US energy 'bank account' shrinks, but more slowly
America's supply of conventional energy reserves can be likened to a shrinking bank account. New figures for 1979 show withdrawals of oil and natural gas continued to exceed "deposits" from new discoveries.
But within that broad context there is some very encouraging news. Drilling activity in the United States, measured by footage, set a new all-time record last year. More exploration helped increase discoveries, and new reserves jumped 69 percent for oil and 35 percent for natural gas over 1978.
With an assist from the overall decline of US general consumption last year, these new reserves replaced about 75 percent of the domestic fuel burned. That is a drastic improvement over the pattern of the past decade, when new reserves averaged only half of what was consumed.
In other words, the US energy bank account now is drawing down much more slowly. And the reasons given by energy analysts for the upbeat performance in 1979 center on fundamental long-term changes in American energy policy that point to continued improvements in the 1980s.
The Natural Gas Policy Act of 1978 and the decision of President Carter a year ago to let domestic oil price controls expire in September are causing sharp increases in the cost of energy in the United States. The greater financial rewards for the domestic oil and gas industry are credited with increasing exploration activity last year and are expected to spur exploration as energy grows more dear.
"Even with the windfall-profits tax, there is good incentive over the long term. The cash flow will be good," commented Edward B. Williams, a vice-president of Smith International Inc., a large California manufacturer of energy industry equipment.
Indeed, Hughes Tool Company economist I. C. Kerridge predicts that drilling activity in the US this year will top the 1979 record. The reason: "improved incentives."
Domestic oil production last year was 3 billion barrels and industry found new reserves of 2.2 billion barrels, according to the American Petroleum Institute.
So America's proved reserves of oil declined 800 million barrels to 27.1 billion barrels, but the decline was only half what it was in 1978.
On another encouraging note, the American Petroleum Institute reported that an additional 3.6 billion barrels of oil might soon be considered recoverable with the development of new techniques for extracting more oil from the ground. These enhanced recovery techniques are becoming more economical as the price of energy rises. And they could open up sizable new oil reserves.
The natural gas industry also had good news in 1979. New reserves for the year came to 14.3 trillion cubic feet, reported the American Gas Association. That is considerably higher than the 7-12 trillion cubic feet increase recorded annually during the 1970s.
The new reserves replaced about 75 percent of the 19.9 trillion cubic feet of gas produced in the US last year. Total proved reserves fell to 194.9 trillion cubic feet, or about 10 years worth of supply at current levels of production.
Despite the overall drop in reserves, the nation consumed more natural gas. Production rose to meet higher demand.
The natural gas industry and the Department of Energy have been promoting greater use of natural gas, partly as a way to reduce oil imports. Residential use of gas is growing, a sharp turnaround from the mid-1970s when a number of utilities placed moratorium on new customer hookups for fear of shortages.