Seven Elements That Have Changed the World

by John Browne

  However, salt was still the main preoccupation of the Chinese. In 1835, the Shen Hai well was dug in Zigong to a record-breaking depth of one kilometre. On the way down, at 800 metres, miners hit a reserve of natural gas, but they kept digging. It was salt that they were after; natural gas was merely a useful by-product.

  In the past, natural gas has often been regarded as an inconvenience. It is not only found separately, but also found dissolved in oil from which it needs to be separated before the oil can be transported. At the start of the modern oil industry in the late nineteenth century, the gas was simply burnt off as no economic use could be found for it. It was easier to transport solid coal to where energy was needed and then convert it into town gas, the forerunner of natural gas. Not until 1935 did sales of natural gas overtake town gas.

  ‘Gas disposal’ was for a long time an important consideration for oil companies since, if gas was not flared, it would inhibit oil production. I remember the roar of the flares burning gas as I played badminton in our garden in Iran. Surprisingly, even today, large amounts of natural gas are flared in Russia since it cannot be used economically. Flaring also continues in other oilfields in inaccessible and hostile environments. Concerns over climate change and simple economics (it may be profitable to use the gas) have reduced this practice. Between 1996 and 2008 the volume of gas flared for each barrel of oil produced decreased by around 30 per cent. There remains great potential to reduce this practice further as around 150 billion cubic metres of gas are still flared each year (around 4 per cent of total global consumption).

  The modern gas industry took off in the US in the 1920s with the development of sophisticated networks of pipelines. Advances in metallurgy, welding and compression technology enabled the building of long-distance pipelines, such as the 1,600 kilometre pipeline from the Texas Panhandle to Chicago. From 1940 to 1970 natural gas went from around 10 per cent to over 30 per cent of total US energy consumption. Despite significant growth in nuclear and renewable energy consumption since the 1970s, in 2010 natural gas still accounted for one quarter of all energy consumed in the US. Gas from the furthest corners of the continent could now be brought to homes in the urban centres of US, providing a cheap source of energy for heating and cooking. It could also be brought to electricity generating stations. Today, that is the principal use of natural gas; it is an efficient way of making the electricity we all need.96

  Pipeline politics

  Where pipelines start and finish can be restricted by both geography and politics. The US, however, was ideally suited in both respects for the emerging gas industry. Pipelines could easily be built over large, flat expanses of land and could be linked to large consumer markets by crossing domestic state boundaries rather than national boundaries. But America is the exception rather than the rule.

  ‘How do I know that when the pipeline is built, China won’t turn around and cut the price they pay for gas to only half of our original agreement?’ said Vladimir Putin to me in 2004, when I suggested to him the possibility of constructing a gas pipeline from the super-giant Kovykta gas field in the east of Siberia into China. Far from any other possible gas market, China, with ever growing demand, seemed the obvious choice. Surprisingly, there were few pipelines crossing their shared border, despite the fact that Russia is the world’s biggest hydrocarbon producer and China is the world’s largest energy consumer.

  ‘But how do I know that when the pipeline is built Russia won’t start charging us twice what we agreed for gas?’ was Premier Wen Jiabao’s response when I approached him in search of a solution. I had explained Putin’s concerns, and hoped we could find some way to guarantee that China would not backtrack on the agreement. Building a pipeline is very costly. To be financed and to get a return on the investment, a pipeline needs a guaranteed long-term contract between the producer and buyer of the gas. Each party must trust that the other will hold to their part of a deal. For China and Russia, this was not possible.

  Through overcoming political and geographical barriers, the use of natural gas has spread across much of the world. And with the ability to trade natural gas internationally, the wealth of nations has grown. But the end of a pipeline is still the end of a pipeline. The inherent restrictions on where gas can be transported from and to often result in a regional, rather than a global, market. The development of LNG has made the market more global, but for an LNG train to be built requires markets to commit to taking the gas for many years. There are, however, surprises as exploration and production technology uncovers new sources of gas. This is the story of the US, which needed to import LNG a few years ago but now has the potential to produce all the gas it needs. That comes about from the successful production of gas from shale deposits, previously thought too technically challenging to tap.

  A fracking revolution

  This shale gas revolution has largely been brought about by the pioneering work of Texas businessman and philanthropist George Mitchell. In an area known as the Barnett Shale in Texas, Mitchell spent the later decades of the twentieth century experimenting to find an economic way to develop the gas dispersed through the region’s impermeable shale rock strata. Natural gas was long known to exist there, but considered worthless as there was no way to extract it. After an initial period of excitement in the 1980s, most other oil and gas companies gave up, but Mitchell continued to have faith in shale gas.

  The risk paid off when Mitchell fine-tuned hydraulic fracturing, or ‘fracking’, technologies to release the gas. The techniques he employed, injecting high-pressure water with sand and small amounts of chemicals to break apart rock formations, were not new and had been used across the oil and gas industry for decades. Indeed, Colonel Roberts, using a different technique, was trying to do the same thing in the nineteenth century. But no one had ever succeeded in using the technology to produce economic quantities of gas. When combined with horizontal drilling, which allows more of a shale formation to be fracked, Mitchell’s work finished what Colonel Roberts began.

  The US has benefited enormously from the widespread use of these techniques across its many shale basins. At the beginning of the millennium it seemed as if the US would need to import a great deal of LNG. Then, shale gas contributed just 1 per cent of the supply of natural gas. By 2012 it was contributing 36 per cent and reserves of natural gas had almost doubled. At current production rates, the US now has over a century’s supply of gas, half in shale and similar unconventional hydrocarbon-bearing formations. Mitchell’s innovation had made gas plentiful and inexpensive. It is competing with coal for the production of electricity. And most in the industry cannot remember the last time it was so cheap when compared to oil on an equivalent energy-content basis. Compared with oil, gas has lost around 80 per cent of its value in a decade.

  Twelve years after the beginning of the millennium, the US is planning to become a LNG exporter. That has not helped Trinidad. The US market no longer needs Trinidad’s gas.97 Former Prime Minister Manning was right: make sure you use your gas to add as much value in your own country before you export any of it. I suspect that thought will go through the heads of many policy makers.

  The successful development of shale gas in the US was enabled by liberal pipeline regulations, subsidies and an abundance of drilling rigs and other infrastructure already in place. These conditions do not exist in the same combination elsewhere in the world, but the development of shale gas and oil is nonetheless beginning to happen, albeit at a slower pace. Countries are dreaming of a new abundance of energy below their feet and some hope that they will become a little more energy self-sufficient.

  However, the growth of shale gas development in the US and elsewhere faces great challenges from surrounding communities, environmental NGOs and other pressure groups. They are concerned that fracking can cause earth tremors; that too much scarce water is used and that after it is used it is contaminated and disposed of incorrectly; that the chemicals used in the fracking process contaminate natural aquifers; and that
the natural gas released from fracking can get into their drinking water. Dramatic images of US citizens setting fire to water pouring from their kitchen taps have provoked a lot of concern.

  Many of these are fears born out of suspicion and misinformation. The incidences of water contamination investigated in the 2010 movie Gasland, for example, have largely been shown by the State of Colorado Oil and Gas Conservation Commission to result from activity unrelated to fracking.98 Some concerns, however, have a basis in fact. Just as with nuclear energy, this newly applied technology will be feared and resisted unless all stakeholders’ concerns are balanced with those of commerce. Ideally, the discussion needs to be based on evidence. Some of the evidence in the US is of bad practices by some operators who have cut corners to improve their profits. Standards and regulations are needed everywhere to avoid the reputation of the industry being set by the weakest players.

  Big global changes

  Shale and fracking represent the start of a big change in the US energy supplies. What Mitchell had started for gas is now applied to oil (and similar liquids) which can be made to flow from naturally almost impermeable shale beds or other geological formations, so-called ‘tight oil’ or ‘shale oil’ fields.

  The balance of opinion is that the US could at last become effectively self-sufficient in energy; it would not need to import energy from anywhere except its neighbour, Canada, unless it decided otherwise. Every US President since Richard Nixon has aspired towards that independence, seeking freedom from reliance on apparently unreliable supplies from the Middle East and South America.99 If this comes about, the political implications will be far-reaching. It means that less oil and gas will flow from the East to the US and the West, and much more will flow from the Middle East into Asia. As my friend and Pulitzer prize-winner Daniel Yergin writes, this is ‘nothing less than a rebalancing of world oil’.100 The US would have many choices as to how it considered its historic energy and defence relationships both inside its hemisphere and in the Middle East. China, too, will need to consider its relationships as it continues to import energy and in particular oil from the Middle East. Domestically, the US has, from shale oil and gas, a cheap and reliable energy supply, which gives it a considerable economic advantage. In short, we cannot know how the US will react to being able to meet its energy needs from its own continent. The choices that it and increasingly energy-dependent Asian economies make will, however, shape the global politics of the twenty-first century.

  One important side effect of increasing gas consumption of the US is a drop in its carbon dioxide emissions. Natural gas is ‘carbon-light’; for an equivalent amount of power generated, it only produces half the carbon dioxide of coal. As a result, the US’s carbon dioxide emissions have fallen by almost half a billion tonnes, or 7.7 per cent, in the past five years, more than in any other country. The growing use of natural gas around the world will be important in reducing the risk of climate change.

  Carbon fears and climate change

  ‘The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race … gigantic inevitable famine stalks in the rear, and with one mighty blow levels the population with the food of the world.’101 Writing in 1798, Thomas Malthus darkly predicted a future of famine, disease and war. He saw these disasters as necessary and natural checks on exponential population growth, which outpaced the steady linear growth of our food supply. These checks, he believed, confined humanity to a life of basic subsistence – the so-called ‘Malthusian Trap’. Malthus had, of course, failed to foresee the Industrial Revolution.

  Malthus was one of the earliest in a long line of distinguished prognosticators who predicted doom but turned out to be wrong because they failed to appreciate the capacity of technological innovation to change the world.

  In 1972, the Club of Rome, an international think-tank, famously published a report entitled The Limits of Growth.102 Assuming no technological or political change, it looked at the dangers of rapid population expansion in a world with finite resources, forecasting, among other things, severe shortages of food by the turn of the millennium. This modern-day Malthus failed to anticipate the consequences of the Green Revolution, which has led to a doubling of wheat production over the last forty years.103 Today, food consumption per head is around 20 per cent higher than in 1972.

  Marion King Hubbert and other peak oil pessimists, including the Club of Rome, have also so far been proved wrong. When forecast demand rises above known supply, prices rise, and technology is unleashed to tap new sources of oil or to put existing sources to better use. In 1980, proven oil reserves were around 650 billion barrels. Since then, we have produced over 700 billion barrels, and now have at least 1.5 trillion more in reserve.

  Today, the world’s pessimists and doom-mongers have settled on a new fear: climate change. They predict a Malthusian catastrophe of famine, disease and war on a global scale. Is there any reason to believe they are right this time, when pessimists have been wrong so many times before?

  On initial inspection, there are two reasons to give this new generation of pessimists some credence: a compelling scientific case for anthropogenic climate change, and humanity’s apparent inability to address the problem. There exists a strong scientific consensus that human activity is causing the earth’s temperature to rise, with extremely severe consequences for human beings and the environment.104 Energy use and greenhouse gas emissions continue to grow rapidly, with no prospect of a global agreement to control them. As a species we appear incapable of cooperating on tackling this existential challenge.

  Science and the risk of climate change

  I first began to be aware of the actual risk of climate change in 1992 at the Earth Summit in Rio de Janeiro.105 More than a hundred heads of state were gathered there to discuss, among other things, what to do about global warming. The science was not new, but this was the first time it had really hit the global agenda.

  The discussions at Rio were, on the face of it, entirely at odds with the success of the oil industry and BP. But it was obvious that climate change was not an issue that could be ignored or wished away: I wanted to understand much more and to work out whether BP could ‘square the circle’. It had to do something significant towards lowering the risk of climate change.

  After Rio, I held meetings with a wide range of scientists and experts in a bid to get to grips with the issue. In the end, one man did more than any other to convince me. John Houghton was chairman of the Intergovernmental Panel on Climate Change (IPCC) scientific assessment group.106 He spoke in the language of probabilities, a language I had been trained in and understood, and persuaded me that we could no longer be passive about spiralling global emissions.

  Climate change is often presented as a simple, linear process of cause and effect: increasing energy consumption will increase the carbon dioxide concentration in the atmosphere, which will cause the earth’s surface temperature to rise, which will have catastrophic consequences for our environment. But, as I came to understand it in my discussions with John Houghton, there are many possible outcomes at each step in the chain of causation, and each is subject to significant margins of error.

  Modelling a system as complex as our atmosphere and climate, based on assumptions about even more complex systems of human activity, leads to a great degree of uncertainty. The ultimate effects of climate change on the environment, human life and the economy are even harder to estimate. The IPCC calls it ‘a cascade of uncertainty’; we do not know exactly how the climate will change or what the consequences of that will be.107

  But that does not justify inaction: uncertainty does not imply ignorance. It is difficult to know what the world will be like in a hundred years’ time, but we can make estimates, acknowledge the inherent uncertainties and act appropriately. And work continues to improve our understanding and reduce uncertainty. Karl Popper once described all science as being provisional.1
08 It is a central tenet of the scientific method that all findings can, and should, be questioned. Our knowledge about the connections between human activity, the atmosphere and the environment must be subject to constant challenge and criticism.

  The scientific case for anthropogenic climate change is now overwhelmingly powerful. Even fifteen years ago, it was an idea that needed to be considered seriously. That is why, on 19 May 1997, I gave a speech to announce that BP would take action against climate change.109 Standing in the blistering sun in the Frost Amphitheater of Stanford University, California, I explained that the time had come for BP to ‘go beyond analysis to seek solutions and to take action’.110 On that day, we broke ranks with the entire oil industry.

  Over the next decade, the issue of climate change continued to gain momentum. Several leading politicians worked to put climate change on the agenda. US President Clinton and Vice-President Al Gore pushed for the passage of the Kyoto Protocol, the first and only treaty to set binding emissions targets on participating countries. The protocol was a great beginning but suffered some fatal flaws. It did not apply to developing nations, including China and India, and was never ratified by the US or Australia. Gore went on to win the Nobel Peace Prize for ‘efforts to build up and disseminate greater knowledge about man-made climate change’, notably through his documentary An Inconvenient Truth.111