Gold Rush

by Jim Richards

  I was instructed to wind up our operations in Pangandaran, fire all the staff and to return to Jakarta. Firing the staff was hard. They were a great team, and for the three young geologists this was their first job. These guys were in tears, and did not deserve or even understand what was happening. The financial carnage was all around, but this was the innocent human wreckage right here in front of me, and it made me angry.

  When I saw Mike Bird in his office, he looked shell-shocked. He had personally known and mentored all of BRE-X’s Filipino geologists over many years. He, like everyone else, had been completely deceived by them in what was the biggest mining fraud in history.

  ‘I can’t believe it, Jim,’ Mike said. ‘I had Puspos in this office two weeks ago, and he was swearing blind it was all OK.’

  ‘Just before he flew back to the Philippines and disappeared,’ I added helpfully.

  ‘Yes,’ agreed Mike drily. ‘I swore after the last crash that I wouldn’t be caught out again, but I have been totally torched in this one.’

  ‘What about John? Did he know?’

  ‘No, definitely not. I’ve known John for thirty years; he didn’t know.’

  John Felderhof, once crowned Canadian Prospector of the Year and seller of C$84 million worth of BRE-X stock, was taking a mighty fall. He had a torrid decade ahead of him as his reputation was shredded. Regulators and shareholders chased him through the courts over numerous charges, including insider trading; a charge he would eventually overcome.

  I reflected on the BRE-X debacle. The history of scientific lies is consistent: they always lead to catastrophe for their maker.

  The gold price continued to plummet, aided by the British and Australian governments selling off the majority of their nations’ gold reserves at rock-bottom prices. The Asian financial crisis was just beginning, and the gold exploration industry – my industry – was in ruins.

  As I headed back to Perth, my chance of setting up a mining business or floating one on the stock exchange in Australia seemed further away than ever. Indeed, with low prices for virtually every commodity, many people were questioning whether the mining industry had much of a future at all. How could I come back from this wipe-out?

  CHAPTER 15

  BLACK GOLD AND PINK DIAMONDS

  It was June 1997. In Perth, a bad recession was taking hold. I tried to get work, but there was nothing going; the jobs tap had been turned off.

  The gold industry downturn bit hard for months that turned to years; it coincided with a mainstream economic slump that added to the misery. Going for a job was academic: there weren’t any jobs. The joke doing the rounds at the time was about a geologist applying for a job at a McDonald’s restaurant in Perth.

  ‘So, I have a bachelor of science in geology, five years’ work and management experience, a wife and two kids to feed, and am keen to get the job,’ says the desperate geologist.

  ‘Well, I don’t know,’ replies the McDonald’s manager. ‘Most of my other geologists have got PhDs.’

  It was a bit like that. I stacked some shelves at a hardware store, got involved in local politics and tried my best to get a job.

  My parents in the UK were now elderly and I used the last of my cash to visit them and my sister Aileen, who lived in London. Jane was working as a missionary in Nepal, so I missed out on seeing her.

  I spent my spare time at the Department of Mines offices in the city, researching how the tenement system worked. A tenement was a mineral concession area that could be applied for by an individual or a company. To create or float some kind of resources company, I would need control of mining tenements. To peg these tenements, I would need money. So first I had to get some money.

  Raising money from others for a mining venture during an industry bust was not likely to happen, especially given my lack of experience. I would have to use my own, but earning cash in the middle of a recession in which one’s own profession has disappeared is not easy. Once more I had to amend my career path, which meant starting at the bottom of the heap again with the only thing going – the job no one else wanted.

  I applied to a company called Baker Hughes Inteq for a position they described as geological logger on offshore oil rigs. It all sounded terrific at the interview, except the pay, which was terrible: A$140 per day, almost a third of what I had previously earned as a contract geologist at the height of the boom. But this was not a boom, it was a bust, and I was happy just to have scored a job.

  Three days later I was on a helicopter taking off from Karratha on the remote north-western coast of Western Australia. My destination was the offshore drilling rig the Ocean Epoch.

  We flew westwards over pristine outliers of the Ningaloo Reef (a point of contention was having oil drilling so close to this reef). As we were flying fairly low, I could plainly see the clear blue water and the scattered reef below. I also saw a whale shark effortlessly gliding along. It was massive, around 10 metres in length, grey with regular cream-coloured spots and some stripes. This was not only the largest fish on earth but, after whales, the largest living creature on earth. I hoped the oil rig was carefully managing its environmental obligations. (The oil company was Woodside Energy, and it was.)

  My job was only called geological logger by the guy conducting the job interview; the rest of the world’s oil industry called it mud-logging. On the rig, the place where I worked was a converted sea container fitted out with electronic equipment used to monitor and record the drilling of the oil well.

  The person in charge of this mud-logging unit, the data engineer, was a smooth-talking American geologist who lived in Thailand. Everyone called him Spunky because at any one point in time there was always a woman, somewhere in the world, pregnant with his child – or so he claimed.

  Spunky explained mud-logging to me.

  ‘Catch the stream of cuttings [small pieces of rock] that are brought up from the bottom of the drill hole, look at them and describe the sample on the mud-log. It’s just like a woman, Jim: you catch, you investigate and you interpret,’ he said.

  Spunky was something of a poet, which must have been helpful in achieving his ambitious procreation targets.

  It sounded easy enough: the same principle as the drill logging in Meekatharra, just on a larger scale. I learned a new set of skills and, after a couple of hitches, I was promoted to data engineer. This more responsible position involved monitoring and recording the workings of the drilling.

  I reported directly to the wellsite geologist, who was the oil company’s geological representative on the rig. After working for twelve hours, I retired to a four-man bunked room to try and sleep through the stench and noise of the rig and my snoring sleeping companions. This was the routine every day for twenty-eight days. No days off: not much point in that.

  Oil rigs have a lot of politics, mainly centred on blame-shifting for the horribly expensive screw-ups that regularly occur. I had a strong grounding in blame-shifting from the military, so I felt quite at home.

  At the company man’s (the boss’s) morning meeting I would defend the mud-loggers’ corner.

  ‘The mud-loggers’ sensors are not working. They should have seen the tanks overflowing,’ the mud engineer would complain in his wheedling Scottish accent.

  ‘Not so, mate. We gave the call three times, but your derrickman didn’t pick up the phone,’ I would reply.

  The mud engineer didn’t seem to like mud-loggers much, and it was mutual.

  The Ashes cricket was on and the English were getting smashed in the December 1998 Adelaide Test match. The mud engineer had recently become an avid fan of the Australian cricket team, which was odd because he had no understanding of the game. However, he got a caustic pleasure out of taunting the small English contingent on board.

  After a month on the rig my break came around. I was sitting with two other guys in the mess waiting for the chopper to arrive. One of the guys was a senior executive with the oil company and we were discussing his fear of flying.


  ‘I just keep going over the flying statistics in my head to convince myself how safe it is,’ he told us. He looked quite green around the gills, and we tried to reassure the poor guy as best we could.

  We all glumly looked out of the window at the atrocious weather. There was a 6-metre swell, with driving wind and rain blowing horizontal spray off the whitecaps; the rig was moving around quite a bit too. It was touch and go as to whether the chopper could land, and the storm was not helping the executive.

  My nemesis the mud engineer sidled up to our table, cradling a cup of tea. He didn’t know who the others were, but he couldn’t resist a parting shot at me.

  ‘Pretty bad weather out there today, Jim,’ he said.

  ‘Yes, it does look nasty,’ I said.

  He sucked in a deep breath through his teeth. ‘Hope the chopper doesn’t go down,’ he said, then sauntered off.

  ‘Who the fuck is that arsehole?’ asked the aerophobic executive.

  I obligingly wrote the name down for him.

  We never saw that particular mud engineer again on the Ocean Epoch.

  Eventually, hard work, a bit of luck and help from a friend called Carl Madge landed me a job as a wellsite geologist for Woodside. Finally, I had a more responsible job and the kind of decent money that could leverage me back into acquiring some mining tenements, which might lead to bigger things.

  The wellsite geologist (just known as ‘wellsite’) is responsible for managing and reporting all of the offshore geological aspects of drilling the oil well. Some of the drilling rigs cost up to a million dollars per day to operate, so I didn’t want to be the person responsible for a screw-up that cost rig time (for instance, having to re-run the data-gathering wireline logs).

  I built up my experience drilling well after well; they were invariably dry (no hydrocarbons). The Asset Team oil company geologists in town would often call asking the depths of the different geological formations we encountered while drilling. Were these formations higher than predicted (‘high’) or lower (‘low’)?

  Oil and gas are always targeted to lie below a constraining cap rock (for example, a shale). Under the cap rock was the reservoir rock (usually a sand), which contained, you hoped, the goodies. The hydrocarbons always lined up from top to bottom by order of density: firstly gas, then oil and then the unwelcome water. The water level was generally constant throughout the field, so if you could raise the top of the gas by the geology (and thus, more importantly, the cap rock) coming in high, you got more gas and oil.

  On one eagerly anticipated well, the inevitable question came through.

  ‘Jim, are we coming in high or low?’ the Asset Team geologists asked me.

  ‘We’re coming in twenty metres high,’ I replied, and we were all keyed up.

  As we drilled deeper, I watched the geophysics or MWD (measurement while drilling, which told you the rock type and hydrocarbon/water type you were drilling through) on the screen in the mud-logging unit. We drilled through the shale cap rock and into the sandstone hydrocarbon reservoir. This was always the most stimulating part of drilling a well: what have we discovered?

  I looked at the screen: we were in gas. Then, 20 metres later the gas changed to oil and 30 metres later we hit the water. This was a good result: a 50-metre hydrocarbon column.

  After years of planning the well, the Asset Team was ecstatic, and rightly so. It was good to get a result: only one exploration well in ten was a discovery.

  I liked working for Woodside, but I still needed to maximise my earnings in order to have enough capital to initiate a float or set up a resource company when the time came. So I was most interested when another wellsite-geologist opportunity came up in Pakistan.

  It was 2001, and the 9/11 attack on the twin towers in New York had just happened. Just over the border from Pakistan, in Afghanistan, war was raging.

  Not surprisingly, oil company BHP Billiton was having trouble filling the role. I looked at the salary package and realised I could achieve my financial goals and get my mining tenements far more quickly with this Pakistan job than by staying on at Woodside. Otherwise I would still be on an Australian oil rig in twenty years’ time doing the same old thing.

  How risky can Pakistan be? I went for it.

  Three weeks later I was at Dubai International Airport, waiting to connect with my flight to the Pakistani city of Karachi. I walked around the terminal to get some exercise, admiring the exotically dressed people from all over the globe. As I wandered past a particular departure lounge desk there appeared to be a serious dispute in full swing, with desperate passengers besieging airline staff.

  With detached interest, I looked up at the flight destination board.

  Karachi. Oh shit. That was my flight.

  I negotiated the chaos of the airline desk without having any idea what all of the shouting was about. This was a forerunner of every queue I would ever see in Pakistan, where arguing with officials appeared to be something of a national pastime.

  The departure lounge was full to bursting with men; there were no women or children. Many had long straggly beards and were mostly dressed in the loose clothing and hats also worn by the Taliban fighters in Afghanistan you saw on the news every night.

  On board I sat next to two friendly Arabs in dishdashas both holding live hunting hawks on their arms. Falconry is a common sport in the Middle East, and the bird-rich Indus delta in Pakistan was a popular destination for the activity.

  At Karachi I transferred to an ancient 747 for an internal flight to Islamabad, where I was met and whisked off to the BHP staff house in the diplomatic quarter of the city. There I was greeted by the chief drilling engineer, a dour Welshman called Griff who walked with a limp. He was a devout Christian and was recovering from being blown up in a church in Islamabad where he had been delivering a sermon a few weeks earlier.

  Some terrorist wannabe, inspired by 9/11, had rolled a few grenades into the church, and shrapnel had lodged in Griff ’s leg. He was one of forty injured in the attack, in which five people were killed. The post-9/11 atmosphere in Islamabad was febrile.

  It was around 11 p.m. and I fell into bed and went straight to sleep, pleased that my edgy journey was now safely over.

  CRACK!

  I awoke to the unmistakable sound of a high-calibre rifle going off, right outside my door. I jumped out of bed, grabbed some trousers and dived into a cupboard. Ever since my boarding-school days I have had a phobia about getting attacked without having trousers on.

  A commotion was starting up in the corridor. I could not decipher the language, but it sounded like someone getting seriously lambasted. I left the cupboard and cautiously stuck my head out of my room door.

  An officer was shouting at a cowering guard; he turned to me.

  ‘I am most humbly offering my very gracious apologies, sir, for this grossly incompetent man,’ said the officer.

  The guard had negligently discharged his weapon in the stairwell while doing his night-time rounds.

  The BHP Islamabad office was staffed by a group of smart, well-educated Pakistani men and women from the upper echelons of society. It was a stimulating place to work and I immersed myself in the new culture and routine.

  During my time there, I got to know a couple of the younger women and learnt of their difficult dilemma. They were well educated, westernised and Muslim. The cultural traditions in Pakistan, though, were pervasive. Women were expected to marry young, serve their husbands and have children.

  The male counterparts to these women were already accounted for through family-arranged marriages, often to much younger women. The men willingly went along with this tradition. For the women, arranged marriages were more problematic. Men seeking educated, proficient and slightly older (than the teenage alternative) women were not in great supply, and many of these attractive women were basically left on the shelf.

  I got on uncommonly well with one of these women, who was most striking. We became quite close in a platonic way and, sens
ing her dilemma, I offered to take her back to Australia with me. She sensibly declined; there were too many family and religious taboos to overcome for her – or that’s what she said. I was disappointed by her answer, as I had grown most fond of this elegant young woman.

  Islamabad was designed and built in the 1960s as the modern capital of Pakistan. It had broad tree-lined streets and imposing public buildings. There were some excellent restaurants and numerous cheap shops selling any product you could imagine, pirated goods being a speciality. I gave my reading glasses to an optician and three hours later he had created three new identical pairs and charged me $10.

  Our offices and accommodation were in the leafy diplomatic quarter, and it was a decent billet. There was the constant threat of kidnapping, with or without a beheading, depending on whether your employer coughed up the ransom. So to prevent BHP’s worst nightmare (not to mention the kidnapee’s), there was some considerable, albeit rather bizarre, security. A simple trip to the shops was a surreal experience.

  ‘Ahmer, stop here, at the chemist,’ I instructed the driver.

  I got out to buy some medicine (no prescription required). Two armed bodyguards jumped out of the back of the car and followed me, two paces behind, brandishing their loaded AK-47s. One of the bodyguards was the same man who had discharged his rifle in the stairwell of the staff house the night of my arrival, which gave my retail experience something of an edge.

  One day I gave my bodyguards the slip and got away on a day trip to the scenic hill station of Murree in the foothills of the Himalayas, the place the British colonials would escape to in the heat of the summer. If I had kept going north that day, I would have ended up in Osama Bin Laden’s home town of Abbottabad, only 65 kilometres away.