- The Offshore Imperative: Shell Oil's Search for Petroleum in Postwar America
This is not a history of Shell Oil, the semiautonomous entity of which the British-Dutch company Royal Dutch Shell owned a slim majority. It might have been that, had the company not undergone radical restructuring and [End Page 494] management changes in the early years of this century. As a consequence, this is not a company history. Rather, Tyler Priest has used research he had already completed, from archives and interviews, to write an independent book on the technological and managerial development of Shell's offshore exploration and production operations in the Gulf of Mexico.
The story starts with a small, land-bound oil company operating in California and then Texas, early in the twentieth century. Through the 1930s and 1940s, Shell companies produced and marketed petroleum products throughout the United States, struggling a bit to avoid criticism as a non American company exploiting U.S. resources. But Shell was invariably crude-short, importing product for its refineries and its successful retail marketing operations. In 1945, it established its Bellaire Research Center in Houston, a hive of geoscience, engineering, and geology which would shortly push Shell to the forefront of offshore technological development.
In chapters 2 through 7, Priest tells a rich story of technological evolution, some of it plodding by solving small problems and fixing mistakes, and some of it encompassing breathtaking breakthroughs—even scientific epiphanies. First, Shell used sonographic, then seismographic, measurements to look for salt domes in Louisiana's coastal marshes. Then it ventured a few meters offshore, laying down wood mats and using army-surplus barges to block waves. The company bought leases for a few million dollars and by 1950 had discovered a field of 670 million barrels using submersible barges on which it built drilling platforms. From here, the science took off. Shell became a leader in seismic technology and measurement. Once the Tidelands controversy was settled in 1953, by a federal law designating federal waters beyond the three-mile mark, Shell and the other majors got increasingly serious and committed to offshore oil in the Gulf of Mexico. They began building semi-submersible drilling platforms capable of drilling in 300 feet of water . . . and they began bidding ever larger amounts for offshore tracts with potential, first $18 million, then $50 million, then $162 million. Eventually Shell would pay $316 million for sixteen tracts in a sale with bids of $2.8 billion.
In the early 1970s, Shell mastered "bright spot" technology, a way of reading seismic data more effectively, to discover oil traps some thousands of feet below sea level. But the 1970s marked the end of "business as usual," as oil spills, environmentalism, OPEC price shocks, and the decline of U.S. reserves all put intensive pressures on Shell and the industry. Chapter 6, the title chapter, is my favorite. Here, Priest provides a discussion of Shell's riskiest challenges—its biggest platforms, biggest bids for offshore tracts, and some of its biggest failures. The Cognac platform, designed in three vertical stages that had to fit together perfectly and cost $800 million, ended up producing 72,000 barrels daily by 1982 in 1,000 feet of water! But at the same time, exploration in Alaska, California, the Baltimore Canyon, and Georges Bank were failures, costing more than $2 billion. [End Page 495]
During this entire period (1945–2000), Shell really did put together an extraordinary research and development team at Bellaire. In 1956, M. King Hubbert, associate director of Bellaire, predicted that oil reserves in the United States would peak in 1970, which they did. Shell scientists and engineers broke dozens of records for depth of exploration and depth of production, seismic technologies, and sizes and designs of offshore platforms. And they were the low-cost offshore producer.
While The Offshore Imperative is great at engineering and rich in personal stories and interviews, it could have been stronger in conceptual content. While Priest periodically ties events...