07 April 2010

What Technology Can Do

A few weeks ago the Economist had a fascinating article about deep water oil drilling. If we can make such rapid progress in fossil fuel energy technologies, it is probably safe to conclude that should we choose to direct public resources into fossil alternatives, then we can make rapid progress there as well.

This is not to suggest anything specific about the relative roles of the public and private sectors -- they are mixed up in complex ways and both have important roles to play in processes of accelerating technological innovation. The remarkable graphic above indicates that technological change happens fast when we focus attention and other resources on challenges that once seemed impossible.

Here is an excerpt from the article:
Until the mid-1990s, says Robin Walker of WesternGeco, an oil-services company, there was a general view that successful offshore oil-drilling operations were limited to a water depth of around 600 metres. But this had less to do with the challenge of accessing the oil than with finding it in the first place. Giant platforms like Thunder Horse and Perdido provide the necessary muscle, but advances in computing at the exploration stage have been just as important when it comes to tapping deepwater oil. In this most physically demanding of industries, software, as much as hardware, is changing the game.

To give an idea of the difficulty of deepwater drilling, Mr Walker uses an analogy. “Imagine a large offshore oil rig as a matchbox,” he says. Next, imagine the matchbox on top of a two-storey building, with the upper floor filled with water and the lower floor filled with rock, sand and, in some cases, salt. Striking an oil reservoir with a drill pipe is then like hitting a coin at the base of the building with a strand of human hair. The penalties for getting it wrong are enormous. An industry rule of thumb puts the cost of drilling a deepwater “dry hole”—a well that does not strike oil—at around $100m; BP says it can be as high as $200m.

With the stakes so high and the margin for error so small, “you need to know before you drill,” says Stuart Strife, Anadarko’s head of exploration in the Gulf of Mexico.