American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc.

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.

Introduction

The energy outlook for the United States for the next 10 years can be most grim when compared with the 50's and 60's. Prices and easy supply situation of these bygone years are only memories. We now face the realities of world interdependence for oil and gas supplies.

FEA Project Independence supply projections depend heavily upon selection of a range of policy options. All scenarios call for more policy options. All scenarios call for more coal and nuclear development. Vigorous energy conservation programs become a national imperative. Achieving the production levels that provide an acceptable degree of security will require massive infusions of capital, manpower and technology.

The broad strategic options outlined in Project Independence are: (1) increasing Project Independence are:

  1. increasing domestic supply,

  2. conserving and managing energy demand, and

  3. establishing standby emergency programs.

The implementation of these strategies will have impact on:

  1. development of alternate energy sources,

  2. vulnerability to import disruptions,

  3. economic growth, inflation and unemployment,

  4. environmental effects, and

  5. regional and social impacts.

Whereas these points of impact are only illustrative of the energy concerns, a national energy policy will contain some elements from each point.

SUPPLY AND DEMAND BACKGROUND

Demand has been growing at a 4- to 5- percent rate in recent years. Since 1950, energy consumption in the U.S. has outstripped domestic production. Coal production recently has been at 1940 levels. Oil production has been dec g since 1970. The last year the U.S. added to gas reserves was 1967 (excluding the Prudhoe Bay addition in 1970).

Sixty percent of the world oil reserves and 70 percent of the oil moving in world trade is centered in the Middle East. All important oil exporting nations with the exception of Canada are members of the highly effective "trust" (OPEC).

Whereas the 1973 oil embargo had minimal effect on the U.S. economy at the time, it did set in motion a series of events that threaten U.S. well being as a nation. The first effects of the embargo were:

  1. cut off of 14 percent of U.S. oil supply,

  2. sharp oil price increase,

  3. reduction of $10 to $20 billion in (20, and

  4. 500,000 unemployed as a direct result.

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