Probable Pattern of United States Petroleum Supply
- Kenneth E. Hill (Eastman Dillon, Union Securities & Co.)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- November 1960
- Document Type
- Journal Paper
- 15 - 17
- 1960. Original copyright American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc. Copyright has expired.
- 4.6 Natural Gas, 5.3.4 Integration of geomechanics in models
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To render an intelligent judgment on the future of the petroleum industry, it is necessary to look ahead for as long a time as feasible, even though forecasting always is fraught with danger. It particularly is useful to study the outlook for the United States petroleum industry, because it is not only the largest producer, but also the consumer of over one-half of all the petroleum produced in the world. Because of this dominant position, the U.S. price structure-particularly for crude continues to be the principal influence on prices for both crude and crude products throughout the world. Therefore, it is quite important to focus attention on the long-range outlook for petroleum demand in the U.S. and on the probable sources of supply.
It now is becoming apparent that U.S. consumption of petroleum will grow less rapidly in the future than during the first postwar decade when it averaged 5.8 per cent per annum. This appears probable principally because of several factors: (1) the impact of cheaper natural gas on petroleum consumption, (2) a slower rate of industrial expansion and (3) a slower rate of growth in gasoline use as a result of compact cars and congested highways. The consensus of most observers leans toward a rate of about 4 per cent for the next few years, and then a slow decline.
In this analysis, a simple expedient has been used-the assumption of constant increments in demand each year. Thus, for the next few years, an increment of 400,000 B/D is expected, equal to a growth rate of about 4 per cent each year. During the latter part of this decade, consumption should increase by 450,000 B/D each year. By 1970, the increment likely will be 500,000 B/D. By 1975, domestic demand for petroleum liquids will total approximately 17 million B/D. This represents an increase of about 7 million bbl (or 70 per cent) during the 15-year period, or an average of about 3.6 per cent per annum.
During the same time, natural gas demand (which currently supplies about 27 percent of our energy needs) should continue to grow at a faster rate than petroleum at an estimated rate of about 5 per cent per annum. As has been pointed out many times, this is a mixed blessing because natural gas does reduce the demand for petroleum. Otherwise, crude-oil production would be larger relative to capacity than herein estimated, thus accelerating the time when domestic production would reach a peak and begin to decline.
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