Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 2

S/S–NSC files, lot 63 d 351, NSC 97 Series

Statement of Policy by the National Security Council¹

top secret
NSC 97/6

Washington, November 16, 1953.

A National Petroleum Program

general considerations

1. A supply of petroleum and petroleum products adequate for military and essential civilian requirements is vital to the security of the United States and the free world.

2. In the event of a war in which all Middle East oil producing territories, Burma, and parts of Western Europe are lost, available supplies of petroleum products will fall far short of meeting indicated minimum requirements, both at the outset and during the war, unless drastic action is instituted at once. Although deficiencies will exist in crude oil, basic refining capacity and inland transportation, the most serious risk to our national security stems from the shortage of production of alkylate (an essential component of aviation gasoline) and in tankers.

3. These conclusions are the result of a study predicated on a four and one-half year war to begin July 1, 1953,² but they are equally applicable to a shorter war. For whatever period shorter than four and one-half years a war may last, the annual requirements will be at least as large as the annual requirements projected for the four and one-half year period.

4. If the courses of action described below are adopted and vigorously implemented, it will, however, be possible to meet minimum wartime requirements, except that shortages during the first year of war, primarily in aviation gasoline and tankers, will in any event exist. Certain of these courses of action involve construction, purchase and other action prior to the outbreak of war. Others, though limited to construction to commence after war begins, involve present planning for that construction.

5. The assumptions of paragraph 4 with respect to the correction of wartime deficiencies are subject to the important condition that manpower and materials will be available in sufficient quantities. There is at present no completed government-wide study which appraises petroleum requirements for manpower and materials against competing essential wartime needs. Although it is not now possible to predict with any accuracy the nature and extent of specific shortages in manpower and materials which will be disclosed by a government-wide study now in preparation, it is certain that shortages will exist.

6. To the extent that the assumed D–Day is postponed beyond July 1, 1953, the difficulty of achieving a wartime balance in crude petroleum, under the assumption of loss of the Middle East, will steadily increase. Retention of Middle East sources of supply will accordingly grow in importance, as will the need for developing and expanding all other possible sources. Therefore, in the formulation of policy with respect to Middle East countries and the determination of the proper future level and disposition of our military strength, the increasing importance of the Middle East as the greatest known source of petroleum must be recognized. At the same time the hazards of wartime petroleum transportation from the Middle East must also be considered. There must also be increasing emphasis on sources of liquid fuels which are not now conventional, as an alternative protection to the free world’s position.

objective

7. It should be the objective of the United States to develop and insure, in conjunction with its allies, resources which will provide an adequate supply of petroleum products to meet the combined requirements of the United States and its allies in a future major war.

courses of action

Current Programs Requiring Action (other than planning) Before the Outbreak of War.

8. Expansion of Alkylate Capacity. Accelerate efforts to obtain expansion by private industry by December 31, 1954, of 30,000 barrels per day (B/D) aviation alkylate capacity (in addition to completion of all projects now under way, including 5,800 B/D additional alkylate capacity already contracted for under the “Facilities Contract Program”).^*

9. Review of Aviation Gasoline Requirements. Review annually the requirements for aviation gasoline (and related needs for alkylate capacity) with special reference (a) to the effect on such requirements of the increasing use of jet aircraft and the eventual decline in military use of the reciprocating engine, and (b) the possible greater use for non-combat tasks of lower octane fuels, where such substitution will not involve loss of efficiency.

10. Stockpiling of a Mobilization Reserve of Aviation Gasoline. Stockpile sufficient mobilization reserve of aviation gasoline to meet wartime deficits from D–Day to the date when production will meet demand.

11. Creation of a Tanker Reserve of 175 T–2 Equivalent.

a. As a general objective, provide a mobilization reserve of 175 T-2 equivalent laid-up tankers in order to meet initial wartime deficits and to create a tanker ship-building base capable of expansion to meet wartime needs, with the understanding that the quantitative limits of such objective shall again be reviewed not later than December 31, 1953, and annually thereafter, and that the implementation of specific programs in aid of such objective, except as hereinbelow provided in subparagraph b, shall be subject to the further consideration and action by the Council.

b. Implement immediately, including submission to Congress of a request for necessary authority and funds, a trade-in and build program to result in the construction in the United States of about 20 new tankers (not exceeding 40 T–2 equivalents) capable of a sustained sea speed, loaded, of not less than 18 knots.

c. Implement a program for (1) the construction by private industry, in return for a 10-year Military Sea Transportation Service (MSTS) charter, of 20 new tankers capable of a sustained sea speed, loaded, of not less than 18 knots, the execution of the contracts for, and the delivery of, the new ships to be phased over a period of between two to four years, and (2) the placing in reserve, as the new ships are delivered, of about 37 tankers now owned by the government and operated by MSTS.

d. Review further immediately, in consultation with industry, the feasibility and cost of implementing with oil companies or independent tanker operators, a trade-in and build program to supplement the program provided for in subparagraph a, with a specification for a sustained sea speed, loaded, of not less than 18 knots.

e. Review immediately, loss factors, and mobilization requirements, for tankers, in the light of projected sustained sea speeds, loaded in excess of 16 knots.

12. Methods of Producing Liquid Fuels. Continue research in, and development of, methods of producing liquid fuels from non-conventional sources; specifically, continue the applicable Bureau of Mines program.

13. Elk Hills Pipeline Hook-up. Expand an existing privately-owned pipeline to the Los Angeles area in order to insure that the potential production of the Elk Hills Naval Reserve will be available in the event of war.

14. Oil Imports. Resist further restrictions on imports of petroleum and natural gas from the Western Hemisphere in order to assure maximum development and wartime availability of Western Hemisphere resources, with the understanding that the Secretary of the Interior, in coordination with the Secretary of State, the Attorney General, and the Director of the Office of Defense Mobilization, will give continued scrutiny to the volume of oil imports from all sources, with particular relation to any significant adverse effect on the development of domestic resources.

15. Development of Resources in Conjunction with Allies. Explore further with our Allies ways and means of developing, particularly in the Western Hemisphere, increased petroleum resources for wartime use, with special reference to the dispersal of available resources and facilities within the Western Hemisphere.

16. Construction of Two Pipelines for Crude Oil Transportation in Wartime.

a. It would be infeasible, were action to await the outbreak of war, to construct within six months after D–Day (1) a 30-inch crude oil pipeline along the “Big Inch” right-of-way and (2) a further 30-inch pipeline from the vicinity of Lima, Ohio, to the Philadelphia-New York area, as previously proposed,

b. Develop a program for the construction by private industry of two pipelines as follows:

(1) A pipeline from the Gulf Coast to the East Coast, if possible, built for peacetime operation as a gas line, which would be capable within six months after D–Day of transporting crude oil at the rate of about 540,000 barrels per day.

(2) A further pipeline from the vicinity of Lima, Ohio, to the Philadelphia-New York area, built for peacetime operation either as a crude, gas, or products line (or, in lieu thereof, an enlargement of the pipeline referred to in subpar. (1) to handle the same material as such pipeline between the vicinity of Lima, Ohio, and the New York-Philadelphia area), which would be capable within six months after D–Day of transporting crude oil at the rate of about 400,000 barrels per day.

(3) In developing such program, determine the amount of any costs to the government which may be involved, including (a) the cost (both prior to D–Day and thereafter) of converting the two pipelines from their peacetime operation to the transportation of crude in the volumes specified, and (b) any added cost of the tanker program.

(4) In developing such program (a) explore the practicability of obtaining part of the capacity provided for in subparagraph (1) above by the conversion of the Big Inch pipeline from gas to oil, in the event of war, and (b) re-examine the practicability of the previously-approved program for conversion of the Little Big Inch pipeline from gas to oil.

c. Submit a report of progress with respect to the foregoing to the National Security Council by January 1, 1954, with any recommendation considered appropriate.

Programs Requiring Current Planning for Action After the Outbreak of War

17. Periodically review methods for imposing quick and drastic wartime rationing of civilian petroleum supplies.

18. Complete plans, including estimate of material requirements, for the maintenance throughout the war of (a) active exploration for oil, and (b) a drilling program of 50,000 wells annually in the United States and 6,300 annually in foreign countries, principally the Western Hemisphere.

19. Complete plans, including estimate of materials requirements, for (a) the construction of 500,000 B/D refining capacity in the United States to be started immediately after the outbreak of war (to supplement construction of 1,300,000 B/D Free World refining capacity which will be under way on July 1, 1953, and (b) the conversion as soon as possible after D–Day of 400,000 B/D of thermal cracking capacity to crude topping operations.

20. Complete plans for construction of 60,000 B/D additional alkylate capacity to be started immediately after the outbreak of war; and develop a specific operating plan for United States refiners which will maximize wartime aviation gasoline production.

21. In order to minimize tanker requirements for the intercoastal movement of petroleum and provide needed flexibility in other petroleum transportation equipment, develop detailed plans:

a. To expand four existing pipelines within 60 days after D–Day;

b. To reverse, also within 60 days, the flow of certain Pennsylvania pipeline systems (either four or five);

c. To convert the “Little Big Inch” pipeline from gas to oil.

22. Develop an effective program for construction after D–Day of 175 T–2 equivalent tankers within the first six months and 310 annually thereafter. The annual requirement after the first six months will be increased from 310 to 350 (and the over-all wartime requirement from 1582–1732) in the event that the programs provided for in paragraph 21 above are not implemented.

23. Continue planning, in conjunction with allies who will participate in the defense of the area in a major war, to maintain the flow of oil from the Middle East for as long as practicable.

24. Complete plans, in conjunction with other Western Hemisphere countries, for the most efficient and economical wartime use of Western Hemisphere petroleum resources. Such resources, including facilities for transportation, should be handled jointly in wartime in a manner to obtain the best results, without regard to points of origin or cross-boundary shipments.

Study of Feasibility

25. With respect to each of the above courses which contemplate construction or other action after D–Day (including completion of construction in process at that date), make immediate intensive study of the feasibility of completing such construction within the time required, with particular reference to the competing demands of other military and defense supporting programs for manpower and materials.

26. To the extent that programs herein provided for are found to be infeasible, report to the National Security Council, with recommendations for any needed enabling legislation or additional funds to be requested from the Congress.

27. A finding of infeasibility may require that we (a) create before D–Day reserves of materials, components or tools for which shortage may exist after D–Day, or alternatively (b) transfer to the period before the outbreak of war part or all of the construction now planned to begin after D–Day. For example, decisions may be required in case it is concluded that there will be a post D–Day production shortage of oil country tubular goods for drilling, of components for alkylate plant expansion, or of turbines, gears or valves for tanker construction.

1. In addition to the statement of policy printed here, NSC 97/6 consists of a cover sheet, a memorandum by Lay transmitting the paper to the members of theNSC, a table of contents, and a financial appendix.
2. For excerpts of the study under reference, PAD Report No. 435, Dec. 10, 1952, see p. 901.
3. The Progress Report by the Director of the Office of Defense Mobilization on NSC 97/5, dated October 1, 1953, which was noted by the Council at its meeting on November 12, 1953, states: “Against the approved program goal of 30,000B/D of additional alkylate capacity 17,500 B/D are now assured, with an additional 4300 B/D expected to be completed during CY 1955. In the judgment of PAD the balance of 8200 B/D could be met by further resort to the Facilities Contract device, though not before the target date of December 31, 1954. Both that agency and the Office of Petroleum Programs, Department of Defense, consider, however, that under the circumstances further resort to that device would be warranted only if the government’s purchase of aviation gasoline (by which the cost of construction is ultimately met) is attractively priced or involves a strategic location. PAD and Defense believe, however, that the 30,000 B/D goal should be retained.” [Footnote in the source text. Concerning the progress report under reference, see footnote 2, supra.]