Energy is probably the most basic element in a nation’s economy; the progress of civilization and standards of living have followed very closely the growth in its use. Of the many sources of energy, petroleum is supreme, in fact unique, because of the unsurpassed versatility of its chemistry, its utility in a vast array of petrochemicals, and above all else, in its cost. For these reasons demand for petroleum (1) in the 1970s will exceed that of the 100 previous years; (2) will grow at a rate which soon will be increasing faster than its discovery; (3) is such that the time required to find and develop the main crop of fields in new basins has decreased from several decades to a relatively few years; (4) is increasing in many regions and countries at three to five times the rate of population increase; and (5) in the U.S., from recent trends and as a result of national restrictions on the industry, will require imports costing $16 billion in 1982 and $53 billion in 1992. These costs are calculated very conservatively in 1972 dollars at $4.00 and $6.00 per barrel for the 2 years, respectively. Current world prospects for oil indicate that there will be little choice of imports other than the huge reserves, all high in sulfur, in the Middle East.

Greatly aggravating the U.S. outlook is our chronic disregard for costs—unsupportable, largely unnecessary, precludable costs. The malady pervades the entire nation. It results, as it must, in increasing inflation, unemployment and misery to growing numbers, and in undermining our basic economy and national security. The costs have their source in selfish demands at all levels—in the primarily self-serving political circles of government, in the irresponsible and wholly self-centered demands of powerful organized labor and certain professional groups, and in a growing proliferation of economically noncreative schemes which commonly involve many for whom there is now unnecessarily no economic place in creative endeavors. Disgracefully, the unsupportable costs are paid by unsupportably mortgaging the nation’s future and that of our children, while teaching them the same dishonesty.

Whereas other countries manifest great pride in their major industries for the strength and security they provide the nation, the U.S. oil industry is used shamefully as a political football. Many varied and erroneous charges are made. Exhorbitant profits are imputed, although oil is selling below replacement costs in most areas. Simple economics is the reason why many hundreds of U.S. companies are searching for oil in over a hundred foreign countries, and why domestic drilling completions in 1970 were less than half those of 1955. And economics is the reason why the U.S. is today in a critical short position, both in respect to oil and gas supplies and in industry’s capacity to finance their acquisition economically.

Most of the available basin area of the world is leased for petroleum. Experience indicates that upward of 80 percent of the contained commercial oil and gas will be found in 20 percent of the total basin area. In the estimation of potential (still unproved) resources there is a general tendency to overvalue greatly the much larger percentage basin areas with limited prospects and to undervalue the small percentage of highly prospective areas. Even if we discount the effects of inflation, most new reserves will be found and developed at costs appreciably to considerably above those of earlier years.

Worldwide comparisons of petroleum deposits and basin temperature gradients indicate that the existence of a certain optimum temperature was an important factor in petroleum generation. Many modifying situations need to be taken into account.

The so-called continental terrace comprises the coastal plain, the continental shelf, and the slope. Fully 80 percent of the world’s proved reserves are present beneath its 25-30 million sq mi area. There an equal or larger percentage of the petroleum resources of the future will be discovered. These will be found in Mesozoic-Tertiary sediments, and the highest wildcat success rates and the greatest yields, and in most cases the lowest cost per barrel, will be encountered offshore. With very limited exceptions, relatively little petroleum is believed to be in reservoirs beneath medium or deeper sea-bottom depths.

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