A slice of history: WPC celebrates 50th Anniversary at 11th WPC in 1983

Nearly forty years ago, the UK hosted the 11th World Petroleum Congress in London from the 28 August to 2 September 1983. It was the first time that the Congress had returned to London after the initial event in 1933 and marked the 50th anniversary of the First Congress. The 11th WPC designed a special symbol for the event which represented humankind’s need for heat and light, depicted as a free flow of yellow merging into red and contained within a circle. This later became the official WPC logo.

HRH the Prince of Wales took part in the Opening Ceremony at the Royal Albert Hall, London, on 28 August 1983. WPC President, Dr von Ilsemann and Mr Ion, Chairman of the British Organising Committee, opened the proceedings in front of the 3325 attendees. The UK Minister of State for Energy, A Buchanan-Smith MP, gave a speech on the involvement of the UK in the oil and gas industry, particularly the recent offshore developments.

The technical sessions and related activities took place in the newly built Barbican Centre in the City of London. A Gala Evening was hosted at London’s historic Guildhall for members of the Permanent Council and officers of the WPC, the session Chairmen, and other senior people at the Congress and from the British oil and gas industries. 550 invited guests enjoyed a buffet supper and dancing. As part of the anniversary celebrations, events included an evening cruise on the River Thames, medieval banquets, a concert in the British Museum, an opera performance, musical comedy, a Scottish evening, dinner in a London club and a Son et Lumière performance. The Farewell Party at the Barbican Centre took place immediately following the Closing Ceremony and was attended by about 2,300 people.

The Congress was held against a background of the Iran-Iraq war, increased oil prices and lower production. As a result of the Iranian Revolution, the Iran-Iraq War and other Persian Gulf countries reducing output of oil, OPEC crude oil prices had increased to unprecedented levels between 1979 and 1981 while production fell in the same period from 29.8 mb/d to only 22.8 mb/d in 1981. While OPEC was reducing output, companies and governments began to stockpile oil and build reserve supplies. The result was an upward pressure on oil prices. The world price of crude oil jumped from about $14 a barrel at the start of 1979 to over $35 in January 1981. In 1983 prices stabilised at between $28 and $29 a barrel.

The high cost of crude oil stimulated exploration and production operations in non-OPEC countries, prolonged the life of marginal wells, and made secondary and tertiary production techniques possible. New advances in technology such as 3D seismic, horizontal drilling and computer processing were helping to reduce costs further. In addition, projects in the North Sea, Mexico and the North Slope of Alaska began to make significant contributions to world crude oil supplies.

In early 1981, the US government responded to the oil crisis of 1978-1980 by removing price and allocation controls from the oil industry. For the first time since the early 1970s, market forces replaced regulatory programmes and domestic crude oil prices were allowed to rise to a market-clearing level. Export restrictions on petroleum products were also relaxed. Soon after deregulation, many small refineries and older, inefficient plants could no longer compete and were forced to close.

These events marked the end of the era of rapid economic expansion and rising living standards based on cheap energy. The sudden huge price increase brought about a major shift of purchasing power from the oil-importing to the oil-exporting countries; it cut living standards in the former group, brought industrial depression and unemployment, and reduced oil consumption. The 1982 estimate of oil demand was 58.5 mb/d, compared with 57 mb/d in 1973 and a consumption peak in 1979 of 64.1 mb/d. This left the oil business with a huge surplus of tankers, refineries and downstream facilities, which brought increased competition, lower prices and reduced margins. The slump in prices and profits coincided with the need for large injections of capital into the industry.

Delegates at the 11th WPC discussed future investment requirements of the global petroleum industry focusing on the specific needs of developing countries.

A growing need for capital investment to establish new production capacity remained a dominant feature of the outlook for the petroleum industry until the end of the 20th century, although over-supply and weak demand resulted in a temporary decline post 1980. A return in due course to a balance of supply and demand, along with a steep rise in the cost of producing new barrels, was expected to require capital investments of up to $200 billion (in 1983 dollars) by the year 2000 for the exploration and production sector. A paper by Kassler and others from Shell International predicted that oil’s convenience and versatility would ensure that it was used to meet 40% of energy demand at the end of the 20th century, compared with about 50% in 1983. Much of the replacement for current reserves was expected to come from new territories outside the Middle East.

A study presented at the London Congress emphasised the strong prospects of quite substantial new gas discoveries in many parts of the world. It concluded however that, even if production and consumption were greatly accelerated, it would probably be several decades before inventories of gas reserves would begin to be liquidated. Although natural gas had been considered a ‘nuisance product of oil production’ in the past, natural gas consumption and production had risen sharply and world-wide exploration made it possible to multiply the world’s proved resources about eleven-fold since 1950. Since the 1979 Congress, oil reserves had tended to decline, but discoveries of new natural gas reserves amounted to 525 trillion ft3 (15 trillion m3) and world-wide production was only 186 trillion ft3 (5 trillion m3).

A key outcome of the 11th WPC was the work of a study group on reserve and resource classification and nomenclature. Shortly after the Bucharest Congress of 1979, the Executive Committee of the WPC appointed a group of leading experts from Canada, the Netherlands, the UK, USA and Venezuela to study the world’s diverse classification and nomenclature systems for petroleum and petroleum reserves and if possible, to recommend improvements. The group submitted clear, distinctive definitions for three major types of petroleum reserves – proved, unproved and speculative – to the Congress. This study later contributed to the development of the UNECE’s United Nations Framework Classification for Reserves and Resources of Solid Fuels and Mineral Commodities and became a precursor to the  SPE/WPC Petroleum Reserves Definitions in 1997. WPC continues to be part of the Expert Group on Resource Management to this day.

Delegates of the 11th WPC could choose from a large number of technical visits. Day trips had been organised to the British Gas Corporation, London Research Station; BP Sunbury Research Centre; Coal Research Establishment; Esso Refinery, Fawley; Esso Research Centre; Hunting Geology and Geophysics; Meteorological Office, Bracknell/London Weather Centre; Mobil Oil Company, Coryton Refinery; NMI (formerly the National Maritime Institute); and Shell Research. 100 delegates took part on a North Sea Operations tour to Aberdeen, for a view of Britain’s success in offshore oil and gas production. They visited several local oil related sites and the Offshore Europe exhibition on its opening day.