of the oil in place in known reserves. With advances in secondary and 

 tertiary techniques, the average recovery from known reservoirs could 

 reach 50 percent or more, adding in excess of 70 billion barrels to reserves. 



If the price continues upward, crude oil from unconventional sources 

 will become economic — first from tar sands and heavy crude deposits, then 

 oil shale, and finally from coal. 



At the present time crude oil and natural gas supply over 75 percent of 

 our total energy requirements. Economists predict that by 1985 our demand 

 for energy could nearly double the 1970 level but still with petroleum and 

 natural gas as the major source (65 percent). Thus U.S. reserves* of 

 crude petroleum, now at a peak, can be expected to decline. Over the 

 past 15 years proven reserves of crude oil in the lower 48 States have 

 fallen from an equivalent of a 12-year supply to a 9-year supply. Similarly, 

 proven reserves of natural gas have dropped from a 22-year supply to an 

 11-year supply. In 1972 imported crude and petroleum products supplied 

 about 25 percent of our domestic demand and this percentage was in- 

 creasing rapidly. The 1985 imports will probably exceed 50 percent unless 

 substantial new domestic discoveries are made and exploited. A substantial 

 increase in importation of liquified natural gas is also forecast. 



Hydrocarbons can be derived from our very large deposits of coal and 

 oil shale, but it will be from 10 to 15 years before these sources can be 

 utilized economically in large quantities without significant damage to the 

 environment. Conceding that this technology will be available, it is still 

 very important for the United States to remain economically competitive 

 in terms of its basic cost of energy. 



The near term domestic energy resource shortage is a consequence of 

 this required transition over the next 15 years. It can be minimized by: 

 ( 1 ) increasing our petroleum discovery rate with particular emphasis on 

 offshore resources; (2) importing more foreign crude and natural gas; 



(3) increasing the percentage of oil recovered from known reservoirs; and 



(4) realistically working to control the demand side of the equation — 

 certainly not the least important. 



The oceans will play a very important role in the first two of the fore- 

 going approaches. 



Offshore Oil and Gas 



The most promising way to increase our domestic discovery rate is for 

 an intensified exploration and drilling effort offshore on the continental 

 margins. The U.S. onshore, excluding Alaska, has been one of the most 



* Proven reserves are reserves of oil and gas that exist in known reservoirs and can 

 be produced with known technology under existing economic conditions. New dis- 

 coveries, improved technology, and increase in price all have the effect of increas- 

 ing the reserves. 



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