About Stuart Hampton

The Arctic is “hot” again. No, really.

In previous centuries, the expeditions of James Cook, John Franklin, William Parry and others held out an (unfulfilled) commercial promise — an ice-free and relatively short sea route through the Arctic (the Northwest Passage) linking the riches of Asia with the markets of Europe.

Today, melting ice caps and rising oil prices have combined to create a new commercial opportunity in the Arctic. A major geological survey has found that the region might hold as much as a fifth of the world’s yet to-be-discovered oil and natural gas reserves. In a major assessment, the U.S. Geological Survey reported last week that the Arctic might have up to 90 billion barrels of undiscovered oil reserves, and 1,670 trillion cubic feet of natural gas. On its face, this is equivalent to 13% of the world’s total undiscovered oil and 30% of its undiscovered natural gas.

Good news for the governments of the  US, Canada, Russia, Norway, and Denmark (through its Greenland dependency) and the numerous oil and gas companies that do business with them. According to Donald Gautier, the chief geologist for this U.S. Geological Survey project (despite a history of contentious territorial disputes) “most of the resources are on the continental shelf in areas already under territorial claims.”

Big Oil already has experience in the Arctic — the development of Alaska’s North Slope in the 1970s brought in such giants as BP, Shell, and ConocoPhillips, all of which currently jointly own and operate the 800-mile long Alyeska Pipeline, which links the oil fields of Prudhoe Bay to the port of Valdez. Russian and Canadian companies have had similar success in exploiting onshore Arctic oil and gas assets in their countries.

The prospect of drilling on the continental shelf in the Arctic raises serious environmental and conservation concerns. Environmentalists fear the addition of industrial activity might help speed the already accelerating melting of sea ice, reinforcing global warming. Conservationists are concerned about the threat of massive drilling to the Arctic’s unique natural systems and wildlife, and the dispruption to the way of life of indigenous peoples.

But the drive for new hydrocarbon sources is strong, and the Arctic has already proven its potential. In the past several decades, more than 400 fields have been discovered in the Arctic, with reserves of more than 1,100 trillion cubic feet of natural gas and 40 billion barrels of oil (or about 10% of the planet’s conventional oil and gas resources).

However, the Arctic is a long way from civilization and new fields may take a decade or more of expensive infrastructure creation to get the oil to market. Ditto the Northwest Passage. Captain Cook’s dream may now actually be a reality. (Last year, the ice-free Northwest Passage across the top of Canada was navigable by large ships for the first time). But with no nearby infrastructure (communications networks, power grids, ports, etc) the viability of a new shipping route, like the commercial availablity of new Arctic oil,  is still many years away.

In Stanley Kubrick’s landmark movie Dr. Strangelove, Slim Pickens (as Major T.J. “King” Kong) took a memorable ride astride a nuclear bomb, cowboy hat in hand, triggering an atomic Armageddon. By contrast, another “cowboy” named Pickens, oilman T. Boone, is seeking to avoid a slow motion energy Armageddon in the US, by getting astride America’s future energy policy.

Octogenarian multibillionaire T. Boone Pickens has come up with The Pickens Plan, a bold move to address America’s dependence on foreign oil. The former Phillips (now ConocoPhillips) employee became one of the first independent oil operators (through his Mesa Petroleum company) to grow an oil business through the acquisition of much larger companies (rather than through the old-fashioned drill-bit method). By the 1980s, he had achieved a reputation as a voracious corporate raider. Successful takeover bids included Hugoton Production Company, Pioneer Petroleum, and a large slice of Tenneco. Unsuccessful bids included Gulf Oil, Phillips Petroleum, and Unocal. He moved into hedge funds in 1997 founding BP Capital Management (then known as BP Energy Fund). BP Capital Management operates hedge funds Capital Commodity and Capital Equity, both of which invest heavily in oil and natural gas.

For those who only know T. Boone as an oilman, the opening lines of The Pickens Plan may come as a shock:

“America is in a hole and it’s getting deeper every day. We import 70% of our oil at a cost of $700 billion a year — four times the cost of the Iraq war.

I’ve been an oilman all my life and this is one emergency we can’t drill our way out of. But if we create a new renewable energy network, we can break our addiction to foreign oil.”

His 10 year plan, in essence, takes the 20% of electrical power that uses natural gas as its primary source and replaces it with wind energy. The natural gas that is freed from power generation then becomes primarily a transportation fuel source, supplying a new generation of natural gas-powered automobiles. In addition to reducing the US’ dependence on foreign oil by more than a third, natural gas is a cleaner burning fuel, and the US and Canada has it in abundance.

But some critics see slim pickins in The Pickens Plan:

• The $1 trillion price tag to build a massive new transmission infrastructure to tie the turbines to the national power grid has electrical power groups baulking. And what about those hot summer days when the grid is under stress and the wind does not blow?

• On the natural gas side, the premise of cheap natural gas prices is a shaky one at best. In addition, natural gas automobile engines burn gas less efficiently than the power plants, so why make the shift?

• T. Boone Pickens’ vision of the future is shaped by his own self interest. He has been investing heavily in wind power, and buying up water rights in many of the areas where the new wind power grids will be developed — the Great Plains. (Always hedging his bets, Pickens will be able to buy and sell water rights when that commodity become even scarcer than it is today). He plans a 4,000 MW wind farm, the world’s largest, in Pampa in the Texas Panhandle.

My take on The Pickens Plan?

For introducing a plan that cuts US dependence on foreign oil by 38% in 10 years, and for triggering a serious national discussion on energy policy on the eve of a US Presidential election, Pickens deserves much credit.

I see rich pickins in The Pickens Plan.

With oil futures prices flirting with $150 a barrel, and world demand outstripping supply, governments, scientists, and energy companies are casting about, looking for both short- and long-term solutions for future energy sources. An emerging consensus (the drill more oil in more places — ANWR, the Federal lands, and the Continental Shelf — lobby notwithstanding), is to diversify the energy supply source base beyond hydrocarbons.

Green energy technologies such as wind turbines and solar-powered batteries are being steadily integrated into the energy mix. Texas, for instance, has emerged as a leading implementer of wind-powered generating plants. Three of the five largest wind farms in the US are located there. The world’s largest wind farm, Horse Hollow Wind Energy Center, was completed by FPL Energy (a unit of the FPL Group) in late 2006. Other power companies with wind energy interests in Texas include American Electric Power, AES, Austin Energy, Catamount Energy, and Edison Mission Energy.

Solar energy also has gained a solid foothold in the worldwide energy matrix, through such companies as BP Solar International, Suntech Power, Q-Cells, and Solarworld.

A lesser known power source, and one of the oldest, is tidal power. Tide mills date back to Roman times, and operated much like windmills, but with the tide rather than the wind powering the turning a wheel that rotated a millstone that ground grain into flour. Augustinian Canons operated one in Woodbridge in the east of England in the 12^th century. By the 18^th and 19^th centuries there were as many as 750 tide mills operating on both sides of the Atlantic, with about 300 in North America, 200 in the UK and Ireland, and 100 in France.

The main advantage was in the technology. Unlike windmills or even river-powered watermills (whose effectiveness was impaired by calm weather or droughts), the tidal mills could reliably operate 365 days a year.

Fast forward to today. Recent advances in turbine technology (a byproduct of wind turbine development) hold out the promise of using large-scale turbine arrays in high-velocity areas where natural and strong tidal current flows are concentrated — such as the coasts of Canada, the Straits of Gibraltar, and the Bosporus Straits — to generate significant power.

Some examples of what those advances have brought:

• In the US, Pacific Gas & Electricity teamed up in 2007 with the City and County of San Francisco and Golden Gate Energy to study harnessing the tides in San Francisco Bay to create a new source of renewable electric power.
• In the UK, E.ON and Lunar Energy (a British tidal power company), announced plans that year to develop a tidal stream power scheme of up to 8MW in the sea off the west coast of the UK, capable of producing enough power to service about 5,000 homes.
• In March 2008, Harland and Wolff (the shipbuilder famous for building the Titanic) completed construction of the world’s first commercial tidal stream turbine, for Marine Current Turbines. The installation of the 1.2 MW SeaGen Tidal System took place in the fast flowing narrows of Strangford Lough in Northern Ireland in April.
• This year, a joint venture between Lunar Energy and Korea Midland Power Company, was formed to create a tidal power scheme in the Wando Hoenggan waterway, expected to power 200,000 homes by 2015.

With tidal power technology only a few years behind the wind power generation systems that are becoming a regular part of utilities’ operations in the US and elsewhere, generating power from fast-moving ocean currents is about to become mainstream.

It’s just a matter of going with the flow.

High gas prices have you pulling your hair out?

Let me take you back to a simpler time, when abundant crude oil and good hair went together. A time when the murky (Pennsylvania Crude Oil) and the quirky (the prophecies of Edgar Cayce) held out the prospect of a fuller head of shiny hair.

The oil fields of Pennsylvania saw the birth of the modern oil industry in the1860s. Easy-to-access, paraffin-based oil was seeping from rocks or was located a few feet below the surface, accessible via adapted water well drilling rigs and easily refined. And the primary refined product — in those heady days before the internal combustion engine drove the oil market and before Edison’s light bulb revolutionized nighttime illumination — was kerosene, which was used to light lamps around the world.

Beginning in 1863, tough-minded businessman John D. Rockefeller began to seize control of the Pennsylvania boom, squeezing out competitors and creating the Standard Oil behemoth. (Though broken up by Teddy Roosevelt’s anti-trust legislation in 1911 into 34 companies, the remnants of Standard Oil exist today, as whole or parts of Big Oil companies such as BP, Chevron, Exxon Mobil, ConocoPhillips, and Marathon Oil.)

The other legacy of the Pennylvania oil boom? Hair care products.

American psychic Edgar Cayce gave more than 14,000 readings on more than 10,000 different topics. For 43 years of his adult life, Edgar Cayce demonstrated the ability to put himself into a self-induced sleep state by lying down on a couch, closing his eyes, and folding his hands over his stomach. He then gave trancelike “readings” on everything from dreams, religion, philosophy, psychic phenomena, and health.

Some of these readings were on the topic of scalp and hair care, and the unlikely revelation that Pennsylvania Crude Oil was the key to a healthy head. Why Pennsylvania Crude? Because, in part, it was viscous and paraffin-based, unlike the heavier bitumen-based, sulfur laden crudes in other parts of the US. Cayce even invented his own brand, called Crudeoleum. The hair rejuvenation he recommended included use of crude oil, Vaseline, and grain alcohol. Eventually the Crudoleum treatments replaced the grain alcohol with an olive oil-based shampoo to wash out the crude oil.

According to a study of 45 Crudeoleum users in 1972 only 4% reported complete hair restoration, while some 7% reported considerable hair restoration. About 18% reported moderate restoration. Some 42% reported little restoration, and 29% none.

So, if all else fails during this high-priced driving season and you need some relief for your aching, dishevelled head, you can always try a little crude oil derivative on your hair.

Who knows, maybe a little dab’ll do ya.

Lighting up a cigarette during the treament is not advised.

Oil companies spend fortunes with such companies as CGGVeritas, Petroleum Geo-Services, and WesternGeco to survey the earth’s geological strata to detect through seismic wave technology and computer analysis that precious and diminishing commodity, oil.

But when it comes to the Holy Land, a couple of small oil exploration firms have taken a more direct approach … Divine Revelation.

In 1983, US evangelical preacher, oilman, and fomer NFL Quarterback Harold “Hayseed” Stephens formed Hayseed Stephens Oil & Gas Inc. to develop oil and gas operations primarily in Texas and Oklahoma. He also founded publicly traded Ness Energy International, focusing on oil and gas concessions in Israel.

According to a witness at one of Stephens’ early presentations on his plans for Israel, all his data was based on Biblical prophecy found in the “Book of Genesis.” God had originally intended the oil in an alleged fault beneath ancient Israel to be the basis of Israel’s future riches and greatness. However, due to the Israelites’ evil ways, God had caused the fault to move, igniting the oil and exploding it under Sodom and Gomorrah. Stephens’ conclusion was that the largest oil field in the world was under the southwest corner of the Dead Sea.

He capped off this free-form Creationist geological interpretation with a quote from Isaiah 60:5 “Then you shall see and be radiant, your hearts shall thrill at the glorious deliverance; because the abundant wealth of the Dead Sea shall be turned to you. Unto you shall the nations come with their treasures.”

Hayseed Stephens traveled to Israel more than 100 times between 1980 and 2003 seeking license agreements and deals with Israeli oil officials. According to the company’s 2000 10K, in 1984 and 1985, Stephens partnered with three Israeli companies in a $50 million drilling consortium that leased 400,000 acres.

No oil was found. Stephens died of a heart attack in 2003 and his firm’s divine passion for oil in Israel somewhat abated. The company is currently looking to Texas for its financial future, and its vision of finding oil near the Dead Sea is receding into the future.

But the dream of finding divinely designated oil in Israel continues. With the help of oil industry attorney Philip Mandelker (who was once involved in the operations of Ness International Energy), an evangelical Christian called John Brown founded Dallas-based Zion Oil & Gas in 2000. Like Stephens, he was convicted by a calling that Scripture and Biblical prophecy was leading him to discover oil in Israel, in order to protect and preserve the independence of the people of Israel.

Zion Oil & Gas is engaged in oil and natural gas exploration on approximately 219,000 acres onshore in the State of Israel between Netanya in the south and Haifa in the north. Even though Brown is more committed to scientific geological concepts and surveying than Hayseed Stephens ever was, Zion Oil & Gas’ vision is based on the Scripture rather than seismology.

So if the company does strike oil, and the people of Israel become economically independent, who should get the credit?

The Word of God? The Geological Survey of Israel? The petroleum engineers? Human intuition? Serendipity?

I’m agnostic on this one.