Seven Elements That Have Changed the World (9 page)

New employment opportunities, better education and medical care were all now available to the owner of a car. As cities grew, they were shaped around the car in the formation of highways and suburbs. More than a practicality, the car quickly became a status symbol in emerging consumer society. And as a symbol of freedom and prosperity, it became an essential component of the American Dream.

Today the American Dream has gone global. In China’s cities, the once impenetrable streams of bicycles have been replaced by cars and the wide thoroughfares now struggle to cope with the ever increasing mass of vehicles. Before the city imposed restrictions in 2011, almost 1,000 cars and trucks were being added every day in Beijing alone.

This global growth drove the sharply rising demand for oil through the twentieth century. However, long before the invention of the car, oil was mostly used for much simpler ends: illumination and lubrication.

Petroleum, the ‘black juice’ that ‘flows from rocks’, was first documented by Georgius Agricola in the sixteenth century.
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In
De re metallica
, his seminal work on mining and metallurgy, he describes how liquid bitumen, found floating in springs, streams and rivers, could be collected in buckets or, when found in smaller quantities, collected with goose wings, linen strips and shreds of reeds.
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One woodcut in
De re metallica
illustrates a man patiently collecting his haul in a bucket.
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In Agricola’s day, oil was regarded as very inferior to the metallic ores from which iron, gold and
silver were extracted. There was little demand for it, but this started to change in the middle of the nineteenth century. The Industrial Revolution created a growing and increasingly wealthy population, which wanted a bright and clean artificial light source. ‘Rock oil’, as crude oil was then known, was just that, but it was in short supply and therefore expensive. Seeing the potential for profit, wildcat explorers began to search for new and bigger sources of this oil.

In August 1859, Edwin L. Drake, known as ‘The Colonel’, struck oil 20 metres below the surface on a farm in Pennsylvania. Attaching a simple hand pump to the well, he amazed onlookers by easily pumping oil from the ground. His find sparked a rush to Oil Creek that increased oil production from practically nothing, to three million barrels a year only three years later. Today global oil production stands at thirty billion barrels a year, a ten thousand-fold increase in only 150 years.

Finding that amount of oil has been and continues to be an extraordinary challenge. Explorers need to decide where to drill and how to develop the oil if found. They must do so while making a return on their investment and satisfying the desires of a host government and the needs of affected communities. All this must also be done safely, without damage to the natural environment and with some extraordinary technology.

Randomly drilling wells to find oil would achieve little. It would be like trying to find needles in a haystack. There are always clues that guide explorers to the areas more likely to be winners. An oilfield has certain essential characteristics. First, there needs to be a source for the oil. This source is the remains of plants and animals laid down millions of years ago, which have been subjected to the right pressure and temperature to form oil. Flying over the forests in the centre of Trinidad, I saw lakes of inky black oil which had bubbled up from just this sort of source. The La Brea tar pits in California were formed in a similar way. Both were clues to the presence of other oilfields. Second, the oil needs to get from the source into an overlying structure which can trap it. This often has a dome-like shape (an ‘anticline’) that sometimes expresses itself on the surface. Anticlines can be seen from the air in the Zagros foothills of Iran, my childhood home. These are the site of some of the greatest oilfields in the world. Third, the trap needs to be sealed by an impermeable rock. If the seal is breached the oil
escapes. One of the most famous and most expensive wells, called Mukluk, that turned out be unsuccessful (a ‘dry hole’), was drilled in Alaska. For years, BP’s explorers were convinced that it was going to be a guaranteed success. It failed because the seal had been breached and the oil had seeped away. Finally, the structure needs to be filled with a sedimentary rock that can contain the oil in its pores (the so-called porosity) and let it flow. The ease with which the rock allows the oil to flow is called the permeability. If all these things come together then there is an oil reservoir.

Some of these characteristics can be identified by analysing how the geology of a place came together. For example, ancient river deltas often have good porous and permeable sand. In modern times, remote sensing is used to ‘see’ the oil reservoir many kilometres down, below many layers of rocks. The most important technique is seismic surveying in which pressure waves are used to ‘bounce’ off the deep rock strata. The way in which these seismic waves are transmitted and received needs very careful design. Complex algorithms and gigantic computer power is needed to analyse the collected data. There is not much signal and plenty of noise so the computer analysis is critical. In the best of circumstances the shape of the structure can be identified, the seal can be seen, the rock in the reservoir can be characterised and even the oil in the rocks gives off a particular signature. In more normal circumstances some but not all of these things can be identified. All of this is much harder if the reservoir is overlain by a thick salt layer, as is the case, for example, offshore in Brazil, Angola and the US Gulf of Mexico. Vibrational waves travel so fast through the salt that the layer masks the geological formations that lie underneath. The sudden change in the speed of the seismic waves, as they move from sediment into salt, causes the waves to be refracted and reflected so that the salt sheet acts like a mirror. Only recently have computer algorithms improved to allow these signals to be untangled and sub-salt reservoirs to be seen with a degree of accuracy.

After all this is done, a well must be drilled to see if oil is there. Sometimes there is success but often not. In recent years the technologies of remote
sensing have reduced the chances of failure but success is never guaranteed; Mukluk is a constant and powerful reminder.
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Once oil is found, the field then needs to be developed in such a way as to provide a return for the investor and rent for the owner of the subsurface rights, usually a government. But oilfields which are easy to develop are now mostly in production. What is possible to develop continues to change. In the first decades of the twentieth century companies began to move from developing oilfields on land to going out into the water and drilling wells in lakes, in Venezuela, Texas and Louisiana. Going out into the sea was more difficult because the water was deeper, the winds stronger and the waves bigger.

The most extraordinary offshore development I have ever seen is in the Caspian Sea off Baku in Azerbaijan. Oil slicks had been reported by local ships captains and, further out, rocky outcrops were coated in a black oily sheen. In 1947 the first ramshackle drilling platform was erected on the oily Caspian Sea rocks. More and more platforms followed, connected by makeshift wooden bridges. Boulders were shipped out from the mainland to build artificial islands. By 1955, Oily Rocks, as the stilted town came to be known, had become Azerbaijan’s largest producer of oil, exporting more than fourteen million barrels each year. Five-storey apartment blocks, shops and hotels rose out of the waters to house and sustain the increasing number of men working there. But the rest of the Caspian Sea’s rich oil reserves lay east of Oily Rocks, in deeper water. To tap these fields, sometimes as much as six kilometres below the surface, would demand more than just platforms propped up on stilts at the edges of the sea.

I first visited Baku and Oily Rocks in 1990, following the collapse of the Soviet Union, as BP began to negotiate a venture to explore that deeper part of the Caspian Sea.
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The state of the town was shocking: bad practice was rife and everything seemed to be leaking. The characters propping up the bars could have been taken out of a scene from
Star Wars.
Trapped behind the Iron Curtain, technology had gone backwards at Oily Rocks along with any hope of accessing the Caspian Sea’s deepest reserves. But not all hope was lost. Within the first few years of the new millennium, technology imported from the West was used
to develop the super-giant Chirag-Azeri-Gunashli complex.

Developing oilfields in deeper and deeper water required an immense investment in technology. An example is the Thunder Horse field, developed with a monstrous floating structure, which we first met in the previous chapter, ‘Iron’. The field was beneath 2,000 metres of water, very different from the 200 metres in the Caspian or 20 metres at Oily Rocks. The capital cost is very high but, every year, technology improves and the cost of producing a barrel of oil decreases.
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And more can be achieved: developments in even deeper water, of course, but also extracting more of the oil that is in a reservoir. Today, typically 60 per cent or more of the oil is left behind after an oilfield stops producing. The reason for that lies in the economics; extracting more oil becomes increasingly costly and therefore unprofitable. And that cost is being challenged by technology.

Henry Darcy, a nineteenth-century French engineer working in Dijon, was a careful observer. He watched water go through the different types of rock at the bottom of public fountains and wondered what controlled its speed. Soon he came up with an equation that described the rate of flow of a fluid through permeable rocks. It is called Darcy’s law and the measure of permeability is called the ‘darcy’ in his honour.
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The law gives us a way of explaining four different ways in which the flow of oil out of a reservoir can be improved, known collectively as enhanced oil recovery (EOR). First, if the natural pressure of the reservoir is too low to get the oil to the surface, you can increase it by injecting other fluids, such as water, natural gas, nitrogen or carbon dioxide.
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This is often the first and simplest method of improving the recovery of oil. Second, you can expose more of the reservoir to the well bore by, for example, drilling horizontally along the rock strata. Third, you can make the oil less viscous or prone to staying in the spaces between rocks (the oil is held there by a force called surface tension). One way to do this is to pump in fluids, particularly liquefied carbon dioxide, so that it mixes with the oil. Another way is to heat the oil. This is necessary for
so-called heavy oil found in Canadian and Venezuelan tar sands.
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Finally, oil recovery can be improved by increasing the permeability of the oil-bearing rock. This is the oldest method of EOR, and one used since the very earliest days of the industry.

In 1865, Colonel Edward Roberts formed the Roberts Petroleum Torpedo Company. He had fought in the American Civil War three years earlier and had observed artillery rounds fired by the Confederate army exploding in dugouts in the battlefield. He thought that a similar blast could improve production from oil wells by fracturing the oil-bearing rock. By filling thin metal tubes with gunpowder, lowering them into a well and igniting them, Roberts was able to create a surge in production from a well, albeit often only briefly. Later nitroglycerine became the preferred explosive medium. Unfortunately it would often detonate by accident, killing and maiming those nearby.
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These blunt methods became obsolete with the development of hydraulic fracturing in the middle of the twentieth century. By forcing fluids (often a mix of water, chemicals and sand) into rock formations in which oil or gas is trapped, hydraulic fracturing greatly increases the effective permeability of the rock so that more oil and gas can move to the surface.

There is a great deal of potential for EOR today. In some fields, as much as 80 per cent of the oil is left behind. In others, no production can be had without hydraulic fracturing; this is the case in the so-called ‘shale gas and tight oil’ developments in the US.

For some time it has usually still been cheaper to find and produce from new oilfields than to try and squeeze more out of ageing ones. In recent years, however, as the price of oil has risen, the potential for EOR has grown rapidly: in the five years up to 2009 the market for EOR was estimated to have increased by twenty times.

The amount of oil which is developed is not just driven by technology; it is also determined by future expectations of oil prices. These are, of course, governed by supply and demand. However, the presence of the
Organisation of Petroleum Exporting Countries (OPEC), a cartel which controls around 40 per cent of global oil production, means that supply is often managed to achieve particular price levels. In very simple terms, oil prices, according to OPEC, should not be so low as to cause damage to their economies or cause domestic dissent or revolution; but they should not be so high as to dent demand or encourage too much supply from outside OPEC. Prices have varied broadly between these limits for many years.

All mineral resources are, of course, ultimately finite, and as a result there has always been a concern that the world may be about to run out of oil. In 1956, the American geologist Marion King Hubbert concluded that we would reach a point of maximum oil production, known as ‘peak oil’. Using estimates of future consumption and reserves, he predicted that this would occur sometime around the year 2000.
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But the year 2000 came and went without ‘peak oil’ happening. Indeed, it is not even on the horizon. This is because we are increasing the world’s oil reserves faster than we are using them. And that is mostly down to technology; we find oil in new places and invent new ways of recovering more of what has already been discovered. Increasing the recovery of our existing oil reserves by only 1 per cent would increase them by around ninety billion barrels, equivalent to about three years of global demand. As technologies improve, the percentage of recoverable oil keeps increasing and so supplies continue to get larger. I see no reason why this will cease soon and as a practical matter we probably will not run out of oil. We are more likely to have stopped using it long before we run out. As Sheikh Yamani, Saudi’s former oil minister said in the 1970s: ‘The Stone Age didn’t end because we ran out of stones.’
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