2. During the 5 years 1949-53, inclusive, the availability of natural liquid hydrocarbons (crude petroleum and natural-gas liquids) produced in the United States is estimated to increase as shown in the following tabulation:

For comparison, the actual domestic production of these liquids in 1948 is expected to approximate 5,900,000 barrels per day (5,500,000 barrels daily of crude petroleum and 400,000 barrels daily of natural-gas liquids). The estimated 1953 rates, therefore, would be equivalent to an increase over 1948 of 1,060,000 barrels daily on the basis of the average estimate of availability.

3. Supplementing the natural petroleum liquids produced in the United States during the next 5 years the estimated availability of petroleum products from synthetic processes, under foreseeable economic conditions, is relatively small, with the volume reaching approximately 30,000 barrels daily of oil products converted from natural gas by 1953. However, technically feasible and operable processes for the conversion of natural gas, oil shale, and coal to oil products have been developed, and large sources of supply of those raw materials exist. 4. Production of foreign petroleum is estimated to increase substantially during the 5 years 1949-53, inclusive. Total estimated production of crude petroleum in the foreign nations of the Western Hemisphere (for use in those foreign nations and for export) is estimated to increase from 1,750 000 barrels daily in 1948 to 2,490.000 barrels per day in 1953, and in the Eastern Hemisphere (exclusive of Russia) from 1,500,000 barrels daily in 1948 to 2,520,000 barrels per day in 1953. Although it was beyond the scope of the study to estimate future distribution of this foreign oil between consuming areas of the world, these increases in total foreign production should increase the availability from these sources for consumption in the United States. In this connection, it is important to note that consumption within the principal foreign oil-producing countries is relatively small, and the largest part of the output of those countries is available for use in other areas.

5. For the second 5-year period 1954-58, adequate information on which to base detailed estimates of availability of natural liquid hydrocarbons produced in the United States will not be avaliable for several years. From the best data now obtainable, no significant decline from the 1953 estimated rates is anticipated during following 5 years, but it is impossible to foresee definitely at this time the probable trends. However, as these trends become defined, and if a moderate decline in domestic output of natural liquid hydrocarbons should be indicated, supplementary sources of petroleum and its products are estimated to become available in larger volumes if needed. Large reserves of the raw materials for the synthetic production of oil exist in the form of natural gas, oil, shale, and coal. Future availability from these sources may be considered to be limited primarily by the practical considerations of the need for such production and the time, materials, and capital required to construct necessary facilities. Under the conditions set forth in the report, the availability of petroleum produced in foreign countries in both the Western and Eastern Hemispheres is estimated to increase further during the second 5-year period and provide additional supplementary supplies for consumption in the United States if needed.

6. Provided reserves of natural gas are at a relatively high ratio to consumption and, as distribution facilities are expanded, it is estimated that larger quantities of this fuel will be available to supplement liquid petroleum products in supplying the Nation's energy requirements.

ESTIMATED AVAILABILITY OF CRUDE PETROLEUM AND NATURAL-GAS LIQUIDS PRODUCED IN THE UNITED STATES

In estimating the availability of crude petroleum and natural-gas liquids produced in the United States, it was both necessary and desirable to consider a probable range within which this availability may reasonably be expected

to fall. Future availability can be measured only to the degree of accuracy that it is possible to measure the results of future operations in the search for, and development of, additional underground sources of supply. Within a limited future period, these results can be approximated. As the period is extended, the margin of error unavoidably increases due to a lack of the information that will later become available so as to permit a significant determination of the volume of oil found and developed. The following tabulations, therefore, show the estimates of future petroleum availability with an upper and lower range. The lower range may be considered as the minimum volume estimated to become available. The upper range represents the probable availability with more favorable results from exploratory and development activities, including unhampered leasing and development of the Continental shelf. For comparison, figures are included for actual production (not availabilty) during the preceding 10 years, 1939-48.

In addition to the foregoing figures covering crude petroleum, supplies of petroleum products are derived from natural-gas liquids. The actual production of these liquids and the estimated future availability are shown in the following tabulation:

Domestic natural-gas liquids

[In thousands of barrels daily]

Actual production (per U. S. Bureau of Actual production (per U. S. Bureau of

Mines):

Mines):

1 Does not include some cycle condensate included in subsequent years.

Combining the figures for crude petroleum and for natural-gas liquids gives the total volume of natural-liquid hydrocarbons produced in the United States as shown hereinafter:

Total domestic crude petroleum and natural-gas liquids

As shown in the foregoing tabulations. the availability of liquid hydrocarbons (crude petroleum and natural-gas liquids) produced in the United States is estimated to increase during the 5-year period 1949-53. As compared with the 1948 production of crude petroleum and natural-gas liquids of 5,900,000 barrels daily, the average of the upper and lower range of estimated availability equals 6,960,000 barrels per day in 1953, an increase of 1,060,000 barrels daily over the 1948 production. The probable range in availability from this average figure of 6,960,000 barrels daily varies from a minimum of 6,600,000 barrels per day in 1953 to an upper figure of 7,320,000 barrels daily for that year. The lower range represents an increase of 700,000 barrels daily during the 5 years over 1948 production, whereas the upper range is equivalent to a 1,420,000-barrel-per-day increase over the 1948 output.

For the following 5-year period 1954-58, a lack of adequate information makes it impossible to present detailed estimates. Whether availability from natural sources within this country will be subject to a moderate decline, a maintenance of then existing levels, or a continuing increase after 1953 are questions that cannot be resolved at this time. In this connection, however, the study does not indicate any sharp or substantial decline in the availability of domestically produced crude petroleum and natural-gas liquids during the second 5-year period. Also, in this connection, the availability of petroleum from alternative or supplementary sources of supply, as set out in following sections of this report, must be considered.

SYNTHETIC PETROLEUM LIQUIDS

For a very long time the oil industry has been looking to synthetic fuels as one means of augmenting the petroleum supply of this country. It is estimated that private industry has already spent in excess of $100,000,000 in the development of synthetic processes. The industry is continuing to spend funds at a rate in excess of $10,000,000 a year and, as increased needs for synthetics should be manifested, far larger amounts would be applied to this field.

A

Already, processes for the conversion of natural gas, coal, and oil shale to oil products have been developed which are technically feasible and operable. commercial plant is now under construction to convert natural gas to oil. At the present state of the art, refined products from coal and from oil shale are somewhat more costly than for natural petroleum, but it is possible that continued research and development work over the next decade will lead to processes for producing such products from one or both of these materials as cheaply as from natural petroleum.

The proved gas reserves of the country were estimated at 166 trillion cubic feet at the beginning of this year, whereas production in 1947 was at a rate of only

5.6 trillion cubic feet per year, or a ratio of reserves to production of almost 30 to 1. With this high ratio and with the probability that the reserves will continue to increase for the next few years as they have in the past, it seems reasonable that an increasing volume of gas could be dedicated to the synthetics industry without interfering with other demands for natural gas. The oil-shale reserves are known to be in excess of the equivalent of 100,000,000,000 barrels of petroleum. The coal reserves are so great that any estimate of potential synthetics from this source would be too large to be of real significance. There would certainly be adequate coal to supply the oil requirements of this country for many generations to come.

Based on the present plans of the industry and on the basis of present economic conditions, it is estimated that availability from synthetic production during the 5 years 1949-53, inclusive, will increase to approximately 30,000 barrels per day by the end of the period. This estimated production will be entirely from conversion of natural gas to oil. During the following 5-year period 1954-58, it is expected that synthetic production of petroleum products from natural gas will increase at an accelerated rate if needed, supplemented by a relatively small output from plants for the conversion of both oil shale and coal to oil.

In considering the foregoing outlook for synthetics, there is obviously a wide latitude for judgment because of the many conditions that might arise to change the conclusions significantly. Changes in the basic conditions. as set forth previously in this report, would have particularly important effects upon developments in the synthetic field. An additional factor bearing on this situation is the possibility of discovery of unexpectedly large new oil reserves.

FOREIGN PETROLEUM

Petroleum produced in foreign countries in both the Western and Eastern Hemispheres provides an additional source of supply for the United States, as a substantial portion of this foreign production has been developed and is being produced by American companies or their affiliates.

The following tabulation shows the total production of crude petroleum in foreign areas (excluding Russia) for the 10-year period 1939-48 and the estimated production for the 5 years 1949-53, inclusive:

The foregoing figures do not include a relatively small volume of allied liquid hydrocarbons and synthetic production amounting to approximately 50,000 barrels daily in 1948 which is estimated to increase to about 70,000 barrels per day in 1953, approximately one-fourth of which is from the foreign Western Hemisphere and three-fourths from Eastern Hemisphere sources.

With regards to these figures on foreign production, it should be noted that they are total quantities for use in foreign countries as well as supplying the import requirements of the United States. World distribution of these supplies involves questions of estimated oil demands and political considerations beyond

the scope of this study. However, certain observations may be made with relation to the availability of this foreign production for consumption in the United States.

Petroleum produced in foreign countries of the Western Hemisphere has been, and is being: (1) consumed in the foreign nations of the Western Hemisphere; (2) exported for consumption in the United States; and (3) exported to Eastern Hemisphere countries to meet that hemisphere's deficiency in oil supply. Petroleum produced in the United States is also being supplied to meet a portion of the deficiency in Eastern Hemisphere output. An increased availability of foreign production for consumption in the United States may be expected as a result of increased Eastern Hemisphere production, making that area no longer dependent upon Western Hemisphere sources. To the extent that this may occur, it will obviously increase the availability of Western Hemisphere oil for use in the United States and other Western Hemisphere nations. In this connection it will be noted that the estimated production in the Eastern Hemisphere (excluding Russia) increases from 1,500,000 barrels daily in mid-1948 to 2,520,000 barrels per day in 1953, a rise of approximately 70 percent in the 5-year period. Foreign Western Hemisphere production is estimated to increase by about 40 percent during this same period, from 1,750,000 barrels daily in 1948 to 2,490,000 barrels per day in 1953. Oil consumption in the principal foreign oil-producing countries is relatively small, with the largest part of the output in these countries being available for export.

For the second 5-year period 1954-1959, foreign production is expected to continue to increase. In view of the large volume of proved reserves, production from Eastern Hemisphere sources may be expected to continue to increase at a faster rate than in the foreign Western Hemisphere.

NATURAL GAS

In view of the assignment to study the supply of petroleum liquids, no estimates of the availability of natural gas have been prepared other than a consideration of that portion of the gas for conversion into liquid products. However, the relationship of natural gas to petroleum liquids is an important factor in the overall availability of fuels to supply the Nation's energy requirements.

The three principal sources of energy in the United States are coal, oil, and natural gas-with water power playing a lesser role. For many uses, these three fuels are directly competitive.

As previously stated, the proved reserves of natural gas have increased steadily, and were estimated at approximately 166 trillion cubic feet at the beginning of the year 1948. These proved reserves are at the relatively high ratio of approximately 30 to 1 to present consumption, and there is no question that availability of this fuel at the producing wells considerably exceeds present distribution facilities. As distribution facilities are expanded, a larger and larger volume of natural gas will be made available to supply over-all fuel needs in this country. To this degree, therefore, natural gas is closely related to the availability of liquid petroleum, and it represents a highly important supplementary source of fuel energy.

Mr. BROWN. Mr. Chairman, before calling the other witnesses, I will just make a remark or two in advance as to what we are talking about here, to call attention to what we are going to cover. I want to hand out these charts, if I may.

The charts that I have given you are designed to reflect the imports into the United States of petroleum, and its products since 1928, and we have set forth thereon the various actions that have affected these imports. Then, after getting here today, I thought it might be of interest, to superimpose, by pencil, the gasoline prices at certain strategic times. I am just calling that to your attention, so that as the testimony goes along, you will have that before you.

What we are really talking about here is petroleum, which is the principal element of supply in the largest armed service in the world, and that is the armed service of the United States.