Chapter 11 – Confronting a Monster: The Early Natural Gas Industry

Publisher Summary This chapter discusses challenges faced by the offshore oil industry, particularly by Brown & Root in the North Sea. Brown & Root was the first offshore construction company in the region in the 1960s, and after the surge in oil prices in the early 1970s, it was well-positioned to tackle the severe, but profitable, challenges of recovering oil and gas from under the cold, rough waters of the North Sea. The first significant indication of hydrocarbons in the North Sea region came in August 1959, when a Shell/Esso venture found the massive Groningen gas field, an onshore field near the coast of northeast Holland. Harsh, demanding working conditions in these waters forced Brown & Root and the industry as a whole to make fundamental adjustments in most aspects of offshore operations shaped economic options. The technical challenges of the North Sea unfolded in three stages. In the 1960s, Brown & Root developed several gas projects in the calmer, shallower waters of the southern North Sea, although the high winds, choppy waters, and hard clay bottom lengthened installation times and suggested greater difficulties to come. The second stage of North Sea development began in the early 70s, as companies moved to produce petroleum from new oil and gas fields. These fields in the harsher, deeper waters of the central North Sea proved conclusively that the North Sea held massive oil deposits, and a wave of technical innovations enabled their subsequent development. In the third stage, many companies rode the high oil prices of the late 1970s into massive projects throughout the North Sea. In 1963, before the ratification of the Continental Shelf Act and the issuing of production licenses, Brown & Root formed a joint venture with the Dutch contractor, Pieter S. Heerema. Europe's growing dependence on imported oil and manufactured gas in the post-World War II years created a strong incentive to explore all domestic sources. But the development of offshore deposits in the region awaited two closely related developments—the creation of a technology capable of recovering oil and gas from this tempestuous region, and the coming of a price for oil that made recovery economically feasible.