Business: Reserves & Shortage

Not since October 1930 when a drill crew sprinted from under the first gusher in the East Texas field have U. S. oil companies discovered a petroleum pool of any magnitude. Some have talked of a petroleum famine as early as 1950. Last week in its monthly market letter Good-body & Co., Manhattan brokers, reported known recoverable oil reserves in the U. S. at 12,000,000,000 bbl., enough for only 13 years at the 1934 withdrawal rate. According to Goodbody & Co., whose cable address is "Accurate," the annual rate of discovery between 1931 and 1934 slumped far below the withdrawal rate. In that period new wells "brought in" produced an average of 580,000,000 bbl. a year against 870,000,000 bbl. withdrawn to supply the market. In the bonanza period just preceding (1926-30) annual discoveries mounted to the gigantic total of 1,990,000,000 bbl., or double average withdrawals of 895,000,000 bbl.

Seasoned oilmen generally offer two reasons for not getting excited about an oil shortage. One is that science may develop methods for removing more than the small proportion (about 30%) of petroleum now taken from oil-bearing sands. The second and better reason is that no one knows when new pools will be discovered—pools like Kettleman Hills and East Texas which together added more than 4,000,000,000 bbl. to the nation's reserve supply. With the latter argument Goodbody & Co. agrees, with reservations:

"There are undoubtedly large undiscovered reserves of oil in the U. S. However, it should be remembered that the entire country is now pretty thoroughly 'geologized' from the point of view of possible oil pools and location of the promising formations long since spotted. Of course, the most promising of these have already been drilled. It is interesting to note that in the past ten years, oil in commercial quantities has not been found in any State which was not regarded as promising in 1922, and that all fields since located were in territory which at the above date was placed in the 'favorable' column and most of them in the 'probable.' The industry generally believes that only in the State of Texas is there a probability of any large undiscovered reserves."

According to Goodbody & Co. the 12,000,000,000-bbl. reserve is divided among the leading oil companies as follows:

Standard of New Jersey ... 3,600 20 Socony Vacuum ... 500 12 Texas ... 600 17 Shell Union ... 400 11 Standard of Indiana ... 300 21 Gulf ... 800 16 Consolidated ... 300 12 Standard of California ... 1,100 29 Humble ... 900 26 Sun ... 156 14 Ohio ... 450 25