The Icarus Prediction: Betting it all has its price (14 page)

CHAPTER EIGHTEEN

New York City

Mike Ripley had obtained a very expensive MBA from Columbia, but he was the junior guy in the energy-trading group at Blackenford Capital, having only been employed there for six months. As such, he pulled the scrub assignments.

Because the Asian Pacific markets opened on Monday morning, thirteen hours ahead of New York, Ripley was the “the monitor” on Sunday evening, reporting for work at 8:00
pm
when the Tokyo exchange opened in the Pacific.

He sat down at his station and powered up the screens. The Tokyo exchange had opened, and he scanned the pricing for Russian D2 oil, North Sea Brent Crude, and other energy commodities. Pricing was largely unchanged from Friday’s close, so he had nothing of substance to report. Still, he prepared a meticulously worded e-mail to Jarrod, Sergei, and Chet, stating exactly that. His job was to provide the management team with immediate feedback on any significant price fluctuations.

He hit the send button, then opened his briefcase and took out a study guide for the Certified Financial Analyst Exam. He put his feet up on the counter and began to read.

*

Other than the subway, most New Yorkers have no clue as to the subterranean labyrinth that lies underfoot. The city operates on five fundamental systems that run through the warren of tunnels and pipelines beneath the streets—water, electricity, communications, natural gas, and sewer. At different places, some or all of these systems share the same tunnel. And of course, maintenance is a continuing enterprise. To avoid traffic disruption, quite often maintenance operations are performed during the dead of night.

Two blocks away from the Arcadia Tower, a city water crew put up yellow tape and pylons around a manhole. A maintenance engineer (fancy way of saying welder) named Randy Gates climbed down a ladder into the tunnel. He carried a mechanic’s light that provided stark illumination as he counted off the sections of pipe. He found the pipe section that was spewing a tiny stream of water, and after inspecting it, he spoke into his walkie-talkie. “Bring down the rig and a six-foot section. We got a leaker. Shut off flow at J-24 junction.”

“Roger that,” came the response.

Gates and his crew rigged up the lights as a valve closed and the water flow came to a halt, causing the tiny stream to disappear. The water department would get a flurry of calls from customers downstream complaining their toilets wouldn’t flush, but he’d be finished and have the flow restored before any real inconvenience ensued. He put his mask on in the flip-up position and flicked the flint starter to ignite the acetylene gas coming out of the torch. He flipped down his mask, then adjusted the oxygen flow to where the blue flame was spewing out of the nozzle at five thousand degrees Fahrenheit.

His welder’s view was truncated by the heavily darkened visor, as were his assistants’ views as they looked on through their welding goggles.

The welder was down on one knee, concentrating on the path of his torch as it cut through the pipe, so he didn’t notice the Norwegian rat as it walked into the little tunnel forming in the gap of his trouser leg. When he felt something furry up near his knee, his leg involuntarily went into a spasm. This, in turn, panicked the rat, which defensively sank his teeth into the soft skin of the hairy calf.

Reflexively, the welder dropped the torch to grab his leg, and the heavy metal nozzle clattered to the ground. There, the flame tip wound up pointing at the natural gas pipeline that ran along the tunnel near the floor. One of the assistants reached to grab the nozzle, but it was already too late. At five thousand degrees, the flame turned the metal into a molten liquid in a heartbeat, igniting the natural gas within.

Topside, a young urban veterinarian was walking his girlfriend back home following a late Sunday evening dinner with friends. He was confident the rest of the evening was going to go according to plan, as her fingers were entwined with his, and she was caressing his inner arm with her free hand. They’d stopped for a lingering embrace, when suddenly the earth rumbled and a tongue of flame erupted from the street with a
BLAM!
The manhole cover shot into the air.

Mesmerized, the couple watched as the steel disc came down like a Frisbee to bury itself in the passenger windshield of a passing FedEx truck. And then the lights on a string of office buildings suddenly winked out as the vet’s girlfriend ran the other way, screaming.

*

Mike Ripley swore quietly when everything went dark at the trading desk.

He put the Certified Financial Analyst manual he had been studying aside and stood, waiting for the power to come back on. When nothing did, he left the trading room and went through the reception area, using the screen of his cell phone as a flashlight. He tried the light switch and got nothing. Then he punched the elevator button, and it was stone dead as well.

While the building did have an emergency generator, the Arcadia Tower was so new it had not yet been teched out and plugged into the grid.

In a quandary as to what to do, he decided to go back to his desk, but when he swiped his security card through the access lock, nothing happened, causing him to groan. Now he was locked in the reception area. He tried the phone at the receptionist’s desk. Dead. Then he tried his cell phone. Even up on the forty-second floor, he usually could get a signal, but now he couldn’t get any bars on his screen.

Being a quick study, Ripley sized up his options and figured he could either navigate forty-two floors of the emergency stairwell in the dark or curl up on the reception couch and get some sack time. Looking at his watch, he saw it was 12:23
am
Monday morning. London markets hadn’t opened yet, so there was not much he could do anyway. He opted for a quick nap and took off his shoes, curled up on the couch, and was soon fast asleep.

CHAPTER NINETEEN

Moscow

Yevgeny Yakolev peered out the window of his ornate Kremlin office. The streets were starting to fill with Muscovites making their hung-over way to their Monday morning work places. Ordinarily he would be with them, returning refreshed from a long weekend at his dacha, where he would’ve received the invigorating ministrations of a Lithuanian masseuse—topped off with a sauna, vodka, and caviar taken from sturgeon in the Caspian.

But that had been cut abruptly short. He’d been roused out of his dacha in Yasnevo early Sunday morning by a phone call from a hysterical deputy minister screaming that the Caspian pipeline had “blown up.”

The last twenty-four hours had been a nightmare as he fielded calls from pipeline operations, ministerial staffers, and the Novorossiysk oil terminal. Then there were two uncomfortable calls on Sunday afternoon—one from the prime minster himself and the other from that swine in the FSB. Putin’s lapdog of a president also called, but he didn’t matter. Everybody knew who ran the Kremlin.

Because of the remoteness of the incident, it took some time to piece together the true picture. The entire pipeline had not blown up, as the hysterical deputy minister had originally claimed, but a significant chunk of it had gone up in smoke, maybe upward of forty kilometers. How that could be done? Yakolev had no clue, but as Minister of Industry and Energy, he damned well better find out.

Overlaid on top of all the chaos were the bodies. Half a dozen recovered so far at the pumping station. And it had been determined all were dead before the explosion.
One positive thing was the damage had occurred in such a remote venue that the press had not gotten wind of it, so far. So maybe they could keep it under wraps. And on this, Yakolev patted himself on the back. He’d instructed the Novorossiysk oil terminal to keep the tankers on schedule, filling them up from the terminal’s tank farm stockpiles. Then he ordered the inflow from other pipelines servicing the Sheskharis oil terminal on the far side of Novorossiysk Bay to be patched into the Caspian pipeline to refill the CPC terminal holding tanks. While that was being done, the Sheskharis terminal would draw down their own stockpiles to take care of their own tanker exports, then switch the flow back for a refill. This shell game couldn’t go on indefinitely because total outflows would eventually exceed inflows without the oil coming through the CPC pipeline. But perhaps it would buy enough time to get some of the pipeline rebuilt so they could shut it off “for routine maintenance” and finish the repairs. That way, the outside world would remain blissfully unaware of its vulnerability. Indeed, if he could pull this off, it would deflect any criticism about the slack security on the pipeline.

Yakolev had always been fatalistic about pipeline security. They were vulnerable, no question about it, but heretofore terrorists could only take out a tiny segment of a pipeline that ran over a thousand kilometers. That kind of disruption could be repaired in a week, if not days. It was an accepted risk. But a forty-kilometer gash? How the hell did that happen? Who could have done such a thing? They had to keep a lid on this until answers were found. In the New World Order, Russia’s only true strength was her petroleum reserves. If it was shown that the country’s ability to export that strength was compromised—or if there was even the perception of weakness—the nation would also be perceived as weak, something catastrophic for a Russian, and in particular for this Russian. If word leaked out about the pipeline, Putin would immolate Yakolev’s career. Or worse, he might just immolate Yakolev.

The minister’s new secretary—a leggy blonde he’d “recruited” from the ministry’s field office in Kharkov—brought in a fresh tray of tea. As she exited, his eyes traversed the curvature of her form, which was tightly wrapped in a Valentino dress. This put his mind in a different place as he pulled on the glass of warm tea. He’d thought about inviting her to his dacha this past weekend, perhaps for a
ménage á trois
with the Lithuanian masseuse. But he demurred because he felt it might be a little premature. She’d only just moved to Moscow, after all. But after this crisis was put to bed?

His thoughts were moving in a prurient direction when the moment was shattered by the jingle of his damned cell phone. He cursed under his breath and looked at the caller ID. He didn’t recognize it. Only a select number of VIPs had his cell number. He hit the answer button and said,
“Da?
”

“Ah! Minister Yakolev. So glad I was able to reach you. I have been pulling every string I know to get your cell number. I even drove out to your dacha yesterday afternoon, but your staff said you had left early to return to Moscow.”

Yakolev’s brow furrowed. The spoken Russian that he was hearing through the phone was grammatically correct, but with a weird accent, prompting the minister to enquire, “Who the hell is this?”

“Oh, forgive me, Minister. My name is Raschid al-Massif. I am the Moscow bureau chief for the al-Jazeera news network. I am calling because we have received some compelling video of the destruction of the Caspian oil pipeline from a terrorist the Russian government has long claimed was dead. I was calling to find out if you had any comment before we ran the story.”

Inwardly, Yakolev groaned as he dropped the tea glass to the floor.

CHAPTER TWENTY

New York City

Jarrod Stryker woke about 9:30
am
, having slept deeply from polishing off the better part of a bottle of Merlot. He’d caught a French art house movie late Sunday afternoon, and the film had put him in an epicurean mood.

He’d checked his phone late last night and all was calm after reading an e-mail from Mike Ripley. Stryker had a personal rule: he did not jump into the day’s business until he brushed his teeth and got rid of the morning dragon breath. He went to the bathroom and ran some water, put a smudge of toothpaste on the brush, and started scrubbing his molars.

In his morning ritual of multitasking, he went back into the bedroom and clicked on CNBC with the remote control. While the TV circuits were initializing he looked at his iPhone, which was dead. Jarrod cursed because the battery had been low, and he forgot to recharge it before going to bed. But just then, the screen of his high definition plasma TV came to life, with the comely brunette anchorwoman of CNBC saying, “The explosion resulted in the destruction of a significant portion of the Caspian pipeline, which sent oil prices skyrocketing past $90 a barrel on all major exchanges.”

*

Tbilisi, Georgia

Elbruk Matsil only had a vague idea of what the American football Super Bowl was, but he imagined the victorious team’s locker room must have been something like this. When the al-Jazeera anchor finally began speaking about Shamil Basayev and the Caspian pipeline, everyone froze. When the footage of the burning pipeline came on, everyone leaped into the air and threw their arms up with exultation, in a kind of mini human wave. A chorus of cheers, hoots, hollers, and dancing followed as al-Jazeera played the Basayev tape and the burning pipeline over and over.

Vodka flowed, bear hugs were exchanged, and they spontaneously broke into the Chechen national anthem.

Matsil realized
that
was what the fire hydrant contraption was about. How it managed to take such a large bite out of the pipeline he didn’t know, but now it all became clear he had transported the mechanism that made all this destruction possible. Oh, if only he’d known!

Then came the realization about why he’d been selected for the transport mission in the first place. It was because he didn’t know what the device was and did not know Basayev was alive. If Elbruk had been captured, he couldn’t tell anyone anything because he didn’t know anything. That was why he was chosen.

But now that the pipeline was destroyed and known to the world, what would the Americans pay to know the whereabouts of Basayev now? The very idea made him dizzy.

But the thought was interrupted as Basayev threw his arms around him and pounded his back. “Elbruk, my brother! See what you brought to us over the mountains? Is this not the most glorious day of our lives? This is what it must have been like in Osama’s tent the day the towers fell!”

“Without doubt,” Elbruk agreed.

Basayev released Elbruk and turned to his computer geek. With the fervor and rage of the zealot glowing in his eyes, he said, “We have plunged the knife into the heart of the Russian bear. Now it is time to do the same to the Israelis and those odious Americans! Upload the second video to al-Jazeera—now that they demonstrated their loyalty.”

*

New York City

As the anchor’s voice filled his ears, time seemed to freeze for Jarrod Stryker. A dollop of toothpaste foam trickled out the corner of his mouth and fell to the hardwood floor with a soft
plep
.

He felt his knees buckle as his stomach and bowels switched places. His butt was on a trajectory for the floor, but he was lucky he’d been standing at the foot of the bed because the mattress caught his posterior on the way down. He dropped his toothbrush to the ground, and the pasty foam dribbled out of his open mouth and onto his chest as he witnessed a grainy video of the immolation of a pipeline.

He stumbled to the bathroom and wretched on a dry stomach into the sink. He ran some water and splashed his face, then rinsed his mouth before taking a hand towel and returning to look at the screen. Already there were pundits plastered on CNBC, pontificating on the upheaval of the oil markets as a result of this “catastrophic event.”

He grabbed his phone to make a call, forgetting it was dead. He ripped open the drawer of the bedside table to retrieve the spare battery case that he used for emergencies. He plugged it in, and as the phone rebooted, he ran through the news channels with the remote control. All were showing the same thing. Numbly he looked at his bed, thinking maybe he was still sleeping there, and all this was a bad dream. But no such luck. Finally, the phone came alive and he saw a familiar name flash up on the caller ID. He pressed the button and said, “Sergei?”

“Where the hell have you been? I about to send someone for you. Why you not pick up?”

“Jesus, my cell somehow went dead during the night, and the ringer was off on my landline!”

“It pandemonium down here. You see?”

“I just saw it! What happened?”

“Terrorists attack the pipeline. We could not respond in time to close our position because of the power outage.”

“Power outage?”

“Look, you right now get down here. Right now! We in the war room.”

“On my way.”

Unshaven and unshowered, Jarrod yanked on a pair of jeans and a pullover and set a new personal best in getting outside. He pushed a hipster out of the way to grab a cab. He shoved a hundred-dollar bill through the cab’s plastic window and said, “Arcadia Tower. Yesterday!”

The driver from Gabon understood the universal language and floored it, weaving through traffic with a deft hand. In the back, Jarrod was whipsawed by conflicting terrors—on one hand he wanted to get to the office with all deliberate speed, while on the other, he had a sense of dread about what he would find there.

It seemed to take three forevers to get there, but Jarrod finally entered the reception area where the ordinarily flirtatious Rebecca said nothing and only eyed him warily. Not a good sign. He made a beeline for the Nimitz conference room where his entire team was assembled.

When he appeared—unshaven, wild-eyed, and in jeans—the room fell silent, except for the low background noise of CNBC on the large LED screen.

Sergei had never seen the crown prince so disheveled, so the Russian stood and said, “Perhaps you sit here,” offering his chair.

In a daze, Jarrod sat down and sensed he’d better get a grip. “OK, I checked the markets before I went lights out last night, and Mike’s e-mail said there was no change in prices. What has happened?”

Sergei nodded and said, “Chet.”

Chet Delaney looked up from his computer and said, in a tentative voice, “Early this morning, about 12:30
am
, maintenance work was being done in the utility tunnel alongside the Arcadia Tower. Mike was on the overnight shift.”

Ripley gazed at Jarrod with a sheepish look on his face.

“Anyway,” continued Delaney, “there was some kind of explosion, three maintenance people killed, and power was knocked out for several blocks. Because the Arcadia Tower is such a new building, the backup generators had—as I understand it—had been installed but not brought online. That left Mike stranded up here without power.”

“Stranded?” asked Jarrod.

“Yes, stranded,” Ripley chimed in. “No lights and computers and servers all frozen. Even the elevator didn’t work.”

“Couldn’t you use your cell phone to call one of us to let us know you were offline?”

Ripley squirmed. “I tried but apparently the power was knocked out to the cell tower, and its backup battery power didn’t have enough juice to generate a signal up to the forty-second floor. The elevator was dead, and the lights were off, and I didn’t want to try and navigate the stairs in the dark.”

Half a goddamn billion dollars on the line, and somebody on my team is afraid of the dark
. Jarrod looked at him with a cold stare.

Chet Delaney cleared his throat. “In any case, shortly after European markets opened—about 4:30
am
our time, al-Jazeera ran their story about the terrorist attack on the Caspian Consortium Pipeline that runs from the Caspian Sea to Novorossiysk on the Black Sea.”

“What are the stats on the pipeline?”

Never at a loss for facts and figures, Delaney said, “It’s 940 miles long and runs from the Tengiz field in Kazakhstan to the new offshore loading terminal at the Russian port of Novorossiysk on the Black Sea coast. It discharges up to 1.3 million barrels a day and uploads about 400 tankers a year. Regular operations commenced in 2003, and upgraded capacity to 1.3 million commenced this year.”

Jarrod absorbed the data and was both a little relieved and a little frustrated. In the larger scheme of things, 1.3 million barrels per day might not sound like much because US consumption alone was 20 million barrels per day. But the reaction of the market with a price spike reflected an uneasy truth about oil dependency—and that was there wasn’t much slack in the system. That which was produced was consumed. Only the Saudis with ten thousand producing wells had the capacity to increase or decrease the world flow to affect price in any significant way. Before the oil embargo hit the Iranians, that country was exporting 2.3 million barrels per day. When that came offline the Saudis kicked up their production to fill the gap, and prices stabilized. But in so doing, the Saudis used up their excess capacity until their Khurais field ramped up its production capacity. Still, in the bigger scheme of things, even with the Iranian situation, 1.3. million barrels was a punch world markets could take.

“OK,” Jarrod said evenly, “1.3 million barrels offline for a week or so can cause a scare, but once it comes back online the markets should stabilize. In fact, prices may fall pretty hard when it becomes apparent the market overreacted.” Then he continued, trying to convince himself as much as the others. “Pipeline attacks are good at getting headlines and TV coverage—smoke and flames, that sort of thing. But the reality is the damage can usually be repaired pretty quickly. A couple of new pipe sections get spliced in, and it’s done. Nigeria has had terrorists taking potshots at their oil pipelines for years, and it’s just background noise. So once the Russians get control of the situation—which should be hours if not days—the markets should settle back down”

The soliloquy seemed to have a calming effect on the room until Poindexter—who was tapping on his laptop—said, “Uh, Jarrod, I think you better look at this. I’ll put it up on the big screen.”

Heads turned to see a satellite image appear on the LED screen.

“This is imagery from the new Pleiades Satellite system, which we have access to through our contract with SPOT Image Corporation. This just came in from the new tasking order it received after news broke on the pipeline attack.”

The Pleiades system was comprised of two state-of-the-art imaging satellites that orbited the earth at an altitude of 434 statute miles. Launched under the control of the CNES French Space Agency, the array of optical sensors they possessed brought military spy satellite capability into the commercial world. It shrunk the 2.5-meter resolution previously available down to less than a meter, meaning that if a well-endowed blonde was caught sunbathing on the beach, the satellite could discern her cleavage.

Using satellites for energy trading was nothing new. Enron had employed them for years before the company imploded. But the Pleiades brought that capability to a new level.

“This was taken seventeen minutes ago and downloaded to the Pleiades ground station at Kiruna, Sweden. It’s of the pipeline in the Stavropol Krai Province of Russia.”

Jarrod and the others could clearly see the light colored string that was the intact pipeline, which then turned into a dark line, ending in a black smudge at the terminal point. Poindexter zoomed in on the smudge and said, “I believe this was the pumping station that was taken out.”

Clearly it was. As Poindexter blew up the image, it was obvious nothing remained of the facility but burned and twisted metal. A score of fire trucks and other emergency vehicles were scattered about.

“How much of the pipeline was destroyed?” asked Jarrod, not wanting to hear the answer.

Poindexter moved the image around and said, “Applying the scale at this resolution, the damaged link appears to be over twenty miles in length.”

“
Twenty miles?
”

Poindexter nodded. “That’s correct. Maybe a little more than that.”

Jarrod saw his only hope literally go up in smoke. “Twenty miles? How on earth could a ragtag group of terrorists take out twenty miles of a pipeline? That will take months to repair.”

“To say nothing of the pumping station,” added Poindexter.

Sergei had never seen his young boss rattled this badly. He poured a glass of water from the table pitcher and put it at his elbow. Then he asked Delaney, “Chet, what are the numbers currently?”

Delaney responded, “Our put options are at $81. West Texas Intermediate peaked at $91.25, but now it’s down to $89.50.”

Well, a glimmer of hope there.