1999 Saturn SL2 Oil use

My son has a Saturn that he bought used. I know that he changes his oil every 3000 miles and checks it in between. It seems every time he checks it between oil changes most of the oil is gone! There is no oil leaking from the engine but there seems to be what looks like oil in the tail pipe. What do you think this might be? Is his engine blown? If he has to have the engine rebuilt because of an internal problem is it very costly and is there any other way of fixing the problem other than just adding oil every 500 miles or so?
Thank you so much.