PEOPLE JEERED AT EDWIN DRAKE as he and his small team of laborers dug, drilled, and cursed in their search for oil in Titusville, Pa. Documentary accounts establish that their work was not easy going. Water kept seeping into the hole, making progress a muddy mess and engendering jokes about “Drake’s Folly.” His team persevered and, eventually, at a depth of 69½ feet, they struck a gusher. “Oil” was the magic word yelled that day in 1859, and right there, the nation’s love affair with the black, gooey stuff began.

Today’s aggressive consumption of petroleum means the oil and gas industry is doing things that even a generation ago, nobody would have thought possible. “So many people just don’t understand the industry,” says Tulane finance professor Peter Ricchiuti. “They think it is a low-tech business. In fact it is as high-tech as any business there is.”

“What we are doing in the petroleum industry today isn’t that different from NASA engineers exploring Mars,” says Stuart Scott, associate professor of petroleum engineering at Texas A&M University. The comparison fits because today’s oil hunters are boldly going where, literally, no one has gone before.

Name any place on earth where the climate is truly wretched, and there’s probably an oil and gas exploration team at work there.

A case in point: Go out 185 miles off New Orleans into the Gulf of Mexico. Now head down ... and down deeper. “We are going about 18,000 feet from the water surface; we are operating in around 9,000 feet of water, then we are drilling another 9,000 or more feet below the sea floor,” reports Jim Alsup, an engineering manager with Anadarko Petroleum.

Headquartered in The Woodlands, Texas, Anadarko is working with Enterprise Products Partners to spearhead this mind-boggling project, named Independence Hub. “These are record depths,” says Alsup, who points out that every step of the way involves perfecting, tweaking, and pushing technologies to achieve new capabilities.

Anadarko knows a lot about deep-water petroleum production. About 140 miles from Independence Hub, at a water depth of 4,300 feet, lies the Marco Polo facility. That Anadarko site produces up to 120,000 barrels of oil and 300 million cubic feet of natural gas a day. And as sweet as that yield is, it pales in comparison with the output expected from Independence Hub, a huge facility that runs 60 miles north to south and 30 miles east to west. Come 2007, the target date for initial production following more than four and a half years of work, Independence Hub — consisting of 10 separate gas-producing fields — is expected to pay back its explorers with a rich outpouring of natural gas, perhaps as much as 1 billion cubic feet daily.

Because of these projections, the Independence project has attracted big investment — to the tune of $2.5 billion. But on occasion, a huge investment produces zilch. “Nobody knows how many dry holes are drilled,” says Art Weglein, a professor of physics and geosciences at the University of Houston. And dry holes don’t come cheap, tallying up to $100 million or more in costs for no return.

ICEBERG ALLEY

Sometimes, too, even investments that pay back take a long time to produce a profit. Exhibit A is the Hibernia field, in the Grand Banks of the North Atlantic. In this region off the coast of Canada, where waves often hit heights of 60 feet, the seaways are known as Iceberg Alley, and the wreckage of the Titanic sits on the ocean floor. To call this a tough place to operate is an understatement. But in 1979 oil explorers discovered reservoirs that hold a breathtaking 750 million barrels of recoverable oil and unmeasured quantities of natural gas. That was the promise. What followed were 18 years of research, hope, technological breakthroughs, and undoubtedly a good deal of angst before, finally, oil was successfully extracted in commercial quantities by Hibernia Management and Development Co., a consortium involving ExxonMobil Canada, the project lead, along with Chevron Canada Resources, Petro-Canada, Canada Hibernia Holding Co., Murphy Oil Co., and Norsk Hydro.

The odd fact about Hibernia: the field is in comparatively shallow water. “The [production] platform sits in about 80 meters [262 feet] of water,” says Phil Bording, Memorial University of Newfoundland and Labrador’s Husky Energy Chair in Oil and Gas Research. But shallow water doesn’t mean easy, not in Iceberg Alley. For starters, says Bording, “the platform had to be built to withstand icebergs.” But probably the bigger challenge is the ocean floor. In the Gulf of Mexico, the ocean floor typically is sandy mud, which, with little provocation, can lead to massive underwater mudslides that shift many tons of silt on the seabed. In the Grand Banks the difficulty is exactly opposite. “Here, the ocean floor is granite,” says Bording. “Solid rock.”

To compensate, ExxonMobil engineers concocted a strategy revolving around deviated wells that allow for maximum penetration of the petroleum reservoir, with minimum need to crunch granite — the company says one of its wells is 28,000 feet (roughly 5.3 miles) long. This creative approach lets Hibernia produce up to 200,000 barrels of oil daily. Once it’s brought to the surface, the oil is transferred to shuttle tankers that make regular runs to Canadian and U.S. markets.

As for icebergs, every spring, up to 2,500 of them exit Greenland and drift toward the Hibernia platform. These frozen masses weigh up to 750,000 tons (picture a fleet of half a million VW Bugs heading at you). Hibernia’s response to this hazard was an innovative iceberg management system involving boats, aircraft, and radar. The system tracks icebergs, and when a threat to the platform emerges, a boat is sent to literally lasso the iceberg and drag it a safe distance from the platform.

One giant challenge remains. Oil in this reservoir is associated with natural gas (the two fuels are sometimes found together in reservoirs). But in this treacherous climate nobody knows how to make good use of the natural gas. “These gas reservoirs are 200 kilometers offshore,” says Bording, “and we don’t have pipelines to run the gas to land.” He adds that researchers are exploring various options, including building an island out in the middle of Iceberg Alley and siting a liquified natural gas processing plant there. And confidence reigns that eventually this natural gas will be put to use. As for the gas that bubbles up today, it’s not wasted. “It’s reinjected back into the reservoir,” says Bording. So when the engineering is ready, the gas will be there to be harvested.

NEWER, BETTER

“Technological advances are what allow oil companies to explore in places that had been too difficult,” says energy economist A.F. Alhajji, an associate professor of economics at Ohio Northern University, in Ada, Ohio. The two key areas of advances, Alhajji elaborates, are information technology — that is, raw computing power — and innovations that allow drilling in very deep water.

Consider the deep-water challenge. The traditional approach is a fixed-leg platform, with the legs secured to the ocean floor. That makes sense in the comparatively shallow water of the Grand Banks. But when the water is 5,000 or even 10,000 feet deep, the preferred method of attack is a floating vessel, according to Tim Probert, senior vice president of Houston-based energy service giant Halliburton’s Drilling and Formation Evaluation division, which focuses on research and development of more effective drilling technologies.

A big difference with contemporary floating rigs: they are intertwined with onshore intelligence, says Pro-bert. Intelligent probes are attached to drills to convey information, in real time, to an onshore command center. “This integration of communications technology” – which allows onshore experts to gain a glimpse into what is occurring perhaps five miles beneath the surface of the sea — “has been a huge change in our industry,” says Probert. “We know what is happening as it happens.” Experts no longer need to guess, and that is letting energy companies continue to maximize their production.

POWER UP

But the real cutting edge in the petroleum sector is in the domain of the IT wonks. According to Gary Adams, global upstream leader for IBM’s petroleum practice in Houston, that’s because “new computing technology is letting companies drill more precisely, recover more petroleum from any given reservoir, and even see what is in an underwater reservoir that might be several miles below the surface.”

Three-dimensional seismic tools let industry experts project a faraway petroleum reservoir on a wall. In some cases they wear 3-D glasses and walk around a field — all on dry land, even though the field might be 15,000 feet below the sea’s surface.

Cutting through the reams of data is a key mission at IBM, Adams explains. “We’re creating screens that reduce the data just to the important facts onshore executives need to know,” he says.

This may become ever more important because an emerging frontier for oil industry pioneers is maximizing output from known reservoirs. Right now, in many cases, only the top third of the oil in a reservoir is pumped out before attention shifts elsewhere. Now, with new tools in hand, companies are revisiting old wells in the hope that they can up output to 50 percent, even 75 percent of the total volume.

Experts, increasingly, are optimistic. Today the talk is of “digital oil fields,” says Barry Irani, president of Houston-based Information Store, which develops software and analytical tools for the petroleum industry. “The more we can get the right data at the right time to the people who need it, the better the decisions in the field become,” says Irani.

The probable outcome: more, better production from wells drilled in increasingly hostile environments. Edwin Drake would be proud. — Robert McGarvey

A Peek at the Offshore Technology Conference

Call it the Super Bowl for petroleum exploration geeks — that sums up what the annual Offshore Technology Conference (OTC) is about. Held every May in Houston, the conference, now in its 37th year, will bring more than 51,000 attendees from 110 nations to the Reliant Park Convention Center. For four days, May 1–4, the talk will be of tools, technologies, and new ideas for finding oil and gas at mind-numbing depths and in physically wretched conditions.

Ask Arnis Judzis, chair of OTC .06 and an executive vice president at TerraTek, a Salt Lake City–based geotechnical engineering company that pro-vides service and intelligence to petroleum companies so that they might maximize their gains from offshore activities. “This conference is about exploring new frontiers,” says Judzis.

In an industry where a handful of billion-dollar companies garner most of the attention, what is intriguing about the OTC is that its more than 2,100 exhibitors are mostly com-panies that aren’t known outside the petroleum industry. For example, announced winners of the prestigious Spotlight on New Technology award at OTC .06 include Weatherford International, PowerWell Services, Draka Marine Oil and Gas, ProPure, and Aker Kvaerner Subsea. Haven’t heard of any of them? That’s the point. The OTC is a celebration of the businesses that supply drill bits, platforms, piping, software, seismic analysis, geological research, and the rest of the support that lets the enormously expensive offshore petroleum hunt proceed. Many of these companies are at OTC to debut breakthrough technologies that may let the industry search more successfully still. “The OTC sets the standard for innovation in our business,” adds Judzis. If it’s new and cool, and it’s oil related, OTC will be where its makers show it off. — R.M.