Challenges facing the petroleum industry to the year 2000: an appraisal

Abstract

THE PETROLEUM INDUSTRY, which is in the enviable position of supplying over half the world's energy needs, can best be described as being engaged in seeking for sources of liquid hydrocarbons, producing them and converting them into fuels and a vast variety of other products and intermediates that permeate every facet of our lives. Ever since the industry came into being over 100 years ago crude oil and later natural gas have been the source of the hydrocarbons that are its raw materials. But it should not be overlooked that there is no reason to assume that this will always be the case. This is evident from what took place in Germany prior to and during the last war. Deprived of oil and natural gas but well supplied with coal, German technology used the Fischer-Tropsch process to convert the hydrogen and carbon in the solid fuel into liquid fuels for internal combustion engines and into chemicals for industry. Today, in spite of the large reservoir of liquid hydrocarbons at our disposal, the petroleum industry is more than aware of the hydrocarbon reserves in coal, oil shale and tar sands. The industry already refines the oil extracted from Athabasca tar sands and, in South Africa, coal is being converted into liquid fuels 1. In fact, the chemistry and much of the technology is now available to convert the carbon in the cliffs of Dover into the hydrocarbons and products now derived from petroleum. As in all things, it is a case of economics and timing. From an economic point of view it can be said that the objective of the private sector of industry is to use its human and material capabilities so that the capital invested is employed to maximum advantage. This should not be construed to mean maximum short run return on capital, for this goal can too easily be attained by mortgaging the future of an enterprise. For example, return on capital could be enhanced by cutting back, or even terminating, certain functions such as research, but in the long run these expedients would be ruinous. In this context research is one of the special skills employed by a technologically based industry, and particularly the petroleum industry, to enhance the productivity of the capital invested. Primarily it is concerned with future developments though a certain amount of effort has to be expended on current problems. It is axiomatic that research, and of course the development it generates, must be motivated and justified by the needs of the industry it serves. In the petroleum industry, and in the allied chemical industry, research programmes and budgets are designed to: