IAGS - TiE Event July 30: Fuel Cells: The Next Technology
West African Oil: Hope or Hype?
President Bush's trip to the African continent has turned public attention to the Dark
Continent. Some analysts have trumpeted West Africa's large crude oil and gas as a possible
substitute for America's growing dependence on crude exports from the unstable Middle East.
Vice President Richard Cheney highlighted this view in his May 2001 National Energy Policy
Report: "West Africa is expected to be one of the fastest-growing sources of oil and gas for
the American market." He added, "African oil tends to be of high quality and low in sulfur,
making it suitable for stringent refined product requirements, and giving it a growing market
share for refining centers on the East Coast of the U.S."
Despite the optimism, the possible impact of the West African oil and gas reserves should
however not be overestimated. The West African oil province (the so-called Ecowas region
or Gulf of Guinea) holds 33.8 bln barrels of proven oil reserves, 3.1% of the global total.
Taking into account unproven reserves increases West Africa's share to around 7% of the world's
total. In comparison to known oil reserves in the Middle East - 690 bln barrels - West
Africa is at present nothing more than a minor player. Much of West Africa's oil reserves
are offshore and thus more expensive to extract.
While analysts look to the potential of West African oil to stabilize the international
oil markets by adding a new layer of supply under the current volatile oil sector, giving
traders and consumers more leeway to cope with crisis such as strikes in Venezuela or an
Iraq war, current optimism is based on prerequisites of stability in the region, increased
foreign investment, transparency and liberalization in the domestic petroleum sectors
of West Africa and geo-strategic considerations.
Revolutions, violence, ethnic unrest and corruption undermine the growth potential of the
petroleum sector in this vast region. Domestic political strife brought several African
countries to a standstill this past year. In March, international oil majors ChevronTexaco
and Shell were forced to suspend production in the Niger Delta region following violent
clashes and even outright kidnapping of international personnel. The 266,000 barrels per
day (bpd) of lost oil represented approximately 13% of Nigeria's total average production
of 2.1 million bpd. International oil markets felt the pressure.
The ever-growing illicit small-arms trade has added fuel to the fire. Warlords have wreaked
havoc in huge countries such as the Democratic Republic of Congo, Sierra Leone, Angola, parts
of Nigeria and Liberia. Over
the last months, international security services from the U.S,
the EU and Asia, have turned their attention to al-Qaeda operatives in West African countries,
such as Mauritania, Liberia, Sierra Leone and Burkina Faso. Illegal finance schemes involving
arms and terrorist networks have also surfaced.
Bi- or even multilateral border disputes over control of potentially oil rich territories pose
a threat to on- and offshore developments. Congo and Angola are in conflict over access to
offshore oil; according to Congo the dispute is depriving it of as much as 200,000 bpd.
Nigeria has multiple disputes with other states, of which the
disputed Bakassi peninsula is the most pressing one.
Since West African oil producing states are almost solely dependent on oil income, volatile international oil prices have profound impact on local economies, leading, as in the case of Nigeria, to potentially paralyzing national strikes.
Oil related corruption is rampant in the region. According to
Nigeria is the world's second most corrupt country, and corruption is growing in Gabon,
Equatorial Guinea, Angola, Ghana, and various other West African countries, including oil
newcomers such as Sao Tome, whose government was just toppled by a military coup. In an effort to combat this problem, a push for transparency
and liberalization has increased pressure on international oil operators, such as Shell or
BP, to open their books. The "Publish What You Pay"
campaign, sponsored by George Soros'
Open Society Institute and Global
Witness, and supported by over 130 NGOs, has called on
international extraction companies to "publish net taxes, fees, royalties, and other payments
made so civil society can more accurately assess the amount of money misappropriated and lobby
for full transparency in local government spending." Underlining the effort, British Prime
Minister Blair announced the Extractive
Industries Transparency Initiative, endorsed by a
coalition of institutional investors, during the World Summit on Sustainable Development in
Johannesburg this past September.
Nigeria, by far the largest West African producer, provides a concrete example of the risks
of relying on the region. Nigeria was the fifth largest crude exporter to the US in 2002,
behind Saudi Arabia, Mexico,
Canada and Venezuela.
According to the DOE's Energy Information
Administration (EIA,) Nigeria's exports to the U.S. declined from 842,000 bpd in 2001
(9.03% of total U.S. imports) to around 567,000 bpd in 2002 (6.27% of U.S. imported crude
oil.) Increased reliance on Nigeria means increased exposure to unrest, disputes and
instability in this volatile country. Since Nigeria is a member of
OPEC its crude oil
exports are also limited by the oil cartel's policy restrictions, which already constrain
further expansion of production.
Production sharing agreements in Africa have left international oil companies with a smaller
percentage of revenue than popularly believed and thus little tolerance for the additional
heavy risk premiums brought on by instability. West Africa's volatility limits its appeal to
investors and impacts the likelihood of oil industry expansion. It remains to be seen whether
the rush to Africa will improve America's energy security or replay in another arena the
problems the U.S. currently faces in the Middle East.
Dr. Cyril Widdershoven is the editor of Global Energy Security Analysis (GESA) and IAGS associate fellow.
Africa Drowns in a Pool of Oil
IAGS LA Times Op Ed by Gal Luft: Bush can help Africa by leaning on international companies to stop
paying off corrupt officials.
Terrorist Threats in Africa
Toward the end of his five-nation tour of Africa, President George W. Bush warned in Nigeria that he would not allow extremists to use
the continent as a base for attacks. He also repeated a call for Liberian President Charles Taylor, known for harboring al-Qaeda operatives,
to resign and leave the country.
These two statements show how central Africa's position is to the U.S. war on terrorism. Open borders between states,
lawlessness and corruption, have made parts of Africa attractive havens for terrorists. It is
where they go to relax, refit and
refinance. The impoverished, and often radicalized, societies in the region offer willing volunteers, training places, weapon supplies and a
variety of poorly protected western targets. Among the results were the
of the U.S. embassies in Kenya and Tanzania
in which 291 people were killed and 5,000 wounded; last November, 16 people were killed when a hotel was
blown up in Mombasa, Kenya, while at the very same time terrorists fired missiles at an Israeli airliner carrying over 200 passengers.
All of these attacks were executed by al-Qaeda.
Osama bin Laden is known to have sent emissaries to various African countries in an effort to unite Islamic groups under the
umbrella of al-Qaeda.
One such emissary, Emad Abdelwahid Ahmed Alwan, aka Abu Mohamed, one of bin Laden's key lieutenants, was targeted last
year by Algerian authorities. The Yemeni terrorist traveled in June 2001 from Afghanistan to Chad and from there to Niger,
Mauritania, Mali and Nigeria, finally reaching
Algeria in early 2002. Another al-Qaeda agent still on the loose is Fazul
Abdullah Mohammed, suspected to be behind the 2002 Mombasa attacks. British and U.S. intelligence sources believe
he is still in Kenya and could be plotting an attack on a western target in the region.
According to U.S. and British intelligence sources "clear terrorist threat'' exists in Somalia, Tanzania, Uganda, Ethiopia,
Eritrea and Djibouti. One additional country facing a significant rise of radical Islam and terrorist threat is Nigeria, home to
Africa’s largest Muslim population and a major oil producer. U.S. ambassador to Nigeria Howard Jeter said recently that
Nigeria faces real threat of al-Qaeda attack because of its close ties with Washington. And indeed, in February, al Jazeera
television aired a message allegedly from bin Laden listing Nigeria as one of six countries which needed to be "liberated" from
Africa’s diamonds provide a large part of al-Qaeda's funding. There are many links between al-Qaeda and the illicit trade in
so-called "conflict diamonds" or "blood diamonds" bought from rebel groups in Africa, primarily in Sierra Leone. The London
based organization Global Witness working to expose the link between natural resource exploitation and human rights abuses
has estimated that al-Qaeda laundered $20m through diamonds purchases. According to David Crane, the head of Sierra
Leone's U.N.-backed war crimes court, al-Qaeda's dealing in "conflict diamonds" took place under the protection of Liberian
President Charles Taylor. This evidence against Taylor is one of the reasons President Bush insisted on his removal. Bush said
Taylor must step down and that the U.S is "not going to take 'no' for an answer."
To reduce the threat of terrorism from Africa, the U.S government launched several programs
designed to assist countries like Mali, Niger, Chad, Kenya and Mauritania in combating
terrorism by helping them protect their borders, track movement of persons and illicit
materials and control financial transactions. The Bush administration announced a
new $100 million anti-terrorism initiative designed to enable allies to improve their
counter-terrorist efforts. The war on terror has brought about a growth in U.S. military
footprint in Africa, particularly in East Africa where military bases and access to ports
and airfields are of increasing strategic importance. Washington is reportedly considering
requests by the U.N. that it head up a peacekeeping force in Liberia. But the growing presence
of U.S. forces in Africa is a double-edged sword. On the one hand it allows African countries
to improve their counter-terror capabilities and restore order in places of turmoil. On the
other hand, increased presence of U.S. forces in the region could make Americans more
vulnerable to attacks. This is especially true in countries where radical
Muslim groups operate or enjoy support of the local government.
State Department: Patterns of Global Terrorism 2002--Africa Overview
Global Witness: How al Qaeda moved into the diamond trade
On the technology front
Federal Express starts using GM fuel cell vehicle for deliveries in Japan
FedEx and GM officially launched the first commercial test of a fuel cell vehicle
in Japan. The firms are collaborating on a
one-year test program in which FedEx will operate GM's HydroGen3
fuel cell vehicle, based on the Zafira MPV,
on its regular delivery routes in the
metropolitan area of Tokyo. The HydroGen3 has a range of 250 miles and a top speed of 100 miles per hour. It is
GM's first entry in the recently announced Japan Hydrogen and Fuel Cell Demonstration Project, directed by Japan's
Ministry of Economy, Trade and Industry (METI). Japan is particularly concerned with enhancing its energy security by
transitioning to next-generation
fuels: over half of the energy Japan consumes comes from oil, and since Japan has no reserves it is completely
dependent on imports, almost 90% of which come from the Middle East.
GM will collect data from FedEx on a daily basis, to determine how its fuel cell vehicles
operate under the demanding commercial driving conditions faced in Tokyo, and will provide all vehicle
engineering and maintenance.
"To really prove that fuel cell vehicles are equal to or better than conventional, internal combustion vehicles, you need to operate them under tough, every-day conditions," said Raymond Grigg, Chairman and CEO, Representative Director, General Motors Japan Ltd. "Our fuel cell technology has advanced to the point where it's important to involve a real heavy-duty commercial user in our research and development activities. We expect to learn a lot by having FedEx Express put our HydroGen3 to the test on their daily delivery runs on the streets of Tokyo. This is how you truly prove durability and dependability."
Larry Burns, GM vice president of research
and development, and planning, said "This is another key step toward true commercialization -- when we can sell large numbers of fuel cell vehicles to consumers
at prices they can afford and that also make sound financial sense for GM," adding, "It's really important to get fuel cell
vehicles on the road in competitive business environments like the ones FedEx works in on the streets of Tokyo. They run a
very successful global operation that demands reliability and durability."
GM recently announced a partnership with Shell Oil to provide hydrogen refueling for a fleet of GM HydroGen3s in
Washington, D.C. And in May, GM and Dow Chemical Company signed the world's largest-ever fuel
cell power deal.
Japan: Agency for Natural Resources and Energy
FedEx seeks ways to curb dependency on gasoline
Boeing announces partners for Fuel Cell Demonstrator Airplane Project
Boeing announced its partners for a demonstration airplane project aimed at exploring the use of fuel cell technology for
future aerospace applications.
The project will evaluate the potential application of fuel cell technology for future commercial airplane products. As part of the evaluation, the project will develop
and flight-demonstrate an electric-motor-driven airplane powered by fuel cells.
The project is led by the Boeing Research and Technology Center in Madrid, Spain,
Diamond Aircraft of Austria will supply the demonstrator
airplane, based on a certified Katana Xtreme motor-glider (in Europe called the Super Dimona); Intelligent Energy of the
United Kingdom will provide the Proton Exchange
Membrane fuel cell hardware and technical support; Spanish firm Sener will design
and build a fuel cell controller unit to be used in research activities; Aerlyper, also of Spain, will integrate the electric motor into the airplane
and perform airframe modification work; and U.S. firm Advanced Technology Products (ATP) will supply the motor, batteries, and controllers to complete the electric
propulsion system, and perform the flight testing of the airplane.
Work to integrate the fuel cells into the demonstrator airframe is expected to begin at the end of summer 2003,
enabling a possible flight test in late 2004 or early 2005.
In addition to being inherently cleaner and quieter than current technology gas turbines, fuel cells can generate approximately
twice as much electricity from the same amount of fuel. Unlike a battery, which needs to be recharged, fuel cells keep
working as long as the fuel lasts. Fuel cells and electric motors could potentially
replace gas turbine auxiliary power units, which provide electricity and air for airplane systems.
Also see: Coal fuel for jets
Yamaha Motor tests methanol fuel cell powered small motorcycles
Yamaha Motor, Japan's second-largest motorcycle maker, is testing a fuel cell powered scooter that runs on
methanol, a hydrogen rich liquid fuel with physical characteristics similar to gasoline. The scooter's fuel cell produces
500 watts of power, about equivalent to that of a 50cc motor.
Yamaha's test scooters have reached speeds of 25 miles per hour. The prototype can travel about 125 miles on a 1.3 gallon
Yamaha intends to cut the weight of the vehicle from its current 44 lbs with a full methanol tank to 22lbs. Yamaha is also
considering boosting acceleration by coupling the fuel cell with a lithium ion battery in a hybrid fuel system.
Also see: DOE: Clean Coal-to-Methanol project a success.
Eastman CEO: Coal gasification solution for natural gas crisis
In testimony before the U.S. Senate's Energy and Natural Resources Committee, J. Brian Ferguson,
chairman and CEO of Eastman Chemical Company, said that
coal gasification is one of the long-term solutions to help the U.S. overcome a growing
natural gas crisis. The committee met to hear testimony on the impact of soaring natural gas
prices and possible solutions.
Ferguson noted, "Short-to-medium term solutions include reducing natural gas demand and increasing natural gas production.
Long-term, however, federal environmental, energy and economic policies must achieve better alignment."
He added, "It is economically unsustainable to continue policies that drive natural gas demand while simultaneously limiting
to natural gas supplies without providing a balancing energy alternative. One of the long-term alternatives
to help alleviate this natural gas crisis is tapping into America's vast coal reserves - through the use of competitive coal
gasification technology - to reduce natural gas demand."
The U.S. has a quarter of world coal reserves, but less than 3% of global natural gas reserves.
The U.S. accounts for a quarter of global natural gas consumption.
Coal gasification uses a chemical process to turn coal into synthesis gas (syngas) that can be
used like natural gas.
While European chemical manufacturers derive most of their raw materials from globally traded oil feedstocks; U.S.
manufacturers are tied primarily to natural gas. Thus, Ferguson said "the current situation threatens the entire U.S. chemical industry
as we try to compete with this now disadvantageous feedstock."
"Even though Eastman believes that coal gasification is ready for further commercialization right now, some additional
market incentives such as the Clean Coal Power Initiative and the proposed clean coal tax credits are useful and
necessary inducements," Ferguson said.
Also see: Greenspan warns on implications of natural gas shortage