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Era of 'tough oil' won't deter drillers

Oil drilling rigs in Midland County, Texas.

Bob Moon: The worst oil spill in nation's history started pouring into the Gulf of Mexico one year ago this week.
The explosion of the Deepwater Horizon oil platform killed 11 people. And, enough crude to fill maybe 10,000 or more average-size swimming pools gushed into the deep, dark sea.

This week, we'll be heading down to Louisiana to check on life after the spill. And later in the week: The quest to replace oil in consumer products.

Today and tomorrow, we're focusing on why BP
was drilling two miles underwater in the first place. Seems all the easy stuff has been found,
and the search for new oil is tough: Expensive and risky. Yet the true believers in the oil sector say they're up to the task, and they've got the track record to prove it.

From the Marketplace Sustainability Desk, Scott Tong reports now from one of our hydrocarbon capitals: West Texas.


Scott Tong: In '08, the government warned we're running out of oil -- 1908.

Oil historian Diana Hinton.

Diana Hinton: The United States geological survey did a survey and concluded that America would be out of oil by 1935. Well, they were wrong!

This is the story of I told you so. Time after time, West Texas oil drillers have proved the skeptics wrong, proved the oil companies right. In fact, Hinton lives on Stanolind Avenue -- as in Standard Oil of Indiana Avenue -- just off Gulf Avenue and Shell Avenue. And in these parts, folks are whispering that b-word again -- boom.

Rodeo announcer: And picture perfect here on a Thursday night.

The local rodeo charges $5 a head. That's pocket change to Zach Nolan. He rents trucks to oil drillers, for Texas-size margins.

Zach: I go on vacation quite a bit.

Tong: Where?

Zach: Montana, I really like it up there. Been up there. Hawaii a couple times, I like it. We're going to Puerto Rico next week, so... Next Friday we're leaving.

His buddy Jack Gardenhire owns trucks, too. But when they break down, most local mechanics are out. Drilling.

Jack Gardenhire: They don't make nothing what they can make out in the oil field. So you're going to have to wait at least a month to get any of your trucks worked on.

To put this in perspective, consider the terrain here. Take map, and draw a line down kind of the middle of Texas.

Bobby Weaver: West of there it don't rain no more, OK? Haha.

Local boy Bobby Weaver is author of "Oilfield Trash."

Weaver: And so it's very dry, sand tends to blow. Everything that grows has thorns on it.

Joke is, god felt sorry for this place, so he gave it oil. They just had to find it.

It wasn't easy for early drillers like Carl Cromwell. In a 1970 interview courtesy of the Permian Basin Petroleum Museum, Cromwell said in the 1920s he had no technology, no geology.

Carl Cromwell: We had no geologist. Nobody knew anything about anything. We didn't know limestone from concrete.

But in May 1923, Cromwell drilled and the earth gushed. A Hallelujah well, as they called it. Local Catholics christened the well, dubbed it Santa Rita, patron saint of the impossible. And still, two decades later the "we-are-running-out" messengers came knocking again. World War II allies were burning through American oil.

Here's Amy Myers Jaffe at Rice University.

Amy Myers Jaffe: The U.S. Department of Interior in 1939 had a declaration that we had eight years left, or five years left, of resources in the United States. And we all know how ridiculous that turned out to be.

Cue the next rebirth. The West Texas sequel.

Local geophysicist Patrick Whelan.

Patrick Whelan: And that's when seismic technology came along. And seismic technology enabled people to see into the earth. And that's what kept the oil industry going.

West Texas provided a quarter of the country's petroleum -- to power the postwar economy. By now, specialized engineers and geologists ran the show.

Though author Bobby Weaver says the old-school drillers didn't always take to the geeks.

Weaver: They just felt like these over-educated types were infringing on their bailiwick, so to speak.

In the 1950s, the Peak Oil sirens went off again.

Mark Ellis heads the company Linn Energy.

Mark Ellis: The easy finds have been had. All those high-prolific reservoirs have already been discovered. They're still producing, but on the tail end of their maturity. Is it tough oil? Yeah.

American production did finally peak in the 1970s. But Ellis says there's still a lot down there.

Ellis: It's harder and expensive to get, but if prices stays up, technology will provide. It always has.

Take this Chevron facility. An industrial spaghetti of pipes and connectors has a single job: to squeeze more oil out of an old hole.

A hole full of rock, says company man Mitch Mamoulides.

Mitch Mamoulides: People think there's a cavity down there, and there's not. The oil and gas exist down there in solid rock, denser than the concrete on your driveway.

The brainy solution: Flush carbon-dioxide down, and force up the oil. With the help of a few pump rigs, it works. But that's not the biggest deal here in Texas. The hydrocarbon superhero today is a man named George Mitchell.

Hinton: They thought he was nuts. Even people on his own staff thought he was nuts.

Historian Diana Hinton says Mitchell tried to coax oil out of a thin layer of shale rock. It's called fracturing: you drill a hole, and fire a cocktail of water, sand and chemicals to crack the shale. And the oil escapes.

Hinton: It took them 17 years to do it. But Mitchell was right.

There are fears that fracking pollutes groundwater. And, once again, there are warnings the oil drillers' luck will eventually catch up to them.

Steve Kopits is with consultancy Douglas Westwood.

Steve Kopits: Yes, you can increase production somewhat with better technology and high oil prices. But you can't reverse geology forever.

The industry response: Yeah, we've heard this before -- 1908, 1939, 1956. As long as the world wants it, and will pay for it, we'll go to the ends of the earth -- into rocks, three miles below the ocean, wherever. We'll figure it out. Trust us.

In West Texas, I'm Scott Tong for Marketplace.

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.

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