The Tough Search for Power

A different kind of oil problem: getting at a bountiful supply

The Soviet Union, like the U.S., faces serious energy problems in the 1980s. The U.S.S.R. is by far the world's largest oil producer (11.9 million bbl. per day, vs. 9.5 million bbl. for Saudi Arabia). Nonetheless, in the view of many Western energy analysts, the Soviet Union will soon run into a petroleum bind even though the country is an Eden of energy riches.

The Soviet squeeze, however, is dramatically different from the American one. Energy wildcatters and big oil companies have exhaustively drilled the Western Hemisphere for more than a century, and the U.S. has been forced to rely on imports for half its oil because it has simply outgrown its readily available reserves. The Soviets, on the other hand, still have enormous amounts of oil in the ground, with estimated proven reserves of 67 billion bbl. of oil, compared with 26 billion for the U.S. and 166 billion for Saudi Arabia. But even though Moscow planners are not hindered by environmental protest groups or disagreements between government and industry, they have greater trouble finding the oil, getting it out of the ground and, finally, transporting it to where it is needed.

Just how prolonged and how severe the U.S.S.R.'s energy gap will prove to be is a subject of widespread discussion. The CIA, in a controversial and criticized report in 1977, predicted that the Soviets would have to start importing petroleum before 1985. The CIA updated that study last year and said that Soviet oil output could fall as low as 8 million bbl. in 1985. If this view is accurate, the Soviet Union will soon have to halt its lucrative oil exports, including 129 million bbl. to such Western nations as Italy, West Germany and Austria. Last year petroleum was the largest Soviet export, with about $6 billion in precious foreign exchange coming from Western Europe alone. An end to oil exports, moreover, would weaken the political and economic hegemony the Soviets have over their East bloc satellites and Cuba, which are heavily dependent on Soviet petroleum supplies.

Should the Soviets cut back their own energy consumption, or that of their satellites in Eastern Europe, the move would surely hurt their economic growth. Even in a dictatorship with the power to enforce harsh conservation measures, the political consequences might not be pleasant. Some feel that the country's growth is already slowing because of the power squeeze. Says former Department of Energy Chief James Schlesinger: "There's just no doubt that Soviet economic growth has been constrained by energy shortages."

Alexander Krylov, a top Soviet oil expert and a member of the Academy of Sciences, has predicted that "national oil output will peak in a relatively short time and then start to fall." Yet other energy experts in both the East and the West are more optimistic about Soviet potential. Leading Kremlin officials insist that their country will remain a net exporter of oil and natural gas for the next 50 years. Economist Marshall Goldman of Wellesley College maintains in his book The Enigma of Soviet Petroleum: Half Empty or Half Full? that the Soviets will actually increase production of energy by 2% to 3% a year through 1985 and possibly more in the years afterward. Most experts believe that the Soviet Union will eventually solve the difficult problems of extracting its reserves. In a Communist command economy, Soviet managers are able to bulldoze important national priority projects, like energy development, through normal roadblocks.

Whatever their longer term views, independent observers agree that the U.S.S.R. will suffer some Western-style energy headaches in the next few years. Indeed, the Soviets are already suffering the first symptoms of the coming crunch. Gasoline prices have doubled during the past two years, to roughly $1.25 per gal. Plans to expand car production beyond the present million-a-year level have been shelved; talk of building a second large automobile and truck factory has ceased; and Pravda, the Communist Party newspaper, has printed lengthy exhortations to conserve energy. Except at Moscow's Sheremetyevo Airport, where many foreign flights arrive, jets of Aeroflot, the national airline, no longer use their own engines to taxi into takeoff position; to save fuel, they are towed into position by tractors. NATO radar bases report that Soviet air force training flights, already 30% below those of the U.S. and Europe, have been cut back even further.

The basic cause of the Soviet energy problem is geography. The bulk of the nation's population--and most of its industry--is in the western half of the country. The major oil reserves, as well as the sites most likely to yield new supplies, lie thousands of miles away, in Siberia. Getting the oil from where it is to where it is needed requires more railroads and pipelines than the U.S.S.R. possesses or will be able to build in the near future.

Another difficulty is management. Oil experts say that the Soviets have not done a good job of handling their resources. Reports Arthur Meyerhoff, a Tulsa, Okla., oil engineer who has traveled widely in the U.S.S.R.: "To say that the Soviets have mismanaged their petroleum industry is the understatement of the year." Western oilmen say that the Soviets made their first serious mistake when they set drilling targets in terms of meters drilled, thus making a deep dry hole as good as a gusher in terms of fulfilling the plan.

Another serious mistake, say U.S. experts, was deciding to accelerate production by employing a technique known as water injection, whereby water is forced into wells to make the crude petroleum easier to pump. Result: more oil in the short run, but less in the long term. Some older wells in the Volga-Ural region now pump five barrels of water for every barrel of oil; and the average Soviet well pumps 50% water.

Soviet energy policy has been plagued by bureaucratic infighting and indecisiveness. No fewer than 15 different government ministries are involved in energy policy. Indeed, it was not until late 1977 that the Communist Party authorized an all-out program for oil exploration and development, necessitating a rush of orders for U.S. equipment.

The Soviets have not kept up with progress in the petroleum industry, a situation exacerbated by Western trade restrictions, like those imposed by the U.S. after the Afghanistan invasion. Vladimir Dolgikh, the Communist Party secretary for heavy industry, admitted last January that the only way to realize ambitious plans for developing energy sources in Siberia would be "to introduce new equipment, improve technology and raise labor productivity."

Soviet oil-drilling equipment is estimated to be about 40 years behind that found in the West. The standard Soviet turbodrill, for example, bores much more slowly than American equipment. It takes a Soviet team 14 months to dig down 10,000 ft.; U.S. drilling teams can reach that depth in 34 days. Seismic technology, essential for exploration, also lags far behind. The best Soviet gear probes down to 7,000 ft.; U.S. equipment is more accurate and goes down to at least 10,000 ft. Given the state of their industry, says Meyerhoff, "there is simply no way that the Soviets are going to meet their crude oil requirements."

How can the Soviets meet their energy needs? Certainly not through conservation by consumers. Leonid Brezhnev and other Soviet leaders have called repeatedly for conservation, but there is not much fat to trim in the consumer sector. A nation that has only one automobile for every 42 people (the U.S. has one for every two people) and does most of its long-distance hauling by rail cannot cut back much on gasoline consumption. Some savings might be possible in factories, since Soviet industry is notoriously wasteful of energy, largely because the government sells energy to industries at low rates, which invites managers to squander it. But significant conservation may be impossible without economic decentralization, and that is politically unfeasible.

To some degree, the Soviets can substitute other energy sources for oil. The Soviet Union has 28 trillion m^3 of natural gas, which is a third of the world's proven reserves and enough to last 70 years at current rates of consumption. Gas production is currently booming.

Coal, which the Soviets also have in abundance, is unlikely to fill much of the gap. Soviet coal reserves total 7 trillion tons, or enough to last 350 years, but most of the coal, like the other fuels, is in Siberia, where distance and climate make exploitation difficult. The coal is primarily low-grade, high-polluting lignite, and much of it is pyrophoric, that is to say, it can ignite spontaneously upon contact with oxygen. Still, Western analysts are baffled by the U.S.S.R.'s declining coal production. In 1979 output was 3 million tons less than in 1977 and 33 million tons under the goal set by the national economic plan.

Nuclear power should be a major help. Not hindered by Jane Fonda-like ecology zealots, the Soviet Union is moving ahead on nuclear energy. The country currently has 23 reactors in operation, providing 10% of its electricity, about the same percentage as in the U.S. But the Soviets intend to build fast. The present Five-Year Plan calls for construction of ten reactors a year.

Yet even if their nuclear program goes as planned, the Soviets will still need oil, and lots of it. If they cannot produce enough energy to meet their own needs, they have two alternatives, neither of which bodes well for the rest of the world. They could use their gold reserves to compete with Western buyers on the already strained world oil market. This would push prices higher and cause incalculable economic turmoil. Or the Soviets could try to conquer Persian Gulf oilfields, which begin just across their southern border. Kremlin leaders flatly deny that they covet oil vital to the industrial West, but intelligence sources report that even Saudi Arabian leaders have held informal talks with the Soviets about the possibility of selling crude in exchange for Soviet aid in refinery construction. Given the political instability of most Middle Eastern regimes, many Western experts fear the Soviets could intimidate them into bartering their oil for a token amount of technical aid. Says Schlesinger: "Unless the U.S. is prepared to put more muscle into its position in the Persian Gulf, we can expect increased Soviet pressures."

Few U.S. authorities believe it is to American advantage for the Soviets to suffer from an energy shortage. But some, like Samuel Huntington, a Harvard foreign policy strategist, advocate keeping a tight rein on shipments of all oil technology and equipment unless the Kremlin is willing to make political concessions in return.

Others find such an approach shortsighted. They believe that the U.S. should help the Soviets to expand and exploit their fuel reserves. Says Theodore Shabad, a U.S. expert on Soviet natural resources: "It is not in our interests to create an energy problem for the Soviets; it is in our interest that they be self-sufficient." American attempts to deny the Soviets much-needed drilling technology have not been totally successful. After U.S. firms were stopped from making sales, the Soviets turned to Italian and French firms for the equipment.

Because energy is the lifeblood of a modern industrial society, the Soviets will undoubtedly make an all-out effort to tap their hard-to-get reserves. It remains to be seen, though, whether the country can accomplish the job in time to avert serious shortages. Concludes Jack Ray, a Tenneco petroleum specialist who is often in the Soviet Union: "With brute strength and will power they'll muddle through, just as they always do."

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