Crude

by Sonia Shah

  As much as geologists knew about oil and its movements, and the huge amounts of money involved when they were wrong about their guesses, nine out of ten exploration wells drilled in the United States were dry holes. Just one in a hundred exploration wells discovered a usable oilfield.23 When, in 1975, two University of California geologists analyzed the three hundred thousand exploratory holes that had been bored in the continental United States, they concluded that more oil would have been found faster had the holes been drilled completely at random.24

  Military technology, harnessed to hunt the enemy and underwritten by the public, was transferred to the private hunt for oil, which many described in openly warriorlike terms. The mapping of the ocean floor for submarines, aerial surveys for picking out bomb targets, and seismographs used to pinpoint enemy artillery: all of these military technologies developed to wage war were put to service in the hunt for oil.

  The seismograph proved to be the “most powerful new weapon of all,” as one historian put it.25 Translating the echoes of seismic waves pumped into the ground could reveal the deformations where they lay below unseen, just as a bat’s clicking could find its mosquito. The reverberations from explosions of dynamite, a vibrating steel plate under a truck, or underwater bursts of air would be recorded by tiny microphones stuck into the ground or dragged behind boats.26 Seismic information was recorded from top to bottom and side to side, yielding a two-dimensional slice of data about the rock.

  By the 1950s, seismologists had started to record their echoes on digital magnetic tape, allowing computers to analyze the mountains of data.27 As computers improved, so did the speed and sophistication of the data analysis.

  From each oil strike, explorers would fan out incrementally, slowly leading them to slip off the side of dry land and wade into the shallow water. By around 1950, companies had drifted off the spent oilfields of Texas and California into the shallow waters off the coasts. As seismic surveys improved, they found that some oil was trapped under the water, untapped. The lure of a big find pulled them in deeper as effectively as an undertow.28

  Geologists had suspected there might be oil bubbling from the thick marine sediments under the North Slope of Alaska since the 1920s, but the harsh Alaskan environment had kept them away. At the North Slope, an area larger than the whole of Minnesota, winter temperatures could plummet to 40 below. Add to that two months of continuous darkness and ground permanently frozen down to two thousand feet.29

  By 1967, oil companies had just about given up on finding any oil in Alaska. There was one last exploratory well scheduled to be drilled, at Prudhoe Bay on the northern coast, where the Sagavanirktok River splashed into the Arctic Ocean. They almost didn’t bother, but the rig was already there and only had to be moved sixty miles. “It was more a decision not to cancel a well already scheduled than to go ahead,” explained the oil exec who ordered the well. The conflict in the Middle East had intensified, as Israel attacked and conquered the Arab-populated lands of the Sinai Peninsula, Gaza Strip, West Bank, and Golan Heights in June 1967. Any dribble of domestic oil, no matter how chilly, would surely be greeted with approval from American officials.

  The day after Christmas that year, the drillers at Prudhoe Bay made an incredible discovery: over 10 billion barrels of recoverable oil situated thousands of miles away from the bloody conflict in the Middle East. It may have been just a fraction of the amount of oil sitting under Saudi Arabia, but Prudhoe Bay was the largest oilfield ever found in North America.

  While oil companies set to work developing the harsh new oilfields, analysts debated over how to supply the oil to thirsty American engines in the lower forty-eight. Nuclear physicists suggested that nuclear-powered submarines might carry Prudhoe’s crude. Others advised a fleet of jumbo jet oil tankers. A pipeline, in the end, seemed the most sensible idea. But heartbroken locals and environmentalists, worried about the fate of their beloved Alaskan wilderness, fought the proposal bitterly, winning a court injunction against its construction in 1970.30

  Oil explorers’ determination against the elements paid off across the pond in Britain as well. In the days when Middle Eastern oil was available for the taking, nobody in the oil industry was interested in the North Sea, bound by the east coast of Great Britain, Norway, and the Netherlands. That shallow sea was so turbulent that one of its storms had vanquished an entire invading armada back in 1588.31 The equipment needed to even think about exploring or drilling in such a forbidding place was hardly available at the time; a few feet of calm shallow waters might be all right but somewhere like the North Sea was inconceivably difficult. Plus, it wasn’t clear who owned the rights to explore or drill in it.

  Still, geological clues as to the Sea’s crude potential tantalized. In the early 1960s, a huge gas field had been unearthed in the northern Netherlands, and geologists found that the same rocks that spurted that gas lay on the other side of the North Sea in eastern England. Those same hydrocarbon-rich rocks might extend underneath the North Sea as well.32

  If so, it would be a tremendous boon to Britain, by then a fallen colonial power. Hopeful government officials resolved the ownership issues. Seismic surveys followed, showing plenty of “bright spots” where the pore spaces in the rock had trapped gas. The race was on.33 In the early 1970s, BP and Shell pinpointed two of the North Sea’s biggest oilfields, the Forties and the Brent fields. Eventually, oil companies would find over 16 billion barrels of oil under the North Sea.34

  As in Alaska, draining the North Sea oilfields would be expensive and physically challenging, but oil companies could rest assured that their costly investments would be safe. Unlike in Mexico, Iran, or Saudi Arabia, the British and U.S. governments could be relied upon to drape a protective wing over their activities.

  In 1971, while the industry readied their conquest of Alaska and the North Sea, Hubbert’s unheeded prediction quietly came true. The government agency that regulated the amount of oil pumped out of U.S. wells announced that the oilmen could pump out as much as they liked. “The Texas Railroad Commission announced a 100 percent allowable for next month,” read the obscure announcement in the San Francisco Chronicle, Hubbert’s colleague Kenneth Deffeyes recalls. “I went home and said, ‘Old Hubbert was right.’”35 From then on, the taps in the lower forty-eight states would be fully on; if the flow of oil they provided was insufficient, Americans would have to look elsewhere for more. Oil production from the United States, save for Alaska, would steadily decline ever after.

  The news may not have been heard very loudly outside the industry, but within it, “The world split,” says Deffeyes.36 “There were Hubbertians and non-Hubbertians. The non-Hubbertians were larger in number and tended to be economists, managers, and a lot of geologists,” who insisted that the boys were crying wolf. They argued, variously, that higher prices would provoke more drilling and thus render more oil; technology would improve so that more oil could be pumped out of already spent oilfields; that previously inaccessible hunting grounds like Alaska and the North Sea would pour forth riches; that Saudi Arabia still sat on a goldmine and could easily make up any shortfall. But many insiders took Hubbert’s predictions to heart, and “literally shaped their careers around it,” Deffeyes says.37 They didn’t trumpet the news to the masses, but anyone watching might have noticed their minor exodus from the U.S. oil business, as shaken engineers, geologists, and others fled for more secure industries, some migrating into nukes, others, like Deffeyes, into the ivory tower.

  CHAPTER THREE

  Into the Cold

  BY 1973, THE earth’s crust was bleeding more than 55 million barrels of oil every day, over half of it from the Middle East.1 With each barrel swallowed by the industrial world’s roaring machines, there wasn’t a drop to spare.

  Then, in October of that year, Egypt and Syria attacked Israel, attempting to recapture territories lost in 1967.2 The United States promptly arranged for aid to be sent to Israel.

  For the ministers in a then-obscure cartel called
OPEC, this was just too much. They decided to take a stand. What they did would make OPEC “a household word, not just an obscure acronym,” noted the National Petroleum News, turning Western attention to the distant lands they unknowingly relied on “for the first time.”3 Several OPEC ministers voted to cauterize the arteries pumping life-blood to Israel’s allies, embargoing shipments of oil to the United States and the Netherlands.

  Over the next six months, the price of the now much scarcer oil skyrocketed from $3 to almost $12 a barrel. The effect on industrial oil-gorging economies was tremendous and long-lasting. Almost every product by then came with an embedded oil cost.4 Between 1970 and 1980, consumer prices doubled. Unemployment rose. Inflation set in.5

  Then-President Nixon considered forcibly seizing Middle Eastern oilfields, but American soldiers were already stuck in a costly unpopular war in Southeast Asia.6 What else could the United States do? Its own once-prodigious oilfields were in decline, North Sea and Alaskan oil had yet to come into full production, and the country relied on imported oil for almost a third of its oil.7 They’d have to settle for a slow buildup of forces in the region: maybe they’d be better prepared next time.8

  In the meantime, as prices kept rising, the government reluctantly did the obvious: institute measures to curb energy consumption. Nixon instructed homeowners to turn their thermostats down and companies to shorten working hours. Gas stations were to ration each driver to just ten gallons each. No gasoline would be sold on Sundays. For the first time, vehicles would have to meet some minimum efficiency requirements. Later, President Carter would urge energy conservation, appearing on national television wearing woolly sweaters in the chilly White House. He pressured companies to reverse their historic switch from coal to oil and gas—and to go back to coal. In 1978, he instituted the “gas guzzler” tax, a penalty leveled at those who bought inefficient cars.9

  “Governments, corporations, and individuals were entirely unprepared for this turn of events,” writes historian David Hackett Fischer. “Many American families found their budgets strained beyond the breaking point.”10 A new government agency was formed to study how energy was used in the economy—it would come to be called the Department of Energy.11 A new way of thinking about energy, power, and society sprang up in the book-lined thinktanks and universities, with groundbreaking works from political philosopher Ivan Illich, biophysicist Donella Meadows, economist Herman Daly, and others. But none of it made much sense to insular, oil-coddled Americans. Commented one finance writer, “To many Americans it was impossible to understand how their standard of living was now being held hostage to obscure border clashes in strange parts of the world.”12 Broke and uncomprehending, they waited impatiently in the endless lines at the gas stations. Disappointment turned to pessimism, and a widespread cynicism set in.13

  President Gerald Ford instituted a stockpile of oil, to be used in a future emergency: the Strategic Petroleum Reserve. Ultimately, several billion barrels of oil would be squirreled away in Louisiana’s salt domes for safekeeping should capricious oil suppliers play dirty again. The industrialized countries that depended on OPEC oil formed their own alliance to counter the cartel, the International Energy Agency.

  The second “oil shock” arrived in 1979 when Islamic fundamentalists overthrew the Shah of Iran. America’s shaking hand curled into a fist. Carter announced what came to be known as the “Carter Doctrine.” From then on, the policy of the United States would be to smother any hostile act that might curb the flow of the Gulf ’s oil using “any means necessary.”14

  However dispiriting and difficult the 1970s oil shocks were to Americans, they were much worse on the countries of the developing world. Poorer countries couldn’t simply cut back on Sunday driving in order to weather a quadrupling of oil prices. Their newly industrializing factories needed the oil to function. The oil-intensive mode of growing food prevalent in the West had taken hold, and those who eked out a life growing their own food on small plots had seen their lands bulldozed by the oil-fired machines, sprayed with oil-derived fertilizers and pesticides, and their monoculture crops carted off on oil-burning trucks and planes. Amidst the plenty that petroagriculture made possible, one out of every seven human beings still went hungry, yet at least in the short term, industrial farms would demand their crude to avert potentially even greater catastrophe.15 Many Third World governments borrowed billions of dollars from commercial banks and institutions to pay for the expensive oil imports.16

  A crushing debt grew. In 1970, the developing economies of the Third World had a manageable external debt, approximately $100 million. By 1988, the Third World’s external debt had grown to a staggering $1.3 trillion. Just paying the interest on these loans constituted a massive transfer of wealth from the countries of the South to the bankers of the North.17

  Meanwhile, the oil industry was enjoying golden years. Flush with cash from the pricey oil that was dragging so many economies down, oil companies invested in developing their perilous but politically safe treasure chests in Alaska and the North Sea.

  In hot pursuit of “energy independence,” the nation’s new battle cry, Congress had decreed that the trans-Alaskan pipeline be given the go-ahead.18 The old gangs from Saudi Arabia were resurrected. A $50 billion matrix of roads, rigs, and machines rapidly colonized the windswept, icy, coastal plains, ferrying in drawling cowboy-booted oilmen from the south. “The whiteout blend[ed] sky and earth in a deafening whiteness,” remembers one oil consultant, fondly. “And here, where the opposite extremes of earth are found, here you find the commonality of the drilling rig and its crew, the buddies of those in Arabia. Some have been there themselves. I hear[d] the drawl, and I [saw] the cowboy boots and the tobacco spit again.”19

  The clouds of dust following the zooming trucks and tankers sent the wildlife running, hunters finally penetrating the tundra on the new roads made for oil. The oil empire exhaled almost a hundred thousand tons of pollutants into the cold air every year and leaked over a million barrels of contaminated wastes every day. The native Alaskans watched as strange new sores and lesions befell their moose and caribou, their children started coughing more, and their seals’ skins thinned.20 Yet the industry and the governments that supported it were determined to continue plumbing the most forbidding seas and braving the most extreme climates in pursuit of crude anywhere in the world—except for in OPEC countries.

  The triangular island of Newfoundland lies off the eastern edge of Canada in the frigid North Atlantic. It is a snow-covered jag of rock, its poor soils supporting stark pine forests and reindeer-moss covered plateaus. The people who live there, “Newfies,” are the poorest and least-employed people in Canada.

  One hundred and eighty miles off Newfoundland’s southeastern coast, a series of banks rise off the continental shelf. Cold currents from the Labrador Sea wash over the banks, carrying stately icebergs, broken off the Greenland ice sheet. Meanwhile warm waters pushed by the Gulf Stream rush in from the south. As the frigid waters meet the warm over the shallow banks, clouds of fog are belched into the air, and the waters below start to churn.

  This patch of ocean has long been known as “iceberg alley” to the Coast Guard. The lethal combination of shallow water, fog, and icebergs over the banks menaced the busy shipping lanes linking North America to Europe. Some of these ice pillars could be as heavy as 5 million tons, soaring to three hundred feet above the water.21

  The waters are rich in oxygen and nutrients, providing a perfect medium for plankton, the precursor to a lush food chain. For more than four hundred years, fishermen and women from all over the world braved the seventy-mile-per-hour winds and hundred-foot swells of the largest of the banks, the 350-mile-long Grand Banks, for what was once one of the richest fisheries in the world.22

  In 1979, Mobil, after drilling and abandoning fifty dry holes, struck oil off the Grand Banks in a field dubbed “Hibernia.” The news met with great excitement among political elites, oil execs, and the long-suffering Newfies. Hiber
nia became the “indisputable darling of Wall Street investors,” with commentators guessing the Grand Banks could hold up to 10 billion barrels of oil. This was “ big-league stuff,” as one analyst gushed.23

  But how to get it out? In order to drill exploratory wells off the forbidding Grand Banks, oil companies would need a new and improved kind of vessel, one able to withstand the blow of gigantic icebergs. They’d need something much better than the Titanic, which an iceberg had punctured near the banks in 1912, and it wouldn’t come cheap. Drilling a single well under the ocean could cost four times more than even the most expensive wells drilled on land.24

  The truth was that oil companies were extremely cautious about new methods. Mistakes were costly and nobody wanted to ruin a perfectly decent well with some untested gadget, no matter how efficient or groundbreaking it might be. “Making a huge up-front investment in a technology that might not be commercial for ten years may be a necessity, but it’s not a pretty addition to the balance sheet,” commented one analyst.25 By the turn of the millennium, many were still lionizing the breakthroughs that made Halliburton and Schlumberger legendary names in the business, innovations pioneered in the 1920s.26 As a petroleum engineer put it, the industry was “totally oblivious to other technologies that were not stamped with a big H or a big S.”27

  Oil companies approached the problem of taming the banks’ icy tempest the same way they approached others: enlarge. In 1981, Mobil spent almost half a million dollars a day to send a towering rig to drill exploratory wells on the stormy banks. At fifteen thousand tons, the rig, called the Ocean Ranger, was the world’s biggest. “The massiveness kind of terrifies you at first,” the Ranger’s captain admitted.28 The platform was twice the size of a football field. As one reporter who ventured onboard put it:[The Ocean Ranger was] as square and solid as the Parthenon, which, with her eight massive supporting columns, she somewhat resembled. Towering thirty-seven stories from keel to derrick top, moored by twelve anchors with cables each a mile long, the Ranger seemed a temple of stability. Veteran ship captains were amazed to find that she hardly rocked at all, often less than half a degree. But the oil men who ran the Ocean Ranger just propped up their cowboy boots and smiled. Well, Oklahoma didn’t move around under your feet, either.29