Energy from the Americas

By Marshall Loeb

Hollywood's central casting would never think of Jim Ketelsen as a flamboyant Texas oil baron. He is a well-fed, Iowa-bred C.P.A. in a vested gray suit, and his soft accents echo the prairies more than the Panhandle ("If I don't git it now, I'll forgit it"). He went to work for J.I. Case, turned that sputtering farm-machinery firm into a winner and last year was made chairman of its conglomerate parent, Houston's Tenneco, Inc., which pumps revenues of $8.8 billion a year from oil, gas, chemicals and many other interests. At 48, Ketelsen is the youngest chief of any company among the 20 largest U.S. industrials.

Maybe because he is a newcomer with unorthodox ideas, Ketelsen rejects the oilmen's common wisdom that little crude remains to be found outside the Middle East. The solution to the energy problem, he argues, is to reduce OPEC's power by developing the plentiful oil and gas of the Americas. As a first step, the U.S. has to "create an entirely new relationship with Mexico and Canada on a bold and broad front. It would be based on giving something to the Canadians and the Mexicans in the way of trade and industry relationships."

Rather minimal drilling in Canada's Arctic Islands has already turned up as much gas as the U.S. used all last year. The oil-rich Mexicans also have plenty of gas, but they are just burning off much of it because they are burned up at Energy Secretary James Schlesinger for rejecting their price demands. The U.S., Ketelsen believes, "could clear up the differences in just one meeting in Mexico."

"In addition, there are potentials in the Central American belt just south of Mexico. If something could be developed, it would be a great boon to those countries. Certainly there is more to be found in Peru and Colombia, in Ecuador and Argentina--all areas where hydrocarbons have been discovered. With the vastness of Brazil, there are bound to be additional potentials."

Venezuela is the militant founder of OPEC, but it is running out of easy crude and is eager to develop its tarlike heavy oils in the Orinoco basin. Ketelsen figures that the U.S. can get together with the Venezuelans "if we try to help develop that resource on a joint basis that is worthwhile to them."

Naturally, the U.S. has to be highly sensitive to nationalism in all these countries, to protective feelings that hydrocarbons are a national patrimony. So the peoples must be carefully courted. Perhaps, he reasons, the U.S. could lower its tariffs on their labor-intensive exports and make deals to help supply what hemisphere nations want. A major trading tool would be U.S. agriculture. The U.S. produces more than 101 bu. of corn per acre, Mexico fewer than 18. The Mexicans need U.S. food and farm technology to help feed their exploding population. In short, both countries need each other rather desperately.

By 1990, Ketelsen believes, oil and gas from Mexico, Canada and the rest of the hemisphere could be providing well over half of the U.S.'s energy imports.

Consequently, OPEC'S prices--and political power--would weaken. But for that to happen, the U.S. would have to develop the whole gamut of its own energy sources in order to hold down the growth of its oil imports from more than 8 million bbl. a day now to 10 or 12 million bbl. a day then.

What are the chances? Not bad, says Ketelsen. Decontrol of U.S. gas prices has made deep drilling worthwhile; there is a lot of gas 15,000 to 25,000 ft. below Louisiana, Oklahoma and probably New Mexico. Just last week, Tenneco struck gas in the previously discouraging Baltimore Canyon, 80 miles off the New Jersey shore. Farther in the future, Ketelsen has hopes for geopres-surized gas--squeezing out large amounts of methane that is mixed in with sea water in mammoth caverns along the coasts of Louisiana and Texas. The $3-per-bbl. tax credit, now proposed by the Administration, would bring Colorado's oil shale to the brink of profitability. In sum, says Ketelsen, "If we properly develop the energy sources we have in the Americas, we could end up in a strong position and have a very exciting two or three decades."

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