Guessing What's There

"Estimating oil reserves is like guessing the number of beans in a jar--only the jars are buried deep underground and you aren't even sure exactly where they are hidden."

That comment by an oil expert points to one of the most troublesome problems facing Jimmy Carter in selling his energy program. The President based his case for urgent conservation efforts partly on a CIA study that forecasts serious world petroleum shortages and economic upheavals as early as the mid-1980s. No sooner had he stopped speaking, however, than critics--most notably Ralph Nader--began contending that the U.S., and the world, contains more oil than Carter seems to think. If that idea takes hold with the public, the President can scarcely hope to rally the U.S. for the "moral equivalent of war" against energy waste.

The critics were strengthened last week by release of a United Nations report, prepared by an international symposium of petroleum experts, that took a much more optimistic line. Oil and natural-gas supplies, declared the U.N. report, "would most probably be available, albeit at a substantially higher cost, not only for the next two or three decades but very likely during the period of transition to the use of renewable energy sources even if this transition should last a hundred years or more." The U.N. experts believe that today's high oil prices will encourage exploration in remote, previously uneconomic but potentially promising areas such as the deep ocean bed and the polar icecaps.

Neither the pessimists nor the optimists can afford to be dogmatic. Says Sheldon Lambert, manager of energy economics and forecasting for Shell: "Anyone who says he knows exactly what the reserves are or when we are going to run out of gas and oil is either naive or stupid." Areas that seem promising often turn out to be duds. U.S. companies have sunk well after well off the northwest coast of Florida in a spot where the geological characteristics seemed encouraging; they all have been dry. By contrast, oil turns up in places that looked hopeless. In the North Sea, Phillips Petroleum was ready to quit after four failed wells. The fifth, sunk at the insistence of the Norwegian government, turned out to be a gusher.

Natural gas, often found in the same fields as oil, suffers from the same imponderables. The Soviet Union has, by far, the world's largest gas reserves; Saudi Arabia, Iran, Algeria also have huge reserves. But gas cannot be imported into the U.S., now and for the next several years at least, in quantities large enough to make any difference.

The difficulty of calculating potential world oil and natural gas supplies is compounded by other factors. Many governments keep reserves secret. For political reasons--or simply because they do not need the money--countries with large reserves may hold back production and exploration. Also, any estimate of how much oil or natural gas will be produced in any given future year depends heavily on a guess as to what the prices will be. Expensive recovery methods that were not economical when the world oil price was about $2.70 a bbl. are profitable now that OPEC has jacked up the price to $12.50.

For example, in most U.S. fields, two-thirds of the oil is left behind in drilled wells as the gas pressure decreases and the flow becomes weak. So-called secondary and tertiary methods, which involve pumping water or solvent chemicals into wells can bring out much more. In recognition of the high cost of such "enhanced" recovery, the Carter energy program would free oil produced by those methods from domestic price controls, thereby rewarding the producer with a handsome potential profit.

Probable Output. As a rule, oilmen use two basic figures in assessing world oil potential: proven reserves and possible, or probable, reserves. Proven reserves are figured by many oil geologists at 640 billion bbl., almost a 30-year supply at current consumption rates--but despite the name they are scarcely "proven" in the sense that a proposition in Euclidean geometry is; they are really only estimates based on the best available evidence. To determine proven reserves, geologists study earth strata by drilling for rock and fluid samplings. Often calculations predict probable output by comparing it with production from similar fields already in operation. Trouble is, real output seldom matches the estimates.

Possible reserves are more problematic. They represent, as one oil geologist puts it, "guesstimates," based largely on the observation of strata formations that in other areas have proved to encase oil and gas basins. The calculations can be miles off--literally, Alaskan topography intrigued oil geologists, but some thought that the reserves would be found on Alaska's south shore. Instead, the oil is gushing from the North Slope.

There is even a farther-out category called undiscovered potential resources, meaning areas where geological clues would indicate the possibility of reserves but where exploration has been nonexistent or too scanty even for guesstimates. Parts of Siberia and China are leading examples.

Because of their imprecise nature, estimates of oil resources tend to gyrate wildly. At first, the oil reservoirs under the British sector of the North Sea were estimated to be 15 billion bbl. Now they are regarded to be at least 33.75 billion bbl.--and the figure is climbing. Proven oil reserves in Mexico and the waters off its coast have been revised from 7 billion bbl. to about 11 billion bbl. Still, the established fields remain the citadels of proven resources (see map): the Middle East (with 368 billion bbl.), followed by the Soviet Union (78 billion bbl.), Africa (61 billion bbl.) and the U.S. (31 billion bbl.). The CIA'S forecast of shortages assumed that the Soviet Union, now an oil exporter, and its client states in Eastern Europe would become net importers by 1985. Other oil experts would argue that Moscow may continue to be an exporter, or at least be self-sufficient, since it is developing its gigantic Tyumen field in western Siberia and pressing ahead other far-north exploitation.

Where are the finds of the future? The list of places to look is long, but expectations are limited. Almost no oil geologist expects that a drill bit will some day chew into another Kuwait or Spindletop. Only in the Soviet Union, China and the Middle East are there untapped onshore areas that bear the geologic marks of major potential reserves, and even new strikes in the Middle East are expected to be less sensational than the discoveries of earlier drillings.

In the rest of the world, the finds on dry land are likely to be small and scattered. In the U.S., where more than 2.25 million wells have been sunk in the past 75 years, only a handful of encouraging regions remain. Among the most tantalizing: the Rocky Mountain foothills; Wyoming, where rock outcroppings may indicate trapped petroleum reserves; and parts of Mississippi and Alabama.

Holding Hope. For the U.S., by far the most promising areas are far offshore, in deep, hard-to-drill waters. According to Oil Consultant John D. Moody, fully one-third of the world's undiscovered oil is locked beneath the sea bed. The geological profile of the U.S. Eastern Continental shelf holds hope of rich deposits. Most promising: the Georges Banks, 125 miles east of Cape Cod, and the Baltimore Canyon, 75 miles off the New Jersey shore.

Even if the oil is there, however, it is by no means certain that the U.S. can get it out at an acceptable cost--economic or environmental. A court injunction has restrained federal leasing of drilling sites in the Baltimore Canyon until a fuller ecological study is completed, and Secretary of the Interior Cecil Andrus is holding off on other leases. Meanwhile, the blowout on the Phillips Petroleum rig in Norway's Ekofisk field in the North Sea (see ENVIRONMENT) is certain to buttress environmentalists' arguments about the dangers of offshore drilling.

In general, the very uncertainty of world oil-reserve estimates should reinforce the urgency of Carter's pleas for conservation. No responsible government can base policy on the hope that the most optimistic calculation of world resources is right--and that the technology will develop to pump the oil out at an acceptable price even if it can be found. In embracing a very gloomy estimate of world reserves and production capabilities, Carter may indeed have erred on the side of caution, convinced that that was the safest course for the security of the nation.

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