End of Cheap Oil @ National Geographic Magazine

End of Cheap Oil
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Oil: Where It Is and How
Much Is Left

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Plunging Into Deep Water

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By Tim Appenzeller

Photographs by Sarah Leen

It's inevitable. But just how soon will the vital fuel become so scarce and expensive that we're forced to make hard choices about how we live?

Get a taste of what awaits you in print from this compelling excerpt.

Below more than a mile of ocean and three more of mud and rock, the prize is waiting. At the surface a massive drilling vessel called the Discoverer Enterprise strains to reach it. It's the spring of 2003, and for more than two months now the Enterprise has been holding steady over a spot 120 miles (200 kilometers) southeast of New Orleans in the Gulf of Mexico. The ship is driving a well toward an estimated one billion barrels of oil below the seafloor—the biggest oil field discovered in United States territory in three decades.

The 835-foot (255-meter) Enterprise shudders every few minutes as its thrusters put out a burst of power to fight the strong current. The PA system crackles, warning of small amounts of gas bubbling from the deep Earth. And in the shadow of the 23-story-tall derrick, engineers and managers gather in worried knots. "We've got an unstable hole," laments Bill Kirton, who's overseeing the project for the oil giant BP.

The drill, suspended from the Enterprise's derrick through a swimming-pool-size gap in the hull, has penetrated 17,000 feet (5,000 meters) below the seafloor. Instead of boring straight down, it has swerved more than a mile sideways, around a massive plume of rock salt. But now, with 2,000 feet (600 meters) to go, progress is stalled. Water has begun seeping into the well from the surrounding rock, and the engineers are determined to stem its spread before drilling farther. Otherwise, the trickle of water could turn into an uncontrolled surge of crude. "There's a lot of oil down there wanting to come out," says Cecil Cheshier, a drilling supervisor, after struggling all night with the unruly hole. "You can cut corners and take chances—but that could cost you a lawsuit or cause a spill into the Gulf of Mexico, and then deepwater drilling gets shut down."

The troubled well is just one of 25 that BP plans to drill in the giant field, called Thunder Horse, which sprawls over 54 square miles (140 square kilometers) of seafloor. The entire project, including a floating platform half again as wide as a football field that will collect the oil from individual wells and pipe it to shore starting next year, will cost four billion dollars. But if the wells live up to expectations, each will eventually gush tens of thousands of barrels a day. "That's like a well in Saudi Arabia," says Cheshier. "We hardly get those in the U.S. anymore."

You wouldn't know it from the hulking SUVs and traffic-clogged freeways of the United States, but we're in the twilight of plentiful oil. There's no global shortage yet; far from it. The world can still produce so much crude that the current price of about $30 for a 42-gallon barrel would plummet if the Organization of the Petroleum Exporting Countries (OPEC) did not limit production. This abundance of oil means, for now, that oil is cheap. In the United States, where gasoline taxes average 43 cents a gallon (instead of dollars, as in Europe and Japan), a gallon of gasoline can be cheaper than a bottle of water—making it too cheap for most people to bother conserving. While oil demand is up everywhere, the U.S. remains the king of consumers, slurping up a quarter of the world's oil—about three gallons a person every day—even though it has just 5 percent of the population.

Yet as the Enterprise drillers know, slaking the world's oil thirst is harder than it used to be. The old sources can't be counted on anymore. On land the lower 48 states of the U.S. are tapped out, producing less than half the oil they did at their peak in 1970. Production from the North Slope of Alaska and the North Sea of Europe, burgeoning oil regions 20 years ago, is in decline. Unrest in Venezuela and Nigeria threatens the flow of oil. The Middle East remains the mother lode of crude, but war and instability underscore the perils of depending on that region.

And so oil companies are searching for new supplies and braving high costs, both human and economic. Making gambles like Thunder Horse and venturing into West Africa and Russia, they are still finding oil in quantities to gladden a Hummer owner's heart. But in the end the quest for more cheap oil will prove a losing game: Not just because oil consumption imposes severe costs on the environment, health, and taxpayers, but also because the world's oil addiction is hastening a day of reckoning.

Humanity's way of life is on a collision course with geology—with the stark fact that the Earth holds a finite supply of oil. The flood of crude from fields around the world will ultimately top out, then dwindle. It could be 5 years from now or 30: No one knows for sure, and geologists and economists are embroiled in debate about just when the "oil peak" will be upon us. But few doubt that it is coming. "In our lifetime," says economist Robert K. Kaufmann of Boston University, who is 46, "we will have to deal with a peak in the supply of cheap oil."

To print the whole National Geographic story, click here.

The U.S. tax code offers a $2,000 consumer credit for hybrid car owners and a deduction of up to $100,000 for people who buy the largest SUVs for business use. Should such incentives be increased for hybrid cars and decreased for gas-guzzlers? What can, and should, be done to conserve oil?

Flashback to 1910 when new cars belonging to Manhattan's wealthy crowded Fifth Avenue.

Which would you rather own, an SUV or a hybrid?

SUV Hybrid

In More to Explore the National Geographic magazine team shares some of its best sources and other information. Special thanks to the Research Division.

Hidden within hollowed-out salt caverns along the U.S. Gulf Coast are 648 million barrels of oil—the United States Strategic Petroleum Reserve, a rainy-day fund for the country. When you are the world's largest consumer of oil and import more than half of it, it's good to have a back-up plan. In December 1975, in response to the Arab oil embargo of the previous two years, President Ford signed the reserve into action, creating the world's largest stockpile of emergency crude oil. While reserves have been loaned to secure flow in the face of such obstacles as an impending hurricane and a blocked ship channel, only once in its 25 years has it been drawn upon for sale in an emergency—in 1991, during the Persian Gulf war.

For more information, visit the Strategic Petroleum Reserve's website:
www.fe.doe.gov/programs/reserves/

—Emily Krieger

Energy Information Administration
http://www.eia.doe.gov/
This is probably the most comprehensive source of energy statistics on the Internet. Along with hundreds of Web links, it offers easily accessible information about everything from end-use consumption to analysis of energy consumption and resources in most countries of the world. The site also includes a lively section for kids about energy production and consumption.

Society of Petroleum Engineers
http://www.spe.org/
Although this site is primarily for professionals, it has very good material for general readers about the exploration and production aspects of the oil and natural gas industry. Links include state and national geological agencies and organizations that focus on sustainable development and environmental issues.

Energy Efficiency and Renewable Energy Portal
http://www.eere.energy.gov/
An informative site from the U.S. Department of Energy, this is a great place for information about currently available alternatives to conventional energy sources and technologies under development. Resources for energy-conscious consumers cover everything from guidance in buying windows to installing a solar pool heater.

Oil Market Basics
www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/intro.htm
If you've ever wondered what a spot price is and why it matters, this is the place to start reading. In clear language the text explains supply, trade, and pricing in the global oil market. It's full of links to help you navigate within the document and to outside resources.

U.S. Department of Energy Office of Fossil Energy
www.fe.doe.gov/programs/reserves
This site provides details about regulations, supply, delivery, and facilities pertaining to various energy sources. It also includes current inventories and the guidelines for releasing the Strategic Petroleum Reserve, Northeast Home Heating Oil Reserve, and Navy Petroleum Reserves.

Association for the Study of Peak Oil
http://www.peakoil.net/
Read news and analysis about peak oil at this website. Founder Colin Campbell is one of the strongest voices on the subject of oil depletion.

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Deffeyes, Kenneth S. Hubbert's Peak: The Impending World Oil Shortage, revised edition. Princeton University Press, 2001.

Klare, Michael T. Resource Wars: The New Landscape of Global Conflict. Henry Holt and Company, 2002.

Smil, Vaclav. Energy at the Crossroads: Global Perspectives and Uncertainties. MIT Press, 2003.

Yergin, Daniel. The Prize: The Epic Quest for Oil, Money, and Power. Simon and Schuster, 1991.

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Jerome, Kate Boehm. Using Energy. National Geographic Books, 2003.

Salopek, Paul. "Shattered Sudan: Drilling for Oil, Hoping for Peace." National Geographic (February 2003), 30-59.

Johnson, Rebecca L. Global Warming. National Geographic Books, 2002.

Mitchell, John G. "In Focus: Arctic National Wildlife Refuge: Oil Field or Sanctuary?" National Geographic (August 2001), 46-55.

Jeffery, David. "America's Auto Mania." National Geographic (February 1981), 24-31.

Case, Paul Edward. "Boom Time in Kuwait: An Obscure Persian Gulf Sheikdom, Enriched by Oil, Uses Its Wealth to Improve the Lot of All Its People." National Geographic (December 1952), 783-802.

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