and price setter into the
global market.” The Platts oil expert continued, “Drilled but
uncompleted wells hold reserves that can be brought on line in a short
period of time, thereby defining the concept of spare capacity. It is
plausible to believe that US spare capacity may be close to rivaling
OPEC’s current spare capacity. However, we believe that the
prices needed to incentivize the US producer to complete their drilled
but uncompleted wells may be much lower than global competitors believe
or would like it to be. Minter concluded, “Texas alone could introduce 1.25
MMB/d of oil into the global market and can do so in a short space of
time – on average just 30 days. That’s more oil than the Saudis have
threatened to flood the market with.”
So poor Prince Salman and his Royals may soon face an internal revolt
by jealous and angry Royal rivals for destroying the finances of the
once-super-rich Saudi Kingdom. The only fly in the US shale oil soup,
however, is how long the shale oil bonanza can last. Shale oil reservoir
depletion rates are significantly faster that with conventional wells.
Some estimate that shale volumes in the US will drop dramatically,
despite the new technologies, within five or so years. But by then
Washington’s foolish Pentagon planners hope to have locked the entire
Persian Gulf into their military grip, including the foolish Saudis.
Both sides have a mad agenda.
Source: Global Research
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