A bleak landscape of oil rigs at Ilych Bay near Baku, Azerbaijan. Drilling began in 1923 after the bay had been filled with rocks and soil. Oil production peaked around World War II and continues today. |
American civilization as we know it appeared to be in grave peril a quarter century ago. When Arab nations cut off oil shipments to the United States during the 1973 war in the Middle East, gasoline prices abruptly rose 40 percent and panic ensued. Motorists idled in long lines at gas stations, where creeping tensions led to fights and even occasional shootings. Automakers scrambled to retool their assembly lines to manufacture miserly compacts rather than gas-guzzling behemoths. Entrepreneurs poured millions into upstart solar-energy and wind-power companies. Politicians pontificated about the need for collective belt-tightening and offered income tax credits to homeowners for energy-saving insulation. Meanwhile, doomsday scenarios predicted ever-increasing shortages of fossil fuels and $100-a-barrel oil prices by the year 2000.
Surprise. Doomsday is nigh and oil has been selling at $10 to $15 a barrel, not $100. Adjusting for inflation, gasoline is cheaper today than it was before the Arab oil embargo. Indeed, the world seems to be awash in oil.
This year, wells around the world—from the sands of Saudi Arabia to the deep continental trench off the coast of Brazil—will pump some 75 million barrels of oil each day to satisfy demand. That’s about 25 billion barrels a year, and the number is climbing at a rate between 2 and 3 percent a year. Barring a worldwide recession, the U.S. Energy Information Administration believes the world will be consuming around 110 million barrels a day by the year 2020. And it looks as though we won’t be running short by then either. “It’s hard for people who remember the seventies to accept this, but I believe we’ll never ‘run out’ of oil the way the pessimists used to think,” says Michael Lynch, a political scientist at MIT.
“People think of the Earth as having a certain amount of oil the way you might have a certain amount of money in your bank account,” adds Daniel Yergin, chairman of Cambridge Energy Research Associates, who wrote the The Prize, a history of oil, and The Commanding Heights, a study of market forces and the energy industry. “But in reality, the ultimate amount available to us is determined both by economics and technology.” So even though the United States has already spent more than half its domestic oil reserves on its energy-hungry economy, the gloom-and-doom predictions of the seventies were averted because of advances in oil technology and colossal new oil finds in West Africa, Colombia, and Russia. And Roger Anderson, director of the energy research center at Columbia University’s Lamont-Doherty Earth Observatory, expects the future will hold more of the same. “If you pay smart people enough money,” he says, “they’ll figure out all sorts of ways to get the oil you need.”
Genesis, an offshore drilling platform in the Gulf of Mexico, reaches 2,600 feet down to the seafloor. The drill risers (within the black portion) can pipe oil up from more than 11 wells at a time. |
That prize has prompted oil companies to spread the risk of discovery among themselves. Chevron, working with a consortium of other oil companies, recently drilled an exploration well in the Gulf of Mexico in waters 7,718 feet deep, a distance five times the height of the Empire State Building. The 618-foot Glomar Explorer, a former CIA vessel built during the Nixon administration to recover a Soviet nuclear submarine that sank deep in the Pacific, was converted into a deepwater-drill ship. And instead of dropping anchor—which is impossible in such depths—the ship hovered over the spot with the help of the global positioning satellite system, which identified the latitude and longitude. First the crew lowered the pipe—21 inches wide and weighing a million pounds—into the water through a hole in the ship. Once the drill bit reached the seafloor, it bored another 10,000 feet until it had reached down 17,000 feet—more than three miles.
But, after $20 million in work, the well is said to have come up dry. If so, that’s not unusual: about half of all prospective wells do. “But there’s lots of oil to be found at that depth,” predicts Anderson. “The big news is that it can be pulled out at a profit.” And crews should soon be able to drill in even deeper water. The Glomar Explorer can’t be used in water much deeper than 8,000 feet, because it doesn’t remain stable against the million-pound pipe. But new, larger ships are under construction, and they could lower pipe down to 10,000 feet, maybe more.
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Even the most inhospitable locations are being made drill-friendly. A decade ago, oil was discovered in just over 200 feet of water off the coast of Newfoundland. Because icebergs flow through the area, no ordinary oil platform would work. Then engineers hired by a group of oil companies designed an iceberg-proof goliath. Its base is a huge 16-pointed star made of 650,000 tons of concrete and steel. (The points, which are supposed to deflect and break up icebergs, have not yet actually collided with one.) The price: $4 billion. The platform, called the Hibernia, is expected to recover 615 million barrels of oil over 15 to 20 years. That’s not much compared with, say, the 200 billion barrels that Saudi Arabia holds in its oil fields. But it’s a good example of how oil companies are branching out and squeezing oil from improbable places.
“People think of the oil industry as this backward, nineteenth-century industry with people randomly drilling holes,” says Yergin. “But in fact, next to the military, it’s emerged as probably the biggest consumer of computer technology in the world.” Because of the way oil is distributed throughout cracks and pores in the Earth, as much as 70 percent of the oil from a typical well used to remain trapped in the ground. So anything that increases a single well’s yield can have a huge impact on production. All the big oil companies are beginning to tap hard-to-reach deposits by using 3-D seismic imaging and computer-controlled sensors to detect where pockets of oil are located in a well. Once the well is bored, drill bits can be steered sideways through the ground in search of oil.
“There’s no specific technology, no silver bullet to extend the oil supplies,” says Lynch. “But there are sure an awful lot of copper bullets lying around.”
He most promising copper bullet is new technology for turning natural gas into fuels like gasoline and diesel. For years, natural gas has been used mostly for generating electricity and fueling kitchen stoves and some home furnaces. In the Alaskan oil fields it’s pumped back into the ground to maintain pressure in the oil wells. In Nigeria and the Middle East, it’s simply flared. But such waste is soon to become a thing of the past.
| c. 700 B.C. In Homer’s Iliad, Trojan warriors cast “unwearied fire”—petroleum-soaked arrows—over enemy ships. “Colonel” Edwin Drake drills the first modern well and strikes oil in Titusville, Pennsylvania
John D. Rockefeller consolidates control of the oil market. Founds Standard Oil Company in 1870 and becomes the Bill Gates on his day. Henry Ford builds a car that runs on gasoline. On January 10, oil is discovered in Texas, at Spindletop. The first U.S. gusher draws a crowd of thousands. Oil is discovered in Masjed-Soleym¯an, Persia—the first of the great Middle East oil finds. 1920s Drive-in gas stations open across the country. The United States, Britain, and the Netherlands bar oil shipments to Japan. In December, the Japanese bomb Pearl Harbor.
Offshore drilling accident near Santa Barbara spills some 6,000 barrels of oil over 30 miles of beach. Helps spawn the environmental movement. During the Arab oil embargo, Americans face the first gas lines since World War II.
After five years of construction, the Alaskan pipeline delivers oil to the market. Iranian Revolution. More gas lines, and oil tops $1 a gallon.
The Exxon Valdez oil tanker spills 240,000 barrels of crude into Prince William Sound, Alaska.
1990–91 Iraq invades Kuwait, culminating in the Gulf War and the burning of the Kuwaiti oil fields.
Gas prices in some places drop below 80 cents a gallon. The Asian recession and the oil glut lead to the lowest prices since before the ’73 embargo. |
