This statement is excerpted from "Growth in U.S. Energy Import Dependence," testimony given by RFF senior research associates Joel Darmstadter and Milton F. Searl before the Senate Committee on Foreign Relations, in May 1973.
The estimated U.S. resources of shale oil and crude oil are so large that it is unlikely that there will ever be a time at which the nation will not be able to develop substantial additional supplies of oil. It seems likely that long before the nation even comes close to exhausting either crude oil or shale oil resources other sources of energy will have taken over the market. The nation may well leave large amounts of oil in the ground forever which would be recoverable at higher prices.
In regard to natural gas, the Potential Gas Committee, which represents the production, transmission, and distribution segments of the industry, has estimated that as of the end of 1970 there were nearly 1,200 trillion cubic feet of gas (over and above proved reserves) yet to be found "without a fundamental change in economics or technology." Since this committee has provided direct estimates of the amount still to be found under these conditions, it is not necessary to consider the amount of natural gas originally in place or produced to date (end of 1970). The U.S. Geological Survey does estimate the amount of natural gas originally in place—discovered and undiscovered—and its figures are much larger than those of the Potential Gas Committee, even when adjusted for recovery percentages and past discoveries. And, as was the case with crude oil, the estimated remaining resources of natural gas are far more than needed to support levels of production which might be desired through 1985. The problem is with finding and developing the needed gas resources, not with their existence.
It is not necessary to go into any detail on coal resources. There is no question about their adequacy in the time period under consideration. There are, of course, questions as to the ability to produce and consume this coal without undue damage to the environment, as is also true for natural gas and oil.
Although nuclear fuels will not be discussed in detail here, there is increasing evidence that we do not face a shortage of low-cost uranium on anywhere near the time scale the Atomic Energy Commission resource figures might lead one to believe. And thorium supply appears favorable.
Now assume the nation decides as a matter of policy that it wants to limit imports to only 20 percent of its oil and gas consumption in 1985, producing the rest domestically. This is a level of oil imports which the nation has historically found acceptable, but a higher level of gas imports than has prevailed in the past. Cumulative production of oil in the 1973-85 period, plus increases in reserves to support this production, will require that about 70 billion barrels of oil be added to reserves (gross additions). This is clearly well within the previous conservative estimate of 300 billion barrels of oil that the nation could still produce. And this makes no allowance for extensive utilization of any of the 1,700 billion barrels of oil shale resources. As previously indicated, neither oil shale nor coal gasification is expected to play a large role before 1985.
In the case of natural gas, perhaps 450 trillion cubic feet may need to be added to reserves (gross additions) in the 1973-85 period. This is only a little over one-third of the 1,200 trillion cubic feet that the Potential Gas Committee included in its estimates.
As yet, the questions of how fast domestic output can be expanded or what the cost will be has not been dealt with. We are now in the midst of studies concerning these questions and do not want to prejudge the answers. However, the following observation can be made. The National Petroleum Council study found in one of its supply cases that dependence on foreign oil and gas sources could be limited to approximately 20 percent in 1985. So far the preliminary indications from our own study do not contradict this conclusion.
Our best bet for increasing domestic energy production through 1985 is expanded output of crude oil, natural gas, and direct use of coal in power plants, along with scheduled expansion of nuclear power rather than reliance on any new technologies. The resources are there. Price increases will be necessary as well as a policy of leasing federal lands as needed. Reasonable environmental standards can be maintained but ending the uncertainty about environmental requirements is important. Unless there is a crash effort by the government, oil shale and coal gasification are not likely to be major contributors by 1985, and the breeder reactor is not scheduled to contribute by then. It might be wise to direct a larger portion of the government's energy R&D to the possibility of using coal in an environmentally acceptable manner, to improved oil recovery, and possibly advanced drilling technology. These are the areas in which R&D could be a major help within the next decade.
A matter of particular interest concerns offshore areas beyond the established jurisdiction of the nation. There is evidence of important oil and gas deposits in these waters. It is important that jurisdiction over these areas be established, whether it comes under the United States or an international body, so that exploration and development can proceed with no more than normal business risk. Uncertainty is deadly in economic matters.
Action in resolving our energy policy is urgent. Decisions made next year instead of this year won't have much effect on short-term supply, but the principle of exponential growth applies to the longer term. If decisions are made this year, however hard that may be politically, domestic energy supply in 1985 may be 10 percent greater than if the decisions are made next year.
A version of this article appeared in print in the June 1973 issue of Resources magazine.
