Strategic Trend of Note

Fracking FAQ: The science and technology behind the natural gas boom.

This is a very interesting article worth reading in full. This part in particular should give us something to think about.

New technologies to access hard-to-reach fuels mean that, in 2012, the United States experienced its largest rise in annual oil output since the middle of the 19th century, according to data from the US Energy Information Administration (EIA) released in December. Shale gas is a fossil fuel trapped inside formations of shale rock. Some of these formations also contain oil.

The expected 760,000 barrel-per-day increase in US crude oil production in 2012 is the largest rise in annual output since the beginning of US commercial oil extraction in 1859, an EIA official said in a statement.

"This is a once in a lifetime thing we are experiencing now," Paul Faeth, a senior fellow with the CNA research organisation, told Al Jazeera. "The chemical industry is moving back to the US [because of cheap gas] and demand will increase because of low prices."

The gas boom has led to about $90bn in new investments in related US industries over the past two years, including steel manufacturing, petrochemicals production and fertiliser fabrication, according to Dow Chemical's calculations.

Since 2005, more than $125bn has been spent on shale extraction, including drilling and purchasing land, by the 50 largest US oil and gas companies, according to a study by Ernst and Young.

High prices over the past decade, the flow of petroleum from east to west, and the gush of money the other way has allowed Russia to re-assert its international clout and Gulf states to build up massive sovereign wealth funds. The shale boom has the potential to derail those trends.

In 2011, members of the Organization of Petroleum Exporting countries (OPEC) earned $1,026bn in net oil export revenue, a 33 percent increase over 2010, the US Energy Information Administration reported in May. If the price of oil drops because of new supplies, or if natural gas starts to eat into demand for traditional crude, oil-rich nations could potentially find themselves significantly less well-off.

"There will be significant impacts for security and global politics," Faeth said of the shale boom.

The time frame is what makes this interesting.

Thanks largely to fracking, the US is set to overtake Saudi Arabia and Russia to become the world's biggest oil producer by 2017, according to a November report from the International Energy Agency (IEA).

There are a lot of unknowns with fracking, and there is quite a bit of risk in the technology. I also do not want to minimize nor trivialize the impacts of fracking on the environment either, specifically the relative unknowns as it relates to water supply. Still, if you were the guy suggesting the US could potentially be energy independent of Middle East oil by 2017, you were likely the guy in the room everyone else thought was crazy in 2007. This is a reminder why a decade can be a very long term when discussing major economic and geopolitical shifts.

I think potential energy independence from Middle East exports by 2017 is a pretty big deal, indeed I believe such an achievement would force a significant reevaluation of current strategic posture, particularly in regards to the Middle East. I highly recommend folks read the entire article, particularly down further in the article where a discussion of how this might impact global oil prices and what exports of natural gas from super-tankers originating from the US that can carry LNG might mean.

The Big Russian Navy Exercise of 2013

Russian naval warships, submarines berthed at port in the eastern city of Vladivostok on Sept. 5, 2012. /AP

Wired has a good article discussing the upcoming big Russian Naval exercise.

The Russian navy is about to stage its largest war exercise in a long time — possibly the largest since before the breakup of the Soviet Union. It’s a chance for President Vladimir Putin to show off his military might, of course. But the exercise may also be a subtle warning to the United States: Stay clear of waters that traditionally lie in Russia’s sphere of influence.

The Russian defense ministry says its the “first time in decades” it’s launched naval exercises on this scale. The drills involve warships from all of Russia’s fleets: “the Northern, Baltic, Black Sea and Pacific,” noted a statement from the ministry. The exercise will be reportedly held in late January, and involve amphibious landings in the Caucasus and naval exercises in the Mediterranean.

Putin has undertaken a major $659 billion arms buildup through 2020. On Thursday, the Defense Ministry in Moscow also announced the scale of its ongoing naval increase. By 2016, a statement noted, Russia will have 18 new warships, “and also 30 special-purpose and counter-subversion vessels,” along with six new submarines. One of these vessels, the Borei class ballistic missile sub Yuri Dolgoruky, joined the fleet this week.

I just want to mention something here: Putin is a long time Navalist, and this is not some small thing in his world, indeed he has been wanting this for over a decade. Putin has always been navalist, and nothing has changed.

When Boris Yeltsin resigned in December of 1999, in those first three months when Putin was still only acting President and before he was officially elected President the first time in March of 2000, he ordered the Russian Navy to prepare for its largest exercise since the end of the cold war for late summer in 2000. His objective was well known at the time, Putin wanted Russia to resume operations in the Mediterranean Sea, which is where Putin and many of his cold war strategists have long believed to be the center of gravity that exists between Russia and NATO (thus the US).

During that major Russian naval exercise in August of 2000 the Russian nuclear submarine Kursk suffered an explosion during training and the result was the Russian Navy sidelined for most of the decade. The major Russian naval upcoming exercise has been coming since 2000, and I fully expect it to be something the Russian government pushes across their media as a very big deal.

Russia is reducing the size of their Army, Air Force, and missile forces, but is increasing the size of their Navy. China is also holding static the size of their Army and Air Force, while increasing the size of their Navy. This pattern of military power investment that heavily favors increasing the size of naval forces is being repeated in many nations today.

When people talk about the early part of the 21st century as the emerging Maritime Century, they aren't describing the 21st century in those terms because of what the United States is focused on with our military power, nor what our European allies are focused on with their military power, rather the phrase describes what the emerging and growing economic and military powers across Asia (and to some degree, South America) are doing. We may have the largest Navy in the world, but the United States is not leading the world into the emerging Maritime Century - indeed it is openly acknowledged today that US naval power is in relative decline while the rest of the world engages in this maritime shift.

But it is important to note the emerging Maritime Century isn't simply a description of naval power, rather it is a description of the central role the maritime domain is and will play in the 21st century. Trade is a big part of it, but the emerging technologies that already are but also will in the future convert the worlds oceans into territories cultivated for resources is a global economic trend that will not be reversed, and there will be a competition for those resources. There will also be consequences of these activities, both predictable and unforeseen.

We do not know what the Maritime Century will look like 10, 20, or even 30 years from now, although it is a safe bet that it will last at least the first half of the 21st century. In the early years of the 21st century as we observe large scale naval exercises by Russia, China, India, and whomever else plays the naval game over the next decade, and we watch nations like Russia, China, Brazil, and Argentina attempt to systematically claim large swaths of sea within their regional periphery as sovereign territory without any basis in international law - keep in mind we are watching how the Maritime Century began.

One Thing I'll Be Watching in 2013

TOKYO BAY (August 6, 2024) Senior Chief Damage Controlman Gary Wise, from Clearwater, Fla., speaks with inspectors from the board of inspection and survey (INSURV) during a test of the hangar bay aqueous film forming foam counter measure wash down system aboard the aircraft carrier USS George Washington (CVN 73). INSURV conducts inspections every five years of a ship's life to ensure mission readiness and material conditions are up to standards. (U.S. Navy photo by Mass Communication Specialist 3rd Class William Pittman/Released)

Both CDR Salamander and Bryan McGrath appear pleased with these changes. I don't think there is any reason for optimism until we see reason for optimism, and a policy change this big by itself is no reason to be optimistic.

The president of the Board of Inspection and Survey (INSURV) rolled out major changes to the frequency and grading method of the INSURV program effective Jan. 1.

Rear Adm. Robert Wray, INSURV president, said changes to the frequency of the inspections and the grading system were implemented to improve the readiness of Navy ships and crews and to provide Navy and congressional leaders with an accurate reflection of that readiness.

Under the old program, INSURV teams conducted exhaustive inspections and surveys of ships every five years and reported their material readiness to Congress. Now ships will be inspected about every 30 months.

INSURV has become a huge shell game within the surface force, so we must start with the fact that change is necessary, because what exists is not working and it was well documented by the Fleet Review Panel of Surface Force Readiness (also known as the Balisle Report) to be a shell game. The report went into some detail to note the shell game by how people and resources were being shuffled solely for the purpose of passing the INSURV. It is noteworthy the new changes are not part of the recommendations in the Balisle Report:

Under the new inspection timeline, INSURV inspectors will conduct a traditional "Material Inspection" during a unit's Fleet Response Plan (FRP) cycle. In the alternating cycle, a similar inspection will be conducted by the unit's type commander with INSURV support.

The Balisle Report has an entire section (section 5.2) on INSURV Material Inspections, and while it is possible to argue that the changes being implemented by Rear Adm. Robert Wray are in the spirit of the Balisle Report, what must be stated loud and clear is that the most important recommendations of the Balisle Report still have not been implemented, and it is absolutely fair to say that the most critical issue with both INSURVs and surface maintenance has not been addressed at all.

For example, Section 5.2.2 states "The panel believes that the long term solution for reversing the downward trend in INSURV performance is to implement the balanced set of material readiness initiatives addressed in Section 3.3 of this report. Full implementation of these initiatives may well take 12-18 months longer, and a near term plan of action is needed to ensure acceptable readiness levels are achieved for pending INSURV inspections."

Even if we suggest the changes to the INSURV policy are only one part of the short term or long term action plans, despite them coming 35 months after the Balisle Report was published, these changes do not address the very serious issues outlined in the Balisle Report as the fundamental problems that have led to poor management of surface force readiness nor WHY the fleet is experiencing an increased frequency of failing INSURV grades.

I am trying hard not to call bullshit here, but it is very hard for me to understand why this is anything other than typical Navy bullshit. How exactly does increasing the frequency of INSURVs help solve the problems of an increased number of failed INSURVs, or somehow address surface readiness? Instead of No Child Left Behind, we get the Navy's version of No Ship Left Behind...

Whether you are reading Section 5.2 or Section 3.3 of the Balisle Report, there is only one topic that is consistently being emphasized as the solution to the failing material readiness in the Navy, and that is the significant shortfall of manpower in support of maintaining surface ships.

And lets be very clear... the manpower shortages today are throughout the fleet, indeed they are everywhere.

Ships are undermanned. Any aircraft squadron not specifically assigned to an aircraft carrier today is undermanned. Submarines that are not on deployment today are undermanned. Everyone in the Navy outside of Washington DC knows this, but no one except those directly involved is willing to admit it's a problem. I don't want to suggest that hollowing the Navy hasn't been the right choice, because it has probably been the correct, hard choice. But what we have to also admit is that those choices have consequences, and the Balisle Report already told us that you can't ignore those consequences or you simply compound the problems.

I am not outside the lines to note the seriousness of the problem, nor am I saying anything that is new to anyone. ADM Harvey was perfectly willing to tell the Emperor loud and proud and that he was wearing no clothes... except he waited until the day he retired to say it. But at least he said it...

So going forward in 2013 I am very curious to see how Rear Adm. Robert Wray handles this issue. For example:

The other notable change comes to the overall grading system. Previously, the program utilized a grading status of Satisfactory, Degraded or Unsatisfactory, which oversimplified inspection results with a coarse one-word descriptor attempting to describe a ship with nearly 200 sub-systems. The new system will use a more quantifiable INSURV "Figure of Merit," which is a weighted average of 30 scores used to provide a final grade and report on the overall readiness of a ship.

It is very easy to call a simple system that grades Satisfactory, Degraded or Unsatisfactory as oversimplification but it is just as easy to take a 30 pointed weighted average and skew statistics to meet a stated requirement. This sounds great... or does it?

"The major change for the average Sailor will be two-fold," Wray said. "First, each ship, prior to each deployment, will have a full-blown material inspection in which the ship will be expected to get underway, do full power, anchor, shoot guns, operate combat systems, etc., for a team of external inspectors. Second, ships will be expected to do this on their own, without months of external preparation and assistance."

While twice as many inspections may sound like a bad thing, Wray stressed that the new process will benefit the Sailors who have to prepare the ship for INSURV.

"We want the pre-deployment material inspection to be a normal part of doing business, like the Composite Training Unit Exercise (COMPTUEX), something ships know how to do on their own," he said. "In a larger sense, we want to create a 'culture of material readiness' in which ships and their crews are always thinking about being ready for INSURV. The concept is to create a culture for material readiness, in which any ship, at any time in the appropriate part of the FRP, could successfully shoot their guns, do full-power runs, anchor, and demonstrate her combat systems."

Wray said the goal of these changes is very simple.

"In a perfect world, every ship will complete a rigorous material inspection prior to every deployment, conducted either by INSURV or by their TYCOM, using INSURV methods. Ship's crews will be able to prepare for, and successfully complete, the inspection on their own. Navy leadership will also get true, accurate, unvarnished readiness information upon which to make resourcing decisions."

Dear CO, "Come as you are" right before deployment and we shall have an INSURV, because we really want an "honest" assessment of the material readiness of your ship. If the ship fails the INSURV and has to skip deployment because of it, your honesty will be rewarded...

I simply don't see how this new policy is performing a service or function related to the intent of the change, because the Navy still hasn't addressed the most significant factor that led to failures of INSURVs according to the Balisle Report - manpower shortages.

Rear Adm. Robert Wray has a book described as a Primer on Leadership for the Young Sea-Service Officer coming out in March of this year. I look forward to reading the book, because under this system of INSURVs where people are no longer going to play the old shell game, every Surface Warfare Officer in the Navy will know with certainty whether Rear Adm. Robert Wray practices what he preaches regarding leadership, or if he is full of shit.

Or put another way, either Rear Adm. Robert Wray is about to get several opportunities to offer significant input into the problems towards the real solution of surface readiness, putting him in a position towards fixing the shell games caused primarily due to serious manpower shortages at all levels of the water front - or he is going to be one of the quiet majority that isn't willing to use their position of leadership to speak honestly to the problem, and we will simply see a new shell game emerge to replace the old one that currently thrives under the old system.

Changes to INSURV

Some interesting stuff here, mostly to the good.  We'll really be serious about INSURV when we make them no-notice.

Bryan McGrath

Crowdsourcing the HASC Seapower and Projection Forces Subcommittee's 2013 Agenda

As many of you know, Rep. J Randy Forbes was named the next Chairman of the Seapower and Projection Forces Subcommittee on the House Armed Services Committee in mid-December. I have written several times on this blog in the past and now serve as Rep. Forbes' Defense Policy Advisor. We are definitely excited about the news and the opportunity it presents to take a larger leadership role on Navy, Marine Corps, and Air Force power-projection questions over the next two years.

While we are working to build our 2013 priorities list, I thought I would try and use this particular group to help generate a memo I am building for my boss on the issues the Seapower and Projection Forces community feel are most important for him to consider as the incoming Chairman. Specifically, I have provided a number of questions below that we are looking for feedback on. Please feel free to answer as many or as few as you would like. I will take the answers I receive and put them into a larger memo later this month to provide Rep. Forbes a holistic view of what the broader community is thinking when it comes to these matters.

Please feel free to share your thoughts below or email them to me directly at: [email protected]

All the best and a Happy New Year!

Questions

• What are the most important issues for the US Navy in 2013?
• What are the most important issues for US Marine Corps in 2013?
• What is the future of American power-projection? What assumptions regarding this mission have we got wrong or have changed over the last two decades? Are our Navy and Air Force capabilities postured correctly for this future?
• What hearings would you like to see the Subcommittee hold during 2012?
• What is one non-traditional hearing you would like to see conducted that might not otherwise get attention?
• What smart people amongst Navy/MC/AF leadership should Rep. Forbes meet with to consult their opinion beyond the usual suspects?
• What other ideas in terms of policy recommendations and/or messaging opportunities would you like to share?