Potential Reserves of Domestic Oil and Gas

Abstract

A more favorable and more quickly implemented Federal offshore leasing policy, improved economic incentives, more thorough studies of the ocean policy, improved economic incentives, more thorough studies of the ocean environment, and cooperation among all engineering and exploratory sciences and between government and industry are critical requisites if the much needed potential U. S. hydrocarbons are to become a reality. Introduction The theme of the Symposium Survival in the Seventies - sounds a bit sinister, but I think it may be quite appropriate, for this decade is indeed a critical one. Domestic exploration as measured by the level of seismic activity and wildcat drilling has decreased these past 20 years, while at the same time our demand for petroleum has continued to grow. Because of this decreasing exploration effort, the steadily growing withdrawal of reserves of both oil and gas has not been compensated for. As a consequence, the divergence between projected demand and our domestic supply capacity is so severe that we now face the near certainty that by 1980 we will be dependent on foreign imports for more than half our oil supplies. As a measure of the exploratory effort required if we were to meet this increasing demand from domestic resources, the industry would need to find and develop within these 7 years the potential from five more Prudhoe Bays plus, of course, the production from Prudhoe Bay itself. Through a much needed national energy policy, our domestic potential must be realistically assessed and a goal must be set to achieve the highest possible level of domestic production that is economically feasible and environmentally sound. This, of course, means a greatly accelerated exploration effort. I propose to discuss first the over-all unexplored potential, propose to discuss first the over-all unexplored potential, then to discuss in somewhat more detail three selected provinces. Elements Essential to Achieving Highest Potential Fortunately, there is a substantial resource base in this country for discovering oil and gas; coupled with this is an exploration capability that is technically superb. It is ironic then that such a capability should be at the highest in the industry's history while the exploratory effort is the lowest in some 30 years. For our nation's best interest, this technical capability must be employed in an increased level of exploration. It is estimated that in the 15 years from the mid-1950's to 1970 the industry spent about $68 billion for exploration and found for its efforts a little more than that many billions of oil and gas equivalents. This is an average "finding cost" of just under $1/ bbl a reasonably acceptable figure. But the big question is, how much can be found in the next 15 years? And at what cost? In Aug. 1972, while I was presenting testimony before the Senate Interior and presenting testimony before the Senate Interior and Insular Affairs Committee Hearing on S.B. 45, the following question was posed by one of the Senators: "If the unit price for a barrel of oil and a cubic foot of gas were, say, doubled, could we expect this to double the petroleum products available for our homes and our automobiles?" JPT P. 150