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One of the live oaks that bless my home

Tuesday, January 8, 2013

Arctic Oil and Sanity

As Nicholas Taleb stated in "Antifragility":
Now as a skeptical empiricist, I do not consider that resisting new technology is necessarily irrational: Waiting for time to operate its testing might be a valid approach if one holds that we have an incomplete picture of things. This is what naturalistic risk management is about. [ I.e., management of risk by nature, TWP.] However, it is downright irrational if one holds on to an old technology that is not naturalistic at all yet visibly harmful, or when the switch to a new technology ... is obviously free of possible side effects that did not exist with the previous one.  (Page 191)
So what does this statement have to do with the current developments in the Chukchi and Beaufort seas?  It turns out that a lot.

First, both sides in the Arctic disputes have taken fragile, absolutist positions. Environmentalists claim that there is no technology that could ever be applied in the Arctic from here to eternity, because all technologies can have only dire negative consequences.  The same environmentalists travel, I presume, to Alaska by jet, then continue by car, or small plane or helicopter, or by ship or motor boat.  I have not heard about many opting for horses, or husky dogs with sleds, or kayaks.

In tune with the customary attitude of the industry, Shell has taken a mirroring absolutist position and claims that nothing they do could possibly cause harm, or discomfort, or cause an accident - big or small.  This childish game that supports lots of lawyers on both sides creates bad blood everywhere and leads nowhere, because we all need oil and we all do not want environmental disasters to happen - big or small.

The lesson here is that if one sues environmental organizations on the premise that one cannot possibly make a mistake, one should put an A-team on the job, and try not make multiple, avoidable mistakes. A word of caution, however: If for a strategy to be successful everything has to align perfectly and as planned,  this strategy is fragile and likely leads nowhere.  Does this remark sound familiar to those who follow the "fracking" (I hate the word) debacle?

Second, and more importantly, instead of focusing so totally on the here and now, the Kulluk grounding most recently, a better question to ask is how long will it take at a minimum to develop a significant offshore oil prospect in the Arctic?  My educated guess is 10 - 15 years.  Let me translate for the impatient i-phone users demanding instantaneous gratification:  If you are 20 today, you might be 35 by the time significant oil will flow from the Arctic offshore.  This oil will be produced using technologies that either do not exist today, or are on drawing boards.  By that time, Saudi Arabia might not be a net exporter of crude oil.  Think of the implications for the world.

Third, and most importantly, by making this bold move now (really starting in the 1980's, and then picking up pace in 2008) Shell is essentially buying an option to produce a potentially huge amount of oil in the Arctic at a relatively small cost (what is 5-10 billion dollars in the big scheme of things?), taking a measured go-slow approach, and taking relatively small environmental and social risks. So the downside for Shell - and us - is likely to be quite small, but Shell gets to be a sole operator of a potential treasure-trove at a time when everybody will be begging for oil. Now this may be called visionary thinking.  Shell has made and will continue to make mistakes, and mishaps and accidents will happen.  Let's assume that all will be small, but such is the price for blazing new difficult trails. If such an assumption cannot be made, all bets are off.

We know well that nowadays no deed seems excessive in the middling efforts to squash daring and courage. Again, as Taleb teaches us, there is no middle in real life. It only exists in a bureaucratic Mediocristan the U.S. may be in danger of becoming.

P.S. When I criticize or praise anyone, including my old dear employer, Shell (1983-1990), I do it independently and with little regard for consequences.  An old infatuation, called Solidarity, taught me a thing or two, and 10 years of fighting for the Earth's environment and its people invaded by the giant, mega-polluting plantations of agrofuel crops have only hardened me.

For calibration, this is what I told the EU Ministers of Transport and Environment, and the U.S. delegation to OECD. They did not like me over there, but still changed their agrofuel policies much in line with my arguments.  Six years later, after the Big Recession, my OECD speech sounds eerily prescient.  Perhaps because of this, my 2007 OECD paper was recently delinked by Hekate's little sprites prowling the OECD archives.

Incidentally, the main thesis of my 2007 OECD paper is that the Earth's gross and net primary productivities are constant and industrial agriculture damages both.  A recent paper in Nature essentially repeats this thesis.