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Inside Iraq’s Oil Machine

“A gasoline engine is sheer magic,” he said to me once. “Just imagine being able to take a thousand different bits of metal—and if you fit them all together in a certain way—and then if you feed them a little oil and gasoline—and if you press a little switch—suddenly those bits of metal will all come to life—and they will purr and hum and roar—they will make the wheels of a motor car go whizzing around at fantastic speeds. . . .”

—Roald Dahl, Danny the Champion of the World

The striking thing about the Rumaila oil field is that the land itself appears to be so completely dead. The hardpack plain is inorganic, barely even a desert. It had been marshland once, a refuge for night herons and water buffalo, but Saddam bled it dry so that he could more easily exterminate the rebels hiding in the reeds. It is hard to believe anything valuable remains. The engineers say there are at least 115 billion barrels of oil in Iraq, though, much of it right here beneath Rumaila. There could be more, too, maybe twice as much, but three decades of dictatorship and sanctions have slowed exploration, and the war has only worsened matters. Now it is dangerous even to extract the known quantities.

It was for this reason that we were driving across Rumaila late last winter in a convoy of four explosives-resistant SUVs, inside of which were ten employees of the British security firm Erinys, each of whom wore black double-plated body armor and carried, at minimum, a handgun and an assault rifle. The convoy had been arranged to transport a single engineer to inspect a single part of Iraq’s aging and frequently attacked oil infrastructure. Our driver had told us that Rumaila was “friendly-ish” but that there were still some concerns about kidnapping and roadside IED attacks. He drove defensively. Sometimes he would speed up to ninety or a hundred miles an hour in the left lane, against traffic. Sometimes he would pull off onto the hard dirt itself, driving across twin ruts or inventing an altogether new path. There were no towns or villages. In a few rare instances we would pass a low house made of cinder blocks, and sometimes we would see two or three kids running around in front. Our driver would always wave, even when the kids threw rocks at us.

The engineer, whom I will call Sam, was a “project delivery team leader” for Foster Wheeler, the Houston engineering firm the Army Corps of Engineers had hired to oversee much of the oil-field reconstruction.1 His title meant that he spent a lot of time in convoys like this, traveling from well to well, inspecting our progress. Sam was precise in his speech and in his dress. His purple button-down shirt was tucked neatly into his jeans, and his boots were dusty but otherwise immaculate. The rest of us had been required to wear Kevlar army helmets for the trip, but Sam, like most of the engineers in Iraq, wore a white hard hat with his name printed on the front. He had been working here almost since the war began, usually eight weeks on, three weeks off, but as of today he had not been home to Texas in thirteen weeks and still had another two weeks to go. When he did get home, he said, he would do nothing for three days but sleep and watch TV.

1 The Corps, with which I was embedded, asked me not to identify civilians in the field.

Sam demonstrated a sort of dry enthusiasm for his work. What makes Rumaila oil so great, he said, is that it is light—its predominant hydrocarbons lack viscosity, which means that you can push them through a pipe and onto a ship without much effort—and it is sweet, which means that it contains only trace amounts of sulfur, which is hard on refineries and expensive to extract. Sam said the best way to know if oil is sweet is to smell it. Sour oil smells like rotten eggs. Sweet oil has a satisfyingly bituminous scent, like hot pavement after a light rain.

The oil in Rumaila is especially sweet, and we could smell it everywhere. For the most part, though, we could not see it. The crude was carefully sealed within the surrounding pipelines, mile upon mile of rusty tubing and oil-blackened flanges perched above the corrosive soil like balance beams. Even the wellheads jutting out of their hardened concrete pillboxes were really just vertical pipes draped with gauges. Sam called them Christmas trees. He said there were no horse’s heads going up and down like you see in Texas and Oklahoma because the oil in Iraq is already under such intense pressure.

The oil remains hidden within this vast arterial matrix all the way from the reservoir to the Persian Gulf. It flows by way of overburdened degassing plants and pump houses and into main lines that parallel the Tigris and Euphrates rivers and then follows their confluence along the Shatt al-Arab Waterway until, a few miles south of the port city of Basra, it plunges into the sea, runs along the ocean floor for another twelve miles, and finally rises abruptly to the surface at a barnacle-encrusted catwalk structure called Al-Basra Oil Terminal. From there it goes everywhere, but mostly to the United States.

I was making that same journey from well to terminal, and yet in all my time in Iraq I would see the oil itself only once. This was in a particularly empty patch of desert, beyond even the lonely cinder-block houses and the rock-throwing kids. We had sped past dry concrete canals and abandoned oil drums and rocket-charred tanks, past mile upon mile of flat dirt and rust, and then we found ourselves driving between a series of mirror-black ponds. These pools crept along both sides of the highway, and through the scratchy ballistic glass of our SUV it was hard to tell at first if the liquid within was oil or water. There were no ripples, though—the pools were thick—and the hot asphalt smell was strong enough that it had become a taste. Sam said the oil came from leaky pipes, that there is no EPA watching over Rumaila. “You have to give the devil his due here,” he said, meaning Iraq. “On a good day, they export 60,000 to 70,000 barrels an hour. If 500 barrels of crude spill on the ground here, what is that? Not more than a half minute of export.”

Oil was selling for about $60 a barrel at the time, and so that half minute of potential export was worth at least $30,000. But Sam was right, of course. Any competent engineer would recognize that these particular pools of oil, already disappearing into the distance, existed within a degree of precision that was irrelevant to the success of the larger project. And, truth be told, seeing the oil was a relief.

I had come to think of Iraq as a kind of black box. Not the black box engineers analyze after a plane crash to determine how the disaster occurred—though such a device would have some metaphoric relevance to Iraq—but rather the black box engineers speak of in describing a mechanism with a known function and an unknown method. The pig goes in one end, the sausage comes out the other, and what goes on in between is no one’s business. More and more of what happens in the world happens inside black boxes. It was not very long ago, for instance, that an interested observer could look under the hood of a car and determine that, yes, gas flowed in through this line, and these ceramic plugs probably sparked that gas, and these tiny explosions—you could practically hear the individual pistons!—were probably what was spinning that shaft. Now, of course, the inside of an engine compartment is almost entirely sealed off. Gasoline goes in, motion comes out, and when that ceases to happen the engine’s innermost ailments are diagnosable only by a computer, which of course is another kind of black box.

Drivers seldom think about how engines work, just as they seldom think about where they get their power. The foot goes down and the car goes forward. Easy. Indeed, discussing the source of our power has become more taboo than discussing the source of our meat, likely for similar reasons. We say the oil is a commodity. That it could be from anywhere. That it is more appropriately understood as a number on a screen, as an idea. We have allowed ourselves to believe that Iraq is not a nation-sized infrastructure with intricate workings—indeed, with many leaky pipes—but a kind of philosopher’s stone, as if through our engineering prowess we had found a way to defy the laws of physics as easily as we defy the laws of war, as if we really could flatten the world with a wish or melt all that is solid into air. This is obviously not true, and it is a dangerous fantasy. The mechanism may become increasingly complex, indeed the accelerating system may blur to invisibility, but every system must be understood before it can be controlled. And here at last, in this oil made visible, was the beginning of understanding.

The oil, according to the Iraqi constitution, belongs to “all the people of Iraq,” but the people of Iraq have never fully been able to exploit their national patrimony. Even when Iraq was at its most extractive—in 1979, just as Saddam was taking full control of the ruling Ba’ath Party—the best it could do was to produce an average of 3.7 million barrels of oil per day. Now, after three decades of advances in extraction technology, it is able to produce about 2.1 million barrels per day. The invasion in 2003 briefly interrupted that flow, but output today is essentially the same as it was just before the war began. Everyone agrees that this is unacceptable. Saudi Arabia produces nearly five times as much oil each day, and even the United States, sucking at the dregs of its own dwindling reserves, manages to produce four times as much.

One of the oft-cited benchmarks for success in Iraq is the passage of a national hydrocarbon law. Even more than the Iraqi constitution, such an agreement would address the major fault lines of the war and of the nation itself, primarily because it would address how the oil money is distributed. But agreement on the law has proved elusive. The Shia in the south and the Kurds in the north happen to be sitting on two very large oil deposits, whereas the Sunnis are concentrated in the center of Iraq, where there is relatively little oil. This trick of geological fate underlies an ongoing political dispute. The Kurds would prefer oil revenue to be distributed on a local basis. The Sunni, who make up a minority of the nation’s population, prefer what they call a federal model, in which all of the oil revenue is shared more or less equally. The Shia, who now control the central government, appear for the most part also to favor a federal model, but some clans in the south have suggested they might prefer to make their own deals. There are other divisions as well. A lively labor movement has emerged since the invasion, and in June some 600 members of the Iraqi Pipelines Union went on strike in Basra, calling for a redistribution of profits. Some union leaders have taken to signing their communications, “Long live the Iraqi working class.”

Whether the disputes are based on geography or religion or class, the result has been constant violence, both against the system of extraction and against the people who maintain it. Since the war began, the Institute for the Analysis of Global Security has tracked “attacks on Iraqi pipelines, oil installations, and oil personnel.” They counted 148 such attacks in 2004, another 100 attacks in 2005, and 101 more attacks in 2006. Some of these were minor efforts: “two rocket propelled grenades fired at exposed and leaking valve,” for instance, or an “explosion apparently caused by homemade bomb thrown under oil and gas pipes.” Some attacks were deadly. The report notes, for instance, that a “bomb blast during changing of the guard at an oil storage facility south of Baghdad in Al Latifiyah killed six Iraqi National Guard soldiers and wounded five more” and also that a bomb on an “oil pipeline near Kirkuk killed an Iraqi oil security chief and eight of his men, who were in the process of defusing another explosive device.”

For this reason, and because they are rich enough to afford it, a great many of Iraq’s native oil professionals have fled the country. The Wall Street Journal in 2006 called this flight a “petroleum exodus” and reported that about a hundred oil workers had been murdered since the war began and that “of the top hundred or so managers running the Iraqi oil ministry and its branches in 2003, about two-thirds are no longer at their jobs.” Now most of the engineers in Iraq are from Texas and Oklahoma. They earn double what they would in the United States, but there is still a shortage of talent in Iraq. The inevitable result is that the oil flows a little slower.

The convoy was taking Sam to West Qurna 7, which was also the next stop for the oil after it left the ground. As we drove, Sam explained that West Qurna 7 was a gas-oil separation plant. Crude oil at the well contained a great deal of natural gas and water and salt. The gas-oil separation plant was where those impurities were removed. Raw crude would flow in one end, undergo a series of thermodynamic processes, and out the other end would come a commodity as consistent and interchangeable as a bag of soybeans.

The first sign of the plant was the flares, three massive plumes of orange flame that smudged black smoke across the horizon. This was the liberated gas. The plant itself was almost entirely out of doors, a football-field-sized complex of pipelines connected to three clusters of compression tanks. Everything had been painted gray, and there was nothing else for miles around but flat plains of strangely abraded dirt.

We pulled to a stop and our driver greeted the Iraqi guards in English. He had to shout over a constant screech, like steel cutting steel, and Sam, also shouting, explained that the screeching was the sound of the oil itself. The crude was under so much pressure that it rattled all the loose parts of the system, especially the valves, as if they were reeds or uvulas. The whole system vibrated in sympathy, the oil-gorged tubes acting like amplifying throats or pipes in a church organ. Sam said the oil would flow more silently once the gas had been removed and the pressure lowered to atmospheric level.

The inspection consisted of making sure that the equipment that needed to be installed—in this case, a desalting unit—had in fact been installed. But Sam also wanted to check the overall condition of the plant and seemed pleased to describe the function of its various components. We would walk and Sam would point to something and shout a brief explanation and then we would move on, surrounded at all times by our security team, half of them walking backward, all of them sighting their rifles into the distance.

We approached a rack of four submarine-sized compression tanks. “Basically, after the well,” Sam shouted, “the crude goes through one of these production trains.” We could hear the crude gushing into the first tank. Sam said the field manager controlled the relationship between the entry and exit valves such that the tank never quite got full. Per Boyle’s law, this increase in volume caused a decrease in pressure, and the decrease in pressure caused the “gas”—which at that point was in fact a liquid in solution—to boil to the surface. You could see the same principle at work by popping open a bottle of Coke. Under pressure the carbon dioxide would remain suspended in solution, but as soon as you decreased the pressure (by opening the bottle), it would boil to the surface. In the first tank, the pressure was lowered just a bit, which caused lighter gas, such as methane, to boil up and out. In the next tank, the pressure was lowered again, and heavier gas, such as propane, would rise from the mix. Finally, the pressure was reduced to atmospheric level, which caused even the heavy butane and pentane to separate. You do it in stages, Sam said, because big pressure drops tend to eat up the equipment.

The next step, as we had seen from the highway, was that the newly liberated gas was flared off. This was not the optimum engineering solution. A more elegant approach would be to send the liberated gas through another series of pipes to a natural-gas liquefaction plant, where it could be further refined and then sold. Some plants in Iraq did just that but many did not, for the simple reason that no one had ever gotten around to building the necessary infrastructure. The result, Sam said, was that Iraq burned away at least $10 million worth of gas every day. Indeed, due to its lack of domestic refinery infrastructure, Iraq is a long-time net importer not only of natural gas but also of gasoline, kerosene, fuel oil, and all of the other much-needed products that may be obtained from raw crude. (This is one reason Baghdad has so little electricity, which is generated in most Iraqi power plants by burning fuel oil or natural gas.) Rectifying this problem has proved difficult not only because of the war—and the looting and the years of sanctions—but also because the entire system had been allowed to collapse under Saddam. Every engineer I met in Iraq seemed to have a special loathing for the former dictator simply because he had taken what was, by the standards of the 1970s, a fairly good industrial infrastructure and run it into the ground.

Saddam’s legacy was everywhere around us at West Qurna 7. As we wandered past another production train, Sam pointed to a yellowing notice that had been glued to one of the tanks. The text was entirely in Russian. Other notices on other tanks were in English. This patchwork of documentation was possibly evidence of Cold War gamesmanship or perhaps just the switch to a new low bidder. Sam was pretty sure the company that built the plant itself was based in Ukraine, but it was hard to know because engineers working under Saddam were reluctant to keep detailed records, and many of the records that did exist were looted or destroyed after the invasion. The current contractors had spent several weeks trying to track down the Iraqi engineers who built the plant just to find out what worked and what didn’t.

We wandered further into the maze of pipes, and Sam paused in front of another tank. This was a desalting unit. Sam said the groundwater in Rumaila is so salty and alkaline that if you put it in your mouth you would gag and probably throw up. The crude that flowed into West Qurna 7 was full of this salty groundwater. Desalting the crude was a fairly low-tech process that also, conveniently enough, involved removing the water. The main problem at West Qurna 7 right now was that some of the desalters were not working, and replacing them had turned out to be a typically convoluted process. The Army Corps of Engineers had hired KBR—which at that moment was in the process of spinning off from Halliburton—to buy new desalters, which would in turn be installed by engineers from South Oil Company, or SOC, which itself was a part of Iraq’s many-tentacled Ministry of Oil. The good news was that SOC was just about finished, which is why West Qurna 7 was able to generate so much noise. It should be noted, though, that there are fifty-two gas-oil separation plants in Iraq, as well as three major and fourteen smaller refineries, fifteen major pump stations, and 1,600 wellheads, all of which are attached to 4,350 miles of rusty and ill-maintained pipeline. None of it works very well.

We continued through the maze. One of the Erinys men warned us to duck as we passed under some low pipes full of newly degassed oil. It was quieter now, and I could hear the static of his radio. Sam pointed to a cluster of concrete buildings in the distance and said they housed transfer pumps. Behind the pumps we could see a series of towers that carried high-tension lines off into the distance. After the oil had been degassed and depressurized it had no more natural momentum. Moving energy requires energy, though, and these pumps, driven by the equally embattled electrical infrastructure, would invest the dry crude with the power it needed to continue its journey to the Gulf.

The United States has committed less than $3 billion to repairing Iraq’s oil infrastructure, which is not very much money. The government of Iraq could reinvest its own oil income—just over $30 billion in 2006—but oil and international aid are pretty much the government’s only sources of income, and the country has several other pressing concerns, including the need to rebuild its failing agricultural, educational, electrical, and medical infrastructures. Iraq also owes various creditors about $100 billion and owes Kuwait an additional $250 billion in reparations from the first Gulf War. (Some of that debt may be forgiven.) Meanwhile, the engineers I spoke to said it would take tens of billions of dollars just to get the oil infrastructure up to international standards and as much as $100 billion to fully exploit the nation’s potential oil wealth. The extent of that potential wealth is unknowable, but at 115 billion proven barrels times, say, $60 a barrel, it is in the neighborhood of at least $7 trillion and probably far more than that. (As of this writing, the price of oil has climbed to more than $80 a barrel.) All of this puts Iraqis in a situation familiar to anybody who has ever had a check on the way but needed a lot of money right now. They can get the money, but it will cost them.

I asked Sam about the reconstruction and he had fairly strong views on the matter. He said Iraq should use the best available technology, the expensive kind, and it should use that technology as quickly as possible. The Iraqis could probably upgrade the system on their own—they were smart enough and ambitious enough—but it would take them twenty years: “They need the horizontal wells, they need the secondary, tertiary recovery processes, they need access to capital, and all of those things rhyme with foreign oil companies.”

Sam seemed to understand that he was suggesting something controversial. The oil companies certainly have enough money. Six of the ten largest corporations in the world—ExxonMobil, Royal Dutch Shell, BP, Chevron, ConocoPhillips, and Total—are in the oil business, and those six companies together earned $1.5 trillion in 2006. ExxonMobil, which last year made $40 billion in profits alone, could start drilling advanced wells within a few months of signing a contract. But no major oil company thus far has been able to strike any significant deal with the government of Iraq. The Kurds have made a kind of separate peace with several American and European oil companies in the past few months, but the central government in Baghdad says such deals will not be legitimate until Iraq’s parliament passes the draft hydrocarbon law. The law itself is foundering, however, in part because of disagreement over how such deals should be structured.

The current draft of the law calls for “production sharing agreements” between Iraq and its potential oil-company partners. Such agreements are rare—they divert an unusually large portion of oil wealth to the oil companies—and typically are struck only in unexplored regions where a large capital investment would represent a significant gamble on the part of the oil companies. Much of Iraq does remain unexplored, but no one doubts the country’s oil-producing potential. The risk in Iraq stems from the war itself and from the clear instability of the government, which at times appears to lack the support even of its American sponsors. Such a government could fall at any moment, and whatever entity replaced it could “nationalize” a company’s investment or require a new tax on exports or simply push the country further into genocidal chaos, all of which would be bad for business. The proposed agreements basically amount to a risk premium, and the proposed premium is steep. A 2005 joint study by the Global Policy Forum and the British research group Platform noted that any agreements signed “while the Iraqi state is very weak and still under occupation” would last twenty-five to forty years and ultimately cost Iraq between $74 billion and $194 billion.

The people of Iraq could wait for better terms, of course. Their oil is only going to become more valuable. Sam called this “the theory of saving stuff for the grandchildren.” When the East Texas field was developed, he said, there were a lot of operators who didn’t want to run their wells at capacity. They were in no rush to get the oil out of the ground because they thought: Hey, we’re already filthy rich—let’s save it for the grandchildren. Now, that might make sense from the perspective of achieving maximum value over time, Sam said, but achieving maximum value over time doesn’t always make sense. He had spent a few days working in the fields near Sadr City once, for instance, and a lot of the people up around there (“old boys,” in his Texas parlance) didn’t even have running water or indoor plumbing or really anything at all other than their tents. “So on the one hand they’re saving for the grandchildren,” Sam said. “But on the other hand, ask that old boy down there who only has two hours of electricity if he wants to save it for the grandchildren.” Sam’s guess was that he probably would not. And indeed in October the New York Times reported that Iraq’s electricity minister, Karim Wahid, had signed a $150 million contract with Sunir—an Iranian company—to construct a 160-megawatt power plant in Sadr City. “This is a free marketplace,” an anonymous U.S. military official explained, “so there’s not much we can do about it.”

Many of the engineers in Iraq live at Basra Airbase, an immense interruption of the empty desert that is honeycombed by mile upon mile of precast concrete barriers. These barriers are everywhere in Iraq, and sometimes you can see a parade of eighteen-wheelers transporting a few hundred more of them to wherever someone or something needs to be stopped. I was told that whenever a rocket was lobbed over the top of the tallest of them a siren would go off and the security guards would announce that we were in condition red. This had happened 160 times in the previous three months.

The base itself began as a simple regional airport and has evolved into an intricate assemblage of functions, a literal military-industrial complex. The government of Iraq operated the commercial airport at its core, the British Royal Air Force operated a separate military airport, and several other military or quasi-military units, including the Army Corps of Engineers, had their own Quonset huts and white single-wide trailers, all of which had been configured, Lego-like, into hundreds of offices, bunkhouses, dining facilities, and latrines. KBR had a large camp there as well, which housed not only the KBR staff but also several Foster Wheeler engineers (including Sam) and two lone U.S. officers.

One of those officers was Steven Loken, a youthful Air Force lieutenant colonel who had been transferred from Hawaii to manage the oil program in Basra. This morning I was sitting with him and Erich Langer, a public-affairs officer from the Corps of Engineers who was accompanying me as I traveled in Iraq, in a fluorescent-lit cubbyhole of an office and learning about how the reconstruction worked. Colonel Loken began by warning us that he himself had arrived here only six weeks ago and that he was learning most of what he knew from private contractors like Sam. Moreover, he was an electrical engineer, so he did not want to claim any special expertise in oil extraction. He had already learned a lot, though. Moving the oil from the ground to the ship involved billions of dollars in capital development and the ceaseless labor of thousands of accountants, electricians, engineers, pipe fitters, security guards, and others. The repairs alone involved hundreds of companies working under contract to dozens of agencies, all of them with varying degrees of access, expertise, and honesty—Axsia, BearingPoint, Boots & Coots, Eastern National Oilfield Services Company, Erinys, Gas Packing Company, Iraqi Drilling Company, KBR, North Oil Company, Oil Pipelines Company, Parsons Iraq Joint Venture, South Oil Company, Wild Well Control, Inc.—as well as the Army Corps of Engineers, the Department of Energy, the State Department, soldiers and representatives from a dozen other coalition member countries, and, of course, the people of Iraq.

Colonel Loken pointed to a whiteboard behind his desk where he had written in Magic Marker the names and cost of the projects he oversaw. The list was divided into two columns. On the left were projects under contract with KBR and on the right were projects under contract with Parsons Iraq Joint Venture, or PIJV, an offshoot of the Pasadena-based construction firm Parsons. The projects were organized by Army task order. Task Order 11 was the $136.7 million upgrade of several natural-gas liquefaction plants, which would help reduce wasteful flaring and provide the country with significantly more cooking fuel. Task Order 12 was to repair desalters (including those at West Qurna 7), at a projected cost of $91.6 million. Task Order 22 was a series of well workovers: $69.6 million. Some projects were more mysterious. Task Order 28, for instance, would cost $7 million and was labeled simply “chemicals.”

Erich, the public-affairs officer, was from Oklahoma, the son of a petroleum geologist, and he seemed as fascinated as I was by the inner workings of this complex bureaucratic mechanism. Loken continued to describe the chain of command, how the State Department intersected with the Iraq Reconstruction Management Office and how the Iraq Reconstruction Management Office intersected with the Army Corps of Engineers and how the Army Corps of Engineers intersected with dozens of private contractors—some American, some British, some even Iraqi—and how all of them, in turn, intersected with the government of Iraq, which had its own set of complex and evolving bureaucracies. Erich, who had been in Iraq almost from the beginning of the U.S. occupation, added that once all of the projects on the whiteboard had been completed, the Iraq Reconstruction Management Office would close up shop. All of the subcontractors would go home or, more likely, contract directly with the government of Iraq and continue their work. Most of the projects on the whiteboard were slated for completion within the year, but those projects did not by any means attempt to address the full extent of Iraq’s restructuring concerns. They were just stopgaps. Moreover, the war would continue. Some of the projects, once completed, would simply be re-destroyed. I had heard someone mention that the British would take over the KBR camp when KBR finished here and that the U.S. State Department would take over the PIJV camp. It would take one to three years to accomplish the turnover. But who knew? “It’s like building an airplane as you fly,” Erich said.

About an hour into our conversation we heard what sounded like someone dropping something very heavy on the floor above us. Erich and Colonel Loken looked at each other and I remembered that we were in a one-story building. “Whoa,” Colonel Loken said. “That’s incoming.” A high alarm began to sound and Colonel Loken suggested we move to a bomb shelter. On the way out I noticed that the twin clocks in the hallway told Iraq time and Houston time.

We joined several other engineers in an open-ended concrete box known as a Scud bunker. The weather was perfect, a beautiful California afternoon, and the mood in our bunker was strangely upbeat. We crouched on our benches and analyzed the situation. The attacks, one of the engineers explained, rarely came more than one at a time. The bad guys would get their hands on a 105-mm mortar round or an old Russian Katyusha rocket or even an American rocket left over from the Iran-Iraq War, and they would lean it against a low wall and light it up like a Roman candle and then run like hell. They hardly ever hit anyone. All we had to do was wait for the all-clear siren.

As we waited, our discussion, still in the analytical mode, turned to the strange ways of the Iraqis. One engineer, a Scotsman, recalled the Iraqi practice of sacrificing an animal anytime a new plant was opened. It was a hell of thing, he said. Blood everywhere. Erich nodded and said he’s seen a ceremony at a plant up north where the Iraqis had killed four sheep. They had dipped their hands in the blood and then walked through the industrial corridors, painting bright red streaks on the walls. It was all part of the blessing, he said. The bigger the plant, the more animals you sacrifice.

Not all of the oil makes it to the Gulf. There is the spillage, of course, but there is also the matter of theft. The Ministry of Oil has a tradition of bribery that long predates the current war, and the American contractors too have seen their share of corruption charges, though their tendency is to steal money from Americans, not oil from Iraqis. Most of the smugglers, in fact, are local operators. Some simply drill a hole in the pipeline and fill modified pickups directly from the source. Others bribe officials to look the other way as they load eighteen-wheelers at inland terminals. The Guardian reported in June that one clan was netting $5 million a week selling stolen crude to local refineries, $250,000 of which went right back into paying gunmen to protect them from other smugglers in other clans. Many believe that smuggling profits are funding the insurgency. The underworld battle between various criminal elements has itself undoubtedly led to considerable violence, and certainly has added a not very well understood layer of political intrigue to the hydrocarbon-law negotiations. One Mahdi Army fighter told a researcher for the International Crisis Group that “All parties, without exception, steal and smuggle oil. I mean all of them.”

No one knows how much oil the smugglers take from the system. The Iraq Study Group reported that “150,000 to 200,000—and perhaps as many as 500,000—barrels of oil per day are being stolen,” and that estimate has since been repeated in other news reports. It is a very large claim, and as I was eating lunch at an oil facility one day I overheard a Navy engineer ridiculing it. He said moving that much oil out of the system would require something like a thousand tank trucks every day to transport their loot to a refinery or across the border, and that they would have to do this without being detected in what is possibly the most heavily surveilled country on earth. The engineer seemed fairly confident in his scorn—he suggested that maybe the real culprits were little green men—but my own sense was that you could move a lot of trucks around in Iraq before someone figured out they weren’t part of someone else’s mission.

There is another failure of accounting that may explain the massive smuggling estimates. Two U.S. agencies report on how much oil Iraq produces. The Department of Energy keeps track of production everywhere on earth and has a standard reporting method. The State Department, which is ultimately responsible for the reconstruction, also generates daily reports, but only about Iraq. The Government Accounting Office compared their data and found a large discrepancy. The State Department was consistently reporting higher production than the Department of Energy, often by as much as 300,000 barrels per day. When the GAO first announced its findings last spring, many news outlets saw this gap as evidence of smuggling and corruption. The Department of Energy noted in the GAO report, though, that the discrepancy could also be explained by a perhaps even more dispiriting phenomenon: the Department of Energy does not count as “produced” the significant amount of oil that Iraq extracts and then, for lack of an alternative, simply injects back into the ground.

This might seem an improbably Sisyphean twist, but it is true that Iraq is now somewhat better at producing oil than at exporting it. The northern pipelines have been shut down by saboteurs for most of the year, and one of the country’s two off-shore terminals is barely functioning, while the other, Al-Basra Oil Terminal, has been operating at far below capacity for decades. Iraq also has very little oil-storage capacity, so any oil that cannot be exported or refined immediately must be returned to the reservoir. This is called reinjection. One engineer told me that Iraq is the only country in the world that still reinjects. The process is not only frustrating and wasteful; it is also bad for oil fields. Further complicating the accounting is the fact that some of the oil is partially refined before it is reinjected. Refiners strip the gasoline from the oil, sell it for local consumption, and put the remaining, now-cruder crude back in the ground, where it devalues the entire field.

Plausible as this explanation for the accounting discrepancy is, it is impossible to know whether it is correct, or how much smuggling goes on, or even how much oil is pumped out of the ground or back into it, because—almost unbelievably—the entire system lacks meters. At no point is the flow of oil measured within Iraq. The GAO report notes that the United Nations “first cited the lack of oil metering when Iraq was under U.N. sanctions” in 1996 and that Iraq had in 2006 signed an agreement with Shell Oil Company, which was to “advise the ministry on the establishment of a system to measure the flow of oil, gas, and related products within Iraq and in export and import operations.” But still no meters. Measuring a flowing, transforming, regularly spilled, and often stolen product as it makes its way across a war-ravaged desert is not easy. The best Iraq could do was to track the oil as it left the terminal, but the meters there have not worked for years, and so the technique was not precise. A Navy lieutenant explained the method to the military newspaper Stars and Stripes. He said they “guesstimated” the output based on the displacement of departing ships: they would watch the waterline, and each centimeter the tanker sank represented another 6,000 barrels of oil. “So you can imagine,” the lieutenant said, “a couple of inches could equal 180,000 barrels of fuel.”

There were improvements in the works, though. One of the projects on the whiteboard in Colonel Loken’s office was Task Order 16. The $42.6 million contract was in the PIJV column, and it had been awarded in 2004. The goal was to refurbish the terminal, improve worker safety, improve loading capacity—which, not incidentally, would help solve the problem of reinjection—and fix the meters. Progress had been slow, but as it happened, Colonel Loken and his boss and his boss’s boss were flying out from Basra Airbase to the terminal to inspect PIJV’s work, and he said Erich and I could fly along and see for ourselves what they had done.

When Erich and I arrived at the Royal Air Force helipad, our Sea Hawk was already fired up, and the whack-whack-whack of the rotors made meaningful speech difficult. Colonel Loken gave us a shouted introduction to his boss, Captain Fritzley, who was noticeably short, wore rimless glasses, carried his cell phone in a holster, and, until the National Guard called him up, had run a fifty-man logistics team for Boise Cascade in Idaho. I noted the complexity of the contracts he must be negotiating right now, and he laughed and said, “I’m an engineer, not a lawyer.” Captain Fritzley’s boss was General Abt, who showed up just a few minutes later—leathery skin, shaved head, identical rimless glasses—and was accompanied by several silent aides, one of whom kept his dog tags twined into his shoelaces.

The journey from oil field to terminal with a two-star general is somewhat less complicated than the same journey for crude in the pipe, but it is still difficult and dangerous and done in stages. We crowded into the Sea Hawk, bound up in our body armor and oddly constrictive Navy lifejackets, and before I could finish buckling everything together we were off. We flew fast at about a hundred feet, rising only to pass over the occasional power line, and the combination of low altitude and high speed caused the already indistinct landscape beneath us to blur into a reflective field. The brown-and-tan flux was so smooth that it created the illusion of a rippling desert ocean, an illusion that was dispelled only by the occasional set of tire tracks, and then the brown ripples turned a shade lighter and we really were over the Gulf. We could see rusty fishing boats and the occasional freighter, and the sea deepened to a steely gray and we lost sight of the shore. We flew in odd lines, rolling left then right, the better to confuse would-be missile attackers, and then—as abruptly as we had taken off—we landed. We were on the flight deck of an Australian frigate, the HMAS Toowoomba, rotors still whacking, and an Australian seaman was shouting a greeting and hustling us quickly to a lower deck, where we disentangled ourselves from our armor, and another seaman lowered an orange rope ladder over the side and we climbed awkwardly down, hanging under the high ship for the last few rungs, and onto a twelve-man rigid-hull inflatable boat, which, as soon as the last passenger had tumbled aboard, raced off across the open sea. Then it was all bouncing and waves, a dozen men in a rubber boat in the ocean, until—and this had all taken about ninety minutes—we could see the terminal.

It was a spidery arrangement low on the horizon, a central platform about five stories tall with two long catwalks extending a half mile in opposite directions. At the end of each catwalk were two berthing stations, and attached to each berthing station was a very large oil tanker. As they loomed closer we could see their names: the British Pride, the Tiara, the Front Crown. The last of them, the Universal Hope, was low in the water and beginning, with the aid of two tugboats, to pull away. Captain Fritzley looked out at the oil-gorged tankers and said that if you wanted to shut down Iraq, this sure would be the place to do it.

There were no concrete barriers here, just latticework catwalks and ladders and miles of pipe. The workers, from Texas and Oklahoma and also from Iraq and Kuwait, wore bright yellow coveralls and American-style goatees or bushy sideburns or handlebar mustaches. The security came in the form of four massive, twin .50-caliber machine guns, one on each corner of the central tower, manned by the men of Mobile Security Squadron Seven, a part of the U.S. Navy. A little plaque noted that the guns had a maximum effective range of 1,829 meters, which—along with several Navy warships just over the horizon—had been sufficient to defend the terminal since the war began. For all its intricate scaffolding, the terminal seemed solid. The dozens of lines that held the ships fast were thicker than my well-fed arm.

As we walked along the catwalk in the direction of the departing Universal Hope, Captain Fritzley told us about the terminal’s past and future prospects. Saddam Hussein had hired KBR’s corporate predecessor Brown & Root to build it in 1973, six years before he took full control of the Ba’ath Party. Iran had bombed it several times in the ’80s, and it fell into further disrepair under U.N. sanctions in the ’90s. It was theoretically capable of loading 4 million barrels a day, but it had never operated at anywhere near that level. In the past couple of years PIJV had worked to improve the safety systems, train the workers in how to use them, update the power systems, fix the loading arms, and fix the meters. They had made some progress, but the meters still weren’t working. This was a concern. (“I’ll tell you what,” General Abt muttered to another officer as we wandered down the catwalk, “I’ve had more ass kicked in the last two weeks than in the whole rest of the time since I got here.”)

I later learned that the office of the Special Inspector General for Iraq Reconstruction, or SIGIR, had just issued a report in January severely criticizing Parsons’s $75 million Baghdad Police College project—the inspectors found, for instance, that failed plumbing had somehow caused several overhead light fixtures to fill with urine and feces—and was about to issue another report criticizing the Parsons-built Iraqi Civil Defense Headquarters in Baghdad, citing faulty security systems and more leaky pipes. As a result of the investigations, the inspector general was considering barring Parsons from future contracts with the Army. SIGIR was investigating the terminal project as well, and in another report, issued just a few weeks after our visit, it would note deficient concrete pours, substandard plumbing installation, and unsafe electrical wiring. The more satisfying news, also noted by SIGIR, was that all four berths were in operation, which was a major breakthrough in Iraq’s export capability, and the meter project was on track for completion. (Erich later wrote to tell me that PIJV finally completed its part of the project in May, at which point it closed up shop and sent its engineers home.) Still, there was much to be done, and the work would likely continue only in fits and starts.

Erich and I climbed a four-story spiral staircase to the crow’s nest, the highest point on the platform. Some of the stairs were loose and the railing did not seem entirely reliable. The view was worth the risk, though. The sun had come out and the sea lit up in a brilliant cerulean wash. The station itself had been painted in Tonka truck primaries: bright red, yellow, and blue. I could see at least two tankers near the horizon, high on the water and waiting their turn.

That the black box works at all is a significant achievement. Yes, the crude is impeded by friction and siphoned by thieves and thousands of barrels fall along the way, victim to leaky pipes and relentless saboteurs. But the machine, the vast engine of transformation, continues for the moment to function. The sparks ignite and the pistons pump and the desert crude is transformed into heat and light and motion, and also into money. All of this is the work of engineers. They overbuild and create backups and fail-safes, and after a while it seems as if their systems could never go awry, no matter how poorly maintained, no matter how overburdened, no matter how corruptly constituted. The engineers have made a machine, though—not a miracle—and a machine can always fail, or be made to fail, or simply be turned to some other purpose.

This is how the last war began: Saddam invaded Kuwait, largely in order to control Kuwait’s superior oil-production system. He had overseen much of the construction of his own oil machine and likely believed he had an engineer’s understanding of its inner workings. He knew that Kuwait and Iraq both were part of OPEC, whose member nations had for many years controlled international oil prices by agreeing to limit how much oil they produced. And he knew that Kuwait was producing (and selling) far more than its quota. This meant more money for Kuwait and, because it drove down the price of oil, less money for everybody else, including Iraq. The invasion was meant to shift the gears, so to speak. With Saddam in control of Kuwait’s oil machine, Iraq not only would increase its oil holdings but also would considerably improve its refining and export capacity, and ultimately add billions of dollars to its national wealth. And it would do all of this even as it kept oil prices at OPEC-preferred levels, which would go a long way toward muting protests from Iraq’s oil-producing neighbors.

Of course, Saddam was no more adept at manipulating the regional oil system than he was at maintaining his own infrastructure. The neighbors complained, the United States intervened, and Saddam had no choice but to retreat. But even in retreat he worked what levers he could. And here is where we see the violence that can spill forth from within the black box. Saddam ordered his retreating army to set each of his enemy’s 700 wells afire. Great jets of flame shot into the sky, and the oil that wasn’t turned into heat or light poured back down as black rain, a demonstration of thermodynamic transformation that seemed at first to be immeasurably more wasteful than the gas flares of West Qurna 7. And yet Saddam aimed to control the force of those fires just as a driver controls the force of the thousands of miniature explosions that occur every minute within the internal-combustion engine of his car. By destroying Kuwait’s oil machine, he would drive up the price of his own reserves.

Saddam proved to be a poor engineer in this regard as well, however, and so came the inevitable ironic turn. He was forbidden to sell his nation’s oil until the United Nations established the Oil for Food Programme in 1995—and by then Kuwait had managed to repair and indeed significantly improve its own infrastructure. In the end, Saddam had failed to appreciate the true complexity of the systems he was attempting to master, not an uncommon problem.

Prometheus and the citizens of Babel discovered long ago that hubris generally is followed by disaster. In this land of lifeless desert clay, though, it is the tale of the golem that seems most fitting. A rabbi with knowledge of the secret name of God, the story goes, could transform an earthen statue into an unstoppably powerful ally. Every wish of the rabbi was answered by the strength of the golem, who in many instances would defend the rabbi’s village from outside danger. Sometimes the story ends well. In many golem tales, though, the inventor suffers for his knowledge. One such tale has the rabbi crushed by the weight of his collapsing creation.

It seems to me that in this non-mythical world, this immutably Newtonian world, the golem turns on us not because we know too much but because we know too little. We are punished not by the gods or by fate but by our own willful stupidity. We make our machines and then forget they are our creations, there to be understood and controlled, perhaps because knowledge of their methods also brings knowledge of their purpose. We stand agog, self-paralyzed, even as all that is solid moves ever more quickly, blurring indistinguishably like the war-scarred desert beneath us, a golem drawn from the dying ground and running beyond our control.

The trip back from the terminal was much faster. We passed over a town—the first inhabited place I’d seen in Basra—and the coastline was suddenly complex. Railroad depots, grain elevators, a gravel lot mysteriously gridlocked by a hundred identical brown pickup trucks. Freighters loitered along concrete ports, and the gradation between land and sea was perfectly sharp. Then we flew inland across the desert and, surprisingly, the sky filled with a light mist of rain. It was dusk now and I could just see the hazy outline of a refinery in the distance, pipelines extending in every direction, a dark tangle of oil and water and gas that flared bright orange smudges on the violet horizon.

Later that night, back at the airbase, Erich asked me if I had noticed the rain. I told him I had. I thought it softened the desert to the point where it was almost beautiful. Sure, he said, but smell it. It doesn’t smell like rain, not like back home. I couldn’t see his face very well—the camp was kept dark at night to discourage snipers—so I couldn’t tell if he was taken aback by the perversity of the weather or simply alert to an unusual inversion of the natural order. Erich was the son of a geologist, though, and it was clear that he had considered the matter carefully. He said the rain down here smelled like dirt. And he was right. If such a thing was possible, the rain smelled dry.

is a senior editor of Harper’s Magazine.

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July 2009

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