CHEMICAL A N D E N G I N E E R I N G
NEWS-—
VOLUME21
JANUARY 25,1943
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NUMBER2
Harrison E. Howe, Editor
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Petroleum Shortage in the United States B E N J A M I N T . BROOKS, 114 East 32nd St. New York, Ν. Ύ., AND L. C. SNIDER, University of Texas, Austin, Tex.
O
N NOVEMBER
14,
1942,
Business
Week, reporting the meeting of the American Petroleum Institute in Chicago the preceding week, stated: " A t the present crude oil output rate of about 4,000,000 barrels a d a y , there will n o t be enough essential petroleum prod u c t s to supply estimated Army, Navy, lend-lease, war production, a n d necessary civilian needs in 1943, even under present rationing programs" It reported that t h e 75 largest fields in the United States produced only 7 5 per cent a s much oil in t h e first h a l f of 1942 as in the same period in 1941. T h i s situation does n o t come altogether as a surprise to many who have followed t h e matter. In 1936 w e concluded (7):
A consideration of probable rate of domestic consumption, decline of produc t i o n from present producing fields, and the chances o f discovering new fields leads t h e writers to t h e conclusion t h a t there is a possibility of a shortage of domestic pe troleum i n the United States as early as 1 9 4 0 and a probability of a considerable shortage b y 1945.
Howard (4) in a statistical review stated recently that a shortage of 47,000 barrels of crude daily i n the l a s t quarter of 1941 was supplied b y imports. "Now that im ports have ceased and practically all do mestic oil must be transported overland, there is a shortage of 300,000 barrels daily in the area east of the Sierras if refinery runs are to be maintained at last year's level," On October 2 2 , 1942, Judge William P. Cole, Jr., retiring chairman, Petroleum Subcommittee, House Committee on Interstate and Foreign Commerce, re ported t o the President and asked the appointment of one m a n to control prices, to acquire essential materials, strategic or otherwise f o r necessary drilling, refin ing, and transportation of oil, and to re strict or encourage drilling for oil (1). Judge Cole said in part :
T h e facts brought o u t in this article were never disputed o r controverted, but t h e conclusions were n o t well received by many, particularly those who had n o t examined t h e facts adequately. In 1938 Marland stated (5) that a serious domestic shortage o f crude petroleum w a s to be ex pected by 1942 unless large, new reserves w e r e discovered i n the meantime. More recently Ralph K. Davies, Deputy Petroleum Coordinator, stated before the American Petroleum Institute (2): A t your meeting a year a g o I stressed t h e fact o f t h e decline in oil reserves. T h e point was t h a t since 1938 production h a d exceeded discovery. I n some quar ters this observation was n o t well re ceived But I think there is today a ready acceptance o f the fact which I stated t h e n . O n all sides I hear t h e as sertion t h a t our reserve position is deterio rating, t h a t something must be done to alter the trend.
The cost of finding and producing oil is greater than the price for which it sells. . . . W e are certainly headed towards disaster, M r . President, if we cannot make provision at t h i s time for an increased supply of near-by petroleum. T h e t i m e lapse between t h e search for petroleum and its u s e where needed is at least t w o years . . . . During the last year, w e have discovered oil in new pools a t the rate of about one fourth of what w e have consumed. Including extensions of existing pools and t h e drilling of deeper sands, t h e ratio is somewhat better, but still alarming . . . . We d o not know t h a t 3,800,000 barrels per d a y will be t h e limit for our war needs. Our needs m a y reach 5,000,000 barrels a day, in which case there is no present prospect of meeting them, and all the tanks and trucks and planes grounded in this country for lack of fuel will be of no a c c o u n t . . . . In looking t o the future o f our country it is obvious that o u r room for develop ment of virgin territory within the con fines of continental United States is but a fraction of what it has been in the past . . . . During the last year we drilled 3,400 wildcat wells a n d discovered 400,000,000 barrels o f new oil, about one fourth of our consumption. In the region a t the head of the Persian Gulf (only a portion of t h e main area) the last 100 wildcats have discovered 12,000,000,000 barrels of oil. Last April E . L. D e Golyer, director of conservation i n O . P . C , called attention t o the decreased rate of oil finding and stated (3): For t h e 5 years 1 9 3 4 to 1938, inclusive, w e found on averages 121 new fields and 1.8 billion barrels o f oil annually. The average estimated reserve per field dis covered was 15.6 million barrels. For the past 3 years, 1939 t o 1941, inclusive, the average number of fields discovered an nually w a s exactly double t h a t for the pre ceding 5 years, being 242 fields. The average reserve discovered dropped t o the pittance of 613 million barrels and the esti mated reserve per field to the alarming figure of 1.18 million barrels.
O l d - t i m e gusher, Oklahoma City Field
Soyster stated in 1934 t h a t the rate of discovery would slow down (5).
Spring Meeting οf the A . C. S . , Detroit, M i c h . , April 1 2 to 1 6 , 1943
Position of Proved Reserves The foregoing statements indicate some fooling of concern and even alarm, but are by no means an adequate or complete picture of our present situation. There is almost a certainty that, sufficient petro leum can be produced to meet all the war demands of our armed forces, lend-lease requirements, and essential civilian needs in the United States during the next two years. However, in view of the sharp de cline in the rate of finding new fields and t h e decreasing production of existing fields, it is equally certain that the critical rate o f production of many fields will be ex ceeded with damage to such fields and with lower net ultimate production. The immediate necessity for rat'oning of gaso line and fuel oil, particularly on the East ern Seaboard, is due t o lack of transporta tion and the temporary need for the con servation of rubber. The basic situation discussed here should not be confused with t h e primary causes of rationing. There is general agreement that the best estimates of our proved reserves of petro leum, producible by present methods, are 19 to 2 0 billion barrels, or about 5 billion barrels more than in 1936. But one of the now generally recognized benefits of re stricted and controlled production, includ ing repressuring of fields where possible, which came in with proration, is in increas ing the net ultimate production. This is now so widely recognized that voluntary restriction of production is not uncommon. I n the early days of proration, many fields
were estimated to give absurdly high "potential" production. Thus in the East Texas field, a determination on a few k e y wells in October 1934 gave the field a potential of 14,355,000 barrels per hour. Such a rate of production, if sustained, would have completety drained this field of the remaining recoverable oil given it b y even the most liberal estimates in about a week (7). T h e importance of critical rate of production is well illus trated in the Yates (Texas) field. In March 1931, the potential was rated as 5,508,000 barrels per d a y . In 1930, the field produced for a t i m e at the rate of 130,000 barrels per day a n d the number of water wells was increasing. A reduction t o 89,500 barrels per d a y checked the spread of water and ufreed" several wells that had been making water. The critical production was, therefore, about 100,000 barrels per day. The proration umpire of the field estimated t h a t the field could produce 3,500,000 barrels in one day with o u t restriction, but that 9 8 per cent of the wells would then be showing water and that in 30 days the field could produce only 10,000 barrels per day. The re coverable reserves of the field were esti mated at 800,000,000 barrels with pro duction held to about 100,000 barrels per day, but at only 235,000,000 barrels with unrestricted flow (7). Judge Cole evidently had such facts in mind when, in his letter t o the President, h e stated, "At the present rate of produc tion, within a year, at o u r present rate of
drilling, it will be necessary to draw upon present producing areas a t a rate to cause shamefully inexcusable waste of a con siderable proportion of our proven reserves of oil." In 1939 R. E. Wilson, testifying before the Cole Committee, stated (9) : "If you had strict engineering principles ap plied t o all oil fields, you wouldn't have enough oil t o supply the refineries." In other words, efficient recovery at the opti mum rate of production requires a much larger reserve than when the old flush method of production was practiced (6). That decreased rate of finding of new fields is quickly reflected either in lower production or in unduly rapid draining of old fields, even with apparently large re serves, is readily understood from the fact t h a t for many years up t o about 1935, approximately 50 per cent of our annual production had been from new flush wells which constituted about 2 per cent of the total number producing (7). Since the greater efficiency of restricted production has been demonstrated, the estimates of reserves of producible oil have been revised upwardly in recent years, both for old and new fields, and this is re flected in the larger figures for our reserves. This larger ultimate recovery is possible, of course, only when restricted production methods are practiced, and these figures would have to be revised sharply down ward if the exigencies of the war compel us to open u p many fields t o flow rates ex ceeding their critical rates. Many earlier discussions of the question of greater recovery of oil commonly stated that only 20 to 40 per cent of the oil in the sands was brought to the surface, and hope was expressed that the day of a shortage might be put far off by more ef ficient recovery. Recent work, however, has shown that in many producing sands 40 to 5 0 per cent of the voids is occupied by connate water. When this is taken into consideration, and also the fact that a barrel of oil on the surface represents a smaller volume than the same oil contain ing dissolved gases under high pressure, it is now estimated that the ultimate recov ery of oil in some fields has been as high as 80 or even 9 0 per cent. Judge Cole, in his recent letter t o the President, said, "The combination of these facts makes it imperative that many, many years before we have a collapse of our oil productivity, we have a substitute to take the place of natural petroleum", and recommended pilot plants for the manufacture of shale oil and oil from coal. In 1936, we stated (7): The writers do not picture a return to horse and buggy days as the result of a
Charging floor in plant for manufacture of tetraethyllead
T h e AMERICAN CHEMICAL SOCIETY assumes no responsibility for the statements and opinions advanced by contributors to its publications. Published b y the AMERICAN CHEMICAL SOCIETY, Publication Office, 20th & Northampton Sts., Easton, Penna- Editorial Office, 1155 16th St., N . W., "Washington, D . C ; Telephone, Republic 5301; Cable, Jiechem (Washington). Advertising Department, 332 West 42nd St., New York, Ν . Υ . ; Telephone, Bryant 9-4430. Entered as second-class matter at the Post Office at Easton, Penna., under the a c t of March 3, 1879, as 24 times a year on t h e 10th a n d 25th. Acceptance for mailing a t special rate of postage provided for in Section 1103, Act of October 3 , 1917, authorized J u l y 13, 1918. Annual subscription rate, §2.00. Foreign postage t o countries not in the P a n American Union, $0.60; Canadian postage, $0.20. Single copies, $0.15. Special rates t o members. N o claims can be allowed for copies of journals l o s t in t h e mails unless such claims are received within 60 days of t h e date of issue, a n d no claims will be allowed for issues lost a s a result of insufficient notice of change of address. (Ten d a y s ' advance notice required.) "Missing from files" cannot be accepted as t h e reason for honoring a claim. Charles L. Parsons, Business Manager, 115-5 1 6 t h St., N. W., Washington, D. C U . S. A .
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C H E M I C A L
A N D
E N G I N E E R I N G
NEWS
shortage of domestic petroleum. T h e shortage of domestic petroleum will b e filled in b y imports a n d substitutes which w i l l c o m e i n t o use as prices become higher. In the ordinary course of events, there should be no very noticeable dislocat i o n of business in the shift from domestic petroleum to imports and. substitutes, though prices m a y have t o go inconveniently h i g h for a considerable t i m e while t h e shift is being made. If, however, we should b e compelled t o m e e t a wartime demand for petroleum products while the shift is i m m i n e n t or in progress, the results might be nationally disastrous. Dependence on imports would naturally be hazardous if w e were engaged i n war, a n d a large-scale shift to a n y known s u b s t i t u t e s would require a n investment o f capital and a utilization, of manpower which would b e a serious handicap t o other wartime activities. The drastic curtailment of Venezuela's production, about 250,000,000 barrels in 1941, w a s caused by t h e activity o f enemy submarines. Much of t h i s Venezuelan petroleum came to the United States, a n d t h e curtailment has of course added to our present difficulties. Venezuela's product i o n can readily be increased promptly, a n d full utilization of this source, b y strong convoy o f tanker fleets if necessary, would g o far i n relieving our present difficulties. As pointed out by Judge Cole, about t w o years separate the initial effort of finding n e w oil a n d its final refining and use. H e h a s proposed raising t h e governmentcontrolled price of crude s o that wildcat drilling, on a n average, will repay t h e cost, which now it does not d o . T h e remedy m a y n o t be so simple as that, a n d i n any c a s e t h e results are uncertain. I n 1936, w e pointed out that (7): . . . . N o stated price shedule c a n be d e pended o n to produce a required increase i n production in a given time Duri n g the war years (1914-1918) and t h e following period of industrial recovery, t h e average price of crude petroleum rose from $O,64 in 1915, t o $3.07 in 1 9 2 0 The high prices of the period from 1917 to t h e middle o f 1921 certainly d i d stimulate t h e search f o r petroleum and hastened i m provements in drilling methods which permitted greater depths to b e reached, a n d s o brought on the flood of o i l which began i n 1922. In this respect, t h e h i g h prices d i d bring about increased production, b u t i t is maintained that t h e d e l a y of 5 years in showing an increased production c o m m e n surate w i t h increase in price and demand is t o o great for price control t o be depended o n as a means of preventing a shortage of petroleum, particularly in times of n a tional emergency. The p r o s p e c t of substantially increasing production b y raising the price i s not so great n o w as during the l a s t war period, when discovery t e c h n i q u e s and deeper drilling methods were n e w . In 1936, it w a s pointed o u t that: Deeper drilling and geophysical explorat i o n m a y be merely t h e m e a n s of rapid d i s covery a n d exploitation of the petroleum deposits remaining in areas already known t o be petroliferous. In this case t h e chances for future discoveries h a v e been reduced by those already made, and t h e unexpected flood of n e w production in t h e V O L U M E
2 1,
NO.
Fractionating equipment installed in a refinery about 1928 past few y e a r s m a y well indicate an early and stringent shortage instead of a continuing ample supply. The present situation i s even more serious in some respects than the writers visioned in 1936. A t that time certainly few, if any, considered the possibility that the oil fields of Burma, the East Indies, Rumania, and Poland would fall into the hands of t h e enemies of the United States and i t s allies, that t h e accumulated storage of France, Norway, Denmark, Holland, Belgium, Poland, Czecho-Slovakia, Rumania, Hungary, Greece, and Bulgaria, and t h e British a n d Dutch storage in the southeastern Asiatic and East Indian areas would do likewise o r have to be destroyed. While the difficulties of maritime transportation i n time of war were thought to be serious, little consideration was given to t h e possibility that t h e eastern portion of the United States would suffer a drastic shortage of petroleum through inability to provide protection for tankers plying between the Gulf ports and the Atlantic seaboard, that we should b e fighting a war in the western Pacific with the East Indian and Burmese fields in the hands of the
2 » J A N U A R Y
2 5,
1943
enemy, or that so drastic a curtailment would take place in Venezuelan production (which reached a peak of about 225,000,000 barrels in 1941), owing to the activity of enemy submarines. Promptly reopening Venezuela's p r o duction, a n d increasing it, is obviously a question of adequate transportation and naval protection. The situation in M e x ico offers little or n o prospect of any s u b stantial increased production in the immediate future. Although many petroleum geologists, familiar with Mexico, are of t h e opinion that important fields m a y be developed in that country, the older fields have already yielded about 85 percent of their ultimate probable production, and since the expropriation of most of tbese properties, both field and refinery equipment has been allowed to deteriorate greatly. I n Venezuela, on the other hand, both government and company policies have, in general, been favorable to extensive petroleum development. T h e writers agree that the need for securing oil from shale and coal is not yet here, provided transportation difficulties are largely overcome, nor would any- of 71
these processes be profitable at anything like present price levels. I t would not b e possible to develop the manufacture o f any of these substitutes to a n y really helpful magnitude in time t o alleviate o u r shortage during the probable duration o f the present war. Our knowledge of these processes has not changed materially since 1936. The skirmish over alcohol motor fuel has in the meantime subsided, and o u r expanded manufacturing capacity for alcohol is already severely taxed t o supply other essential war needs. The methods of alleviation of a petroleum shortage b y improved technology, the increased hydrogénation of oil residues, and the manufacture of oil from coal and shale were d i s cussed fully in 1936 (7). A n y s u c h methods evidently depend upon much higher price levels over a considerable period of time. The question of an adequate supply of crude petroleum during the war i s further complicated by the necessity of manufacturing enormous quantities of high-octane aviation fuel for our own armed forces a n d our allies, an increased need for fuel oils and t h e manufacture of butadiene for s y n thetic rubber, toluene, and other important special products. T h e extent a n d
w a y s in which these questions enter into the problem are, of course, not matters for public discussion.
Everett C. Atwell, formerly technical d i rector at the Newton Line C o . , I n c . , Homer, Ν . Υ., has resigned to rejoin t h e staff of t h e Atlantic Rayon Corp. a n d assume charge of its Special Products Division, Research and Development Laboratory at Lowell, Mass.
New Fellowship at Lehigh
Data Published on Selective Service
Summary
T h e danger of a shortage of petroleum and its products for wartime needs, even a t t h e present and proposed limitations on nonmilitary consumption, i s serious, unless the war should come to a n unexpectedly early end. Drilling of proved locations and produc ing all wells to capacity will postpone a serious shortage for some indefinite but probably relatively short time, but at great loss of reserves which could be re covered if the wells were produced at their critical or optimum rate, rather than their maximum rate. Developing the manufacture of petro leum substitutes from oil shale, coal, or agricultural products in time t o relieve appreciably a wartime shortage of petro leum is practically impossible. There is little prospect of any greatly in creased supply from Mexico. T h e secur ing o f all available petroleum from Vene zuela is a matter of prime national impor tance.
A N E W research fellowship i n the de• ^ partment of chemistry a t Lehigh University has been established by the Westvaco Chlorine Products Corp. T h e new fellowship is t o underwrite re search into the uses of active magnesia, particularly as a catalytic agent. The grant, which carries a monthly stipend t o the student of $60 has been guaranteed for
All means of encouraging wildcat drilling should b e employed, in spite of the impos sibility of predicting the results of a n y particular expenditure of money, labor, and materials and the probability o f a serious time lag between the exploration effort and t h e development of a supply sufficient to remove the impending danger o f a shortage of petroleum for war pur poses. Literature C i t e d
(1) Cole, W. P., Jr., Natl. Petroleum News, 34, 17 (November 4, 1942). (2) Davies, R. K., Oil Gas J., 40, 24 (Novem ber 19, 1942). (3) De Golyer, E. L., Ibid., 40, 67 (April 30, 1942).
(4) Howard, W. V., Ibid.t 40, 14 (November 19, 1942). (5) Marland, E. W., Ibid., 36, 59 (January 29, 1938). (6) Pogue, J. E., Hearings, T. N. E . C. Committee, Part 15, Petroleum Ind., p. 7126. (7) Snider, L. C, and Brooks, B. T., Bull. Am. Assoc. Petroleum GeoL, 20, 15 (1936). (8) Soyster, H. B., Geol. Survey, Petroleum Investigations, pp. 14-18, 1934. (9) Wilson, R. E., Hearings, T. N. E . C. Committee, Part 15, Petroleum Ind., p. 8367. t w o years, and begins February 1, T h e studies will be made under the direction o f Albert C. Zettlemoyer, instructor in physical chemistry. First recipient of the new fellowship is William C. Walker, of Milwaukee, W i s c , w h o received his bachelor of science de gree in chemical engineering at the mid year commencement January 18. Mr. Walker will continue his study in chem istry, working toward his master's degree.
BECAUSB of t h e wide interest in -•-* this subject and t h e need for obtaining trained men for our Pro duction Army, w e give below refer ences to information w e have pub lished on occupational deferments, including those of men in training, and the need for technically trained persons. Future developments will be brought to t h e attention o f our readers. Chemical and Engineering N e w s ( N E W S E D I T I O N previous to 1942)
Vol. 18 (1940), pages 8 9 0 , 1127 Vol. 19 (1941), pages 129, 311, 457, 459, 489, 520, 587, 681, 797, 1164, 1412, 1464 Vol. 20 (1942), pages 110, 157, 472, 579-80, 788, 812, 8 3 7 - 3 9 , 985, 1099, 1100, 1219, 1294, 1392, 1514, and 1536 Vol. 21 (1943), pages 27, 84 Industrial and Engineering Chemistry V o l . 33 (1941), pages 1 , 135, 283,
561 Vol. 34 (1942), pages 2 , 131, 259, 648, 1134 Vol. 35, page 2
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Ii v -Cco -^ • ± .'-yds 4.
