    [From the U.S. Government Printing Office, www.gpo.gov]

       I
          THE PACE OF OIL AND GAS DEVELOPMENT
                          IN SCOTLAND (1970-1977) --
                     POINTERS FOR AMERICAN PLANNERS

                      COASTAL Z&NE
                      INFORMATION CENTER

            HD
            9571 .7 ERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
            B87
            I                  Division of Marine Services
           T

            1978
                            Office of Coastal Zone Management

                                      COASTAL ZONE
                                     INFORMATION CENTER

                THE PACE OF OIL AND  GAS DEVELOPMENT IN SCOTLAND (1970-1977):

                                POINTERS FOR AMERICAN PLANNERS

                                     A Staff Working Paper

                                     property of CSC Library

                                      Helga Busemann

                                         October 1978

                                                                          ------

                       New Jersey Department of Environmental Protection

                                  Division of Marine Services
                               Office of Coastal Zone Management
                                        P. 0. Box 1889
                               Trenton, New Jersey 08625
                                                              DEPARTMENT OF COMMERCE NOAA
                                                          COASTAL SERVICES CENTER
                                                          2234 SOUTH HOBSON AVENUE
                                                               CHARLESTON, SC 29405-2413

                This report was  written by Helga Busemann in her private capcity.
                No official support or endorsement by the Department of Environmental
              Protection or any other agency of the State of New Jersey is intended
              or should be inferred.

    ,

                               DEPARTMENT OF ENVIRONMENTAL FRIOTECTICN@
                                               TRENTON                   Rk-EASE ADDRESS R.E!-LY TO:
                                                                             P. 0. aox 1889
            DIVISION OF MARINE SERVICES                                     R E NT 0 11. N. J. 0 ZS 2. 5

                                                         October 1978

              Dear Friend of the Coast:

                    This document is another one in this Office's series of
              working papers intended to contribute to a better understanding
              of coastal issues. This document reports on the pace of
              offshore oil and gas exploration and development in Scotland
              in the early 1970's.

                    Ms. Busemann began the research for thi-s paper under a
              Fellowship from Columbia University prior to coming to this
              Department in 1976. While the Scottish experience is, of
              course, not directly translatable to New Jersey, there are
              a number of planning principles which hold true where Outer
              Continental Shelf (OCS) activities are contemplated. This
              staff working paper emphasizes, for example, the need for
              early planning and identification of potential conflicts.
              The Department of Environmental Protection has acted upon
              many of the recommendations presented in this report, which
              are offered here to assist other participants and observers
              in onshore planning in the United States for OCS activities.
              I hope this paper will clarify some of the issues surrounding
              Outer Continental Shelf planning and encourage further
              initiative,s to,,ensure that this new coastal-dependent activity
              will be compatible with those other activities now existing in
              the coastal zone. ,

                    I invite your comments on this paper.

                                               -Sincerely,

                                                 D
                                                   @id N..,Kinsey, Chief
                                                  av
                                                 Office of Coastal Zone
                                                 Management

                                           TABLE OF CONTENTS

                                                                               Page

                        Table of Contents                                         i.

                        Tables and Figures                                       ii.

                        I.   Introduction                                          I

                        Ii.  Onshore Bases: Aberdeen and its Satellites            5

                      III.   Well Drilling and Platform Building                 13

                        IV.  Transportation: P   Iipelines, Tankers  and
                                Terminals                                        21

                        Ve   Processing:    Oil, Gas, Petrochemicals             30

                       VI.   Planning By   Local Government                      35

                      VII.   Planning By   Britain's National Government         44

                     VIII.   Conclusions   and Recommendations for American
                               OCS Planners                                      48

                        Acknowledgements                                         53

                        Bibliography                                             55

                                            TABLES AND FIGURES

                                                                                    page

                 Table 1    Wells Drilled East of Scotland and Shetlands             14

                 Table 2    Time Interval (in years) between Discovery and
                            Installation of First Platform and Between Platform
                            Installation and Production Start-Up for 9 Fields
                            in the North Sea                                         16

                 Table 3    Platform Building Pace in nScottish" North Sea           18

                 Table 4    Transportation of Oil and Gas to Shore in
                            Scottish Sector of North Sea                             22

                 Table 5    Major Pipelines in Scottish Sector of North Sea          23

                 Figure 1 Support Bases and Onshore Facilities in Scotland             6

                 Figure 2 Oil and Gas Pipeline Landfalls in Scotland                   9

                  1.   INTRODUCTION

                       The offshore industry is new in Great Britain. It
                  started in 1964 with the leafe of blocks east of England
                  where gas fields were found.     In industrial England, the
                  onshore effects of these initial gas discoveries made little
                  impact on the existing industrialized society. In contrast,
                  further lease sales in waters east of Scotland resulting in
                  significant oil and gas discoveries brought visible changes
                  to the land and economy of Scotland. The growth of the
                  offshore oil and gas industry in Scotland has been rapid and
                  generated interest among planners attempting to understand
                  the process of change. Because environmental and social
                  baseline conditions before the coming of the offshore oil
                  industry to Scotland and the northern islands of Shetland
                  and Orkney were known and documentable, the region has
                  served as a laboratory to planners fascinated with the
                  process of growth and change.

                       This report is based on observations and interviews
                  concerning the onshore impacts of offshore drilling in
                  Scotland conducted during two visits there in 1975 and 1977.
                  Its purpose is to examine some of the changes that have
                  taken place since oil-related industry moved into Scotland
                  in the 1970's and to discuss the extent to which*these
                  changes may be common to other frontier regionst specifically
                  to the Atlantic Coast which anticipates an influx of oil and
                  gas efploration on the Baltimore Canyon and the Georges
                  Bank.   Indeed this matter has assumed a certain urgency
                  with the Exxon Corporation having spudded the first well in
                  the Baltimore Canyon on March 29, 1978.
                       A similar itudy was performed by Pamela and Michael
                  Baldwin in 1975 .. While the Baldwin report inspired this
                  writer's initial interest in offshore oil and gas, this
                  report is intended as an update of their@initial findings.
                  In 1975 insufficient time-had elapsed to document the pace
                  with which new discoveries had been brought into production.
                  The time to plan for onshore facilities between the moment
                  of a commercial discovery and production is short. A discovery
                  is termed "commercial" after several wells have been drilled
                  which permit the size of a reservoir to be delineated.
                  Whether a field is determined commercial depends on several
                  factors including the depth of water, distance of the reservoir
                  to land and whether a pipeline already exists which a company

                   *Footnotes may be found at the end of each chapter.
                  **A frontier region is one which is experiencing impacts of
                    outer continental shelf oil and gas development for
                    the first time.

                  can hook into. Once a field has been declared commercial
                  there is the danger that there might not be enough time to
                  ensure the orderly placement and development of onshore
                  related facilities which could result in disbenefits to
                  local communities. Since some facilities necessitated by
                  Outer Continental Shelf development must be routed through
                  coastal areas which are often unique, serving as recreational
                  resources for a greater than local region, it is important
                  that the relatively short life span of onshore facilities
                  not spoil the longer lasting resource irreparably. This
                  report indicates that with proper planning,disruption can be
                  avoided and looks at the Scottish oil and gas experience
                  from that perspective.

                       Recognition that the Scottish offshore with its harsher
                  climate and operating conditions-has more relevance to the
                  North and Mid-Atlantic frontier states than the gentler
                  environment of the Gulf States, has focussed these states'
                  search ior a model on Scotland rather than on the Gulf of
                  Mexico.   Also in the Gulf, development occurred gradually,
                  moving from onshore to offshore over a period of twenty
                  years. The oil and gas industry, in the Atlantic Ocean in
                  contrast started to drill in deep waters right from the
                  start as it did in the North Sea.

                       With Scottish lifestyles and economic conditions being
                  so different from those in the northeastern urbanized states,
                  Outer Continental Shelf (OCS) planners in the Atlantic
                  states have had little to go on since the changes and onshore
                  impacts which resulted from offshore activity in the Gulf of
                  Mexico were never fully documented. Further, while Alaskan
                  planners are carefully documenting impacts of oil and gas
                  development there, their studies are for the most part still
                  underway so that the literature is sparce.

                       It should be noted, however, that the volume of oil and
                  gas discovered in the North Sea is much higher than that
                  which may be found in the Atlantic Ocean and that the level
                  of impacts on the Atlantic coast may subpequently not be as
                  great as those described in this report.0

                       In the following chapters the following phases of
                  exploration, development and production will be discussed:

                  Chapter II     Onshore bases and the evolution of Aberdeen
                                 into the oil capital of Europe

                  Chapter III    The pace with which well drilling and platform
                                 building has occurred

                  Chapter IV     The various modes of transportation (pipe-
                                 lines, tankers and terminals) used to land
                                 and bring the hydrocarbons to market

                                                 -2-

                 Chapter V       Downstream activities related to reviewing
                                 applications for refineries, gas processing,
                                 and petrochemical plants

                 Chapters VI     The benefits of planning  to promote orderly
                  and VII        development and conservation of  land and
                                 water resources at the local and  national
                                 government level

                 Chapter VIII    Recommendations to planners anticipating
                                 onshore impacts from offshore oil and gas
                                 drilling

                                                -3-

                                             Footnotes

                       iThe British Continental Shelf   Act of 1964 ratified
                        the Geneva Convention of'1958   on the Law of the Sea.
                        This conferred states bordering oceans with sovereign
                        rights over the natural resources below the seabed
                        to a depth of 200 meters. Where several states
                        adjoin a water body, such as the North Sea, the
                        application of median lines is used to apportion the
                        seabed equitably. The Continental Shelf Act empowered
                        the Secretary of State for Energy in Great Britain
                        to grant licenses for exploration, development and
                        production of oil and gas.'
                       2Lease Sale 40 in the Mid-Atlantic covered tracts in
                        the Baltimore Canyon estimated to contain between 0.4
                        and 1.4 billion barrels of oil and between 2.6 and 9.4
                        trillion cubic feet of gas. The lease sale was held
                        August 17, 1976, but court challenges have held up
                        exploration. Resource estimates for the total Baltimore
                        Canyon amount to 6 billion barrels of oil and 32
                        trillion cubic feet of gas. Lease sale 42 was the
                        first one scheduled for the North Atlantic. It was
                        postponed on January 31st pending court challenges.
                        Lease Sale 42 tracts are estimated to contain between
                        .15 and .53 billion barrels of oil and 1.0 to 3.5
                        trillion cubic feet of gas. Mean resource estimates
                        for the total Georges Bank are .9 billion barrels of
                        oil and 4.4 trillion cubic feet of gas. (All estimates
                        are those of the U. S. Geological Survey).

                       3
                        Pamela L. and Michael F. Baldwin, Onshore Planning
                        For Offshore Oil, Washington, D.C., Conservation
                        Foundation, 197f.
                       4See the Baldwin book supra and James K, Mitchell,
                        "Onshore Impacts of    fshore Oil: Planning Implications
                        for the Middle Atlantic States", J. of American Institute
                        of Planners J., October 1976, p. 386, and New Hampshire
                        Department of Resources and Economic Development,
                        The Impact of.Offshore Oil: New Hampshire and the
                        North Sea Experience, Concord, New Hampshire, 1975.
                        The New England Riviii Basin Commission has also drawn
                        from the North Sea experience developing criteria
                        such as the Tech Updates for OCS development along
                        the Atlantic-Coast.
                       5Britain now ranks tenth in the world as a petroleum
                        producer (New York Times, March 22, 1978, p. 1). The
                        Baltimore Canyon by contrast is estimated to contain
                        about 6 billion barrels of oil of which Lease Sale 40
                        is estimated to contain one sixth. See Footnote 2
                        above.

                                                  -4-

                 II. ONSHORE BASES: ABERDEEN AND ITS SATELLITES

                      Support bases are ports or facilities for boats supplying
                 offshore drilling rigs during exploration, development and
                 production. During exploration two supply boats are customarily
                 used to service one exploratory rig or platform. During
                 exploration, such boats transport approximately 1,000 tons
                 of materials per month including fuel, drilling fluid and
                 chemicals. Support bases also include the helicopter ports
                 which transfer work crews offshore. Because of economics,
                 they are usually located closest to offshore operations.
                 Both marine and helicopter bases are potential generators of
                 growth with'marine bases attracting the ancillary OCS
                 industry and air bases inducing a demand for housing by
                 helicopter crews and supervisory personnel.

                      Aberdeen's rise as Europe's oil capital started following
                 the discovery of the Forties field by the British Petroleum
                 Company (BP) in 1970. Thereafter, engineering and specialized
                 tool companies established headquarters in the city with the
                 presence of one attracting the other. In addition, the city
                 government set out to woo the oil industry by sending delegations
                 to other countries to solicit business as well as hosting
                 conventions such as "Offshore Scotland" and "Offshore Europe"
                 similar to the Offshore Technology Conference held.in Houston
                 annually.

                      Aberdeen is now the principal support base for both
                 operations off the mainland of Scotland and off the Shetland
                 and Orkney Islands to the north (See Figure 1). It is the
                 principal air base for operations off the main coast of
                 Scotland, while Sumburgh is the major airport for operations
                 off the Shetland Islands. Aberdeen owes its position as a
                 primary onshore support base to its all-weather harbor,
                 proximity to offshore fields and an existing infrastructure
                 which includes the availability of ship repair, boat charter,
                 and catering services; housing; labor force and its airport
                 which services helicopters operating within a 200 mile
                 radius. Space at the harbor itself is very limited and has
                 forced all but essential water-dependent activities elsewhere.

                      Two integrated service companies which deliver "one-
                 stop shopping" services to a number of individual oil
                 contractors as well as individual oil bases leased by Shell
                 Oil, Total Marine, a French oil.company and Amoco are
                 located at the Harbor. ("One stop shopping" enables supply
                 ships to stock up on equipment, fuel and food at one dock
                 and head back to the platform or drilling rig in less than
                 24 hours in contrast to the past when ships might spend one
                 or more days in refueling). In addition, Aberdeen's fishing
                 industry and a new roll-on, roll-off ferry have berths in

                                              Figure I
                            SUPPORT BASES and ONSHORE FACILITIES IN SCOTLAND

                 (D PIPECOATING PLANT                                                   Sullom Voe
                 0 PLATFORM CONSTRUCTION
                 0 " PROPOSED" PLATFORM                                                t
                   MODULE CONSTRUC71ON                                                 IF          0
                   OIL-GAS SEPARATION                                            SHETLAND
                 A PETROCHEMICAL PLANTS
                      PROPOSED"                                                                    Le i
                                                                                                  scobwo
                   MLL RIG SHIP CONSTRUCTION                                                      H
                   REFINERY
                   SERVICE BASE COMPLEX
                   SERVICE B4S_E
                   POWER STATION
                 I TANKER TERMINAL                                  ORKNEY
                 f TANKER FARM
                -OIL PIPELINE
                 -G-GASPIPEUNE
                 PG PROPOSED GAS PIPELINE                                      Flotta
                 H HELIPORT
                 A AIRPORT

                                            X  stornoway                                           PG

                                      LEWIS

                                                                          MORAY FIRTH
                                                                 Nigg                         PG
                                                     CROMARTY FIRTH
                                                        Loch Kishom     Ardersier     StFergus..
                                            Skye       Drumbuie    Inverness       Peterh       ruden Bay
                  ATLAN11C                                                               .1    -A
                                                                                        G     m
                   OCEAN                                                                     berdeen

                                          0                     SCOTLAND

                                                                                          Montrose

                                                                                      undee
                                                       Por.                                  NORTH
                                                                                FIFE           SEA
                                                               Portkil             @Methfl

                                                                     side R 0
                                                                        I Grongernouth
                                                                        G       Edk*uMh
                         N                                        man=

                                                                                G      ENGLAND
                    0             50            100,
                                miles                                                    G    Teeside
                                                                                                    R
                                                                                                r
                                                                                                    w

                                                                                                  H

                                                                                    G

                                                   -6-

                 the Harbor.  Because of space constraints, oil companies
                 maintain only essential dock space at the harbor while
                 leasing additional space elsewhere in the Aberdeen area for
                 storage and offices.

                   . Interestingly, British Petroleum, which maintained a
                 supply base in Aberdeen until the Forties find, moved its
                 operations to Dundee shortly thereafter because of the
                 growing congestion at the harbor. Even so, it retains its
                 administrative headquarters near the airport in Aberdeen.

                      Since the discovery of oil, ship movement in the Harbor
                 has increased considerably necessitating the installation of
                 radar equipment. The Harbor Authority expanded, modernized
                 and deepened some of the quays up,to 32 feet at low tide to
                 accommodate the new oil activity and traditionaluses of the
                 harbor. At the same time, the fishing fleet also benefited
                 from the expansion and realignment of quays since its own
                 piers were modernized in the process.

                      Aberdeen's airport is almost as  important as its harbor.
                 The airport now has international service to London and
                 other oil capitals in Europe such as Stavanger in Norway and
                 Amsterdam in Holland. The airport also services helicopters
                 carrying personnel back and forth from the rigs. Because of
                 the close rapport which the American oil industry in the
                 Gulf Coast maintains with British oil interests, there was
                 talk in 1977 of establishing an airlink between Aberdeen and
                 Houston.

                 Aberdeen vis a vis Shetland Islands

                      Between 200 and 300 miles separate the oil fields in
                 the eastern Shetland Basin from Aberdeen. Notwithstanding
                 this distance, Aberdeen has remained the primary support
                ,base for these fields rather than the Shetlands which are
                 closer to them. This is because Aberdeen eliminates the
                 double-handling of materials and equipment which would have
                 had to be delivered to the Shetlands from the mainland in
                 any case and whidh is costly and time-consuming. The Sumburgh
                 Airport on the Shetlands, however, serves as the major
                 helicopter base to transfer personnel to the Shetland oil
                 fields. It seems that poor weather and primitive road
                 conditions between Sumburgh and Lerwick have resulted in air
                 personnel preferring to wait out delays in Sumburgh rather
                 than in Lerwick. This has in turn spurred considerable
                 development in previously isolated Sumburgh.

                      Other ports along the Scottish coast have tried to
                 attract the oil industry but with limited success, despite
                 the congestion at Aberdeen Harbor. This is probably because
                 they lack some of the amenities of Aberdeen such as its
                 airport, labor force and services. Where they have specialized
                 in providing a particular service, however, such as pipeline

                                                -7-

                 storage, in the case of Peterhead, they have fared better.
                 The following discussion of satellite bases on the Scottish
                 coast may serve to put in relief Aberdeen's advantages as a
                 service base.

                 Peterhead

                      Peterhead is located north of Aberdeen close to three
                 pipeline landfalls. See Figure 2. Until legislation was
                 passed in 1972 to remove an 1884 stipulation that no activity
                 other than fishing take place in the picturesque "Harbor of
                 Refuge", it sTemed that oil and gas activity might pass
                 Peterhead by. The local port authority leases space to two
                 integrated service companies and a number of individual oil
                 companies. the harbor serves as a base for the storage of
                 pipeline sections. While the pipeline for the Forties field
                 is complete, two gas pipelines are being constructed just
                 north of the harbor with the pipeline lay barges operating
                 out of Peterhead. Although an application for a transfer
                 terminal for bulk chemicals was turned down for safety
                 reasons, Peterhead may yet develop into a distribution
                 center for the gas liquids and their derivatives being
                 processed at the nearby St. Fergus terminal. Indeed an
                 ammonia plant in Peterhead was proposed although it is
                 doubtful whether it will be built now because of a slump in
                 the fertilizer market.

                 Dundee

                      Dundee is a regional center with a university, rail and
                 water access located south of Aberdeen. In addition to
                 servicing the British Petroleum marine base for the supply
                 of equi,pment and fuels it also serves Conoco and acts as a
                 tione-stop service base" for other companies. Dundee has
                 welcomed these new activities which fill a gap left by the
                 decline of the jute industry which had previously been an
                 important generator of port activity. It has failed to draw
                 the anciliary industry, however. This is probably due to
                 its proximity to.Aberdeen and that city's market influence
                 which extends into the Dundee area.

                 Montrose

                      Montrose located between Aberdeen and Dundee could also
                 have served as an onshore support base. Even though its
                 Harbor Authority modernized the port for oil and gas by
                 dredging and deepening the channel which measured six feet
                 initially, it has failed to attract more than about one or
                 two bases but has some ancillary services.

                     FIGURE: 2

                     PIPELINE           LANDFALLS                                                                                  THISTLE      M N SON
                     IN SCOTLAND                                                                                                   Duki-Ill

                                                                                                                        CORMORANT                9RIENT

                                                                                                                               HEATHER

                                                                                                                       36* Ott.
                                                                            SHETLAND                                                  NINIAN
                                                                               ISLANDS

                                                                                              Ta

                                                                        SULLONVOW

                                                                                                                                                       FRIG

                                                                                          ullsomesil

                                         ORKNEY ISLANDS

                                                                                                                        V

                                        SCAPA                 KIRKWALL
                                        ,LOW

                                                                       30. OIL LINE

                                                                                                                            pan

                                                                                                                 AV MON9

                                                                  ST. FERGUS
                                      NOWARTY FINT"                 PUTI[RIMIAD                  00-

                            ."VaRwalls
                                                                 ORUD 4 "T

                                                                A01901949
                              SCOTLAND

                                                                                                                                                        100

                                                                                                                     STATUTE MILES

                 The Firth of Forth

                      The river Firth of Forth is somewhat removed geograph-
                 ically from direct onshore support activity but its wide
                 flat banks, deep water channels and its proximity to an
                 urban labor market in the vicinity of Edinburgh have attracted
                 secondary oil and gas construction activity. Platform and
                 coating yards have located along the mouth of the river.

                      The location of yards in a relatively urban setting is
                 beneficial to employees who may be laid off between platform
                 orders or following the shutdown of a pipeline coating yard
                 since they will find it easier to obtain other work in
                 contrast to locations where the yard may be the only employer
                 in a region.

                 Summary

                      The bridgehead that was established in Aberdeen during
                 exploratory drilling in the 1960's became permanent once
                 significant volumes of hydrocarbons were found and attracted
                 a large ancillary industry. The OCS industry's proximity to
                 Aberdeen University has providedthat institution with an
                 on-site, live and fertile laboratory for research and the
                 monitoring of socio-economic and environmental impacts. In
                 addition, experts from the University have been employed as
                 consultants on pipeline building projects. In this way oil
                 activities have gained acceptance by the community. Also,
                 capitalizing on Aberdeen's natural assets was the city
                 government which encouraged the modernization and expansion
                 of the harbor and airport. It also played an important role
                 in creating a hospitable climate for the industry to work.

                      Aberdeen's success in becoming Britain's oil capital
                 has not been accomplished without a price. This has been in
                 the form of increased traffic congestion, inflation and
                 housing shortages. Housing construction, for example, has
                 declined as workers left traditionally relatively low paying
                 jobs for the higher wages offered by oil companies. In
                 addition, the difficulty of finding accommodations in Aberdeen,
                 even in the off-season because of the oil industry practice
                 to reserve whole blocks of rooms in hotels, has probably
                 caused Aberdeen's summer tourism industry to suffer even
                 though "bed and breakfast" establishments have taken up some
                 of the slack.

                 Support Bases in the Middle Atlantic

                      Unlike Scotland, no oil company has gravitated to any
                 particular port in the Mid-Atlantic. While Atlantic City,
                 closest to the tracts leased in S.ale 40, has been selected
                 by companies as a helicopter base, the inlet into the island
                 harbor often subject to frequent shoaling, barely satisfies

                                                _10-

                 the minimum 20 feet depth requirement of the workboats. The
                 inlet is, in addition, bordered by fringes of wetlands which
                 are strictly regulated by the New Jersey's Department of
                 Environmental Protection.' Lastly, the City has not proven
                 very hospitable to the oil industry since casino gambling
                 emerged as the potential future savior of the aging city.
                 Until significant discoveries are found, therefore, most oil
                 companies will probably operate their boats out of Rhode
                 Island which has wooed the companies and leased space to
                 them at a former naval base on apparently rather favorable
                 terms. Nevertheless, because of the existing infrastructure
                 and the location of the field office of the U. S. Geological
                 Survey which supervises oil industry operations, it seems
                .more than likely that Atlantic City will emerge as a limited
                 center of oil activity, should commercial volumes of oil
                 and/or gas be found.

                      A-Rutgers University study indicated that Perth Amboy
                 within the bi-state Port of New York and New Jersey met more
                 of the physical criteria for support bases than other locations
                 in New Jersey. The Port Authority of New York-Ne,w Jersiey
                 also identified several iites within the bi-state port as
                 potential support bases .   Since oil companies traditionally
                 prefer to use non-union laor, however, it is possible that
                 they may avoid the bi-state port which is heavily unionized.
                 Outside of New Jersey, Lewes in the state of Delaware has
                 been cited as a potential support base. If more southerly
                 tracts are leased in future lease sale there is a strong
                 likelihood that the industry will site g support base in
                 Lewes which has already been soliciting the OCS industry   to
                 locate there. With respect to pipelines, New Jersey's
                 proximity to the leased tracts make it more likely that it
                 will be a landfall for any gas and/or oil pipeline as
                 commercial discoveries are found. The state of New Jersey
                 has taken this eventuality into account in its coastal
                 energy policies which would permit pipelines subject to a
                 number of conditions,,and performance standards.%   Though
                 platform construction yards are,,not dependent on the locations,
                 close to the center of exploration and development since
                 they could be floated into place from the Gulf of Mexico,
                 Brown and Root, a large platform fabricator, has bought land
                 in Cape Charles, Virginia to build a platform yard.

                                           Footnotes

                       The British government viewing oil in terms of
                       serving a national interest, acted swiftly to revoke
                       the 1884 stipulation. It subsquently authorized
                       the expansion and modernization of the harbor. The
                       Harbor is managed by a local authority as an agent
                       to the Secretary of State which obtained jurisdiction
                       of it in 1960.

                       2
                       Rutgers University, Center for Coastal and Environmental
                       Studies, Bruce Hoff et al, Onshore Support Bases for
                       OCS Oil and Gas Development: Implications for New
                       Jersey, September 1977.
                       3The Port Authority of New York and New Jersey, Support
                       Bases for Offshore Drilling: The Port of New York
                       T-otential, May 1977.

                       4
                       See U. S. Department of Commerce, National Oceanic
                       and Atmospheric Administration and N.J. Office of
                       Coastal Zone Management, State of New Jersey Coastal
                       Management Program, Bay_and Ocean Shore Segment,
                       Draft Environmental Impact Statement, May 1978, page
                       137, et. seq. See also N. J. Department of Energy,
                       The State Energy Master Plan (Draft) Paper, June 1978
                       and the background policy paper, Determination of the
                       Need for Energy Facilities, May 1978.

                                               -12-

                  III. WELL DRILLING AND PLATFORM BUILDING

                       Estimates concerning reserves in a   frontier area  remain
                  assumptions until exploratory drilling either confirms or
                  negates them. Often it may require a number of exploratory
                  wells to be drilled before oil and/or gas is found. Following
                  a strike, appraisal wells are drilled to determine the size
                  of the find and whether economics would warrant its reco   'very.
                  Table 1 shows that 262 exploratory wel.ls were drilled between
                  1967 and 1976 in the waters of Scotland and the Shetland
                  Islands. During that period 14 commercial fields were
                  discovered ("commercial" is determined by the individual
                  companies, not the government). Definitions may vary
                  depending on estimated costs of production. This success
                  ratio of 1 to 18 is considered high relative to that in
                  other oil producing regions including the Gulf of Mexico
                  where a ratio of 1 to 40 is more typical.

                       Table 1 shows that an average of 3.7 exploratory and
                  6.67 development wells were drilled per year during the 1967
                  to 1976 period. The higher development drilling well rate
                  probably results from the greater certitude an operator has
                  of a site following its appraisal as compared to when he
                  drills a "wildcat" for the first time.
                       Rig  ime measure's the amount of time that a rig actually
                  operates.

                       To develop the fourteen commercial fields 20 platforms
                  have been ordered, twelve of which will be of steel And
                  seven of concrete. The Argyll field is deploying a converted
                  drilling rig as its platform.

                                                 -13-

                                                                      Table 1
                                                 Wells Drilled East of Scotland and Shetlands
                                                                     1967-1976

                                                    Rig Time (Years)
                                    Exploratory       Deployed in              Wells/Rig        Development   Rig Time
                                      Wells          Drilling Wells              /Year           Wells         Years          Wells/Rig/Year

              1967                        7                 .8                   4.7                      -
              1968                        1                 .8                   5.16                     -
              1969                        8               2.1                    5.45                     -
              1970                      10                2.2                    4.15                     -
              1971                      17                4.0                    4.6                      -
              1972                      16                6.8                    2.72
              1973                      26               10.7                    2.42
              1974                      51               20.6                    2.46                     -             -            -
              1975                      73               25.6                    2.75                     8           1.1         7.27
              1976                      53               18.3                    2.82                     48          7.9         6.07
                                        262

              Source:    Development of the Oil and Gas Resources of the United Kingdom 1977        Department of Energy

                      once a discovery has been determined to be commercial,
                 the most important decision concerns the design of the
                 platform needed to recover the oil. -As platforms are
                 becoming more sophisticated and complex, costs are increasing.
                 Over 40 development wells can be drilled.from one platform
                 and drain a large field through directional or slant drilling.
                 Operators are producing all but the largest fields from one
                 platform in the Scottish North Sea. The large Brent and
                 Forties fields with reserves of one billion barrels of oil
                 each are being produced from four platforms. The more
                 recently discovered Ninian field, however, also with a one
                 billion barrel estimated reserve, is expected to be drained
                 with only three platforms which will have 40 wells each in
                 contrast to the 27 wells on the Forties platforms.

                      Over one third of the platforms being installed on the
                 Scottish North Sea are of concrete rather than the traditional
                 steel. This is because of their reputed stability in those
                 stormy and deep waters. Another advantage is their storage
                 capacity during emergencies and.between loadings when tankers
                 are used as the transportation mode to shore.

                      Table 2 indicates the time lapse for the first nine
                 fields which are being produced in the North Sea between the
                 discovery and the first platform installation. This period
                 averaged 3.33 years between 1967 and 1976. The installation
                 of the Montrose platform took six years, the longest interval,
                 possibly because this was the first field discovered and no
                 operative procedures were in place. Platforms on the smaller
                 fields were installed in as little as two years after they
                 were established as being "commercial".

                      The table also shows the interval between platform
                 installation and production start up. Once a platform is in
                 place, production wells are drilled. This interval has
                 averaged,1.1 years in'Britain. The British government has
                 permitted production start-up before the completion of-all
                 wells and before pipelines were in place. In the United @ -
                 States, start-up*does not usually begin until all development
                 wells have been drilled and pipelines are in place. In the
                 United States, development drilling is generally completed
                 in two years following platform installation. Britain's
                 speed has been more rapid based on its desire to reduce
                 imports of fuel and to improve its balance of payments.

                                                                       Table 2

                                 Time Interval (in years) between Discovery and Installation of First Platform
                           and between Platform Installation and Production Start-Up for 9 Fields in the North Sea

                                              2                3                       4                   5                     6
                                                          Time Interval                               Time Interval         Time Interval
                                      Installation          between               Production            between                between
              Field      Discovery     of Platform        (1) and (2)              Start Up           (2) and (4)           (1) and (4)

              Argyll         1971         3/75                 4                     1975                  0                     4
              Auk            1971         7/74                 3                     1976                  2                     5
              Beryll         1972         7/75                 3                     1976                  1                     4
              Brent A        1971         5/76                 5                     1976                  1                     5
                     B         to         8/75                 4                       -                   -                     -
                     D         if         7/76                 5                       -                   -                     -
              Claymore       5/74         7/75                 1                     1977                  2                     3
              Forties A     11/70         6/74                 4                     1975                  1                     5
                       B       19         6/75                 5                       -                   -
                       C       is         8/74                 4
       a%                      of
                       D                  6/75                 5                       -                   -                     -
              Montrose       1969         8/75                 6                     1976                  1                     7
              Piper          1973         6/75                 2                     1976                  1                     3
              Thistle        1973         8/75                 2                     1977                  2                     4

              Source:    Oil,and Gas Journal "Petroleum 2000", August 1977 and Department of Energy, "Development of the Oil and
                         Gas Resources of the United Kingdom 1977", Her Majesty's Stationery Office, London, England

                      Table 3 reveals that of the twenty platforms built or
                 on order between 1967-76 no more than three were built in
                 any one yard. This is probably due to operator's desire to
                 have platforms (which may take between one and two years to
                 construct) installed as rapidly as possible and the reluctance
                 to place an order with any plant that has any kind of backlog.
                 While this speed is desirable from the operator's point of
                 view, the idle periods between platform orders are often
                 disruptive for a community which will be impacted by worker
                 layoffs. Such impacts are discussed in more detail in
                 Section IV.

                      The figure of 5.4 years nevertheless represents a
                 remarkably swift rate of development which is much shorter
                 than the eight year figure between discovery and produc@  ion
                 cited by United States industry for the Atlantic Coast.

                     The controversy thatthe actual siting of platform
                 yards has provoked hjs been described in the earlier literature
                 about the North Sea.

                                               -17-

                                                                       Table 3

                                                 Platform Building Pace in "Scottish" North Sea

                                                                               Estimated Reserve                                     Platform
                                                          Discovery             (in 000 barrels)                Platform              Building
              Field            Company                      Date                 as of 8/1/77                     Type                  Yard

              Producing Fields:

              Argyll           Hamilton                     1971               under assessment           converted rig

              Auk              Shell                        1971                      60                  steel                 Methil, Scotland

              Beryl            Mobil                        1972                    511                   concrete              Norway

              Brent            Shell                        1971                   1,680
              Platform A                                                                                  steel                 Methil
                         B                                                                                concrete              Norway
                         D                                                                                concrete              Norway
      00
                         C                                                                                concrete              Ardyne Point
                                                                                                                                Scotland

              Claymore         Occidental                   1974                    416                   steel                 France

                      3
              Forties          BP                           1970                  1,750
                Platform A                                                                                steel                 Teeside, England
                         B                                                                                steel                 Teeside
                         C                                                                                steel                 Nigg Bay, Scotland
                         D                                                                                steel                 Nigg Bay

              Montrose         Amoco                        1969                    146                   steel                 France

              Piper            Occidental                   1973                    620                   steel                 Scottish/(Ardesier:
                                                                                                                                French-joint
                                                                                                                                enterprise

              Thistle          BODL                         1973                    555                   steel                 Teeside

                                                                 Table 3 (continued)

                                                                                Estimated Reserve                                     Platform
                                                          Discovery             (in 000 barrels)                Platform              Building
               Field           Company                       Date                 as of 8/1/77                     Type                 Yard

               Fields Under Development:

               Claymore        Occidental                    1974                    416                   concrete              Ardyne Point

               Comorant        Shell                         1972                    150                   concrete              Ardyne Point

               Dunlin          Shell                         1973                    584                   concrete              Holland

               Heather         Local                         1973                    146                   steel                 Ardesier

               Ninian A        Chevron                       1974                  1,022                   concrete              Loch Kishorn
                        B          it                                                                      steel                 Nigg Bay

               UK Stratford    Conoco                        1974                    428                   steel                 Nigg Bay

                      Reserves are being reassessed.

                      2
                      The UK Stratford field straddles the British-Norweigan sectors and will be developed under a unitization
                      agreement still being worked out.

               Source:    Department of Energy
                          Development of Oil and Gas Resources of the United Kingdom 1977

                                           Footnotes

                       The March 1978 issue of Offshore reported that the
                       Claymore field was brought into production in 3.5
                       years. Swift development was attributed to proximity
                       of the Shell field to the large Piper field and the
                       economies of scale which would result by Claymore
                       production being routed through the Piper pipeline.
                       Dick Mutch, "Claymore Fields Set North Sea Record"F
                       p. 102.
                       2Pamela Baldwin and Michael F. Baldwin, Onshore
                       Planning Offshore Oil, op. cit, and New Hampshire
                       Department of Resources and Economic Development,
                       The Impact of Offshore Oil: New Hampshire and the
                       North Sea Experience, 1975.

                                                -20-

                 IV. TRANSPORTATION: PIPELINE, TANKERS, AND TERMINALS

                      Oil and gas are coming ashore today by pipeline, tankers
                 and through newly built marine terminals as shown on Table
                 4. This chapter discusses the several modes in which oil
                 and gas are landed in detail.

                 Pipelines

                      In 1977 two pipelines were landing oil in the Scottish
                 North Sea: one with its landfall in the Orkney Islands and
                 the other landing on the mainland of Scotland. (A third
                 pipeline was in place although oil will not flow through it
                 until the terminal at Sullom Voe in the Shetlands is ready
                 to receive it, in late 1978). Gas pipelines were not in
                 place and gas was either reinjected back into the wells or
                 flaredpending completion of the pipelines. (See Table 5).
                 Speed in laying pipelines depends in part on weather conditions,
                 the particular lay barge being used, water depth and size.of
                 pipelines. on the average it took about one day to lay one
                 mile of the pipeline landing in the Shetlands. To speed up
                 the process, it is possible for a single pipeline to be laid
                 by two lay barges starting at opposite ends of the pipeline.
                 It is also.possible to start constructing a pipeline before
                 a platform is in place as was the case with the Ninian
                 field.

                 oil

                      In the Gulf of Mexico a veritable "spaghetti" network
                 of pipelines has been built over the past 25 years. To
                 avoid this, the Bureau of Land Management, at the insistence
                 of frontier states on the Atlantic Coast has stipulated that
                 common carrier lines (with several companies sharing in
                 their cost and maintenance) be constructed in designated
                 corridors.

                      In Britain in contrast there seems to be no strong
                 compulsion by the government to encourage the concept of
                 common carrier pipelines. on the other hand, the concept
                 works on an informal basis where operators of small fields
                 adjacent to a larger field have found it economically
                 desirable to hook into the major trunkline rather than build
                 their own line or tanker it ashore.

                      British Petroleum built the first oil pipeline. The
                 111 mile submarine line comes ashore at Cruden Bay on the
                 Scottish mainland, a few miles north of Aberdeen. Cruden
                 Bay is the closest landfall to the offshore tracts, which
                 served as an important locational factor in view of the high
                 cost-($1 million per mile) of submarine-pipelines. An
                 onshore pipeline of approximately 130 miles links the
                 offshore pipeline to BP's Grangemouth refinery.

                                               _21-

                                                                        Table 4

                                     Transportation of Oil and Gas to Shore in Scottish Sector of North Sea
                                                                         6/77

                                                Discovery       Estimated Reserve          Production       Landing
               Field Name      Owner              Date          Million Barrels              Startup          Mode                Comments

               Argyll          Hamilton           1971                      ?                  1975      Floating system    Production from a
                                                                                                                            converted platform

               Auk             Shell              1971                     60                  1976      Floating system
                                                                                                            SPAR

               Beryl           Mobil              1972                   511                   1976      Floating system

               Brent           Shell              1971                  1,680                  1976      Tanker initially;Gas being flared until
                                                                                                         then pipeline      gas line is in place

               Claymore        Occidental         1974                   416                   1977      Tanker, then
       to                                                                                                pipeline hookup
                                                                                                         to Piper

               Forties         BP                 1970                  1,750                  1975      Pipeline

               Montrose        Amoco              1969                   146                   1976      Floating system

               Piper           Occidental         1973                   620                   1976      Pipeline

               Thistle         BODC*              1973                   555                   1977      Floating system,
                                                                                                         then pipeline
                                                                                                         hookup to Piper
                                                                                                         line

               Source:    (British) Department of Energy, "Development of     the Oil and Gas Resources of the United Kingdom 1977".
                          Her Majesty's Stationery Office, London England.
               *British Oil Development Corporation. (See Chapter VII).

                                                                                             Table 5

                                                                Major Pipelines in Scottish Sector of North Sea

                                                                                                                                             Completion
                   Field                 Terminal                    Owner                       Length        Diameter                        Date                     Comments

                   Oil:

                   Forties               Cruden Bay                  BP                          11.1 mile        3211                          1975      Links to onshore pipeline
                                                                                                                                                          to Grangemouth refinery
                                                                                                                                                          and tankfarm at Dalmeny

                   Piper                 Flotta terminal             Occidental                  124 mile         3011                          1976      Sells to British refineries
                                         Orkney Islands

                      Claymore           Piper tie in                Occidental                     8 mile        30"                               7

                   Oil Pipelines Under Construction:

                   Ninian                Sullom Voe                  Chevron                     105 miles        3611
                                         Shetland Islands

                   Heather               Ninian                      Union Oil                     22 mile        16"

                   Brent                 Sullom Voe                  Shell/Esso
                                         Shetlands

                      Comorant           Sullom Voe                                                93 mile        36"

                      Thistle            Dunlin                      BODL Ltd.                      7 mile        2411

                      Dunlin             Comorant                    Shell                         17 mile        2411

                   Gas Pipelines Under Construction:

                   Brent                 St Fergus                   Shell                       281 mile         36111

                   Claymore              Piper                       Occidental                    16 mile        2211

                                                             Table 5 (continued)

                                               Major Pipelines in Scottish Sector of North Sea

                                                                                                     Completion
              Field           Terminal            Owner               Length    Diameter               Date              Comments

              Norwegian Pipeline:

              Ekofisk         Teeside (England)   Philips             220 mile    3411                 1975

              Frigg           St. Fergus          Total               225 mile    32"                 May 1978

              Source:    (British) Department of Energy, "Development of the Oil and Gas Resources of the United Kingdom 1977",
                         Her Majesty's Stationery Office, London, England.

                       Shell's pipeline from the Brent field to Shetland is
                  now in place although oil is not yet flowing through it.
                  The pipeline is 93 miles long. The oil is to be pipelined
                  to the Sullom Voe terminal late in 1978 when all four platforms
                  on the Brent field are completed. From Sullom Voe tankers,
                  will transport it to British refineries. Oil from the one
                  producing.platform on Brent is already being tankered to
                  refineries owned by Shell and Esso, owners of the field, in
                  Britain.

                       The Brent pipeline will also transport oil from the
                  Dunlin, Comorant and Thistle fields the first two of which
                  ;are owned by the Shell-Esso group. The Thistle field is
                  owned by the British National Oil Corporation.

                       A 10,5 mile oil pipeline into the Shetlands has been
                  completed to land oil from the Ninian oil field owned by the
                  Chevron group. It will also land Union's oil from the
                  Heather field. The oil companies indicated that two separate
                  lines were needed to land oil from the Brent and Ninian oil
                  fields which are located in relatively close proximity to
                  one another offshore. The two pipelines are 32 inches each
                  in diameter. the construction of a larger diameter pipeline
                  holding a larger capacity which might have eliminated the
                  second pipel-ine was apparently not deemed technically
                  feasible in view of the prevailing water depth, water     pressure
                  and state of the art. A fourth pipeline takes oil from the
                  Claymore and Piper Fields to the Orkney Islands.where it is
                  transferred by tanker to market.

                  Gas

                       Unless liquefied by cooling - an expensive process over
                  short distance,s - gas cannot be transferred ashore by tanker.
                  Therefore, it must be transported by pipeline.

                       In Britain the gas industry is a monopoly regulated by
                  the British Gas Corporationr Oil companies sell gas found
                  in the British North Sea to the British Gas Corporation I
                  which introduces@the processed natural gas into the national
                  gas grid. It sells back any gas liquids or derivatives to
                  the oil or chemical companies.              I

                       British gas is building a terminal on 500 acres at St.
                  Fergus to process gas from Shell's Brent field which is
                  expected to provide 15 percent of Britain's gas. St. Fergus
                  was th2 closest environmentally sound landfall to the Brent
                  field.   It will also receive gas from other fields including
                  the Norwegian Frigg field. Norway is allowing gas from
                  Frigg to be transported to Scotland since the technology to
                  lay a pipeline across the deep trench separating the field
                  from the Norwegian m.ainland does not exist yet. Both the
                  operator of the Frigg and Brent fields, Total Marine

                                                  -25-

                  and Shell Oil are building facilities directly adjacent to
                  those of the British Gas Corporation from whom they are
                  buying back all but the methane which is going into the
                  British Gas grid system. Shell is building an onshore gas
                  pipeline with Esso from St. Fergus to Moss Morran (near
                  Edinburgh) - a distance of some 150 miles -to process these
                  liquids further and then transport them to Britain, Europe
                  or the United States.

                       Two pipelines have already been constructed into St.
                  Fergus and the design of the terminal allows for a third
                  should that become necessary. Constructing the pipelines
                  involved breaching the dunes in two places. Because of the
                  care 1which included selecting the proper season for con-
                  struction) with which-the dune sections were removed, replaced
                  and reseed?d, no long term impacts are expected from this
                  operation.

                       British Gas, British Petroleum and others are under-
                  taking a study to determine the feasibility of building a
                  gas pipeline gathering system to recover gas found in other
                  fields which is currently being flared.

                  Marine Terminals

                       Aside fr*om some oil from British Petroleum's Forties
                  Field being refined and marketed in Scotland, most other oil
         c_;,     (in the absence of overland oil pipelines) goes to England
                  by tanker.

                       The new tanker activity has necessitated the building
                  onshore of transfer terminals and single point mooring buoys
                  where tankers are offloading oil directly from platforms.
                  Single point mooring buoys are sometimes called deepwater
                  ports in the United States. The discussion below describes
                  onshore marine terminal construction on the Orkney and
                  Shetland Islands to which large volumes of oil are being or
                  will be delivered by pipeline. The completed Scapa Flow
                  terminal is in the Orkney Islands; the Sullom Voe terminal
                  in the Shetland Islands (see Figure 2) is expected to start
                  operating late in 1978.

                       Scapa Flow received its first oil in 1977 from the
                  Piper field. The terminal is designed to handle 500,000
                  barrels a day through the pipeline and store four and a half
                  million barrels of oil (or a 9 day's-supply from the oil
                  fields) in five, one-half million and two, one million
                  barrel storage tanks. Each tank is surrounded by a berm   or
                  dike to contain the contents should a break occur in the
                  tanks. Associated gas is separated at the terminal. The
                  lighter gases are used to power the oil burners. Propane is

                                                 -26-

                stored,..in two-100,000 barrels for shipment by 30,000 dead
                weight ton-liquid petroleum tankers. Crude oil tankers load
                from single point mooring buoys in the port while liquid gas
                is loaded onto smaller tankers docking at a jetty.

                     Water treatment facilities remove oil from ballast
                tanks on board the tankers and remove impurities in the
                formation waters contained with the discovered oil. Water
                is discharged into the ocean with no more than 25 parts   per
                million (ppm) oil permitted as effluent. (In the United
                States the range is between 30 and 52 ppm). Sampling
                stations monitor pollution. The terminal has fire fighting
                equipment, skimmersi and low toxicity dispersants to handle
                accidents. This equipment was tested shortly after oil was
                first landed at the terminal when a single point mooring
                line came loose from a tanker in winds ranging up to 68
                knots, in 6 to 8 feet high waves. Thereafter, the Harbor
                Authority mandated that future loadings would not be per-
                mitted under storm conditions. (Storm gauges-which had
                signaled the danger were apparently ignored).

                Sullom Voe

                     The Sullom Vo-e terminal though larger will have facilities
                comparable to those at Scapa Flow. It is being built to
                handle one million barrels of oil and associated gas per day-
                initially, with expansion up to 3 million barrels per day
                possible.* Its storage capacity is equivalent to between 4
                and.7 days of production. Jetties are intended to handle
                tankers between 13,000 and 300,000 dwt. LPG gas will be
                offloaded on a separate jetty. About three tankers a day or
                1,000 per year are expected in-the harbor. The planning
                that was involved in the siting of this terminal is described
                in Section VI.

                Mini-Terminal

                     Following the discovery of the Forties field, British
                Petroleum built a tanker-loading island in 72 feet of water
                at the end of half a mile of underwater pipeline in the
                Firth of Forth river, downstream of its refinery at Grangemouth.
                The terminal permits tankers to load crude oil which will be
                marketed in England. The terminal can handle tankers up to
                30,000 dwt. and load at the rate of 15,000 tons per hour. A
                tank farm located a mile inland from the river is connected
                to the terminal by an underground pipeline. The tank farm
                was built on spoils from oil shale mining operations during
                the 1910's.. Landscaping permitted the tanks to be placed
                into a hollow which is surrounded by a high grassy bank.

                *If reports on July 11, 1978 of a major oil strike by British
                Petroleum west of the Shetlands are confirmed, then the.@
                foresight in providing excess capacity at   the terminal will
                have been more than vindicated.

                                               -27-

                 The tanks are thus not visible from nearby and constitute no
                 eyesore. In addition to the storage tanks there is a
                 treatment plant to handle oily ballast water. BP officials
                 are proud of the design of this terminal and make a point to
                 show it to visiting planners both from Britain and overseas.

                                               -28-

                                           Footnotes

                        Dr. William Rtichie and L. Walton, Environmental
                       Appraisal of Pipeline Landfall Site Area at St.
                       Fergus (Rattray Bay), University of Aberdeen,
                       November 1975. See also: Dr. William Ritchie,
                       Environmental Problems Associated with a Pipeline
                       Landfall in Coastal Dunes at Crudeh Bay, Aberdeenshire,
                       Scotland, American Society of Civil Engineers (reprint
                       from Proceedings of the 14th Coastal Engineering
                       Conference, Copenhagen, Denmark, June 1974.
                       2
                       The Loch of Strathberg just north of St. Fergus was
                       British Gas' first choice for a landfall but was
                       ruled out because it was in the path.of a bird
                       migratory route.

                                               -29-

                 V.   PROCESSING: OIL, GAS, PETROCHEMICALS

                      Important as is onshore planning for offshore exploration
                 and development, it becomes even more crucial for the production
                 phase when processing facilities will be built to market the
                 oil and/or gas. The siting of such facilities can be crucial
                 in determining land uses for many years since such plants
                 may attract ancillary industries such as the chemical industry
                 for which oil and gas are essential feedstocks. In Britain,
                 North Sea oil has replaced imported oil to a large degree.
                 Even so, a company such as British Petroleum, with its
                 production from the large Forties field, plans to continue
                 to import heavy, sulfurous Arabian crude oil. The Arabian
                 product is cheaper than the high-grade, low-sulfur North Sea
                 oil and will be used for blending and to fill an existing
                 demand. When questioned about the potential adverse air
                 impacts from burning Arabian crude oil, officials indicated
                 that Britain's island position and consequent superior
                 dispersion characteristics made air pollution less of a
                 problem than in other countries.

                      A 1977 report by an organization similar in function to
                 the Chamber of Commerce in the United States estimated that
                 Arabian crude could well continue to command thirty percent
                 of the British Til market, thereby freeing some North Sea
                 oil for export.

                      Because of Scotland's limited demand for new petrochemical
                 production, most petrochemicals produced in new plants in
                 S.cotland are expected to be exported to either England,
                 Europe or the United States.

                      Below, four projects are described concerning the
                 construction of processing facilities to indicate the type
                 of facilities that the British government is reviewing
                 during the production phase of North Sea oil and gas extraction.

                      The first pFoject consisted of an ammonia plant which
                 was to be built by a Swedish firm in Peterhead to capitalize
                 on the gas by-products produced at the nearby gas plant at
                 St. Fergus. There is some doubt now whether the plant will
                 be built because of the large investment costs in building
                 the plant and the uncertainty of the world fertilizer market.

                      A second more active project involves a chemical plant
                 to be built by the Shell Oil Company. The original proposal
                 was to build it in Peterhead using the harbor to export bulk
                 chemicals by tanker. Harbor limitations obliged Shell to
                 look for another site. Local opposition was base on potential
                 ,tanker hazards and the inadequacy of the seawall surrounding
                 Peterhead Harbor. The seawall was not believed to be high
                 enough to contain heavy seas during a storm and protect the

                                                -30-

                 @tankers and their potentially hazardous cargo from damage.
                  If the chemical plant had been approved in Peterhead, it
                  would doubtless have had a sizeable impact on the small
                  community in terms of attracting workers from the two existing
                  industries: fishing and agriculture. Peterhead's largest
                  industry, the Cross and Blackwell cannery has already
                  suffered as a result of the oil industry which tempted low
                  paid employees to defect to the higher paying oil-related
                  jobs in the harbor.

                       Shell has now submitted a new proposal to build the
                  plant in Moss Morran on the Firth of Forth estuary opposite,"
                  Edinburgh. The new location is probably preferable to the
                  Peterhead site in terms of being able to absorb the plant
                  and tanker-related traffic and impacts. Certainly the
                  additional traffic generated by the new Shell plant would
                  constitute only a small increment to existing traffic on the
                  Firth of Forth in contrast to the same impacts that this
                  would generate in Peterhead Harbor where there  are no tankers
                  at all. A public hearing on the Moss Morran-Edinburgh site
                  was held by the Secretary of State for Energy  for Scotland
                  and approval issued in March 1978. Shell is building a
                  liquid gas pipeline from St. Fergusto Moss Morran. This
                  will bring the number of onshore subterranean pipelines
                  between St. Fergus and the Edinburgh area to five. (These
                  include the three gas lines at St. Fergus which hook up   to
                  the British Gas grid, BP's oil line between Cruden Bay and
                  Grangemouth and the Shell line under discussion.) This
                .number could increase to six should British Gas decide it
                  needs another pipeline to transport fuel from a gas gathering
                  system currentlyIunder study. More subterranean pipelines
                  in this region may not be permitted in the future, however,
                  since the easements acquired from the farmers for maintenance
                  could mean a reduction of land devoted to agricultural use.

                      Whil-e Peterhead has been spared for1riow from the impacts
                  resulting from the.building of two chemical plants, the
                  pressure from the petrochemical industry to locate close to
                  the St. Fergus plant should not be overlooked.

                      Government and business interests in other areas of
                  Scotland have been trying to attract processing i kndustries
                  because of the growth potential believed to be associated
                  with them. The Cromarty Firth region which already contains
                  two platform yards, a pipe coating yard, a gin distillary
                  and an aluminum smelter is seeking to attract still more oil
                  and gas facilities. The Highland Regional Council, for

                                                -31-

                  example, is trying to promote approval of a proposal to
                  build a grass roots refinery whose products would be exported
                  to Europe and possibly the United States. The refinery
                  proposal has the tacit backing of the Brown and Root platform
                  yard in Nigg Bay. Brown and Root sees the refinery as
                  adding diversity to the local economy from which it would
                  benefit in that it believes workers would have increased job
                  opportunities when laid off between platform orders. This
                  seems to be a false assumption, however, since refineries
                  are capital-intensive and employ relatively few people after
                  the construction phase.

                       The exp ansion project mentioned above concerns.the
                  addition of an alkyla@ion plant at British Petroleum's
                  Grangemouth refinery.   B.P. already expanded facilities at
                  the refinery recently to build a gas separation plant at an
                  adjacent site it owns to stabilize the Forties crude.

                       BP is also planning to reverse the flow of one pipeline
                  that had been used until the advent of North Sea oil to
                  import crude into the refinery. The oil in the "reverse
                  flow" pipeline will now be exported from BP's Finnart
                  terminal on the west coast and will provide,BP with two
                  outlets for its Forties production by 1980."'

                  Implications of Downstream Processing Plants  for Mid-Atlantic
                       Frontier States

                       The decision to build a refinery is not  one that is
                  taken lightly because of the costs involved. New Jersey,
                  Pennsylvania and Delaware between them contain nine major
                  refineries. With the proximity of the Mid-Atlantic refineries
                  to the Baltimore Canyon and the Georges Bank and the absence
                  of a refinery in-New England, it seems all but inevitable
                  that these states will be impacted by downstream processing
                  activity. These states, however, unlike Scotland, have
                  serious air pollution problems and may have a greater
                  problem in absorbing emissions from oil and gas plants. Air
                  pollution is certain to become more and more of an issue as
                  the industrial states bordering the Atlantic Ocean become
                  the focus of scrutiny because of the high incidence of
                  cancer found there4 believed in part to be related to
                  industrialization.

                       While new oil, if it substitutes for imported oil, will
                  probably be refined in existing refineries and would not
                  result in new emissions, gas, if found, would require the
                  building of several processing plants which would most
                  certainly add to existing emissions. Gas plants while
                  smaller in size than refineries, perform the same functions

                                                 -32-

                 as refineries in removing impurities and by-products from
                 the raw material. In addition, they have some of the same
                 impacts such as noise, odor, 24 hours-a-day lighting and air
                 emissions. To date the industry has not indicated to the
                 Mid-Atlantic states what production facilities will be
                 needed except to rule out new refineries   At the same time
                 state governments have not addressed in ;etail how they will
                 review proposals for potential downstream facilities in
                 terms of what may or may not be acceptable from an environmental
                 carrying capacity viewpoint although they do have, of course,
                 existing authorities and procedures for reviewing any facilities
                 with the potential to release air pollutants.. The upward
                 revision by the U. S. Geological Survey of the gas estimated
                 to be found in Lease Sale 40 from between 2.6 and 9.4 trillion
                 cubic feet to 13.3 tcf, indicates that gas plant planning
                 could have significant implications for the.maintenance of
                 air quality, especially if it turned out that the gas were
                 to have a high sulfur.content.

                                               -33-

                                          Footnotes

                       Petrochemicals in Western Europe: The Potential
                       for North Sea Oil and Gas, The Scottish Council
                       (Development and Industry), May 1977. The Scottish
                       Council estimated exports in the 1980's of 60-70
                       million tons/annum of crude oil, 1.9-2.0 billion
                       cubic feet of natural gas, 2-3 million tons/annum
                       of gas liquids, 1-2 million tons/annum of petrochemical
                       feedstocks.
                       2Scottish Economic Planning Department.
                       "North Sea Information Sheet: November 1977," p.5.

                            P* 3.
                       4
                       See Mason, Thomas, J., McKay, Frank W. et al., Atlas
                       for Cancer Mortality (1950-1969) , DHEW Publication
                       #(NIH)75-780, Washington, D.C.:U.S. Government
                       Printing Office. p. x and Council on Environmental
                       Quality, Carcinogens in the Environment, (Washington,
                       D.C.: U.S. Government Printing Office 1975, p. 23),
                       and New York Times, nLatest Data Show Jersey 3rd in
                       Cancer," May 2nd, 1978, p. 28.

                                               -34-

                 VI. PLANNING BY LOCAL GOVERNMENT

                      Thus far this report has dwelled on the pace with which
                ,development has taken place in Scotland from the moment of
                 discovery to the building of platforms, drilling of development
                 wells and landing the hydrocarbons at a refinery or terminal.
                 This chapter and the next look at how planners have attempted
                 to deal with the fast pace set by industry. This chapter
                 looks at how local government - the Shetland Island Council
                 is handling oil and gas activity which has located there
                 because of its proximity to the rich oil and gas fields off
                 its shores. The next chapter looks at how the British
                 government facilitated the development of oil and gas
                 production by invoking a national interest in energy.

                      .The story of how the local government in the Shetland
                 Islands seized the initiative in dealing with industry to
                 ensure that oil would not disrupt the island environment and
                 way of life has been well documented by the Baldwins and
                 others    Here the writer attempts to assess how effective
                 such planning was in retrospect.

                      Generally, the early planning by the Shetland Island
                 Council paid off. The Council is, however, the first to
                 admit where it fell short of its goals. These shortcomings
                 may be attributed to the Council's lack of technical expertise
                 and to its having accepted so-called "facts" at face7value
                 without having performed its own independent analyses. Some
                 of the Council's less successful experiences are outlined
                 below to point out the gullibility of even such a sophisticated
                 entity as the Shetland Island Council.in relying on industry
                 in the absence of other information.

                 Technical Expertise:. Industry versus the Government

                      One dispute between the Council and the industry,
                 concerned the designation of pipeline,,,corridors. Initially,
                 the Council had requested in its plan that any needed pipelines
                 would have to come ashore at one pre-designated site. The
                 second pipeline which was built, however, comes ashore
                 several miles south of the first one. It was sited there
                 because of seabed'conditions which made.the placement of
                 more than one pipeline in the initial pipeline corridor
                 infeasible. The Council was not informed of this until the
                 time came for the second line to be laid. Considerable
                 friction them ensued between the government and the industry
                 which could have been avoided had the industry been more
                 open with the Council.

                                               -35-

                       Another dispute between the Council and the industry
                  concerned the layout and design of the facilities at the
                  Sullom Voe terminal whose construction generated major
                  environmental impacts including dredging and the filling-in
                  of water inlets to accommodate the dredge spoils. One minor
                  issue in the dispute revolved around the siting of storage
                  tanks which is outlined briefly here to illustrate the
                  importance that governmental units anticipating development
                  should attach to performing their own independent impact
                  analysis.

                       In this instance the industry advocated surface placement
                  and the Council subterranean placement of the storage tanks.
                  While the industry position prevailed ultimately on technical
                  grounds with the Council conceding that the siting of tanks
                  in terrace fashion, which eliminated the need for tall
                  venting stacks and a potential eyesore, was preferable to
                  its original proposal, it is possible that the dispute and
                  bitterness generated thereby could have been entirely avoided
                  by greater openness between the Council and the industry
                  initially. Possibly, also, such a dispute might not have
                  arisen in the United States because of the environmental
                  review process mandated by the U.   S. National Environmental
                  Policy Act of 1969 which requires   the various advantages and
                  disadvantages and alternatives of   a project to be presented
                  for public review. Be that as it    may, the incident illustrates
                  the real need for a local unit of   government, whether or not
                  an environmental impact statement   is needed, to'perform
                  independent analyses of projects having a potential for
                  impacting the environment.

                  Work Force Estimates

                       An error of the Council was to take on trust the labor
                  force figures whIch the industry supplied on the construction
                  of the terminal.

                       From the point of view of planning and accountability,
                  this was probably the Council's.biggest mistake because of
                  the adverse impacts that this might have had, if not remedied,
                  on the surrounding@community. Initially, in 1973-1974 the
                  labor force for the Sullom Voe Terminal had been estimated
                  to be about 1200 workers. To accommodate this population
                  the Council required a tem3orary worker camp to be built
                  before construction began.     In 1976 the industry increased
                  its work force estimates to 3,000 people. To avoid overcrowding
                  and overburdening local facilities, the Council required a
                  second camp to bi built before permitting work to continue
                  at the terminal.

                                                   -36-

                       Faulty estimates of the work force and inadequate
                 accommodations to house it probably contributed to delays'in
                 the building of the terminal, now anticipated to start
                 partial operations in 1978. other costs, however, such as
                 those relating to design and inflation, have also contributed
                 to delays in completion of the terminal. The Council's
                 condition that worker accommodations be completed prior to
                 construction start-up was intended to avoid the type of
                 problems which occurred at the platform yard in Nigg Bay
                 where no provisions had been made for an influx of 3,000
                 workers during the peak construction phase. At Nigg Bay the,..
                 platform company had to charter two passenger liners to
                 serve as a work camp - a far from satisfactory arrangement
                 in view of the closeness of living and sleeping quarters and
                 the disruption that different work schedules inflicted on@
                 the sleep cycles of the workers.

                       Many of the problems outlined above related to the
                 Council's relative lack of ex pertise vis a vis industry.
                 They could have been averted.if there had- been better
                 understanding and information exchange between industry and
                 the Council. The experiences have made the Council all the
                 more determined to require a disclosure of industry plans.
                 These difficulties notwithstanding, the Council and industry
                 have worked out a better cooperative relationship on offshore
                 oil and gas-related matters than exists elsewhere between
                 these two interests. In the absence of the formal government
                 and industry task force which the Council had establi-shed
                 early in the planning process to facilitate communications,
                 the Shet1anders might have been even worse off today than
                 they are.

                       Overall, the Council's experience with industry indicated
                 that both found more to be gained through cooperation -which
                 increased the element of.,c,ertainty and predictability in,.
                 decision-making    than in feuding  which resulted'in lloss of
                 valuable time.

                 Inflation

                       Despite its best efforts the Council has not been able
                 to deal with the inflation of prices and.the flight of the
                 local labor force into higher paying oil and gas jobs.
                 Disturbing the Council is the migration of some young fishermen
                 to the oil and gas industry which if it were to set a trend
                 could result in the diminution of the fishing industry where
                 skills are passed on from father to son over a long period
                 of time. The Council is also concerned that short-term,
                 high paying oil and gas-related jobs are luring young people
                 away from pursuing high educational goals. Its main worry
                 is that the oil and gas industry will reduce the diversity

                                                 -37-

                 of activities and jobs in the Shetlands and narrow a "four-
                 footed" economy built on knitting, fishing, tourism, and
                 agriculture to a "one-footed" oil based economy. As the
                 Director of Planning put it, "a four-footed stool can balance
                 itself; not so, a one  Poted stool ... and what happens when
                 there is no more oil?"    Already he reported that unemployment
                 was higher in 1977 than it was in 1971 because of laid off
                 workers from oil-related jobs staying on in the Shetlands.

                 Cumulative Impacts

                      OCS planning is so difficult because no one knows until
                 exploration actually begins, whether the educated guesses
                 which have been made will be borne out. once a field has
                 been discovered the practice both in Britain and the United
                 States allows the resources to be produced as rapidly as
                 possible and for facilities - both onshore and offshore - to
                 be put in place. Seldom are facilities designed for downstream
                 discoveries because of uncertainty as to whether the initial
                 find will be followed up by another. This type of incremental
                 building makes for industrial sprawl which planners would,
                 of courset like to avoid especially in coastal areas where
                 the competition for land is already so intense. Although
                 the north-and-mid-Altantic states have urged Congress to
                 separate exploration'from development so that comprehensive
                 planning can take place, the likelihood of this happening
                 appears gim because it is viewed as 'delaying the recovery
                 process'.  New regulations promulgated by the U. S. Geological
                 Survey would require it to perform an environmental impact
                 statement (EIS) on exploration plans which could have major
                 implications during the development phase. The regulations
                 are new and it is not clear the extent to which a whole area
                 would be analyzed or whether drilling would be held up
                 pending the completion of the EIS. There is no guarantee
                 that following the filing of an EIS that other discoveries
                 might not be mgde which could change the development picture
                 still further.

                      With planning for OCS onshore impacts being so difficult
                 because of the uneven sequence of discovery, it becomes all
                 the rhore important for OCS planners to know as much as
                 possible about industry practices so that at least some of
                 the cumulative impacts and economies of scale can be factored
                 into the OCS planning. This relates especially to the
                 acquisition of land for pipeline corridors and onshore
                 landfalls and facilities such as gas processing plants. In
                 the North Sea, as discussed in Chapter IV, several pipelines
                 have already been built in the short span of ten years and
                 more are expected to be built. At St. Fergus, the British
                 Gas Corporation has, however, provided extra land for a

                                                -38-

                 third pipeline landfall. On land it is somewhat easier for
                 planners to require companies to acquire additional acreage
                 for expansion if necessary. At Sullom Voe in the Shetlands
                 space has been set aside for a refinery should one ever be
                 needed. Planners should, therefore, be aware of this problem
                 and try, to the extent possible, to require that extra land
                 be acquired in conjunction with a new facility so it will be
                 available for expansion if necessary. In this way a new-and
                 undeveloped area may be saved from disturbance lateron.

                 Compensation

                      The Shetland Island Council is probably better equipped
                 through its Reserve Fund to mitigate against impacts than
                 other local governments. The Reserve Fund, established by
                 the Zetland County Council Act of 1974, is funded by the
                 industry. The fund is intended to compensate Shetlanders
                 now, during the,disruptive construction phase and in the
                 future when adverse impacts are expected from the phasing
                 out of oil and gas production. Shetlanders call it a
                 "disturbance fund." Its intent and purpose is the same in
                 many respects to that of the Coastal Energy Impact Program
                 (CEIP) approved by the U.S. Congress as part of the Coastal
                 Zone Management Act Amendments of 1976 although the funding
                 formula and eligiblity are vastly different. (CEIP, for
                 example, provides relatively little money for outright
                 grants, but advances credit assistance to governmental units
                 for facilities requring "front-end" financing until they
                 become self-sustaining).a  The formula by which monies are
                 collected in the Shetlands has never been made public but is
                 based in part on number of pipelines, amount of oil flow,
                 and the percentage of money that the Council has invested in
                 oil and gas related facilities. (The CEIP formula is based
                 on acres leased, oil and gas landings, production and new
                 employees). While no drop of oil haslanded in the Shetlands
                 yet, the fund has been collecting money,for,three years with
                 some of the interest distributed by social service agencies
                 to the elderly and others including fishermen and pre-
                 existing and new@industries in need of financial help. The
                 rationale for activating the fund before oil has been
                 produced is that Shetlanders are already experiencing
                 significant impacts from anticipated development.

                 Advisory Groups and their Role

                      A general criticism directed by planners at the oil
                 industry has been its secretiveness with respect to disclosing
                 specific information on the number, type and location of
                 onshore facilities needed to process the offshore resources.
                 Usually the practice has been for industry to obtain sites
                 and then disclose its plans. This has made the work of
                 planners trying to promote orderly land use development that

                                               -39-

                  much more difficult. The Shetland Island Council had been
                  very bitter about the industry's close-mouthed behavior, and
                  determined to maximize communications with the industry on
                  oil and gas-related matters.

                       In 1973 the Council established the Sullom Voe Association,
                  consisting of representatives of the industry and the Council,
                  as a forum for the transfer of information and industry
                  expertise.. Later the Association established an environmental
                  advisory task force to assess the impacts resulting.from the
                  building of the Sullom Voe terminal. This task force which
                  produced a number of recommendations on oil spill contingency
                  planning, firefighting, safety, and moni @oring disbanded
                  shortly before publication of its report because of concern
                  that environmental issues were1@eing manipulated to the
                  advantage of the oil industry.

                       The Shetland Island Council appears to believe that it
                  is better to have a forum for discussion then none at all
                  however, and has been instrumental in organizing a successor
                  to the environmental task force. The new 15 member entity
                  (the Shetland Oil Terminal Environmental Advisory Group
                  (SOTEAGI) is made up of two representatives each from the
                  Council and industry, as well as representatives from the
                  national (equivalent to our federal) government having
                  statutory environmental protection responsibilities. Also
                  included are representatives from universities and.local
                  fishermen's and birdwatchers' associations. By-laws of
                  SOTEAG preclude either Council or industry representatives
                  from serving in any managerial.capacity on the task force
                  and require any minority viewpoints to accompany a main
                  report.

                  Planning: Public Participation

                       It should in all fairness be pointed out that it is
                  only in retrospect that the Shetland Island Council's activities
                  have been regarded in such an idealized light by its own
                  constituency, although planners from other parts of Britain
                  and abroad have ad-mired its initiative, vision and actions
                  throughout. At the beginning when the Council went to
                  Parliament to obtain its unusual land use powers, it was
                  looked upon suspiciously because of the secrecy it maintained
                  in lobbying for these powers. This continued later on when
                  the Council would conduct long and secret negotiations with
                  the industry. Such concentration of power in the Council
                  did not sit well with many of the independent-spirited
                  Shetlanders accustomed to New England, town-hall-style
                  decision-making although later on their criticism became
                  more muted as the Council acquired their trust. What line

                                                -40-

                 to draw between the delegation of power to one's government
                 and retention of the right to know remains tenuous, especially
                 when values one holds dear are at stake. On the surface it
                 appears that the Shetlanders did well by their Council
                 although some terms of the negotiations remain undisclosed
                 to this day.

                 Summary

                      In the Shetlands as elsewhere planners regarded the
                 development of offshore oil and gas as too important to be
                 left solely to the industry and initiated a number of ways
                 to maximize on benefits deriving from the new activity. At
                 the same time they took steps to protect their island's
                 environment and way of life.. While the Shetland Island
                 Council failed in some areas to retain its early initiative
                 in negotiating with the industry because of its lack of
                 technical expertise, its successes have been overriding
                 stemming in large part from the speed with which it acted
                 when it first learned of the potential role that oil and gas
                 adjacent to its shores might play on the island. Further it
                 demonstrated a willingness to work with and overcome its
                 difficulties with the industry having accepted as a given
                 the different constituency to which the industry was accountable.

                      The Council also early on recognized the importance of
                 oil and gas to the national economy and that failure to take
                 .it sufficiently into account might result in central government
                 actions which might be contrary to its people's way of life
                 and even cost them some of their independence. Accordingly,.
                 it reconciled the inevitability of oil and gas to its shores
                 with its value system. This coming to terms with the situation
                 resulted in few, if any, conflicts with the national government.

                                               -41-

                                           Footnotes

                       ISee Footnotes 3 and 4 in Chapter 1, Introduction.
                       See also, Scotland Oil, Edited by A. MacGregor
                       Hutcheson and Alexander Hoff, (Edinburgh: Oliver
                       and Boyd, 1975) and The Shetland Way of Oil,
                       Edited by John Button (Shetland: Thuleprint Ltd.,
                       1975).

                       The Shetland Island Council acquired powers through
                       the Zetland County Council Act of 1974 to acquire land
                       around Sullom Voe, future site of the oil terminal,
                       which it later leased back to some of the oil
                       companies, obtaining rental income therefrom. In
                       addition, it acquired "port-authority" powers in
                       order to better control and tax traffic in and out
                       of the harbor terminal. At the same time it obtained
                       the authority to participate in commercial ventures
                       in order to assure that the local citizenry rather
                       than outsiders benefit from new oil-related jobs.
                       The Council is currently a partner in the company
                       which is building the construction camp at Sullom
                       Voe and in the company which will tow and pilot
                       tankers in and out of the harbor.
                       2The Sullom Voe Terminal is bein g built to handle
                       a@throughput of two million barrels a day of oil
                       by the mid-1980's. The terminal will consist of
                       fifteen crude oil and four liquid petroleum storage
                       tanks, a gas separation plant, ballast tanks, a
                       settling pond and a 96 Megawatt (MW) power plant.
                       (The island's power needs by contrast are met by a 28
                       MW plant). While the terminal is being built by the
                       industry, the harbor and jetty portion is being built
                       by the Council who will lease it back to the industry.
                       3In addition, the Council proposed that the housing
                       stock of nearby villages be expanded to accommodate
                       oil and gas personnel expected to remain in the
                       Shetlands for the duration of the oil boom, estimated
                       to be 20 to 25 years. Dispersal of this incoming
                       "permanent" population among several villages by the
                       Council was preferred over the building of a "new
                       town" in order to facilitate the acculturation of
                       the newcomers and to distribute any benefits that
                       might come from building new homes and facilities
                       among the existing population.

                                               -42-

                      4Except for the community facilities such as a gym,
                       pool, movie, the work camps will be taken down after
                       the work on the terminal has been completed.
                      5Mr. J. M. Fenwick, Director of Planning, Shetland
                       Island Council, in an interview, May 13, 1977.
                      6The Congress is currently (as of May 1978) considering
                       amendments to the 1953 outer Continental Shelf Land
                       Act (67 Stat 463) (43 USC 1338F). The Amendments
                       are contained in Senate Bill #9 and House bill #1614.
                      7Department of the Interior, U. S. Geological Survey,
                       "Outer Continental Shelf Oil and Gas Sulphur operations;
                       and Oil and Gas Information Program," Federal Register,
                       January 27, 1978, p. 8880, et. seq.

                      8
                       See Department of Commerce, National Oceanic and
                       Atmospheric Administration, "Coastal Energy Impact
                       Program", 43 Federal Register, February 23, 1978,
                       p. 7546, et. seq.'
                      9The Sullom Voe Environmental Advisory Group, Oil at
                       Sullom Voe Environmental Impact Assessment, (Shetland:
                       Thuleprint Ltd., May 1976). Note that there is no
                       British counterpart to the U. S. National Environmental
                       Policy Act of 1969 (42 USC 4371) and its environmental
                       impact statement requirements.
                      10 Personal Communication from J. M. Fenwick, April 24,
                       1978.

                                                -43-

                 VII. PLANNING BY BRITAIN'S NATIONAL GOVERNMENT

                      The last chapter described the approach of the.Shetland
                 Island Council -- a local government unit -- to planning for
                 oil and gas development. This chapter briefly describes how
                 the British government is accelerating oil and gas-related
                 developmentbecause of its importance to the national economy
                 in terms of reducing the balance of payment deficit.

                      Various measures have been taken by the British government
                 to accelerate oil and gas production as being in the national
                 interest. Workers waiting to obtain government-subsidized
                 housing, for example, are put on the top of a waiting list
                 if they are working on a project considered as being in the
                 "national interest." In order to obtain maximum benefits
                 from offshore drilling, the British government established a
                 Manpower Services Commission to train people in new skills.
                 It also established an Offshore Supplies Office to help
                 foreign oil companies identify and obtain help and services
                 from British companies. In addition, the Department of
                 Energy uses its authority in issuing exploration and development
                 licenses to exert leverage on oil and gas companies, giving
                 preference to companies which place orders with British
                 rather than foreign companies. Leverage is also used by the
                 government-owned British National Oil Corporation, established
                 in 1976, to acquire a 51 percent interest in all oil and gas
                 operations operating in Britain. Amoco, a holdout to this
                 procedure, did not receive a lea 'se during the last licensing
                 round until it had acquiesced in BNOC's participation.

                      The British government has also used its national
                 interest powers to acquire information and in the siting
                 process as discussed below.

                 The British National Oil Corporation (BNOC)

                      The problem of access to industry information appears
                 as one common to both local and national governments. While
                 the Shetlanders partially resolved this through the advisory
                 task force approach, the British government formed the
                 British National Oil Corporation (BNOC). The three objectives
                 for forming BNOC cited in a recent Congressional report
                 were:

                      1.   Participation as a way to increase the public
                           share of North Sea oil wealth,

                      2.   Participation as a way to improve the Government's
                           oil information; and,

                      3.   Participation as a way to enhance Government
                           control over North Sea development and disposal.

                                               -44-

                      Interestingly,the latter two objectives related to
                 information access.

                 Siting - The Public Hearing Process

                      In Britain, as in the United'States, local governments
                 exert considerable power with respect to land use. But
                 regarding the siting of facilities having a national or
                 "greater than local interest", such as energy, the Secretaries
                 of State for Scotland and for the Environment in England
                 may, if they choose, intervene in the local siting process
                 by convening a public hearing to consider a pending proposal.
                 Such hearing is then presided over by a state-appointed
                 hearing officer who will submit his findings and recommenda-
                 tions to the Secretaries. Although it is not a foregone
                 conclusion that.they'will always approve every site reviewed
                 at a state-called public hearing, there is a strong presumption
                .that they will favor national interests over local concerns.
                 While they took no part, for example, in the decision'to
                 turn down Shell's proposal to build a petrochemical plant in
                 Peterhead, which was opposed locally, the Scottish Secretary
                 did call for a hearing on the alternate site in Moss Morran
                 which is possibly a more acceptable site because of its
                 proximity to an urban labor force and infrastructure.

                 Siting - Planning Guidelines

                      The siting of onshore oil and gas facilities related to
                 offshore drilling has been facilitated in Scotland by the
                 Scottish Development Department which in 1974 inventoried
                 the Scottish coast for potential development sites for gas
                 and oil facilities to guide both local government and prospective
                 developers to such needed sites. Sites were mapped and
                 criteria developed which favored the clustering of facilities
                 and'the use of 2ites close to existing labor pools and
                 infrastructure.   While the Development Department obviously,
                 wanted planners to follow the guidelines, it made clear that:
                 the guidelines,did not have the force of law and were not
                 intended necessarily to override existing development plans
                 of local governmbnt units. Notwithstanding such disclaimers,
                 the guidelines issued by the highest level of government,
                 have undoubtedly influenced.developers to locate in the
                 government-recommended areas.

                 Comment

                      The "national interest" clauie.in the Coastal Zone
                 Management Act Amendments of 1976 is one by which Congress
                 sought to have coastal states consider the siting of energy
                 facilities in their coastal zone. While the British government
                 seems to intervene quite successfully at the local level to
                 obtain consent for the building of energy facilities in the

                                               -45-

                 name of the national interest, it remains a question still
                 whether local governments in the United States will acquiesce
                 quite that easily to being overridden by higher governmental
                 units without additional state enabling legislation. The
                 petroleum industry, however, is seeking a strict interpretation
                 of the "national interest" both as enunciated in the Act as
                 well as in Fedeial regulations which spell this out in
                 greater detail.

                                               -46-

                                            Footnotes

                       U. S. Congress Senate. Committee on Energy and
                       Natural Resources. Controlling oil: British Oil
                       Policy and the British National Oil Corporation
                       Edward N. Krapels, Publication 95-59 (Washington,
                       D.C.: U. S. Government Printing Office: October
                       1977) p. 20-23.
                      2Scottish Development Department, North Sea Oil and
                       Gas Coastal Plannin2 Guidelines, August 1974.
                       The coast was classified into "preferred development"
                       and "preferred conservation" zones. The@guidelines
                       spelled out the criteria used to identify development
                       zones, They included:

                       a) avoidance of a scatter of industrial development

                       b)  full use of ,existing labor pools, housing and
                           public services

                       c)  economic provision of additional services

                       d)  possibility of diversification to cushion any
                           subsequent decline

                      at p. 6.
                      3Coastal.Zone Management Act Amendments of 1976
                       (P.L. 94-370)
                      4See memorandum of points and authorities in support
                       of motion for preliminary injunction in American
                       Petroleum Institute vs. Robert W. Knecht (-U S.
                       Department of Commerce) filed in United States
                       District Court Central District of California
                       #773375 ALS,(1977).

                                                -47-

                 VIII. CONCLUSIONS AND RECOMMENDATIONS TO OCS PLANNERS

                      The pace with which oil and gas from the North Sea has
                 been produced has been rapid, as documented, averaging 4.4
                 years between discovery and first production or 5.4 years if
                 one compares this with American practices.* This is shorter
                 than the eight years which industry representatives usually
                 cite for start-up of production following a successful find
                 in the United States.

                      Whether the time period is 4.4, 5.4 years or even 8
                 years, however, it is short in view of the long term planning,
                 siting, and construction decisions which have to be made
                 during this time. Frontier states need time, for example,
                 to gain an understanding of the workings of this new industry
                 as well as the economic, social and environmental and siting
                 implications thereof. Not least they need to assemble a
                 competent staff to handle and monitor the new activity, and
                 establish an organizational structure to do this if necessary.
                 The period is, namely, not one of planning alone, but one of
                 building and installing platforms, pipelines and pumping
                 stations to recover initial production. Beyond these
                 considerations, planners need to ensure that facilities
                 built to recover hydrocarbons do not leave irreversible
                 scars in the ocean or on the land once oil and gas have been
                 extracted and producers abandon the region. This leaves
                 precious little time to evaluate alternatives later on when
                 the pressure to bring the resource to production is intense.

                      When the oil and gas industry ventured into the Gulf of
                 Mexico in the 1950's, it proceeded first into state waters
                 and only much later into federal waters. Few regulations
                 existed and there was little contact between the industry
                 and local communities. The accelerated search for offshore
                 oil and gas in frontier states and a previously unknown
                 environmental activism have, however, spurred states potentially
                 affected by OCS.development in the 1970's with a demand for
                 greater participation in the OCS leasing and development
                 program. At the same time these states have called fo
                 reforms of the 1�53 Outer Continental Shelf Lands Act.
                'Amendments to that Act are now awaiting action by a Conference
                 Committee in the U. S. Congress. If passed, as expected in
                 1978, they would provide states with a greater participatory
                 role in the initial selection of tracts,for leasing, review

                 *In Britain the time for an oil/gas field to be brought@into
                 production is measured from the time a field has been
                 discovered, while in the United States this period is
                 measured from the time of a lease sale. It, is assumed here
                 that a discovery will be made within one year of a lease
                 sale.

                                                -48-

                 of lease stipulations and operating orders, review of industry
                 exploration and development plans, environmental baseline
                 and monitoring studies and provide them with funds, such as
                 the CEIP mentioned previously, to carry out these and other
                 functions. Thus such states may be in a better position in
                 the future to handle planning related related to offshore
                 oil and gas production than previously. This does not,
                 however, obviate the need for early planning, acquisition of
                 competent personnel and inventorying of suitable sites for
                 development described in this report.

                      Below are some recommendations directed to planners in
                 frontier states who may be anticipating drilling off their
                 shore. It should be recognized that they are based on
                 observations and interviews conducted in Scotland and should
                 not be regarded aslexhaustive. Also public agencies at the
                 state and local levels in American frontier states including
                 New Jersey have been carrying out m 'any of these recommendations
                 since the Department of the Interior accelerated its leasing
                 program in 1973. Coastal planning under the federal Coastal
                 Zone Management Act o f 1972 and the' 1976 Amendments provided
                 the impetus and financial support for the considerable OCS
                 planning that has taken place in the United States.

                 Prior to Exploration

                 1.   State and local governments  should start as soon as
                      possible to:

                      a)   learn about the oil and  gas industry;

                      b)   acquire competent personnel (including some people
                           recruited from the oil and gas industry) to develop
                           an understanding of the industry they may be
                           dealing with for the next 20-30 years;

                      c)   Visit states where development has taken place.

                 2.   Establish ah organizational unit to handle, monitor and
                      coordinate this new activity with other units of government
                      which could be affected.

                 3.   Identify objectives as to how and where development
                      should take place and set minimum standards. Inventory
                      the land; determine to what extent industry facilities
                      should be clustered or consolidated, for example.
                      Identify areas suitable for development and those which
                      are environmentally sensitive. Determine measures
                      which should be taken.to protect areas of environmental
                      concern.

                                                -49-

                 4.   Ensure that the regulatory authority exists to permit
                      or restrict development, to grant rights-of-way, etc.
                      Amend regulatory authority where it is deficient.

                 5.   Identify problems (potential air, water, land use
                      disposal, adequacy of sites, etc.) that can be foreseen
                      arising from new industry location. Assess the extent
                      to which potential problems may be mitigated. Undertake
                      initial impact studies.

                 6.   obtain funding for planning studies.

                 7.   Review existing applicable legislation and administrative
                      procedures to ensure that the state's objectives are
                      met. Where gaps exist, work with relevant administrative
                      units to obtain reforms.

                 8.   Establish task force consisting of representatives of
                      oil.industry, labor, environment, universities, federal,
                      state and local governments to obtain information and
                      .serve as trouble shooting organization and clearinghouse
                      of information. The success of such task force and the
                      acceptability of its findings will depend on its membership.
                      Member selection should strive to achieve a-balance of
                      views and skills. The Bureau of Land Management is
                      currently organizing a national intergovernmental
                      program including industry representatives to select
                      mutually agreeable transportation rout2s from offshore
                      to onshore in the various lease areas.

                 9.   Begin program of public education. Include other units
                      in government, legislature, universities and the public.
                      It takes months, if not years, sometimes for a new
                      activity to obtain acceptance. Produce a guide for
                      local officials and planners outlining the types of        3
                      impacts they should anticipate from OCS-related activites.
                      Include a section for developers as to the types of
                      procedures they will be required to follow to obtain
                      permits.

                 10.  Seek information on training opportunities for local
                      people. To the extent possible, work with industry to
                      encourage it to offer jobs to local people.

                 During Exploration and Development

                 11. Scrutinize industry drilling safety   and oil spill
                      contingency plans. Review industry   schedules. Compare
                      schedules with experience elsewhere.

                                                -50-

                 12.  Don't take anything for granted. Undertake or sponsor
                      independent checks of data.

                 13.  Ensure that infrastructure exists to accommodate
                      construction crews building new facilities.

                 14.  In addition to the basic task force (See 8) which
                      should be meeting regularly, establish additional
                      groups to monitor both the socio-economic impacts from
                      offshore drilling (such as jobs, new housing, impacts
                      on schools) and the physical impacts affecting the
                      ocean and surrounding land and coastal environment.

                 15.  Consider the cumulative or incremental impacts which
                      may be generated by several lease sales and require
                      that companies set'aside additional acreage and/or
                      capacity for increased production, to the extent
                      feasible.

                 During Production

                 17.  Since production may overlap with exploration and
                      development, continue the actions noted under the
                      previous section. In addition, keep abreast of pro-
                      duction rates. Watch for possible fall offs or irregu-
                      larities in production.

                 18.  Confirm whether'downstream facilities proposed in
                      previous years are still necessary'based on new infor-
                      mation or whether new@facilities, not anticipated, will
                      be heeded because of unexpectedly high production
                      rates. In the latter case, determine where additional
                      facilities should go.

                 19.  Monitor impacts of downstream activites.

                 Shut Down

                 20.  Determine which facilities can be converted to other
                      uses and those which should be decommissioned for
                      another use.

                 21.  Consult with industry how best to reabsorb or retain
                      workers about to be laid off as a result of shut-down.

                                           Footnotes

                       Some of the provisions of the 1953 Outer Continental
                       shelf Lands Act (43 usC 1338F) have been incorporated
                       into administrative (Outer Continental Shelf) operating
                       orders by the-U. S. Geological Survey of the Department
                       of the Interior. Funding for OCS planning was started
                       in 1975 with a $3 million appropriation in supplemental
                       funds under the Coastal Zone Management Act administered
                       by the U. S. Department of Commerce.
                       2See undated monograph by Bert Rodgers, Bernie Hyde
                       and Tom Burke, U. S. Department of the Interior,
                       Bureau of Land Management, Role of BLM in Coordination
                       of Planning For Pipelines on the OCS.
                      -3 The New England River Basin Commission, Factbook,
                       November 1976, describing facilities related to offshore
                       oil and gas development has proved very useful in
                       providing information to planners. The looseleaf
                       format of this book allows technical updates (Tech
                       Updates) to be inserted as and when they become
                       availalile. The data have been collected with funding
                       provided by the Resource and Land Investigations
                       (RALI) Program of the U.S. Department of the Interior's
                       Geological Survey.

                                                -52-

                                        ACKNOWLEDGEMENTS

                     I.would like to thank the Kinne Fellows Memorial Traveling
                Scholarship Committee in the De
                                                partment of Architecture and
                Urban Planning at Columbia University for making my initial
                trip to Scotland and the Shetland Islands in 1975 possible
                That trip served as the catalyst for my 1977 follow-up visit
                and this report.

                     Many people  contributed to this work.' They included
                those in the United States who provided me with contacts in
                Britain to start my initial research as well as those, of
                cour.se, who consented to be interviIewe.d, most of whom went
                far beyond the bounds of duty in extending me their time and
                hospitality.

                     I would also like to thank John Clark of the Conservation
                Foundation; David Kinsey, Dr. Glenn Paulson and Dr. Peter
                Preuss of the New Jersey Department of Environmental Protection;
                Dr. Peter McGovern of the Scottish Development Department;
                Mr. J. M. Fenwick, Director of Planning At the Shetland
                Island Council; Derrick W. Bennett of the American Littoral
                Society; Michael Migel; Dr. William Ritchie of the University
                of Aberdeen and 0. J. Shirley of the Shell Oil Company for
                reviewing this report and for their suggestions and insights.
                Any comments or interpretations given to the events described
                in this report are, of course, strictly mine.

                     I also thank Kenneth Mitchell of Rutgers,University for.
                his permission to use Figure 1 in amended form and Marvin
                Atwood, Jim Azzinaro and Michael Hochman for.the graphics.

                     Finally, I would like to thank Debbie Yedesko for her
                unfailing patience and efficiency in typing and retyping the
                earlier drafts of this report.

                                               -53-

                 William M. Adams, Scottish Council, Aberdeen

                 George Brown, Conservation Manager, Eastern Region,
                     U. S. Geological Survey

                 John Brown, Highlands and Islands Development Board,
                     Inverness

                 R. Burnett, Site Liaison Officer, British Gas Council

                 Philip Clark, American Petroleum Institute, Washington, D.C.

                 Robert Covert, Chevron Oil Company, London

                 J. M. Fenwick, Director of Planning, Shetland Island
                     Council

                 J. B. Fleming, Scottish Development Department, Edinburgh

                 H. R. George, Director of Petroleum Engineering, Department
                     of Energy, London

                 Kenneth Humphreys, Information Officer, Highland Fabricators,
                     Ltd.

                 C. S. Hunter, Oil Pollution Control Officer, Shetland
                     Island Council

                 Charles Lakey, Mobil Oil Corporation, New York

                 Sandy Livingston, Shell Oil, Aberdeen

                 John Lutrell, Mobil Oil Company, London

                 Dr. R. G. McCrone, Scottish Economic Planning Department,
                     Edinburgh

                 Dr. Peter McGovern, Scottish Development Department,
                     Edinburgh

                 Peter Malcolmson, Shetland Island Council, Lerwick

                 John Manson, Shetland Island Council, Lerwick

                 Neil Monroe, British Petroleum, London

                 Robert Moore, Department of Sociology, University of
                     Aberdeen

                 Peter Paige, Shell, U.K., London

                 Christopher Patey, Mobil Oil, London

                 Dr. William Ritchie, Department of Geography, Aberdeen

                 0. J. Shirley, Shell Oil Company, New Orleans, Louisiana

                 Michael Whitall, British Petroleum, Lerwick

                 Jonathan Wills, BBC, Lerwick

                 Philip Wiper, British Petroleum, Lerwick

                                               -54-

                                          BIBLIOGRAPHY

                  Baldwin,,Pamela L. and Michael F., Onshore Planning for.
                       offshore oil. Washington, D.C.: Conservation Foundation.
                        1975.

                  Button. John, The Shetland Way of Oil. Shetland: Thuleprint
                       Ltd., 1975.

                  Council on Environmental Quality, Carcinogens in the Environmentf
                       (Washington, D.C.: U. S. Government Printing Office
                       1975)

                  Department of Energy, Development of the Oil and Gas Resource
                       in the United Kingdom. London: Her Majesty's
                       Stationery Office, 1977.

                  Hutcheson, MacGregor A. and Hoff, Alexander, editors, Scotland
                       and Oil. Edinburgh: Oliver and Boyd, 1'975..

                  Mason, Thomas, J., McKay, Frank W. et al., Atlas for Cancer
                       Mortality (1950-1969), DHEW Publication #(NIH) 75-
                       780, Washington, D.C.: U. S. Government Printing
                       office).

                  Mitchell, James, K., "Onshore Impacts of-Offshore Oil:
                       Planning Implications for the Middle Atlantic States,"
                       Journal of American Institute of Planners.Journal.
                       October 1976.

                  Mutch, Dick, "Claymore Field Sets North Sea Record", Offshore,
                       March 1978.

                  New..Engl,and River Basin Commission, Factbook, Boston: 1976.

                  New Hampshire Department of Resources-and Economic Development,
                       The Impact of Offshore Oil: New Hampshire and the
                       North Sea Experience, Concord, 1975.

                  New Jersey Department of Energy, The State Engergy Master
                       Plan (Draft), June 1978.

                  New Jersey Department of Energy, Determination of the Need
                       for Energy Facilities, May 1978.

                  New York Times, "Latest Data Show Jersey 3rd in Cancer,"
                       May 2nd, 1978.

                  The Port Authority of New York and New Jersey, Support Bases
                       for Offshore Drilling: The Port of New York Potential,
                       May 1977.

                                                -55-

                 Ritchie, William, Dr. and Walton, L., "Environmental Appraisal
                      of Pipeline Landfall Site Area at St. Fergus (Rattray
                      Bay)," University of Aberdeen, November 1975.

                 Ritchie, William, Dr., Environmental Problems Associated with
                      a Pipeline Landfall in Coastal Dunes at Cruden Bay,
                      Aberdeenshire, Proceedings of the 14th Coastal Engineering
                      Conference, Copenhagen, Denmark, June 1974. Amercian
                      Society of Civil Engineers.

                 Rutgers University, Center for Coastal and Environmental
                      Studies, Bruce Hoff et al, Onshore Support Bases for
                      OCS Oil and Gas Development: Implications for New
                      Jersey, September 1977.

                 Scottish Development Department, North Sea Oil and Gas
                      Coastal Planning Guidelines,, Edinburgh, August 1974.

                 Scottish Economic Planning Department, "North Sea Information
                      Sheet", November 1977.

                 Scottish Development Council (Development and Industry),
                      Petroleum in Western Europe. The Potential for North
                      Sea Oil and Gas. May 1977.

                 The Sullom Voe Environmental Advisory Group, Oil at Sullom
                      Voe, Environmental Impact Assessment. Shetland:
                      Thuleprint Ltd., May 1976.

                 The U. S. Congress. Senate. Controlling Oil: British
                      Oil Policy and British National Oil Corporation, by
                      Edward N. Krapels, Publication #95-59. Washington,
                      D.C.: U. S. Government Printing Office, October 1977.

                 U. S. Department of Commerce, National Oceanic and Atmospheric
                      Administration and New Jersey Office of Coastal Zone
                      Management, State of New Jersey Coastal Management
                      Program Bay and Ocean Shore Segment, Draft Environmental
                      Impact Statement, May 1978.

                                               -56-

                                                         utisplotectourwffi

                                                                                     DATEDUE

                                                        NEW i                                                              10
                                                                      GAYLORDINO. 2333                      JPR

                                                                           Jill
                                                                                                    7753