Petroleum Economics - Significance of World Petroleum Production Trends (TP 2228, Petr. Tech., July 1947)

By 1950 or soon thereafter facilities will be available in foreign countries for the production, transportation, and refining of about 4,305,000 bbl per day of crude oil—a volume not far short of current United States output. This is indicated by announced plans for foreign expansion, - some of the work being already under way. The projected potential production is about 1,500,000 bbl per day or 50 pct above the record-setting foreign production of 2,810,000 bbl daily in 1946. The scheduled new foreign facilities are equivalent to almost one third of the present facilities of the United States. Fears that so much additional foreign oil may flood world markets and disrupt the domestic industry of the United States are not justified. The projected foreign expansion apparently has been planned on a sound business basis, with careful consideration of the world's actual need for all the projected additional production. Materially increased world demand for petroleum promises to absorb the increased supplies without ill effect upon the domestic industry. Even by applying conservative estimates of both foreign and domestic demand, it is indicated that world requirements can absorb the projected larger foreign output and still permit continued increase in United States production. World demand would have to increase only 5.7 pct per year in the 1947 to 1950 period to absorb the prospective supply. Such an increase may be conservatively projected, in view of past and current trends. Introduction Recent announcements of plans for expanding petroleum facilities in the Middle East and Venezuela foreshadow an unusually sharp increase in foreign production in the immediate future. Therefore, the next few years will bring far-reaching changes in world petroleum affairs, with foreign petroleum production and other activities assuming much greater importance than formerly. Tabulation of figures on development already under way or planned indicates that in the next several years facilities will be available for producing, transporting and refining twice the prewar production of foreign fields and about 50 pct or nearly 1,500,000 bbl a day above their record-level output of 1946. To say that foreign fields may be producing such an enlarged quantity by 1950 is, of course, a statement of great significance to everyone connected .with the oil industry and especially to those of the American petroleum industry. A production of 1,500,000 bbl daily is equal to the combined yield of the states of Oklahoma, Kansas, Illinois, Louisiana, Arkansas, Mississippi and New Mexico. This means that within the next several years foreign petroleum facilities will undergo a new expansion equivalent to one third of the present facilities of the United States. To think of such an expansion in foreign production is to raise at this meeting the question of what this prospective foreign development means for the United States, the American petroleum industry in general, and the American engineer and technologist in particular. It is only logical to question whether or