The New Map: Energy, Climate, and the Clash of Nations

The New Map: Energy, Climate, and the Clash of Nations

by Daniel Yergin


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A Wall Street Journal besteller and a USA Today Best Book of 2020! 

Named Energy Writer of the Year for The New Map by the American Energy Society
Pulitzer Prize-winning author and global energy expert, Daniel Yergin offers a revelatory new account of how energy revolutions, climate battles, and geopolitics are mapping our future

The world is being shaken by the collision of energy, climate change, and the clashing power of nations in a time of global crisis. Out of this tumult is emerging a new map of energy and geopolitics. The “shale revolution” in oil and gas has transformed the American economy, ending the “era of shortage” but introducing a turbulent new era. Almost overnight, the United States has become the world's number one energy powerhouse. Yet concern about energy's role in climate change is challenging the global economy and way of life, accelerating a second energy revolution in the search for a low-carbon future. All of this has been made starker and more urgent by the coronavirus pandemic and the economic dark age that it has wrought.

World politics is being upended, as a new cold war develops between the United States and China, and the rivalry grows more dangerous with Russia, which is pivoting east toward Beijing. Vladimir Putin and China's Xi Jinping are converging both on energy and on challenging American leadership, as China projects its power and influence in all directions. The South China Sea, claimed by China and the world's most critical trade route, could become the arena where the United States and China directly collide. The map of the Middle East, which was laid down after World War I, is being challenged by jihadists, revolutionary Iran, ethnic and religious clashes, and restive populations. But the region has also been shocked by the two recent oil price collapses—and by the very question of oil's future in the rest of this century.

A master storyteller and global energy expert, Daniel Yergin takes the reader on an utterly riveting and timely journey across the world's new map. He illuminates the great energy and geopolitical questions in an era of rising political turbulence and points to the profound challenges that lie ahead.

Product Details

ISBN-13: 9781594206436
Publisher: Penguin Publishing Group
Publication date: 09/15/2020
Pages: 512
Sales rank: 8,693
Product dimensions: 5.80(w) x 9.30(h) x 1.70(d)

About the Author

Daniel Yergin is a highly respected authority on energy, international politics, and economics. He is the Pulitzer Prize-winning and bestselling author of The Prize: The Epic Quest for Oil, Money & Power, The Quest: Energy, Security, and the Remaking of the Modern World, and Shattered Peace: The Origins of the Cold War, and coauthor of Commanding Heights: The Battle for the World Economy. He is vice chairman of IHS Markit, one of the leading information and research firms in the world; a member of the board of the Council on Foreign Relations; a senior trustee of the Brookings Institution; and has served on the Secretary of Energy Advisory Board under the last four presidential administrations.

Read an Excerpt

Chapter 1

The Gas Man

If you want to get to the beginning of the shale revolution, pick up Interstate 35E out of Dallas and head north forty miles and then take the turnoff for the tiny town of Pender. Pass the feed store, the white water tower, the sign for the Cowboy Church, and the donut store that's closed down. Another four miles and you're in Dish, Texas, population 407. You end up at a wire mesh fence around a small tangle of pipes with a built-in stepladder. You're there-the SH Griffin #4 natural gas well. The sign on the fence tells the date-drilled in 1998.

That was not exactly a great time to be drilling a well. Oil and gas prices had cratered with the Asian financial crisis and the ensuing global economic panic. But SH Griffin #4 would change things more than anyone could have imagined at the time.

The well was drilled mainly with standard technology, but also with experimentation and ingenuity, despite considerable skepticism. The small band of believers working on the well were convinced that somehow you could extract natural gas from dense shale rock in a way that was commercially viable-something that the petroleum engineering textbooks said was impossible. More than anyone else, the unshakable conviction belonged to one man, their boss-George P. Mitchell. He had been a true believer for a long time.

To grasp the intensity of that conviction, you have to understand that the road to SH Griffin #4 really begins much longer ago, in a tiny village in Greece's Peloponnesian peninsula.

In 1901, an illiterate twenty-year-old shepherd named Savvas Paraskevopoulos decided that his only ticket out of a life of poverty was to emigrate to the United States. By the time he ended up in Galveston, Texas, he had been rechristened Mike Mitchell. He eventually opened a laundry and shoeshine shop that just barely supported his family. His son George enrolled at Texas A&M University, where he studied geology and the relatively new discipline of petroleum engineering. George was poor, and this was the time of the Great Depression. To pay his way through school, he sold candy and embossed stationery to the other students, waited on their tables, and did tailoring on their clothes. He also captained the tennis team and came top in his class.

After World War II, Mitchell did not want to work for anyone else. With a couple of partners, he opened an office as a consulting geologist atop a Houston drugstore. By the 1970s, he had built a sizable oil and gas company, though with ups and downs along the way. But he had an unusual proclivity. He favored natural gas over oil.

Around 1972, he came across The Limits to Growth, a book by an environmental group, the Club of Rome, It predicted that a soon-to-be overpopulated world would run out of natural resources. Intrigued, he became increasingly interested in environmental issues. Natural gas became for him not only a business but also a cause, for it was cleaner than burning coal. Sometimes he would call up people and berate them if he thought that they had said something nice about coal.

Fueled by his new environmental ethos, he launched a totally different business-creating a wooded, landscaped, forty-four-square-mile master-planned community north of Houston called The Woodlands. Its slogan was "the livable forest." (Today it has a population over one hundred thousand.) Mitchell involved himself in the decision making down to the details of the flower beds and trees and populating it with wild turkeys (until one got shot).

Yet he could hardly ignore his energy business. He had a big problem. Mitchell Energy was contracted to provide 10 percent of Chicago's natural gas. But the reserves of gas in the ground to support that contract were running down. Mitchell Energy needed to do something. That is when Mitchell stumbled across a possible solution.

In 1981, he read the draft of a journal article by one of his geologists. The article offered a hypothesis that ran counter to what was taught in geology and petroleum engineering classes. It suggested that commercial gas could be extracted deep underground from very dense rock-denser than concrete. This was the source rock, the "kitchen" in which organic material was "cooked" for several million years and transformed into oil or gas. According to the textbooks, the oil and gas then migrated into reservoirs, from which it could be extracted.

It was thought at the time that oil and gas might still remain in the shale but could not be produced on a commercial basis because they could not flow through the dense rock. The draft article disagreed. Mitchell, beset by worries about the contract for Chicago, became convinced that here might be the road to his company's salvation. There had to be a way to prove the received wisdom wrong.

The test area would be the Barnett Shale, named for a farmer who had come out to the area by wagon train in the mid-nineteenth century-five thousand square miles in extent, a mile or more underground, sprawling out beneath the Dallas/Fort Worth Airport and under the ranches and small towns of North Texas. Year after year, the Mitchell team toiled away to break the shale code. Their goal was to open up tiny pathways in the dense shale so gas could flow through the rock and into the well. To do that, they applied hydraulic fracturing, later much better known as "fracking," which uses cocktails of water, sand, gel, and some chemicals injected under high pressure into rocks that would break open tiny pores and liberate the gas. Hydraulic fracturing is a technology that had been developed in the late 1940s and has been commonly used in conventional oil and gas drilling ever since.

But here the fracking was being applied not to a conventional reservoir but to the shale itself. Yet time was passing, and much money was being spent, with no commercial results. Criticism mounted inside the company. But when people dared to suggest to Mitchell that his idea would not work, that it was only a "science experiment," he would say, "This is what we're going to do." And since he controlled the company, Mitchell Energy went on fracking in the Barnett, but still with no good result.

By the mid-1990s, the company's financial position was precarious. Natural gas prices were low. Mitchell Energy cut its spending and slashed its workforce. The company sold The Woodlands for $543 million. When the announcement was passed to him for review, Mitchell jotted, "OK but sad." He later said, "I hated to sell it." But he had no choice. The company needed the money. But Mitchell would not bend on shale. One thing that characterized him, as his granddaughter once said, was "stubbornness." If he had doubts, he kept them to himself.

By 1998, the company had spent a lot of money on the Barnett-as much as a quarter billion dollars. When analysts did forecasts of America's future natural gas supplies, the Barnett did not even make the list. "All sorts of experienced, educated folks wanted to bail out of the Barnett," said Dan Steward, one of the believers at Mitchell. "They said we were throwing money away."

Nick Steinsberger, a thirty-four-year-old Mitchell manager in the Barnett, was not among the skeptics. He was convinced that there had to be a technical solution to commercially produce from shale. Moreover, natural gas prices were low, and he was also trying to bring down the costs of drilling a well. To do that, he had to attack one of the biggest costs-that of guar.

Guar, mostly imported from India, is derived from the guar bean. It is used extensively in the food industry to assure consistency in cakes, pies, ice cream, breakfast cereals, and yogurt. But it has another major use-in fracking, in a Jell-O-like slosh that carries sand into the fractures to expand them. But guar and the related additives were expensive. At a baseball game in Dallas, Steinsberger ran into some other geologists who had successfully replaced much of the guar with water, but in another part of Texas and not in shale. In 1997, he experimented with their water recipe on a couple of shale wells, without success.

Steinsberger got approval for one final try. This was the SH Griffin #4 in Dish. The team was still using water to replace most of the guar, but this time they fed in the sand more slowly. By the spring of 1998, they had the answer. "The well," said Steinsberger, "was vastly superior to any other well that Mitchell had ever drilled." The code for shale had been broken.

The new technique needed a name. They didn't want to just call it "water fracking." That would have been too prosaic, even boring. So they called it "slick water fracturing."

The company quickly adapted the technique to its new wells in the Barnett. Production surged. Yet if it was going to develop shale on a large scale, Mitchell Energy needed a lot more capital, which it simply did not have. Reluctantly, George Mitchell started a process to sell the company. Personally, it was a difficult time for him. Although he could take great satisfaction that his intuition-and conviction-had been proved right after seventeen years, he was being treated for prostate cancer and his wife was slipping into Alzheimer's. There were no buyers. The sales process was called off, and the company went back to work.

Over the next two years, Mitchell Energy's gas output more than doubled. This caught the attention of Larry Nichols, CEO of Devon Energy, one of the companies that had passed on Mitchell Energy during the earlier sales process. Nichols challenged his own engineers: "Why was this was happening? If fracking was not working, why was Mitchell's output up?" Devon's engineers realized that Mitchell Energy had indeed cracked the code. Nichols was not going to let the company get away a second time. In 2002, Devon bought Mitchell for $3.5 billion. "At that time," said Nichols, "absolutely no one believed that shale drilling worked-other than Mitchell and us."

But shale drilling needed another technology to be economic. This was horizontal drilling. This allowed operators to drill down vertically (today, as much as two miles) to what is called the "kick-off point," where the drill bit turns and moves horizontally through the shale. This exposes far more of the rock to the drill bit, thus leading to much greater recovery of gas (or oil). While there was experience with horizontal drilling, the technology did not become more prevalent until the late 1980s and early 1990s. This was the result of advances, in measurement and sensing, directional drilling, seismic analysis, and in special motors that would do a remarkable thing-a mile or two underground, they would propel the drill bit forward once it had made its ninety-degree turn and started moving horizontally. And it required one other thing-extensive "trial and error." Devon was now positioned to try to meld horizontal drilling with fracking.

"Somebody is Dead Wrong"

In the hot summer of 2003, a large group of government officials, engineers, experts, and executives from the natural gas industry were convening, 750 miles to the north, in a cavernous conference room at the Denver airport Marriott. The objective was to review the results of a major study on the future of U.S. natural gas. The conclusions were deeply pessimistic. After languishing for years, natural gas prices had suddenly moved up sharply. Demand was rising, especially in electric power. Yet despite a doubling in the number of active drilling rigs, the report said, the "sobering" fact was that "sustained high natural gas prices" were not bringing the expected increased supplies of natural gas. In short, the United States was running out of natural gas.

New technologies and "non-conventional" or "unconventional" gas, the study chairman told the group, would hardly have any impact. Shale gas did not even get a fleeting mention on the list.

A professor from the University of Texas shot up to object. He noted that this estimate for "non-conventional" was only about a third of another projection. "That's a hell of a big difference," he caustically commented. The chairman disagreed. The dissenting projection of larger potential supply, he said, was flat wrong.

"Somebody is dead wrong here, aren't they?" retorted the professor.

Almost everybody in the room was convinced that it was the professor who was dead wrong and that the United States faced a permanent shortage of domestic natural gas. The main way to make up for the shortfall was to look overseas-to import liquefied natural gas (LNG). The United States would have to do something new in its history: increasingly depend on large imports of LNG from the Caribbean, West Africa, the Middle East, or Asia. The country, it was thought, was destined to become the world's largest importer of LNG, ever more dependent on global markets for its gas, as it already was for its oil.

Yet that July 2003, while the natural gas study was being deliberated in the air-conditioned ballroom in Denver, Devon's crews were working away in almost-hundred-degree temperatures down in Texas, methodically drilling what eventually totaled fifty-five wells.

Larry Nichols, the Devon CEO, missed the Denver meeting because he was focused on Devon's drilling program. "As we drilled each well and as we saw the continuing production of the wells, we realized a little more each day that this was indeed a game changer," Nichols recalled. "There never was a single Eureka moment. There were lots of small Eureka moments as we gradually improved our technology."

By the end of that drilling program, they had the proof. Devon's engineers had successfully yoked together the two technologies-slick water fracking with horizontal drilling-to liberate natural gas imprisoned in the shale. "The rest was history," Nichols would later say.

It was as though a starting gun had gone off. News of the breakthrough set off a frenetic race among other companies to get their piece of that dense rock before anyone else.

These were not the very large companies whose logos are familiar at gas stations across the country. Those "majors" were still divesting from their on-land U.S. production because they thought it was a dead end. Instead, they were putting their money into the Gulf of Mexico's deep waters and into multibillion-dollar "mega projects" around the world. As they saw it, the U.S. onshore was too picked over, too obviously in decline, to provide new resources of the scale they needed.

The onshore was left to the independents-companies focused on exploration and production, unburdened with gas stations or refineries, more entrepreneurial, faster-moving, and with the lower cost structures required to make money in the increasingly depleted onshore. "Independents" itself was a pretty broad term, ranging from companies with multibillion-dollar valuations down to small, scrappy explorationists.

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