Into the Fire
With his back to the wall, would Iraq's Saddam Hussein blow up his oil wells? Just in case, the U.S. military is asking well blowout specialists to be prepared www.canada.com Chris Varcoe Calgary Herald Saturday, January 11, 2003
The U.S. suspects Saddam Hussein would light his oilfields on fire as part of a "scorched earth" policy. Safety Boss workers struggle to bring a wellhead under control in Kuwait in 1991. Mike Miller of Safety Boss expects Saddam to torch the oilfields again if threatened by U.S. military action. The Kuwaiti oilfield fires of 1991 blackened skies for months and burned up to seven million barrels a day. As the world inches towards war in the Middle East, the Canadians who helped snuff out the fires of Kuwait are advising the U.S. military on how Iraqi President Saddam Hussein might torch his own oil wells.
Mike Miller, head of Safety Boss Inc., international well-blowout specialists based in Calgary, was contacted by U.S. army explosive experts this week seeking information on how Iraq blew up more than 700 wells in Kuwait during the Persian Gulf War.
Officials in Washington believe Hussein might set his own wells on fire as part of a scorched earth policy during a new war in Iraq, a country containing 10 per cent of the world's crude supplies.
With oil prices rising above $30 US a barrel in recent weeks, energy traders and political pundits are already anticipating a clash between Western armies and Hussein's Republican Guard.
"Obviously, they're not hiring us yet but they want to know how the damage was caused to the wellheads in Kuwait during the first go-around and what kind of damage could be caused now," Miller says.
"We had a discussion this morning with what kind of explosives (Iraq) may have. They think the Iraqis may have seismic explosives and that is similar (to 1991) and can cause the same damage. So things are heating up."
Miller, whose Canadian team capped 163 wild wells in 202 days in Kuwait, shipped U.S. experts pictures showing a well rigged with plastic explosives that failed to explode during the first Gulf War.
The issue of Saddam attacking his own oil industry has become a concern in Washington with a U.S.-led invasion widely expected in the coming months.
About 120,000 American troops are expected to be in the region within a month and plans are being made to avoid a repeat disaster involving oilfields being set ablaze.
"We would want to protect those fields and make sure they are used to benefit the people of Iraq and are not destroyed or damaged by a failing regime on the way out the door," U.S. Secretary of State Colin Powell said last month.
In Kuwait, the head of the country's state-owned oil monopoly expects such a tactic as Iraq's ruler fights for his survival.
"He is the man that you expect the unexpected (from) and as long as he did it for Kuwait, he would do it for other parts, even if it is for his own oilfields," Ahmed Al Arbeed, chairman of Kuwait Oil Co., told CNN recently.
The environmental and economic consequence of such actions would be immense, given the experience in Kuwait.
The infamous Fires of Kuwait, as they have been known since 1991, blackened the skies over the tiny Gulf state for months, causing black rain to fall from the skies and torching up to seven million barrels a day.
The attack caused some wells to spew more than 60,000 barrels of crude per day, creating dozens of oil lakes in the desert.
A report by the Washington-based Centre for Strategic and International Studies (CSIS) noted recently that a second Gulf War would likely be swift and lead to Saddam's defeat, but Iraq's urban warfare strategy "could include deliberate efforts to burn oilfields and create water barriers."
Iraq produces up to 2.8 million barrels per day, although its petroleum industry has been hampered for a dozen years by international sanctions imposed after its invasion of Kuwait.
Well fires could however cause major problems, restricting the ability of soldiers to move through the country and stoking energy prices around the world.
"Iraq's southern oilfields are between the U.S. military and Baghdad and the presumption is that with an army coming, the fields are in harm's way," says Michael Lynch, an energy expert at the Massachusetts Institute of Technology's Centre for International Studies.
"It's very difficult to fly helicopters in thick black smoke. He may put smoke in the air and put up as much chaos as he can. . . He has asked the Iraqi people to make sacrifices before and it's very easy to imagine him doing that.
"The question is how do we stop it?"
Another major concern is whether Hussein attempts to attack oil installations in neighbouring Kuwait and Saudi Arabia, jeopardizing production from the large OPEC members.
Lynch believes the likelihood of such an event succeeding -- one of the market's great fears -- is extremely low, given Iraq's failure to damage Saudi oilfields with Scud missiles in 1991.
Geographically, two of Iraq's largest oilfields -- Kirkuk in the country's north, and Rumaila near the southern border with Kuwait -- are close to U.S. forces and could be seized quickly by coalition soldiers, preventing serious damage.
Yet, even the prospect of losing some of Iraq's production for several months would have an impact on tight energy markets, which are currently grappling with a strike by Venezuela's oil workers that has choked off its exports.
"In our worse-case scenario, we feel Saddam has nothing to lose and puts the torch to his oil wells," says Robert Ebel, director of energy for CSIS. "The worst case scenario is he torches his field. . . and (oil) prices spike."
The CSIS report says if the war is relatively benign, oil prices would average about $36 US a barrel during the first three months of the year, before backing off sharply.
However, deliberate acts of sabotage of Iraq's oil infrastructure would drive prices higher. If the war drags on and retreating soldiers set most wells in Iraq on fire -- and production in other Middle East countries is impeded -- prices could hit $80 a barrel through the first quarter, the report warns.
"I would hope the coalition would take acton early on to capture those fields," Ebel says. "No one knows what goes on inside Saddam's brain."
University of Tulsa professor Dobie Lagenkamp, former deputy assistant secretary for oil in the U.S. Department of Energy, says a larger threat is that crude production is choked off if there's a scramble to control the oilfields by various factions within Iraq.
"I don't see any substantial interruption, because there's no motivation for anyone to shut them down," Lagenkamp says of the country's oil wells.
"The problem isn't the oilfields being destroyed, but who has control over the fields?"
There's little doubt world energy markets are in a fragile state today given the geopolitical complexities of Iraq, the war on terrorism and the near shutdown of Venezuela's oil industry.
Lynch compares the instability to the last Gulf War period, which saw crude shoot up above $40 a barrel only to tumble more than $10 on the day hostilities began, Jan. 17, 1991.
The U.S. Energy Information Administration warned this week that markets are extremely volatile and American oil inventories are near their lowest point in 26 years.
There is some reason for optimism, though. OPEC members, including Saudi Arabia, are contemplating a large production increase in the coming days to tame rising prices.
Saudi officials insist they have excess capacity -- analysts peg it near 2.5 million barrels per day -- and the kingdom could ramp up production quickly.
If oil prices spike, consuming countries also have a short-term mechanism to coax down prices, notes a study by George Perry of the Brookings Institution in Washington.
The United States has access to 570 million barrels of oil in its strategic petroleum reserve -- enough to supply about 2.8 million barrels per day for six months.
Other countries are stockpiling another 700 million barrels.
"We're not worried about the loss of Iraqi oil per se, because it can be made up," notes Ebel.
"But what if Venezuela is still off? Now you've got a real oil supply shortage looking you in the face."
Back in Calgary, talk of a new Gulf War hasn't gone unnoticed.
Well blowout specialists, a small fraternity with only a handful of expert capable of capping large fires, are preparing for a possible return to the region.
The situation, however, is different this time.
During the first Gulf War, Kuwaiti's rulers had access to money in western banks and spent four months before the battle began planning the blowout-stopping operation.
The tiny country's oil production fell to almost nothing, but was largely brought back on stream within 18 months.
In Iraq, the situation is less clear. It's unknown who would run the country following a war, or where the money would come from to cap any wild wells.
Still, the waiting goes on.
"In the past year when it became evident the U.S. would act, it came to our minds immediately that (Hussein) would most likely -- if seriously threatened -- set the oilwells off," says Miller of Safety Boss.
"He's done it before. There's no reason to think he wouldn't do it again."