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

Report to the National Security Council by the NSC Planning Board¹

top secret
NSC 97/3

Washington, May 20, 1953.

Statement of Policy Proposed by the National Security Council on a National Petroleum Program

(Parenthetical references are to paragraphs of the Staff Study)

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. (46–57) 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

8. Current Programs Requiring Action (other than planning) Before Outbreak of War^*

a. 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”). (33–35, 70–82)

b. Stockpile sufficient mobilization reserve of aviation gasoline to meet wartime deficits from D-Day to the date when production will meet demand. (The extent of the deficit to be covered from the stockpile will depend upon the date of the outbreak of war. Even if the expansion provided for in subparagraph a has been completed at the time of the outbreak of war, a deficit to be met by stockpiling will still exist.) (33–35, 70–82)

c. Provide, as a matter of urgency,^† a mobilization reserve of 175 T–2 equivalent laid-up tankers in order to meet initial wartime deficits and create a tanker shipbuilding base capable of expansion to meet wartime demands. This program will include government purchase of existing tankers as a means of stimulating new tanker construction by private capital. (41–43, 85–87)

d. Continue research in, and development of, practical methods of producing liquid fuels from non-conventional sources.(68)

e. Construct pipeline facilities by which the potential production of the Elk Hills Naval Reserve will in the event of war be available for use. (26, 66)

f. Resist further restrictions on imports of petroleum and natural gas in order to assure maximum development and wartime availability of Western Hemisphere resources. (91)

9. Programs Requiring Current Planning for Action After the Outbreak of War

a. Periodically review methods for imposing quick and drastic wartime rationing of civilian petroleum supplies. (20–22, 24, 62–64)

b. Complete plans, including estimate of material requirements, for the maintenance throughout the war of (1) active exploration for oil, and (2) a drilling program of 50,000 wells annually in the United States and 6,300 annually in foreign countries, principally the Western Hemisphere. (25–28, 65)

c. Complete plans, including estimate of materials requirements, for (1) 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 (2) the conversion as soon as possible after D–Day of 400,000 B/D of thermal cracking capacity to crude topping operations. (29–31, 69)

d. (1) Complete plans for construction of 60,000 B/D additional alkylate capacity to be started immediately after the outbreak of a war; and (2) develop a specific operating plan for United States refiners which will maximize wartime aviation gasoline production. (33–35, 70–82)

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

(1) To expand four existing pipelines within 60 days after D–Day;

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

(3) To initiate and complete construction within six months after D–Day of (a) a 30-inch crude oil pipeline along the “Big Inch” right-of-way (subject to confirmation by the study contemplated in para. 10 below, that timely post D–Day construction is feasible) and (b) a further 30-inch pipeline from the vicinity of Lima, Ohio, to the Philadelphia-New York area;

(4) To convert the “Little Big Inch” pipeline from gas to oil. (36-40, 83)

f. 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 subparagraph (e) above are not implemented. (41–43, 85–88)

g. 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. (46–57, 67)

h. 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. (91)

10. Study of Feasibility

a. without 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.

b. 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.

c. A finding of infeasibility may require that we (1) create before D–Day reserves of materials, components or tools for which shortage may exist after D–Day, or alternatively (2) transfer to the period before the outbreak of war part or all of the construction now planned to begin after D–Day. For example, if the proposed construction after D–Day of a 30-inch crude oil pipeline along the “Big Inch” right-of-way (para. 9e (3) (a) above) is found to be infeasible, we must decide whether we should merely stockpile large diameter pipe for construction after D–Day or should build the line now. Similar 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 proposed statement of policy printed here, NSC 97/3 consists of a cover sheet, a memorandum by Lay to the NSC in which it was stated that the adoption of NSC 97/3 would mean the supersession of NSC 97/2, a table of contents, a 5-page financial appendix, and a 24-page NSC Staff Study. For the text of NSC 97/2, Dec. 13, 1951, see Foreign Relations, 1951, vol. i, p. 978.
2. The reference here is to PAD Report No. 435, Dec. 10, 1952, portions of which are printed on p. 901.
3. Items a, b, and c are considered to be of the highest urgency to alleviate the present risk to national security. [Footnote in the source text.]
4. Without extraordinary measures and corresponding increase in expense, completion of the program to the point where new ships are built and the old ships turned in will probably require between three and four years from the date authority and funds are available. [Footnote in the source text.]