Goodbye to oil that: the excesses of today’s quest for crude

Copyright The Review (Abu Dhabi)
Reading a series of new books about the desperate excesses of today’s quest for crude, Howard W French finds progress and prosperity alongside misery and exploitation, as the threat of the end draws near.
January 21. 2010
In 1998, with the international oil business in the midst of one of its recurrent doldrums – prices had slumped to $10 a barrel, a 50-year low – executives at the company then still known as British Petroleum braced for a test supremely laden with significance for the company, and, as it would turn out, for the industry, too.
It was a $100 million gamble – for that was the cost of a test bore in Block 778, under 7,625 feet of water in the Gulf of Mexico. The potential payoff was a staggering $50 billion over the next 10 years.
For months beforehand, ships dragging seismic equipment had crisscrossed the waters of the Gulf, firing bursts of sound into the seabed. And it was the harvesting of that echo data, recorded millisecond by millisecond, that had led the engineers to their precise quarry, a 12-inch hole they would drill through four miles of rock.
By reputation, this was the most complex geological area on the planet for oil prospectors. One of them likened recording sound through the thick salt formations that lay under the seabed to “photographing through frosted glass.” And yet the prospectors working out of BP’s Houston campus were not daunted: the oil business had been furiously reinventing itself to meet such challenges.
Looking for oil was no longer a game for old-timers. The seismic data that was once stored on miles of magnetic tape could now fit on an iPod, and the majors competed ferociously for the most talented young mathematicians and geophysicists.
On July 4, 1998, the company’s drill sensors reported oil. David Rainey, BP’s head of exploration, exclaimed: “Our sandbox has just got bigger.” But the immense size of his triumph would soon become clear: a billion barrels of oil – enough to boost the revived company into competition with Exxon and Shell, and set off a scramble toward ever more risky deepwater gambles that the majors have pursued around the Atlantic rim ever since.
By 2004, BP had commissioned the construction of the world’s largest oil platform, a 59,500-ton behemoth called the “Thunder Horse” – which they towed from South Korea to the warm Gulf waters off Louisiana – to tap an invisible gusher of crude. There, it would shunt the well’s output into a network of 25,000 miles of pipeline that traverse the ocean floor from Texas to Florida to fuel America’s cars and heat its homes.
This tale of technological triumph, breathlessly recounted in Tom Bower’s new book The Squeeze: Oil, Money and Greed in the 21st Century, still retains an elegiac quality. Indeed, if not exactly an epitaph, the deepwater adventures of companies like BP and its traditional competitors, which Bower chronicles in great detail, hang in one’s thoughts like a chronicle of a death foretold.
Ingenuity is one way to describe the search for crude in deeper and deeper waters; another, equally apt, might be desperation. Once all-mighty, the large Western oil companies now control well under 10 per cent of the world’s known crude.
“Big oil never wanted to be here,” read the telling first line of a recent Wall Street Journal feature about the successful efforts of Chevron in very deep waters not far from BP’s big find.
“Chevron came here, an hour-long helicopter ride south of New Orleans, because so many of the places it would rather be – big, easily tapped oilfields close to shore – have become off-limits. Western oil companies have been kicked out of much of the Middle East in recent decades, had assets seized in Venezuela and seen much of the US roped off because of environmental regulations,” the article read. “Their access in Iran is limited by sanctions, in Russia by curbs on foreign investment, in Iraq by violence.”
We associate few products with the swings and cycles that we all but take for granted with oil. The rise and fall of prices, and the expansion and contraction of the economies that drive them, consume our quotidian attentions. But such vicissitudes are not the half of oil’s cyclical saga, and in many ways they are the least interesting part of the tale.
To really grapple with the history of this industry is to plunge into the rich essence of the story of mankind’s last century, give or take a few years. All of the elements are there, from the final sprint of what, only recently, one might have imagined to be the semi-permanent ascendancy of the West to the resurrection of China and the rise of a host of other new or rehabilitated powers.
In this time, we have gone from widely accepted notions of progress as an irreversible march of material wealth and abundance to an increasingly common acceptance that the heedless consumption that underpins our notions of satisfaction and self-worth has become a mortal environmental menace.
By the same token, that confidence in inexhaustible material abundance has faded, first into an only slightly less quaint belief that science can force the horizons of scarcity into perpetual retreat, and more recently to a gathering acknowledgement of all sorts of limits.
Haunting every one of these plot lines is a spectre that suffuses The Squeeze and two other new books, by the journalists Peter Maass and Michael Peel, about all manner of ravages and excesses committed in the quest for petroleum. It is the still vague and yet certain ghost of “peak oil”.
Western historians have long fixated on the great ideological struggles, hot and cold, of the last century. For many, this competition, and the putative triumph of democracy, is the greatest story of our times.
But the century-long arc of oil’s rise and eventual decline reveals a story whose significance is even greater than the political dispute that defined the Cold War. It is a story in which the West played a starring role, but to whose importance it has remained largely blind: the end of colonial subjugation, and the rise of the “the rest.”
Western hegemony during the colonial era, which began in the 17th century and ended in the wake of the Second World War, created “one of the great asymmetries of world history,” as the historian Niall Ferguson has written.
That asymmetry, as the journalist and analyst Martin Jacques notes in his new book, When China Rules the World, was no accident, for Europe “forcibly sought to prevent – by a combination of economic and military means – Asia from taking the same route”. Decolonisation, Jacques writes, was “arguably … the most important event of the 20th century, creating the conditions for the majority of the world’s population to become the dominant players of the 21st century”.
This is best illustrated, no doubt, by the example of China, which with 20 per cent of the world’s population may serve as a surrogate or indicator, if a leading-edge one, for the non-white populations of the planet as a whole.
China, as everyone knows, is on the march economically, followed by India’s billion-plus, and by people elsewhere in Asia, in Latin America and – although less widely acknowledged – in Africa, too, and the surge of production, consumption and new wealth among these recently-enfranchised populations will condition what’s left of oil’s long, wild ride down to the last drop.
Growth like this is projected to drive a one per cent annual rise in oil demand, according to the International Energy Agency (IEA), whose forecasts have been criticised in many quarters for being too conservative. Power generating capacity during this time-span will rise by 4,800 gigawatts, or five times the United States’ present output.
Virtually all of this growth will come from non-OECD countries, the IEA claims, and 28 per cent of it from China alone – where oil consumption is expected to nearly double, to 15 million barrels a day, by 2030. The IEA’s 2009 World Energy Outlook warns that current investments fall far short of what will be needed to meet future demand; it is the prospect of this looming shortfall that has stoked fears that the “end of oil” may come sooner than previously expected.
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