Engineer's Oil, A Challenge and An Opportunity

In recent years, especially with the advent of the space age, attention has been focused on man's accelerating technological progress. The great majority of this progress has come in the last 100 years, and each generation has seen more progress than the last, Because the petroleum industry has played a vital part in providing the stimulus for this pattern and has continued to keep pace with man's ever increasing demand for energy, we have good reason to be proud of our industry. However, in providing for America's future progress, which is largely dependent on an abundance of low cost energy, technological advances in the domestic oil industry far greater than in the past will be required. Our engineers have the challenge-the opportunity-to provide these advances. Present Status of the Industry As the domestic oil industry enters its second century, it is beset by problems of great magnitude. The threat to our continued growth and prosperity is probably greater today than at any other time in our colorful history. The total result of all our problems is demonstrated by the decline in rate of return on investments from 27.9 per cent in 1948 to 10.2 per cent in 1958. Investors in our industry today are receiving only about one-third the yearly income per dollar invested that they did just 10 years ago. Both the ability and willingness of investors to furnish the risk capital for continued expansion and growth is threatened, This decreased rate of return results from a combination of low production rates, rising costs and lagging prices. Investments and Production The domestic industry made capital expenditures of more than $40 billion to expand resources between 1948 and 1958 exclusive of refining and marketing expenditures. Close to 500,000 wells were drilled, reserves of 30 billion bbl were added, and producing capacity was increased by more than 4 1/2 million B/D. The oil industry had produced at near capacity during 1948, and the outlook was for a continued increase in demand.