TIME: Almanac 1993/TIME Almanac 1993.iso/time/102990/1029510.000

Text File | 1992-08-28 | 7.3 KB | 201 lines

                                                                                INTERVIEW, Page 30

How to Break the Middle East Oil Habit


Texas wildcatter MICHEL HALBOUTY says the U.S. must drill more
domestic oil and form worldwide pacts to eliminate the need
for Arabian petroleum

By RICHARD WOODBURY and Michel Halbouty


    Q. You have said we must end our dependence on Middle East
oil. Given our huge reliance on the Arab countries, is it
possible ever to become entirely free of them?

    A. There are plenty of reserves to be found in our own
hemisphere. We must work more closely with Canada, Mexico and
the Central and South American countries so that we don't have
to worry about Middle East political volatilities and the
problems of transportation over long distances.


    Q. Where else are the big untapped fields?

    A. The Arctic offers giant possibilities. So does the entire
Pacific Rim -- Indonesia, Australia, China, even Vietnam. And
there's Eastern Europe, the North Sea, Africa. There's as much
oil, and more gas, to be discovered worldwide as we've found
throughout history.


    Q. Is Russia a viable source?

    A. No question, but their oil potential is vastly
undeveloped, and much of their production is failing. With our
technical help and equipment, they could increase output by
20%.


    Q. What will it take to bring all the foreign oil home?

    A. We must build a relationship with the producing countries
that will encourage them to ask the majors to come in and
drill. Look at Vietnam. It's a hot area. Other multinationals
are in there, but American companies can't do business there
yet. In exchange for permission to drill, we can offer our
expertise to a lot of undeveloped countries in extracting their
big mineral reserves.


    Q. Will this alone be inducement for our big oil companies?

    A. It will if the Administration comes up with a firm energy
policy that supports such exploration. I've told President Bush
and anyone who would listen that we must create a hemispheric
energy policy. I thought he liked the idea. But nothing has
been done.


    Q. How much of our needs can new foreign supplies provide?

    A. They can provide two-thirds. The rest must come from the
U.S. itself.


    Q. But our reserves are shrinking. The domestic industry is
largely in mothballs, and even the near doubling in oil prices
since the Iraqi invasion has done little to get it going.

    A. It's going to take some real stability in the price. If
the price steadies out at $25 to $28 per bbl. and stays there
six months, then at least wildcatters and investors won't be
scared off.


    Q. But haven't many of our bigger fields been drilled nearly
dry?

    A. There is still as much oil to be found in the U.S. as has
ever been produced. And some of our largest fields were drilled
under terrible economic conditions. But as long as we have
environmental moratoriums up and down the coasts, in Alaska and
in the West, we certainly won't find them.


    Q. What more will it take to bring the industry back?

    A. We need to have the tax incentives to drill. The backbone
of our domestic industry has always been the independents.
They've found 80% of the nation's oil and gas. But we once had
62,000 small drillers and operators, and now there are fewer
than 1,000. The government has thrust one disincentive after
another at the industry.


    Q. In what areas are the tax breaks most needed?

    A. For the operators of thousands of small marginal
"stripper" wells.  Collectively they produce about 1.2 million
bbl. per day. Many of these old wells have been shut down or
need to be reworked.


    Q. Will an oil-import fee help?

    A. It could be counterproductive and hurt our friends. Are
we going to sock it to Mexico and Venezuela, which are helping
us in the pinch now? If we just levied it against Middle East
oil -- great.


    Q. Where do alternative fuels fit into the picture?

    A. It is vital to develop alternative fuels. Shale, nuclear,
biomass, windmills, all of them. We need an energy mix. Natural
gas will fill a great deal of the demand. Solar has been sorely
neglected in the West -- it works. I don't think Congress has
a perception of the situation. It's going to take federal
subsidies at the outset, of course, because no company is going
to go in and try to produce shale oil when it costs more to get
it out of the ground than the oil is selling for.


    Q. When you talk subsidies, isn't that going against your
good Republican grain?

    A. Yes, it is against my philosophy, but we must do this to
help establish our own self-sufficiency. We must try to develop
these processes. We've barely touched the iceberg's tip. There
are 1 trillion bbl. of shale in the Rockies. When the price
steadies to a point at which industry can produce shale oil by
itself, then the monies would be cut off.


    Q. Earlier projects, notably in shale, have fizzled. Where
should most efforts be placed?

    A. We should double our nuclear output by building 100 more
power plants. Nuclear-generated electricity is already saving
us 2 million bbl. of oil per day. With new technology, the
additional ones could save 3 million more. Coal has great
potential. We have 60 times more of it than oil, and we aren't
exporting. It could be a boon to reducing our foreign deficit.


    Q. Won't all this generate an environmental fire storm?

    A. It shouldn't. Environmentalists are going to have to
realize that certain things must be done for their own welfare
as well as for the rest of the country's. Nuclear is really a
very safe method of producing lots of energy cheaply. The
problem with existing plants is that they're of different
designs. New ones should be standardized, like filling
stations, and placed at proper spots -- not on fault lines,
obviously -- and only where electricity can readily be
transported.


    Q. How about the problems with coal burning?

    A. There's no reason we can't take out the materials that
pollute. The Germans back in World War II used coal to create
gasoline. We should be perfecting that process.


    Q. How long would it take us to achieve oil independence
from the Middle East?

    A. If we go on the fast track, it will take five years
minimum just to get production moving fully. And we may have
to pay quite a bit more for oil at the outset. But, what the
hell, it's cheaper to subsidize, to get things cranked up, than
to spend all those billions moving troops over there. Figure
in all those military outlays, and oil today is costing us
about $600 per bbl.


    Q. Are there other problems?

    A. The damage from the corporate raiders and the merger
mania of the '80s is going to be with us for a long time. When
companies began buying their reserves on Wall Street instead
of exploring for them, drilling stopped. All they created was
a mountain of debt but not one new barrel of oil or cubic foot
of gas. There were 4,000 rigs running in the early '80s. Today
there are only 1,000.


    Q. You are 81. Any plans to retire?

    A. No. I work hard. I've gone broke three times drilling
wells, but I've been fortunate to come back. We're drilling a
wildcat in Louisiana right now. I'm always looking for the big
one.