This paper was prepared for the Second Midwest Oil and Gas Industry Symposium of the Society of Petroleum Engineers of AIME, to be held in Indianapolis, Ind., March 28–29, 1974. Permission to copy is restricted to an abstract of not more than 300 words. Illustrations may not be copied. The abstract should contain conspicuous acknowledgment of where and by whom the paper is presented. Publication elsewhere after publication in the JOURNAL OF PETROLEUM TECHNOLOGY or the SOCIETY OF PETROLEUM ENGINEERS JOURNAL is usually granted upon request to the Editor of the appropriate journal provided agreement to give proper credit is made.

Discussion of this paper is invited. Three copies of any discussion should be sent to the Society of Petroleum Engineers office. Such discussion may be presented at the above meeting and, with the paper, may be considered for publication in one of the two SPE magazines.

In recent months, our eyes and ears have been bombarded with differing accounts of the energy "crisis". From the halls of Congress to the front page of our newspapers, from the public relations offices of the major energy companies to the "white papers" of the television networks, we have heard version after version of the causes and the effects of our current problem. All offer convincing explanations of the causes, and most have a proposal or two to get to the solution. It is generally agreed that new sources of energy must be found. "Self-sufficiency" has become a national, and even a state goal. Exploration and development must be increased, capital spending must be greater, lead times for plant construction must be reduced. We have a bevy of unanimous conclusions on what should be done. But few seem interested in tackling a more fundamental problem. How do we finance these ambitious goals? This is the question I would like to address today, and my initial premise is that money is really the raw material that will set the solution to the energy "crisis" "in motion". So, in that sense we both are in the energy business.

If you work for a utility, the days of financing the largest part of your company's capital expenditures from internal cash flow are gone. The days of investors eagerly receptive to utility bonds and equity issues have changed. For the oil industry, politicians are demanding taxes on "windfall profits" - not understanding or not wishing to understand the role of profit in our economy. The situation in the remainder of the seventies and the first half of the eighties will be one in which all industry and all levels of government will be clamouring for capital and you in the gas and oil industries had best begin to make your plans now, to assure that you get your needed share.

To try to place this in perspective, let's look at a few historical numbers. In the twelve years since 1960, capital expenditures of all industry increased by a factor of more than 2.4, from $37 billion to $88 billion.

This content is only available via PDF.
You can access this article if you purchase or spend a download.