Energy Infrastructure Management
Q1.1. World Politics
The current unrest in the North African and Middle East countries has had an impact on the world politics, energy policies and energy prices and overall economy. By looking at the events in Libya and Syriait is evident that revolutions that are initiated locally usually have their outcomes determined at the global level. As is clear from the recent unrest in Libya, the rebels were focused on overthrowing the oppressive Gadhafi regime but their ultimate fate looks to have been influenced by other forces from different parts of the world. The nations of the world are today intertwined and a political or economic problem experienced by one of the nations spreads to affect the others. The events in Libya aroused interest in other states culminating in the intervention of western liberals. The entry of NATO forces into Libya signifies the importance world policy makers attach to protection of human rights. The Libya revolution may have arisen through interaction with the general trend in world politics. There has been a clamor for the longest time to have people in all parts of the world elect their own leaders in transparent democratic processes. The impact of the unrest in Libya had a global political impact. By allowing the intervention of the NATO, the country may have incognitally given western powers a chance to infiltrate their sovereignty. As such, the emerging new Libya may lack its own military or political autonomy. The Libyan unrest may also haveinspired other nations of the world experiencing leadership chaos to demand accountability from the ruling regimes (Barkawi, 2011).
On the other hand, the uprising in Syria could also have an impact on the world politics. The world politics were triggered when early last month an Al-Qaida inspired group confirmed to having been behind twin suicide bombings in the capital, Damascus. Fears are rife that the armed insurgency could spill over to Iran and Lebanon who are close allies of Syria should they decide to offer military support. Already accusations of Iran sending weapons to Syria to quell the uprisings have been made by western forces namely United States, Britain and France. The United Nations has convened several meetings to find a lasting solution to the Syrian crisis. Earlier different member states of the United NationsSecurity Council had taken different sides over the matterwith Russia and China showing support for the incumbent. This led to condemnation from other members of the UN and eventually the two nations agreed to support reconciliation efforts presided by former UN secretary general Kofi Annan. This is an indicator of the impact of the Syrian unrest in the world politics(Kennedy, 2012).Similar to the Libyan case, the world has come together once again to find a lasting solution to the crisis in Syria.
Q1.2. Energy Policies
The recent political unrest in Libya, the world’s 12th largest oil producer and a member of the world oil cartel, OPEC brought with it lessons on energy policies. The political unrest led to a cut in half of Libya’s oil production. Although the shortage did not affect the European Union, a leading consumer of Libya’s oil owing to an effort by Saudi Arabia to step in, it informed on the need to have ready alternative sources of energy. Following the crisis, the European Unionmember states have already contemplated on developing energy policies that would overcome such challenges in future. One of the already agreed measures the European member states have resolved to adopt is the need to stop the over reliance on energy imports and adopt the use of renewable energy. Another strategy as part of the energy policy would involve liberalization of markets and infrastructure across the member states.This is aimed at diversifying energy supply in terms of their sources and the infrastructure they use to reach the market. The unrest in Syria has brought a new twist in world energy policy. With ambitions to adopt nuclear energy, there has been growing concern that with the current unrest, the country may divert its attention and use nuclear energy for war purposes. Although the country is a non-nuclear weapon state as a member of the treaty on non proliferation of nuclear weapons, the political turmoil may affect her commitment to the nonproliferation policies. The nuclear energy could also fall into wrong hand should the current regime collapse. The events in the country have aroused an interest in the use of nuclear energy especially in countries experiencing political instability. The impact of unrest in both the North African state of Libya and the Middle East state of Syria is divergent. The Libyan crisis borders on creating artificial shortage and hence requiring adoption of energy policies addressing such challenges. This would include the use of alternative sources of energy in most cases the renewable forms. On the other hand, the Syrian case would require addressing the use of energy forms that could have deleterious impact on the mankind welfare(International Federation of Red Cross and Red Crescent Societies, 2011).
Q1.3. Energy Prices and Overall Economy
Libya produces 2%of the world’s oil demand and 10% of the total European market. Following the protests that rocked the country, the production of oil suffered a major setback. The resulting shortage in oil exportation led to an increase in price of the commodity mainly across Europe. The resultant hike in prices of petroleum commodities directly affects the prices of entirely many other consumables. The world economy was adversely affected by this unrest since it impacted negatively on inflation. This came at a time when the world has been crumpling with the deleterious effects of the recent global financial recession. With Libya producing about 1.6 million barrels of crude oil daily , halving of the production due to the uprising in addition to the withdrawal of experts from the country by oil exploitation multinationals, the resulting economic impact is major. With the uprising also came the shutting of many suppliers chains from Libya. This negatively affected export of both crude oil and natural gas leading to a sharp increase in prices(Graetz, 2012).
The impact of the Syrian unrest on the energy prices is expected to be similar to that of Libya. The political turmoil in the Middle East energy rich region has made oil exploitation almost impossible especially with the protests emerging from the energy rich district of DeirEzzor. Although Syria does not produce a lot of oil, the little that it exports would be highly valued in a market that is facing a chronic shortage the world over. There is fear that the protesters may target the weakly guarded petroleum infrastructure and thus disrupt the flow of exports. This would affect not only the recipient nations but also the economy of Syria. Threats of an oil embargo against the ruling regime could have a far reaching impact on the economic status of Syria. The impact of oil shortage resulting from the two countries; Libya and Syria would be detrimental to the global economy. Oil is the most integral component of the world economy as it is the commonest source of energy. Shortage created by the unrest in the two countries has already had a negative impact on inflation in many parts of the world(Graetz, 2012).
Q2. Energy assets in the United States to be discussed under this question are the Colonial Pipeline and the Bay Way Refinery in Linden.
Colonial Pipeline is a pipeline firm with headquarters in Alpharetta, Georgia. The pipeline serves many businesses and communities in the southern and eastern United States covering about 5500 miles from Texas to the New York harbor. The firm is owned by ConocoPhilips, Royal Dutch Shell, Kohlberg Kravis Roberts and Koch industries.
Bayway Refinery is located in Linden and Elizabeth, New Jersey. It is owned by ConocoPhilips. The refining facilityconverts crude oil into gasoline, heating oil, diesel fuel and jet fuel.
Two critical security gaps that currently exist in protecting Colonial Pipeline is the high vulnerability to terrorist attacks. If the pipeline was to be targeted and destroyed by terrorists losses worth millions of dollars would be lost in addition to the deleterious environmental impact it would have upon the surrounding ecosystem. The second security gap is the potential for serious injury or loss of life to the employees of the firm, general public, contractors and wild and domestic animals(National Research Council (É.-U.)., & National Research Council (É.-U.). , 2004).
For Bayway Refinery, the most probable security gaps are susceptibility to attacks by terrorists which could result in irretrievable damage or losses of the company’s property and loss of life. The firm’s premises courtesy of the nature of the product they deal with; flammables, is also at risk ofa fire outbreak. Therefore, security systems require being on high alert to avert any danger posed by a likelihood of a fire outbreak(Beatty & Samuelson, 2007).
Two concrete hardening initiatives that could be considered by the public sector or an appropriate industry association for the Colonial Pipeline include setting regulations that the firm alongside with others would have to adhere to before being allowed to operate. The regulations would govern the operations of the Colonial Pipeline to ensure guaranteed efficiency, reliability and an environmentally friendly operations network. This would be carried out by the Association of Oil Pipe Lines (AOPL) and the American Petroleum Institute (API). The safety of the pipeline would be another necessary initiative to ensure smooth operations of the firm.The Department of Transportation should closely regulate the safety of the pipeline through its Hazardous Materials Safety Administration (PHMSA). The administration should formulate and enforce regulations to guarantee safety in operations of the pipelines. This includes observing all security measures to reduce the possibility of the pipeline being vandalized. Security would also include creating public awareness and adopting security emergency responses incase of a security lapse along the pipelines(National Research Council (É.-U.).,& National Research Council (É.-U.). , 2004).
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In case of Bayway Refinery, the concrete hardening initiatives that could be considered by the public sectoror an industry association governing operations of oil refineries include setting up of elaborate regulations particularly concerning security. The Homeland Infrastructure Threat and Risk Analysis (HITRAC) should analyze and make necessary recommendations concerning security measures that should be observed concerning all critical infrastructures in the country. This includes critical installations such as the Bayway Refinery. Such an installation remains a critical target for terror attacks or vandalism. Protecting the Bayway Refinery from any security threats would also involve the engagement of the homeland security department. This department whose roles have been clearly defined since the September 11 terror attacks is responsible for protecting America from terror attacks within her territory. Some of the mandates of the department include protecting critical installations such as the oil refineries and military bases. The security measures adopted to protect the Bayway company production plant should be extended to other infrastructure connecting the firm to suppliers and consumers. Therefore, collaboration between the Department of Homeland Security and Homeland Infrastructure Threat and Risk Analysis Department would be necessary to promote maximum protection of all infrastructure owned or connected to Bayway Refinery. Security against damage by natural disasters is also vital as events such as the hurricanes and floods are known to result in serious damage of infrastructure. As such the company should involve the Department of Homeland Security which also handles internal emergencies emanating from natural disasters or man made emergencies such as fire outbreaks(Beatty & Samuelson, 2007).
One concrete step that the Colonial Pipeline Company should take in order to remove or reduce the existing security gap for its pipe line is allocating adequate resources to address the security gap through a risk-based approach which guarantees the property is always protected from a potential attack or damage. This would also include putting measures to address any deleterious consequences emanating from such an event. The company should also aim at cultivating a collaborative approach with the public sector to develop comprehensive security programs. This program should be reviewed from time to time in line with emerging challenges in the security arena. In this case the most appropriate authority that the Colonial Pipeline can collaborate with on matters of security is the Transportation Security Administration (TSA) (National Research Council (É.-U.).,& National Research Council (É.-U.). , 2004).
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The Bayway Refinery can ensure increased security to address the existing gap in which the company remains vulnerable to terror attacks and vandalism by installing its own security systems. This would involve possibly recruiting privately trained security personnel to keep vigil over the installation. It would also be necessary to carry out internal audits and identify models of addressing the security gaps that exist in the firm. This would guarantee the safety of both the installation and the personnel working in the facility(Beatty & Samuelson, 2007).
Q.3 There are four major security concerns with reference toenergy. These include security of supply which is concerned with availability of adequate supply of fuel. Security of demand involves a concern by the producer nations on the ability of importing nations to continue purchasing fuel in constant or increasing volumes year after year. The other concern entails reliability of energy supply in which buyers need assurance of continuous provision of the fuel and the possibility of acquiring it whenever they need it. The other security concern involves the physical security of energy installations and personnel against sabotage, harm and terrorist attacks. With reference to these four energy security concerns, the following three scenarios can be analyzed thus:
Russia stops natural gas flow to Ukraine. This creates stir not only in Ukraine but in entire Europe. Stopping of the gas flow would be detrimental to the economic well being of Ukraine and in extension the entire Europe. Security of supply is always an important factor to consider in nations that import the particular product. With Ukraine relying on the natural gas from Russia in many of its industrial and domestic operations, an abrupt stop of this flow would have a major negative effect not only on the economy but the day to day operations of businesses. Industries that rely on the natural gas in their operations would face unnecessary disruption in their operations in turn affecting the employees and other dependents of the firms including consumers. For Russia, the concern on security of demand would affect its performance economically. Should Ukraine decide not to import the natural gas from Russia ever again, the Russian economy would be adversely affected. The infrastructure developed to purposely deliver the natural gas to Ukraine would lose value and dent the country’s economy. Ukraine would be affected due to the disruption in its energy supply network. Reliability of energy supplyis very important to avoid disruption of economic activities in a country. The physical security of the energy installations and personnel in Russia could be exposed to acts of sabotage and other forms of harm especially from aggravated citizens of Ukraine whose life and economic status would have been disrupted by the stopping of the natural gas flow from russia. As such, the security of energy for Ukraine could be improved by diversifying her sources of energy to avoid sudden disruptions of her economic continuity. Physical security would be vital for russia to avoid destruction of her energy installations through acts of sabotage resulting from retaliatory attacks by the Ukrainians(Christie, 2009).
Major earthquake in Japan damages significant portion of the nuclear power plant generating capacity in Japan. Such an occurrence would affect security of supply particularly for those countries that import energy from Japan. It would require such countries to seek alternative sources of energy from other countries to avoid disrupting operations at home. Japan as a producer of the energy would have the security of demand for her energy interrupted. Countries importing energy from her would likely seek alternative sources leaving Japan with no ready market for her energy. Reliability of energy supplyis a concern for many energy importing countries and it would affect their perception about Japan being a reliable source of their energy demand. Japan would require adopting major physical security measures to guarantee security of her installations from natural calamities and other forms of damage.On the other hand, nations relying on nuclear energy such as from Japan would require diversifying their sources of energy to address the problem of security of supply(Yamada et al., n.d).
Major hurricane in Gulf of Mexico damages over 50% of our oil and gas production infrastructure. Such an event would greatly affect our security of supply. Nations that rely on imported oil from USA as well as the local consumption would be adversely affected. The occurrence would affect both the economy of the USA and those of the importing countries and would call for such countries to diversify their energy sources. The security of demand as earlier provided by the USA would be affected since importing nations might opt to seek new sources of energy. With reliability of energy supply disrupted, the importing nations would be disorientated in terms of acquiring their oil products from USA and may choose to withdraw and seek alternatives to the detriment of USA’s economy.Physical security of energy installations and personnel would require a new approach to address. Damages from natural disasters and other man activities such as terrorism and sabotage would greatly affect all other forms of energy security. This would affect not only the economic status of the USA but also that of countries relying on energy from her. As such security measures to be adopted would include adopting new strategies to protect the installations from both natural and man activities. The country would also require investing in other forms of energy apart from oil based to ensure that the country’s economy as well as that of those that import energy from USA is not interrupted (Stowers, 2005).
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