tion to have risen from 10 trillion cubic feet in 1955 to 21.5 trillion in 1968, and projects 1980 demand at 35 trillion. Reserve additions since 1955 have averaged 19.4 trillion per year. The group concludes that to maintain the minimum acceptable reserve-to-prdouction ratio of 10 to 1 until 1975, reserve additions would have to average 25 trillion per year. To supply the 1980 projection requires additions of 38 trillion per year for the last five years. These comments and reports highlight the drastic need for increased exploration to take care of our growing need for natural gas. Much of the future oil and gas will come from currently established areas. However, the need is great to open new frontier areas for exploration. Potential new areas are the Northeast Gulf of Mexico and the Atlantic offshore. The time to offer these areas for leasing is now, because considerable lead time is required from sale date to initial production. These types of frontier areas in the United States invite comparison to the Bass Straits of Australia, where Industry had many of the same problems of moving into a new area. The first well drilled offshore Australia was commenced in December 1964. It resulted in a good discovery, and development plans started immediately. Initial gas deliveries were not made until March of 1969 from wells 32 miles offshore. It will still be two to three more years before production reaches peak capacity. Bright as the outlook is for future offshore potential, Industry faces problems. If the offshore operation is to continue to grow, Industry must be allowed to make an acceptable rate of return on its investment. Industry's incentive to continue the offshore search for oil and gas will be decided by the outcome of several issues presently under discussion. Of paramount importance will be Industry's relation with the Federal Government. Lease sales allow Industry access to the exploration arena. Lease sales should be held on a regularly scheduled basis with firm notice well in advance. Appropri ate consideration should be given to the time lag between a sale and anticipated production. The shortage of gas, which will cause serious problems either this winter or next, are problems which could have been lessened or solved by a large lease sale in the western Louisiana offshore in 1965 or 1966. Long-range planning by operators is necessary in order to schedule the required substantial capital expenditures, and to effectively use all personnel and facilities during the presale assessment period, the time lag between exploration and production, and throughout the production life. More long-range planning by Federal agencies is equally necessary. Other offsetting factors which may limit future growth are higher exploration costs, higher taxes, increasing costs for labor and materials, imports and possible lowering of prices. Industry has confidence in its technical ability to operate in ever-deeper waters and under adverse weather conditions; however, continued expansion to meet the growing needs of this Nation will largely be controlled by the politicaleconomic climate of the 1970's. OFFSHORE CRUDE OIL PRODUCTION-MM Bbls./Yr. '48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 |
