European Stars and Stripes (Newspaper) - November 19, 1973, Darmstadt, Hesse                                Vav pc pc .�fc7i  it or continued from Page 11 g. Mclean chairman of the Continental Oil com Pany and head of the National Petroleum Council an Industry body. But there is a huge step Between potential re serves and currently available fuel. Covering the distance takes time Money and technology and that is Why the Short term Outlook is nowhere near As sanguine. A he most critical immediate problem facing the country is natural Gas. Over the last three years schools and factories in various parts of the nation have had to close for Short periods for Lack of it. Natural Gas is the cleanest and therefore most environmentally desirable of the world s traditional fuels. But production in the United states is expected to Peak in 1975 at 24.7 trillion cubic feet. Production has exceeded Reserve additions in each year since 1968. The Industry contends that higher prices will in directly increase supplies by increasing incentives for exploration but How much of an increase would be involved is a question. Moreover it would have Little effect immediately. In the next year or two More plants and schools will probably be Cut off from supplies. Coal would appear to be the obvious answer to the nation s Energy problems. It is by far the most Abun Dant source of Fossil fuel with several Hundred years potential Supply. Coal for All its potential is a difficult fuel. Obtain ing it Means deep mining or strip mining both of which Are objectionable because of human hazards or environmental depredation. And consuming Coal carries its own environmental threat since about 60 per cent of supplies Are High in Sulphur Content and Emit harmful pollutants into the air As they Are burning. Coal is also expensive and unwieldy to transport. High Sulphur Coal can be processed into clean Nat ural Gas or Oil but the technology although Avail Able is not yet economically feasible. Some experts including Lawrence rocks and Richard p. Runyon authors of the Book the Energy crisis believe that a crash program to develop Coal based synthetic fuels must be started now if the United states is to avoid very serious problems be fore it is ready to enter the age of nuclear Power sometime in the 21st Century. The atomic Energy commission predicts that nuclear Power capacity will represent about 23 per cent of the nation s total electric capacity by 1980, 32 per cent by 1985 and about 50 per cent by the year 2000. The National Petroleum Council for its part expects nuclear Power to account for about 17 per cent of the total by 1985. America s nuclear Trump is the fast breeder reactor which theoretically can generate More nuclear fuel than it consumes Over a 30-year period creating a sort of perpetual motion Energy machine. But there Are drawbacks Here too. The first commercial demonstration unit in the United states is not scheduled for operation until 1980, and the breeder creates massive amounts of radioactive wastes whose danger to Man lingers for thousands of years. An even More exotic nuclear solution is fusion the process that powered the Hydrogen bomb and is the Energy source for the Sun and the stars. Its Basic fuel is Hydrogen of which there is a virtually in exhaustible Supply. But it will not be a Factor if at All until the 21st Century. Hen All is said and done it is Likely that Oil the present mainstay of american Energy will have to do even More in the future. Oil is the Energy Jack of All trades. It is a swing fuel capable of running huge electrical generators or the family car. Just As important it is easily transported and can be used in hundreds of products from gasoline to plastics. As a result Oil is expected to be carrying More than 50 per cent of America s Energy Burden by 1980. The trouble is that the United states exhausted its Reserve production capacity in 1970 and probably will never again be Able to meet its total Oil needs from Domestic sources. One solution to the Energy dilemma is conserva Tion or a simple reduction in the use of Energy. Barry commoner the environmentalist contends that conservation practices can bring a 23 percent reduction in Energy usage without reducing the amount of goods produced. But his program Calls for changes in the lifestyle of the average american As Well As a Large scale change in the nation s Industrial Structure including a 75 per cent reduction in automobile traffic. The personal and Industrial Side effects of even the smallest changes in Energy policy can be far reaching. If the size of cars is reduced for example it will mean a cutback in the amount of Metal used in Auto production which in turn May mean reducing the work Force and profits of both the Metal and automobile industries. What we Are doing is shifting from the age of Oil to another Energy age says John Lichtblau head of the Petroleum Industry research foundation. Historically speaking transition periods Are very interesting but living through them May not be so much  a Wuhu. 11,. 4m in los  Tiff ". A.  i be or a a Vaaj wv2 � t �-k117 Ehin. Tr.a-. That ? a terri01e ha6it you be 30t  a Kas Laura so offshore loading to Ljuca saudi Arabia bal California i i Standard Texaco per Cloge of Aramco ownership Sau,is\rabia., 25% California Standard exx land Texaco 22.5% each Mobil 7.5% in Fields Aramco a where Aramco Oil goes crude Oil and Petroleum products what Aramco produces million barrels a Day 1954 1955 1956 1957 1958 1959 1961 1960 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 19721 by William d. Smith new York times Aramco has been called the Oil c Pany nobody knows and its curious s action could hold the key to the world Ergy crisis. Here is a major Oil producer situated saudi Arabia owning neither Gas Stai nor Tanker developed financed and i nominally controlled by american giants who sell most of the output in rope and Japan. At the same time the saudis Are Friendly As any arabs Are toward Wash ton even As the United states support Srael in Battle. Even though Aramco formally pm As the arabian american Oil company far from a household name Hundred millions of people on every . Aramco produces about 90 per cent the Oil taken from the Sands and Waters saudi Arabia and that nation now and Cre singly in the future holds the keyword Oil supplies. Saudi Arabia is currently the Worl third largest producer of Petroleum Hind the United states and the so Factor Union. It is also the world s largest exporter surpassing in recent years both Vene Zuela and Iran. Saudi Arabia has proven reserves of about 138 billion barrels compared with 37 billion barrels for the United states 60 Bil lion for the soviet Union 62 billion for Iran and 13.7 billion for Venezuela. Most experts consider saudi reserves As greatly understated and estimate them at Between 300 billion and 500 billion barrels. This great storehouse is expected to be supplying about 25 per cent of total world demand by the 1980s. Saudi Arabia is the Only country in the world with reserves capable of Matching growing world demand for Petroleum products according to John Lichtblau head of the Petroleum Industry research foundation in new York. 1 he saudis after years of benign neglect toward the Arab cause in its confrontation with Israel have now taken the Lead in using the Oil  now unsheathed the sword is being turned deftly against Israel and its supporters particularly the United states. Saudi Arabia has embargoed shipments of Oil to the United states and Cut Back its Over All production by 10 per cent initially and is reducing it by an additional 5 per cent a month until All the Arab territories occupied by Israel during the 1967 War Are returned. This Way they Hope to keep slicing away 1972 reserves billions of barrels Oil the critical area 1972 exports millions of barrels per Day a Kuwait Iraq ���29 .14, Dubai Qatar �7 Oman 5 Dubai 12 source american Petroleum Institute 1971 at the world s Oil Supply until it hurts the United states enough to cause it to alter its support for Israel. While applying the pressure the saudis have been pro claiming their concern for Oil Consumers and genuine Friendship with the unite states. Caught in the Middle is Aramco base Din new York. Aramco is owned by four giant Ameri can based Oil companies and the saudi arabian government. The Standard. Oil company of California Texaco inc., and the Exxon corporation each have a 30 per cent interest in the american share and the Mobil Oil corporation has the remaining 10 per cent. " since the participation agreements of january 1973, saudis have had a 25 per cent Over All interest that was scheduled to grow to 51 per cent by 1983. The saudis now want to boost their share to 51 per Cen immediately. The irony of being a largely american owned company prohibited from shipping Oil to the United states May have created some emotional problems for Aramco but thus far no obvious practical or technical problems. Joseph j. Johnston a senior vice presi Dent and director candidly remarked All our operations Are in saudi Arabia. We have to follow the saudi government s orders or get out. It s that Clear Cut and getting out would do no one any  some observers note that from trans shipment Points and major refinery areas some Arab Oil will almost certainly end up at embargoed destinations but the traditional path to Market of much of the world s Oil is so Well known that a serious embargo such As the one the arabs Are apparently enforcing prevents Large amounts of Oil from slipping through to blacklisted countries. Refineries in the Caribbean for example have been embargoed because the ultimate destination of much of their production is the Eastern United states. Production cutbacks moreover appear to present no technical problems to the saudis according to oilfield engineers. All that is required is the shutting in closing off of some individual Wells. Thus far no Field has had to be shut in by Aramco. Government and company officials agree that almost nothing can be done certainly nothing nearly As effective As the action taken by Western governments against Iran in the Early 1950s when Mohammed Mossadegh nationalized that country s Oil Industry. At that time the consuming nations forced Iran to terms by simply refusing to buy nationalized iranian Oil and making their purchases from the obliging Arab producers. During the 1950s there was an Oil surplus and it was definitely a buyer s Market. Now world Supply and demand factors Are More closely balanced and the Oil Trade has swung in favor of the Sellers. A recent statement by president Nixon suggesting that the arabs remember or. Mossadegh s Fate resulted in Arab laugh Ter rather than apprehension. Despite the problems of the  War and the fact that Aramco still operates under a Concession agreement in an Era when nationalization is again becoming popular most experts Are optimistic about the company s future. One Bank analyst goes so far As to con tend that even if the saudi monarchy were overthrown Aramco would survive. It has become part of the fabric of the saudi nation. It has done its Job  doing the Job Well has meant a blend of aggressiveness technological capability and the Knack of bending to the inevitable before the breaking Point is reached. The company has been unusual from its beginnings in 1933, when two americans Karl Twitchell and Lloyd n. Hamilton came ashore in the red sea port of Liddah in the Hope of obtaining some sort of Oil Concession for the Standard Oil company of California. Saudi Arabia had been chosen because it alone of the Middle Eastern countries Lay outside the sphere of effective British control. Aramco was awarded a Concession in the Eastern province bordering the per Sian Gulf. 1 he first Well was begun in april 1935. Nine Wells considerable disappoint ment and three years later the dam Mam number 7 Well came in and the saudi Oil Empire began. In 1936 Texaco obtained a half interest in a Deal that also created the Cal Tex Petroleum corporation in which the same companies still have a 50-50 partnership. Export of crude Oil began in 1938 Only to be halted by the outbreak of world War ii. In a complicated arrangement involving lend lease Money to Britain the United states government assumed responsibility for payments to King Saud during this break in operations. Production was resumed in the fall of 1943. About the same time Secretary of the Interior Harold Ickes tried to interest president Roosevelt in setting up a petrol Eum reserves corporation to acquire and participate in the exploitation of foreign Oil reserves. President Roosevelt did buy the idea for various reasons including pressure from the Oil companies. Ickes then tried to get the United states government into saudi Arabia by a Side door proposing that it finance a pipeline running from the persian Gulf to the Mediterranean sea. This too was turned Down but by Hindsight it appears to have been a Lessing. The pipeline crosses the Golan Heights and its destruction could have directly involved the United states in Middle East conflict on numerous. Occasions in recent years. With Washington s decision not to build the line Aramco itself took on the task. To finance it Standard Oil company new Jersey now Exxon was invited to take a 30 per cent interest in Aramco and Mobil was offered a 10 per cent interest. In Addi Tion to Money the two companies provided markets for the Oil that was beginning to pour out of Arabia. The company has grown and prospered until Many analysts believe that its four partners have assumed undisputed leadership in the Competition among International Oil companies through their participation in saudi Arabia s Bounty. One Ana Lyst commented Shell British Petroleum and Gulf will soon become also   has not gone without criticism. Some have blamed it for taking too Little interest in saudi politics and thereby letting earlier rulers waste Money that could have helped the people. Others criticize the company for taking too much interest. In any event Aramco seems to have created a singular position for itself among Oil companies operating overseas. Finding nothing in the beginning but Des erts the company created a Complete infrastructure of its own that grew to include the bedouins of the Eastern province in programs of health education Industry schools and Home ownership. Saharan the company town built in the desert could be picked up and placed any where in the american Southwest. Its amenities include an 18-Hole Golf course movie Heaters swimming pools Little league baseball and boy scouts. The company s work Force totals about 11,500, including some 1,200 americans 9, 300 saudis and 1,000 persons of other nationalities. Aramco is said to contribute almost 40 per cent of Standard of California s profits while it represents around 25 per cent of Texaco s and some 20 per cent of Mobil s and somewhat less of Exxon s. Yet the saudi government has sharply increased its share of the take in recent years and to a Large extent the future really depends upon one Man King Faisal. He is in effect chairman chief executive officer president and Board of directors. His decision to withhold saudi Oil made the Arab weapon real. Only he can turn the taps to full production again. In the meantime Aramco Waits and the world wonders. Page 14 the stars and stripes monday nov Nebr 19, 1973 the stars and stripes Page 15