The Deluge: We Are Entering A New Era Of Fossil Fuels
Rapidly advancing technologies are opening up astonishing sources of oil and gas all over the world. We are entering a new era of fossil fuels that is reshaping global economics and politics—and the planet.
OIL SEEPING TO THE SURFACE of the lazy Kern River, just north of Bakersfield, California, first caught James Elwood’s attention in 1899. The state was in the midst of an oil boom, and Elwood wanted in on the action. He rounded up a few relatives, got some picks and shovels, chose a patch of sun-baked earth near the river seep, and started digging.
Forty-odd feet down, they switched to an auger, and punched down another couple of dozen feet. Oil—trapped in the stone’s pores for millions of years—began oozing into the crude well.
The strike made the front page of the local newspaper, and brought other prospectors rushing to the Kern River. Within a year, 130 wells had been dug. Drillers pumped the black muck to the surface and hauled it away in barrels borne on mule carts. By 1904, more than 47,000 barrels per day were flowing forth, nearly matching the production of the entire state of Texas.
Kern River oil is particularly thick and viscous, with a consistency like molasses, which means it doesn’t flow easily. Analysts at the time predicted that the difficulty in extracting it meant they could get at only about 10 percent of the total that lay underground. By the early 1940s, oilmen had hauled 278 million barrels out of the field, but production was in steep decline; the most accessible oil was gone. Kern River seemed close to being effectively tapped out.
In the 1950s, however, several major oil companies active in the field tried some new ideas. They started dropping “bottom-hole heaters” into the wells, devices that use hot water or electricity to warm the oil, making it flow more easily. A few years later, engineers figured out how to inject steam into the underground crude. The results were spectacular. Within a few years, Kern River was producing more oil than ever. By 2007 the field had yielded some two billion barrels, making it one of the biggest in American history.
The story of Kern River reflects our entire history with oil: every time we think we’re starting to run out of it, new technologies arise that find us more. The widely circulated fears of a few years ago that we were approaching “peak oil” have turned out to be completely wrong. From the Arctic to Africa, nanoengineered materials, underwater robots, side-scanning 3-D sonar, specially engineered lubricants, and myriad other advances are opening up titanic new supplies of fossil fuels, many of them in unexpected places—Brazil, Australia, and, perhaps most significantly, North America. “Contrary to what most people believe,” declares a recent study from the Harvard Kennedy School, “oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption.”
FOR CENTURIES, THE EVER-SHIFTING MAP of where energy comes from has defined much of the character of our world. When people used whale oil for indoor lighting, Nantucket was a bustling center of commerce. Coal drove the rise of places like Newcastle upon Tyne in England and Centralia in Pennsylvania—and then powered the industrial and geographic expansion of the United States. Oil helped fund the creation of Texas and California. Since then, fossil fuels have shaped the development of countries around the world, especially in the Middle East.
Right now, the map of who sells and who buys oil and natural gas is being radically redrawn. Just a few years ago, imported oil made up nearly two-thirds of the United States’ annual consumption; now it’s less than half. Within a decade, the U.S. is expected to overtake Saudi Arabia and Russia to regain its title as the world’s top energy producer. Countries that have never had an energy industry worth mentioning are on the brink of becoming major players, while established fossil fuel powerhouses are facing challenges to their dominance. We are witnessing a shift that heralds major new opportunities—and dangers—for individual nations, international politics and economics, and the planet.
Oil is perhaps the only commodity used, in one way or another, by almost everyone on earth. We depend on it for much more than just gasoline. Oil and natural gas provide the raw materials for asphalt, plastics, and chemicals and fertilizers without which modern agriculture would collapse. To say that we’re “addicted” to oil, as though it were a bad habit we could kick through force of will, is to drastically understate the degree of our dependence. In short: no petroleum, no modern civilization.
Little surprise, then, that practically since we started using the stuff, we have fretted that we were running out of it. In 1922, a federal commission predicted that “production of oil cannot long maintain its present rate.” In 1977, President Jimmy Carter declared that world oil production would peak by 1985.
It turns out, though, that the problem has never been exactly about supply; it’s always been about our ability to profitably tap that supply. We human beings have consumed, over our entire history, about a trillion barrels of oil. The U.S. Geological Survey estimates there is still seven to eight times that much left in the ground. The oil that’s left is just more difficult, and therefore more expensive, to get to. But that sets the invisible hand of the market into motion. Every time known reserves start looking tight, the price goes up, which incentivizes investment in research and development, which yields more sophisticated technologies, which unearth new supplies—often in places we’d scarcely even thought to look before.
ON THE VAST CONCRETE PLAIN OF THE SHIPYARD at Angra dos Reis, Brazil, workers on bicycles scurry among warehouses, cranes, and machine shops. A bright yellow gantry 18 stories tall, luminous against a leaden gray sky, grinds along steel tracks. The hills surrounding the port are swathed in green jungle foliage. But down here by the water, it’s a purely industrial scene, machines working on an incomprehensibly vast scale.
From a slipway jutting into the Atlantic, Amit Tomar climbs six flights of scaffolding to the deck of the Cidade de São Paulo, a red and black ship measuring 1,000 feet in length—the size of a keeled-over skyscraper. On this June day, it is ascramble with workers tightening bolts and welding pipes. Tomar, a trim native of India with a bright smile and brisk manner, is the São Paulo’s second-in-command. The workers are readying the ship for what will likely be its final mission.
The São Paulo took to the water in 1992 as an oil tanker—basically just a gigantic bucket with a motor attached—ferrying crude from port to port. Now Petrobras, Brazil’s national oil company, is just about finished converting the ship to a floating industrial plant. Soon, the $1.2 billion craft will be towed out and anchored at a spot nearly 200 miles from shore. A battery of pipes along the ship’s sides will pull 120,000 barrels of crude per day from beneath more than three miles of ocean, rock, and solid salt.
Once anchored, the São Paulo will take two days to reach by supply ship. Between shifts, the 60-odd crew members will have little to do besides hang around their Spartan dorms and a windowless recreation room equipped with some dark vinyl couches, a few board games, a TV, and a PlayStation 3. [...]
In fact, the new world of fossil fuels poses an uncertain future for all the major nations that dominate the current market—including Russia, Venezuela, and Iran. “There are big challenges ahead for any country that is dependent on oil,” says Citigroup managing director Ed Morse, who recently coauthored a major report on the implications of North America’s fossil fuel boom subtitled North America, the New Middle East? (pdf) “They could lead to all kinds of internal upheavals.”
The handful of new players entering the global fossil fuel scene—Mozambique, Tanzania, Papua New Guinea—are wild cards. The new wealth could lift their people out of poverty—or they could succumb to the famous “oil curse” and see the money siphoned off by corrupt elites and sparking internal conflict.
OR SOMETHING COMPLETELY DIFFERENT could happen. “In this industry people are consistently wrong with their predictions,” says Ross. “In the 1970s, everyone thought prices would be high forever and OPEC would be the world’s power broker. That all fell apart. Then in the 1990s, prices fell and everyone thought they would stay low.” So much for that.
The energy industry is affected by so many complex, interconnected factors that it’s as impossible to predict long term as the weather. Tensions in any number of places in the Middle East could explode. China could slip into a recession and see its energy consumption plummet. Another major accident in the Gulf of Mexico could shut down deepwater production in the U.S.
But one thing we do know: there are plenty of fossil fuels left. And sooner or later we’ll get to them. Human beings are not going to stop driving or using plastic. The mushrooming middle classes in China, India, and elsewhere want their cars and air conditioners, too. Petroleum consumption in China alone has doubled in the past decade, making it the world’s second largest consumer behind the U.S. In the next 20 years, barring unforeseen economic calamity, world energy demand is expected to increase by anywhere from a third to a half—and most of the increase will be met with oil and natural gas. Wind, solar, and other renewable sources have miles to go before they make up a major part of the world’s energy mix, and they are having a harder time than ever competing now that natural gas is dirt cheap.
What’s more, the earth holds other fossil fuels we haven’t even begun to tap. Governments and corporations are researching a number of long-shot energy sources, from a not-fully cooked type of oil called kerogen to methane hydrates in the ice of Alaska.
Which brings us to the biggest unknown of all: what this new era means for our rapidly warming planet. More hydrocarbons burned on the ground means more carbon in the atmosphere, which means nastier storms, a melted Arctic, rising seas, emerging diseases, and the rest of the dismal, all-too-familiar litany.
Even industry execs acknowledge that. “There’s enough oil and gas out there to last us right through to the end of the next century, without much doubt,” says David Eyton, head of research and technology at BP. The real problem, Eyton says, is that “we are running out of the carbon-carrying capacity of the atmosphere.”
So are we doomed to a future of ever-rising temperatures? Maybe. But maybe not. It’s not all bad news: in the developed world, greenhouse gas emissions may be on track to stabilize, thanks to growing efficiency and a shift toward cleaner fuels. In the U.S., energy-related carbon emissions have fallen from a peak in 2005, and are projected to rise only slightly over the next ten years. And cleaner-burning natural gas is starting to replace oil and gasoline in some industries and vehicle fleets.
“We live in a world where things happen more quickly than we expect,” points out Amy Myers Jaffe, executive director of energy and sustainability at the University of California, Davis. Maybe we’ll figure out a means to innovate our way out of climate change, or at least slow its progress enough that we can adapt to its impacts. If there’s one thing our history with fossil fuels shows, it’s that we are unbelievably good at adapting, at finding new ways to overcome problems once thought impossible to solve.