Abstract

Both physical and economic factors should be considered in long-range predictions of U. S. productive capacity. A mathematical model of the U. S. producing industry which considers both types of factors has been developed. This model has been used to predict the future crude oil producing rates of the U. S. under several possible conditions. The predictions indicate even with an increase of 33 per cent in the real price of crude oil, production probably will reach a peak about 1967 and decline thereafter. Even with a substantial volume of shale oil production, steadily increasing crude imports probably will be needed. The two principal factors affecting ultimate volume of crude to be found in the U. S. are drilling return [barrels of reserves developed per foot drilled], and crude oil price.

Introduction

Several estimates of the future crude oil producing rates of the U. S. petroleum industry have been made. The published versions of these estimates have made assumptions that have a critical effect on the answers obtained. The most significant assumption, one made in all cases known, is that there will be found and produced in the U. S. some finite volume of crude oil. A second universal characteristic of these estimates is that they apparently take no explicit account of many of the economic factors which should affect the answers. Probably some account of these factors has been taken, but the published data do not show it. In particular, no published study considers the effect of variations in the price of crude oil.

It is a well known fact that crude oil deposits vary enormously in size. There is no obvious reason why there should be a lower limit to the size of these deposits. There is some evidence that occasionally operators have drilled into a deposit so small that it is depleted in the process of carrying out a drill stem test. There is a lower limit to the size of a commercial deposit at the present time, but if the economic factors involved in crude oil production were changed radically, this lower commercial limit could change. This might make many deposits, not now commercial, producible. Therefore, the economic factors should affect not only the rate of recovery but also the ultimate volume of oil to be recovered in the U.S.

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