Terrorism's shadow falls over oil

Is the world’s energy industry still vulnerable to Al Qaeda attacks? Yes — and no.

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By  Stratfor Published  January 8, 2006

Opinion|~|Statfor.jpg|~||~|Al Jazeera television aired an Al Qaeda videotape December 7th calling upon the faithful to attack energy infrastructure because “most of the revenues go to the enemies of Islam, while most of what they leave is seized by the thieves who rule our countries.” Al Jazeera later noted that it had already aired “the important parts” of the tape in question back in September when it was first released, and apologised for misrepresenting it as a new tape.

By then, however, the markets had already responded, sending prices to about US $60 a barrel. Without any follow up from Al Qaeda, that bump likely was unlikely to have lasted a week, but the airing of the tape raises three questions. First, why did Al Jazeera think that, in the aftermath of Hurricane Katrina, a threat against energy infrastructure from the group that carried out the September 11th attacks was not “important?” Second, what prompted Al Jazeera to share the new excerpts now? And finally, what matters about the threat?

Answers to the first two questions would, at this point, be too speculative. The third is another matter entirely.

The threat of terrorist attacks against oil infrastructure is both better and worse than it seems. Worse, because energy infrastructure is everywhere. There are hundreds of thousands of natural gas and oil wells scattered across the world, hundreds of refineries, thousands of tankers, and millions of miles of transport and distribution pipelines. Protecting them all is a statistical impossibility. If someone truly wants to attack some portion of the network, it is exceedingly easy.

Also, since most energy work requires massive up-front investments and advanced technology, a spanner — or suicide vest — in the works can potentially knock a specific effort back years. That makes the energy industry extremely jumpy. Bear in mind that even though Israel and the Palestinian territories are not notable energy producers, energy consumers or energy transit points, their drama riveted the energy industry for nearly 30 years after the Arab oil embargo. Even a minor attack will be blown all out of proportion.

But the situation is hardly hopeless. Although energy markets are prone to overreaction, indeed, there are very few nodes in the world where an attack would cause more than a local disruption or a perhaps painful — but hardly damaging — price spike. Refineries are massive constructs that conventional explosives and terrorist attacks cannot appreciably damage. Pipelines are easily patched, and an individual wellhead in a system in which 84 million barrels of crude are produced daily is the equivalent to a pinprick on an elephant.

In the Western Hemisphere, there really is only one target that, if damaged, could cause a major impact on energy supplies: the Houston Ship Channel. The channel snakes from Houston Bay through a network of refineries and petrochemical plants.

The channel itself is not vulnerable, but if a large craft — perhaps an oil tanker — were sunk in it, it would block the United States’ most vulnerable energy corridor.

Most targets of note are instead in the Middle East. Saudi Arabia has a five million barrel per day pipeline, the Petroline, which transports crude across the Arabian Peninsula. While it undoubtedly could be repaired quickly, even a brief interruption at the world’s largest energy pipeline could have far-reaching effects. The real concern is that something would happen to Ras Tanura in Saudi Arabia — the world’s largest oil-loading platform, capable of pumping six million bpd. Were something to happen to Ras Tanura — particularly if the Petroline were also knocked offline so that the Saudis could not redirect crude to alternative ports — the global impact would be fierce.

Like most crucial energy infrastructure, however, Ras Tanura is well protected, not only by Saudi security forces, but also by its sheer size. The facility is offshore and capable of loading multiple supertankers simultaneously. One speedboat could not do much damage and even one hijacked airliner, should it be used in a suicide mission, would probably not destroy the entire facility.

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