Crude Oil in Austria Viennese Wine Country Spouts Black Gold

Alpine mountains and tasty milk chocolate spring to mind when thinking about Austria. But oil? Actually, the country is home to Central Europe's largest reserves and it has become a testing ground for new drilling technology. And the country is in the middle of a mini oil boom.

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The world may be running out of oil, but Austria has turned into a bastion of high-tech drilling.
AP

The world may be running out of oil, but Austria has turned into a bastion of high-tech drilling.

One can almost feel the vibrations on the surface as the kilometer-long pipe sunk deep into the earth's crust grunts and belches. Often, if engineer Helmut Langanger is lucky, the fuel deep below pushes its own way to the surface. Both crude and natural gas are hiding beneath the fields -- and gas is usually the first to shoot out. Langanger doesn't particularly care. All he's interested in, he says, is "will it burn? Yea or nay?" At the drill sites, a pipe rises up into the sky and is ignited at the top. "If we see a flame catch," Langanger says, "it really is a fantastic moment."

Langanger, who studied the intricacies of oil and gas at the Montan University Leoben in Austria, has seen the fantastic flames light up in Libya, Pakistan, Romania and on oil platforms out at sea. Now, though, the Austrian is a bit closer to home. Less than a mile to be exact. As head of oil exploration and production at the Viennese oil company OMV, Leoben has hit the jackpot right in the heart of Austria's wine country.

Once a sleepy, bureaucratic, public company, OMV is now two-thirds privatized and has emerged as one of the fastest growing operations in the business. Oil and gas production have quadrupled in the past four years, earning them a mid-table position in relation to their European competitors, with exploration underway in all five continents. Now, the company is pumping oil from the ground just outside of Vienna.

Northeast of the capital city, where the Green Veltlin grape grows and the land is mostly flat, this part of Austria has little to remind one of the Alps further south and west. But nowhere on the Central European mainland is there a higher concentration of oil production. The most important field, named after the local town of Matzen, was discovered in 1949 and was estimated at a volume of half a billion barrels of crude oil.

High-tech oil extraction in Austria.
DER SPIEGEL

High-tech oil extraction in Austria.


Reserves of this size did not quite lift Austria into the OPEC league -- in terms of worldwide oil consumption, the Austrian reserves would last just six days -- but it formed the foundation of OMV and is still being tapped with great care today. Fifty smaller fields in Austria have since been discovered and drilled, with around 750 oil and 120 gas probes extracting fossil fuels in the wine region. OMV’s local production covers some 10 percent of Austria's crude oil needs and 15 percent of its natural gas consumption.
 
But over an above its relatively modest production, the Austrian oil fields are vital for another reason. The 1,500 mile long branch-like pipeline network is the only one of its kind in the global oil business. And Austria is an ultra-modern laboratory which could come up with answers to two of the most pressing questions facing the energy industry. How much gas and oil can still be found? How much scope is there for further developing existing fields?

In the fossil fuel treasure hunt, Austria is way ahead of the rest of the world in terms of efficiency and exploration. This is reflected in a remarkable production curve. Normally, one would expect a new field to chart a rapid increase in yield to begin with, followed by a so-called plateau for a number of years, before dropping off at a similar rate to the initial rise.

Austria’s oil production decreased 30 years ago, but then began to rise again before leveling out in 1992 and maintaining the same level ever since. Gas production has actually begun to improve again.

This ongoing oil boom in the wine country is primarily a result of economic calculation. Transportation costs for gas and oil from Austria are minimal with the oil wells located virtually next door to the refineries. “That’s the beauty of it," Langanger says. “We can afford to invest more."

This translates into greater investment in extracting the maximum yield from existing fields. Oil deposits are not simply underwater lakes which can be pumped out to the last drop. The raw material is held in porous rock beneath which water flows and bubbles -- and as the field is pumped, the water increasingly mixes with the oil and gas. Oil pumped from the vast oilfields in the Arab States may contain between 25 to 40 percent water, a relatively small amount. The pumps in the Vienna Basin, on the other hand, extract up to 92 percent water. Oil swims on the water “like a drop of grease on your soup” says Langanger, and can be skimmed off. The water is pumped back into the field via another borehole, in order to maintain the correct pressure below ground.

OMV will persevere with production up to a water ratio of around 98 percent -- a level already reached by a number of Germany’s minute oilfields. In more remote areas, however, such squeezed out fields have long since been given up.

Water is not the only obstacle in the exploitation of older wells. Porous rock has a habit of clogging the pipes and the porous rock. Explosives then have to be detonated underground to loosen the rock and tiny projectiles are fired into the fissures to ensure that the rock remains sponge-like and porous.

To retain the oil’s ductile structure, enabling a smooth ride to the top, water vapor is blown into the field through further drill holes. Degreasing detergents, not unlike gallons upon gallons of washing up liquid, also have their part to play in the oilfields. Their use may be highly effective but is frowned upon as one of the greatest ecological transgressions of an industry not known for its environmental awareness.

The sustained pumping of the Vienna Basin fields would not be enough in itself to maintain production levels. Austria would have experienced a similar rate of decline as their Northern German competitors in Lower Saxony had OMV not invested vast sums in the exploration of new fields. In the past two years alone, expenditure on the search for oil and gas has topped €120 million. This year will see another 90 million spent.

The explorers are placing their faith in costly technology which they see as key: 3D seismic stratigraphy.

Using either explosives or heavy trucks, which stamp the ground with a powerful mechanical foot, oil explorers shake the earth and then use a series of geophones to measure the rate and strength of the ensuing mini earthquakes. By analyzing this data, it is possible to determine the geological nature of the rock strata. When this technique was first implemented, analysis could only provide two-dimensional results, rather like slices of cake.

Advances in computer technology, however, mean that a much greater body of data can be processed. Geophones can thus be distributed across greater expanses of land, leading to a far more revealing 3D representation, which, in turn, can give much clearer structural information about where potential oil and gas deposits may lie.

The most interesting sections of land in Austria's wine country have been mapped out using this technique to a depth of over 3 miles. A model on the computer screen shows, for example, a gas field which exasperated geologists and engineers had desperately searched for -- and narrowly missed three times in test drills. Thanks to the 3D seismograph, they now know exactly where to drill.

Austria may not produce enough to be in OPEC, but Vienna does host the organization's headquarters.
REUTERS

Austria may not produce enough to be in OPEC, but Vienna does host the organization's headquarters.


It would be wrong to consider this method foolproof. The seismograph merely highlights the “trap structures” in the rock, beneath which fossil hydrocarbons could be hidden. All too often, the drills hit water rather than gas or oil.

Nonetheless, the strike rate has improved dramatically. Out of thirteen test drillings undertaken in Austria last year, OMV consider eight to have been economically worthwhile. Prior to 3D seismic stratigraphy, nine out of 10 attempts offered no prospect of economic viability.

During the second energy crisis back in the late Seventies, when oil prices rocketed sky high, OMV was busy drilling in roulette fashion. Exploration teams headed south into the limestone Alps of the Tyrol, knocking gigantic holes, 8,000 meters deep, into the mountains. A fruitless treasure hunt, as it turned out.

Retreating from this expensive flop, the hunters returned to the wine country. Since then, the motto has been “Where you find some, you can find more," according to the local head of exploration, Reinhart Samhaber.

That is true around the world. Many of the new discoveries in recent decades have been made in the vicinity of existing oilfields. Brand new oil regions, such as the North Sea field in the 1960s, are rare.

Yet new finds are getting smaller all the time. Over 40,000 oilfields have been discovered worldwide to date, with just 1 percent of these -- known in the trade as the “mega giants” -- accounting for three-quarters of all crude oil reserves. The majority of these giants were already on the map over 50 years ago. “We aren’t going to find anything of that size in the future," says Peter Gerling, oil expert at Germany’s Federal Institute for Geo-science and Crude Materials (BGR) in Hanover. Since 1980, oil consumption has outweighed the volume of new discoveries.

“We’ll find every needle in the haystack, but that’s all we’re finding: needles," Colin Campbell, a geologist, explains. The 74 year-old has led the search for oil at several major companies. These days, though, he is the most prominent pessimist in the business. In his assessment, we are about to reach the global oil peak, to be followed immediately by a worldwide decline in reserves, presenting us with the most acute problem of supply since the industrial age began.

Like a drug addict and his needle, mobile mankind has his oil-guzzling automobile to tie him to the fossil fuel drip feed. Eighty-four million barrels of crude oil -- enough to fill the Cheops Pyramid five times over -- are used up every single day, and consumption is rising. As the industrialization of China in particular continues apace, annual demand is growing by a mighty 10 percent.

For how long can this thirst be quenched? The BGR estimates that worldwide demand can be met by conventional oil production for another ten to fifteen years. Thereafter, the production curve will drop, meaning either that energy-saving measures will be a necessity, or other resources will have to be tapped.

Crude oil will make the transition from mass market fuel to exotic trade commodity, becoming too valuable simply to be burned. It will live on for centuries as a component in high-grade synthetics and medicines.

Just how laborious the search for and extraction of fresh oil will become, can already be witnessed in the field. Not far from OPEC’s headquarters, northeast of Vienna, the seismograph trucks are massaging the earth so vigorously that the wine cellars start to shake.

“An experimental station for the end of the world” is how the Viennese journalist Karl Kraus lovingly describes his homeland. If there is one aspect of Austrian activity which perfectly matches his words, then it has to the exploration and production of oil.

Wolfgang Ruttenstorfer, OMV Chairman, leans over one of the seismic charts. The rock strata are shaded in different colors, depicting waves and peaks. Ruttenstorfer points to a red mark. “This little deposit here, you can only pick that up with 3D seismography.”

A steel bore rod works its way down month by month towards that “little deposit," powered by a 900 horsepower motor. Angled heads enable drilling to progress along a curve, meaning several fields can be tapped, with horizontal access to the deposits improving extraction. Pipes are driven into the depths to stabilize and seal the area, telescopic in form, narrowing the deeper they go, like inverted radio aerials. Drilling of this type costs several million euros a go.

In March 2003, OMV announces the “biggest oil strike in Austria for 25 years," On the margins of the main Matzen oilfield, an exploratory drilling unearthed oil and gas deposits in 12 horizontal layers of rock, 2,926 meters under the earth's surface.

The reward for the explorers’ efforts is 500,000 tons of crude oil. Enough to meet worldwide demand for one whole hour.

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