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

     Coastal Zone
      Information
        Cente~-

                                     The Petroleum Panel of the
                        Ocean Science and Technology Advisory Committee of the
                               National Security Industrial Association

             -.~~-'~ ~ ~Report on the Relationship
                               Between the Offshore Petroleum Industries
                                      and the U. S. Government

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            xib~~ ~NATIONAL SECURITY INDUSTRIAL ASSOCIATION
                                        Union Trust Building
                                 15th and H Streets, N.W., Suite 700
                                      Washington, D. C. 20005

         TN
      % 872
      - .A5
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                      jibf~~~~~~~~ 1974                                      INCO ASTAL   C[WE
         1974

                                                                                        ,,

                                                        PROPERTY OF TiE
                                                    UNITED STATES GOVERN:-i'�.i
                                                      NATiONAL OCEAN!C Ai'D'
                                                   ATMOSPHERiC ADMINiST'AK-TiON

                                                           For Retention

                                                   When no onger needecd, p'.se
                                                   return ti: Te::.;cal Poces::s
                                                LBranch   D C3
                                                L ~r I

                                    The Petroleum Panel of the
                      Ocean Science and Technology Advisory Committee of the
                             National Security Industrial Association

                                    Report on the Relationship
                             Between the Offshore Petroleum Industries
                                     and the U. S. Government

                                Property of CSC LUbrary'

                                U. S  DEPARTMENT OF COMMERCE NOAA
                                COASTAl SERVICES CENTER
                                2234 SOUTH HOBSON AVENUE
                                CHARLESTON, SC 29405-2413

             ,-             NATIONAL SECURITY INDUSTRIAL ASSOCIATION
                                      Union Trust Building
        r e-,                   15th and H Streets, N.W., Suite 700
    .b5 rt-                          Washington, D. C.  20005

    r4

                                                                  C{Bl'ST . ZONE
                                                                  IA N MA10i N CENTER
    0

                   NATIONAL SECURITY INDUSTRIAL ASSOCIATION

                                Petroleum Panel
                                     of the
                Ocean Science and Technology Advisory Committee

    Mr. Robert W. Bybee                       Comdr. John H. Jorgenson USN (Ret.)
    CHAIRMAN, PETROLEUM PANEL                 National Security Industrial Assoc.
    Exxon Company, USA                              (Executive Secretary)

    Mr. Bill C. Anderson                      Mr. Thomas H. Montgomery
    Atlantic Richfield Company                Phillips Petroleum Company

    Dr. F. Gilman Blake                       Mr. Eugene A. Moores
    National Science Foundation               Sun Oil Company

    Dr. Kenneth A. Blenkarn                   Mr. L. A. Rupp
    Amoco Production Company                  Mobil Oil Corporation

    Mr. V. C. Eissler                         Mr. John E. Sherborne
    Continental Oil Company                   Union Research Center

    Mr. Ronald L. Geer                        Mr. J. L. Sleeper, Jr.
    Shell Oil Company                         Texaco, Incorporated

    Mr. Mike K. Horn                         Mr. Larry Thrasher
    Cities Service Oil Company                Chevron Oil Field Research Company

    S                                    ~~~~~~~~~~~PREFACE

           The attached report by the Petroleum Panel of the Ocean Science

      and Technology Advisory Committee of the National Security Industrial

      Association is in response to numerous requests from several federal

      offices, functions, and individuals desiring industry views on federal

      marine goals, programs, and activities.

           The precipitous cutoff of crude and petroleum product imports to

      the United States from the Middle East due to the October 1973 Arab-

      Israeli conflict will prove to be a momentous event in our history. At

      the time this report was written, conditions were in such a state of

      flux that little could be said about the short-range energy supply situation.

      However, there is no question that with or without embargos the United

      States faces a difficult energy supply picture for the next decade.

      Whatever else evolves, the Arab action will do a great deal to increase

      the awareness of the U.S. citizen of the great significance of energy and

      particularly petroleum to his well being.

                              EXE CUTIVE SUMMARY

    Summary

         For the next decade, perhaps the most important priority facing our

    nation is the provision of a reliable supply of energy. For at lea-st this

    period of time, the burden of supply will fall largely on oil and gas.

    The greatest U. S. potential for additional petroleum reserves lie offshore.

    Demand for energy not met by increased domestic supplies must either be

    satisfied by imports or go unfulfilled. Marine transportation and

    associated terminaling facilities for petroleum produced either offshore or

    imported are vital links in our energy outlook. Even with early adoption

    of a sound national energy policy with means to implement it, most likely

    some of our energy needs will not be met.

        All segments of our society must work effectively together if our country is

    to develop and maintain even an adequate energy self-sufficiency in a

    reasonable period of time. A closer relationship between industry and

    government must be developed so that the respective proper roles and

    strengths of each can be maximized. Government can best provide national

    direction including the articulation of national goals and priorities,

    providing legal safeguards, encouraging economic growth, and fostering an

    informed and unbiased political climate. Government and industry should

    each develop needed technical information where it is most effectively,

    appropriately, or economically done by them. Government should serve to

    collect and make available to users such information as is essential for

    achieving national goals.

         The offshore petroleum industry feels that the government's primary

    emphasis should be on activities traditionally performed for the benefit

                                                                            ii

    of broadly based user groups. Commensurate with this philosophy, there are

    ocean activities which the government performs or could perform which will

    greatly assist the petroleum industry in finding and producing the additional

    domestic petroleum so greatly needed by this country. Many of these activities

    are closely aligned with offshore lease sales and when appropriate, should be

    conducted as far in advance of pending lease sales as possible. These lease

    sales should be on a firm and regular schedule. The scheduling of sale areas

    under consideration should reflect technological, economic, social, and

    environmental factors.

    Recommendations

         The federal government activities which the Petroleum Panel feels most

    appropriate and important are listed below. Due to many factors, they are

    not listed in any particular order of priority.

         1. Determine the fate and effects of oil in the marine environment.

             Special emphasis should be placed on the long-term sublethal effects

             of low level petroleum hydrocarbons and also the establishment of

             standards for equipment, techniques, and parameters or items for

             measurement.

         2. Assist the states in coastal zone planning and management to assure

             the accommodation of offshore and onshore petroleum facilities to

             meet regional and national needs.

         3. Improve our knowledge of the weather and marine conditions in

             frontier petroleum development areas.

         4. Improve bathymetry and surface geologic mapping of the sea floor

             where needed. Make broad, basin-type mineral resource potential

             studies on a regional basis.

    5. Measure and locate the mean low water line along the shore.

       Charting offshore areas with geodetic markers. Aid mariners

        in the establishment of precise positioning capability.

    6. Intensify research and development on weather modification

       with particular emphasis on hurricanes.

         0                               ~~~~~~~~~TABLE OF CONTENTS

             CHAPTER                                                                  PAGE

    0                ~~~~~PREFACE........................

                        SUMMARY AND RECOMMENDATIONS .                                     ...   ...   ...

                    I.ENERGY OUTLOOK .1...........

    0                  ~~~~~~Resources and Reserves .1.........

                          Availability.                                                    ......................2

                          Supply and Demand Balance.................                      3

    0                  ~~~~~~Demand.                                                     .........................4

                          supply .                                                        .........................5

                          Oil Supply........................                              5

    0                  ~~~~~~Natural Gas Supply.                                         ...................7

                          Causes of the Energy Shortfall..............                    8

              II.  PETROLEUM TRANSPORT ON THE OCEANS.                                   .............10

    0                  ~~~~~~Crude Oil Imports.                                        ....................10

                          Liquefied Natural Gas.                                          ..................12

             III.     THE RESPECTIVE ROLES OF GOVERNMENT AND INDUSTRY.                   ......15

                          Development of Required Technical Information.                  ......15

                          Scheduling of Lease Sales.                                      ................16

                          Consolidation of Federal Energy Activities.                     .......17

     S                 ~~~~~~Priorities.                                                .......................18

              IV.     RECOMMENDATIONS CONCERNING INDUSTRY AND GOVERNMENT
                          ACTIVITIES IN THE MARINE ENVIRONMENT.                           ..........20

    *                 ~~~~~~Activities Considered Appropriate and Important.            .....21

                          Activities Considered to be of Less Importance, of
                            Marginal Value, orl~ore Appropriately Performed
                            by Others . . .*    ..... . . . . . .            . . . . . 30

                                           LIST OF FIGURES

             FIGURE

    *          ~~~1.   United States Fossil Energy Resources (1973)

                2.    Projected U. S. Petroleum Supply and Demand

               3.    Primary Energy Consumption by Sectors

    *          ~~~4.    Comparison of United States Crude Oil Resources,
                        Reserves, and Production

               5.    Estimated U. S. Demand and Supply, Natural Gas

               6.    Comparison of United States Natural Gas Resources,
     *                ~~~~~Reserves, and Production

               7.    Projected Crude Oil Import Requirements

                                               CHAPTER I

                                             ENERGY OUTLOOK

     *              ~~~~For the next decade, perhaps the most important priority facing

               our nation is the provision of a reliable supply of energy. It is clear

               that for this period the burden of supply will fall on the fossil fuels

    *          ~~~and to a great extent on petroleum--oil and natural gas.  For the long

               term we do have adequate resources to satisfy most of our fundamental

               needs. However, for the short-term numerous difficulties must be resolved

    *          ~~~if we are to satisfactorily meet our requirements.  Certain remedies for

               the resolution of these difficulties are apparent and have been variously

               proposed by Congress, the President, energy companies, and others. Nonetheless

    *          ~~~time is definitely not on our side, and even if a sound national energy

               policy is adopted soon with viable means to implement it, there is great

               likelihood that some of our needs will not be met.

     *              ~~~~The recent petroleum embargo placed upon the United States as a result

               of the Arab-Israeli conflict merely catapulted forward the point in time when

               this nation recognized it must address itself to the question of dependence

    *          ~~~on foreign sources of energy.  While severe dislocations and diseconomies

               will be borne by our country as a result of this embargo, the immediate

               severity of the problem will be less now than if the embargo had occurred

    *          ~~~at a later date.

               Resources and Reserves

                    The fossil fuel resources and reserves of the United States are presented

               in Figure 1. To make comparison easy, they have been expressed in terms of

    quadrillion BTU energy units. There is much confusion about the difference

    between resources and reserves, and these terms are often used interchangeably

    by individuals who do not recognize the difference between them. Resources

    are the total amount of a material known to exist or which are authoritatively

    estimated to exist. Proven reserves are that portion of the resource which

    can be produced by today's technology and at today's prices. Thus, the

    amount of reserves available is determined by technological, environmental,

    economic, and often political factors. On the other hand, the resource, e.g.,

    the amount of oil and gas in place, does not change but the amount we have

    discovered at any one time changes.

         It can be seen from the chart that by far the largest amount of

    fossil fuel resources enjoyed by the United States is coal. The 74,400

    quadrillion BTUs are equivalent to 3.2 trillion tons. The reserves represent

    about one-twentieth of the resource--enough to last about 250 years at present

    usage rates.

         Oil shale is the next most abundant fossil energy resource amounting to

    10,000 quadrillion BTUs or the equivalent of 1.78 trillion barrels of oil.

    Although currently we have the technology to produce 54 billion barrels, i.e.,

    3 percent of this amount, no reserves are shown because historic domestic

    oil prices have not justified the necessary investment. It can be seen also

    that the United States has substantial resources of oil and natural gas.

    These will be discussed more fully later.

    Availability

         The fact that a given amount of reserves is known to exist does not

    mean that they are instantly available. There is for each type of energy

    resource a limiting rate of availability governed by many factors. For example,

                                                                              2.

              any given petroleum field may take from 20 to 40 or more years to recover

              the reserves. Significant production from a new field may take from 7 to

              10 years after its discovery.

              Supply and Demand Balance

     *             ~~~~Until recently, most energy studies concentrated on juggling the types,

              origin, and percents of various primary fossil fuel energy forms necessary

              to meet the nation's projected energy demands. The general consensus was

    *         ~~that total unrestrained energy demand would approximately double between

              1970 and 1985, or to approximately 125 quadrillion BTUs per year. If the

              total demand were to be supplied by oil alone, it would require the equivalent

    *         ~~of 62.5 million barrels per day.  Current studies are now concentrating on

              the forcing of demand to meet available supplies.

                   The most comprehensive studies of both types have been conducted by

    *         ~~the National Petroleum Council. 1 2In the first referenced NPC report which

              was made prior to the recent Arab oil cutoff, 22 alternative cases were studied.

              These studies took into consideration various rates of population growth, per

    *        ~~capita usage, environmental impacts, and conservation possibilities.  These

              were condensed into high, intermediate, and low cases. The low case may be

              said to represent a low population growth rate, minimum adequate environmental

    *        ~~impact, maximum feasible conservation, etc.  The high case is representative

              of opposites of these. The intermediate case represents what is thought can

              be more reasonably expected. The most significant aspect of all these

                   1U.S. Energy Outlook, National Petroleum Council, Washington, D.C.,
              December, 1972.

     *            ~~~~2Emergency Preparedness for Interruption of Petroleum Imports into
              the United States, National Petroleum Council, July, 1973, and Its Supplemental
              Interim Report, November, 1973.

                                                                                         3.

    projections is that even with the major effort to conserve usage a 1985

    demand of over one and one-half times the present requirement seems inevitable.

        A thorough study of Figures 2, which is based on the NPC intermediate

    case, will reveal the seriousness of the energy problem. Although these figures

    were compiled prior to the recent Middle East outbreak of hostilities, the

    demand projections up to 1985 have not been altered or reduced, since the

    duration and severity of the denial of petroleum by the Organization of Arab

    Petroleum and Exporting Countries (OAPEC) to Japan, Western Europe, and the

    United States cannot be projected. Also many other factors have a significant

    bearing-on the U.S. demand and supply, including the demand savings due to

    lower speed limits, lower thermostats, less airconditioning and so on.

    Nonetheless, the reader is urged to appreciate the growing gap between the

    normal upward trending "demand" curve and the "total domestic supply" curve.

    As of 1973, Middle East imports amounted to approximately 3 million barrels

    of oil per day and had been expected to provide the necessary incremental

    growth amounts in the future. Nonconventional sources of energy are not

    included in domestic supply sources in Figure 2 due to their anticipated

    small singificance of contribution and their unpredictability of becoming

    economically available. Synthetic crude from oil shale and coal was optimis-

    tically projected to contribute a little over I million barrels per day by

    1985. The recent oil embargo and crude oil price increases have increased

    interest in synthetics and nonconventional sources of energy to a high degree.

    Significant contributions from these new sources will probably now occur

    sooner than previously anticipated.

    Demand

         The manner in which energy has been and could be used is presented in Figure 3.0

    It can be seen that the rate of growth of use of electrical energy is much

                                                                              4.

               higher than that of other uses. However, most electrical energy has been made

               from primary energy sources such as coal, oil, and gas. In the process much

               primary energy is lost. It is estimated that by 1985, 24 percent of all

               primary energy used will be lost in the generation of electricity. Electrical

               energy usage is divided among industrial, commercial, and residential end users.

               Supply

                    How will these demands be met? At present, petroleum hydrocarbons--

    *          ~~~oil and natural gas--supply about three-fourths of our total energy demands.

               It appears that this proportion will decrease only slightly sometime after

               1985. Its importance can be appreciated when one recognizes that as of

    *          ~~~1972 petroleum supplied essentially 100 percent of our transportation energy,

               78 percent of industrial, 97 percent of that used in homes, and 40 percent

               of our electricity.

               Oil Supply

                    Based upon the intermediate case developed by NPC, Figure 2 shows a

               projection of U. S. oil supply to 1985. This has been modified to allow

               for delays resulting from the fact that until recently very little has been

               done to stimulate domestic production. Expected demand by 1985 is 26 million

               barrels per day. However, it can be seen that domestic sources can be expected

               to supply only about 14 million barrels per day, leaving 12 million barrels per

               day to be supplied either by other sources or not met. It will be noted that

               both the Alaskan North Slope and offshore production are expected to play a

               significant and increasing role in domestic supply. The estimated 2 million

               barrels per day from the North Slope and 2 million barrels per day from offshore

               are expected to account for over 1/3 of total 1985 domestic crude supply.

                                                                                          5.

         Our lack of ability to supply more of our demand domestically is not

    through lack of resources. The present status of U3. S. resources and reserves

    is given in Figure 4. The United States has an estimated ultimate discoverable

    amount of oil in place of 810 billion barrels, of which 434 billion have already

    been discovered. About 100 billion of these have already been produced, and

    a reserve of 36.3 billion presently exists at early 1973 conditions. Note

    that this leaves about 298 billion barrels already discovered but not

    classifiable as reserves. With technology already developed, reputable

    engineers have estimated that 35 to 40 billion barrels of these can be

    recovered with an adequate increase in price to offset the higher recovery

    costs which more sophisiticated recovery methods require. The industry has

    eminently demonstrated its capability to develop its needed technology and

    will continue to do so if it has an adequate economic incentive and political

    climate. Since 1942, as a result of improved recovery technology, the

    average recovery of oil in place from known fields has increased from 21

    to 31 percent. With further development of recovery methods, both by

    improvement of existing procedures and pursuit of concepts currently under

    study in research laboratories, it has been estimated that average recovery

    efficiencies in excess of 50 percent of the oil in place can be achieved.

    This would amount to 70 to 80 billion barrels from currently producing

    fields.3 Currently, about 40 percent of U. S. domestic daily production is

    obtained by means of secondary and tertiary recovery methods.

         Probably the most promising way of increasing our near term domestic

    crude oil availability is to intensify offshore exploration and development

    activity. This is over and above oil from the Alaska North Slope which,

         3Clewell, D. W., An Appraisal of the Petroleum Situation in the Ocean,
    presented before NOAA Conference, Seattle, Washington, July 17-19, 1973.

                                                                              6.

    it is hoped, will become available during the period by expeditious

    installation of the required pipeline. As Figure 4 shows, about 65 percent

    of our onshore domestic discoverable crude oil has been found. The U. S.

    land area, excluding Alaska, has been one of the most intensively explored

    regions of the world. The opportunities of finding large new fields on

    land are now limited and future on-land discoveries can be expected to

    be mostly found in smaller, deeply buried fields. In contrast, only about

    14 percent of offshore discoverable oil has been found, and it can be

    expected that significant quantities of remaining discoverable offshore oil

    will be found in large and relatively shallow fields. Such fields are much

    more susceptible to discovery by present oil-finding techniques than are

    the remaining undiscovered fields onshore. This is not to imply, however,

    that we should ignore onshore possibilities. As indicated earlier, we

    shall need to take all reasonable steps to increase domestic energy

    availability.

    Natural Gas Supply

         In some respects the natural gas demand-supply outlook is even more

    bleak than that for crude oil. Even with an aggressive domestic exploration

    and development program and an intensive effort to increase our import and

    synthetic gas production capabilities, it would appear that we shall fall

    even shorter of supplying the potential demand for natural gas than we have

    for oil. The outlook for natural gas is presented in Figure 5. This is based on

    data developed by NPC.4 It is significant that even with an accelerated effort

    the decline in onshore gas supply will continue through 1985. If steps are not

         4NPC, U. S. Energy Outlook, An Initial Appraisal, Volume II, November, 1971.

                                                                              7.

    taken to intensify exploration and production and the present decline in gas

    productivity persists, the onshore yearly production can be expected to drop

    to below 10 trillion cubic feet per year in 1985 rather than the 15.2 trillion

    projected in the intermediate case shown.

        As in the case for petroleum liquids, it is not a lack of gas resources

    which lies at the root of the problem. Rather, the problem stems directly

    from the ill advised Federal Power Commission policy of regulating gas

    prices at the wellhead at unrealistically low prices. The relationship between

    risk and return on investment has caused a poor economic climate. A table

    of resources and reserves is shown in Figure 6. It will be noted that of

    the 1857 trillion cubic feet of ultimate discoverable gas in the U. S., 699

    TCF have already been found, as of the end of 1973. Of that discovered,

    433 TCF have been produced. Thus, there are on hand reserves amounting to

    266 TCF and another 1158 TCF remain to be discovered.

         Similar to the case for oil, the most promising means of increasing

    domestic production rapidly would be intensification of offshore operations

    and for the same reasons. It should be noted that about 15 percent of

    future gas will be obtained from that associated with oil production. Hence,

    accelerating the finding and production of new oil will also make new gas

    available.

    Causes of the Energy Shortfall

         A great number of factors have combined to create the current situation.

    The reasons behind these factors are often numerous and complex and the

    reader is urged to ask himself "why?" as he reads each of the more significant

    of these factors:

         1. Stagnation of domestic crude oil production rates

         2. Decline of domestic natural gas production

    3. Delays in planned completion and operation of nuclear

        powered electric utility plants

    4. Technological difficulties with the development of sulfur

        control equipment for coal and oil burning equipment

    5. Rapid upturn of economic activity

    6. Environmental and safety-related equipment on motor

       vehicles

    7. Lack of significant expansion and addition of new refineries

    8. Concern about environmental effects of strip mining and human

        safety in deep mining.

                                  CHAPTER 11

                        PETROLEUM TRANSPORT ON THE OCEANS

         It is evident that even with a very material conservation of energy,

    and marked increase in domestic petroleum exploration and development, a

    very large increase in imports of petroleum will be needed. Both crude oil

    and natural gas will be required. It is expected that a portion of U. S.

    needs can be obtained from Canada by pipeline. Nevertheless, by far the

    greater bulk of our imports will have to be transported by ship. Transport

    of natural gas by ship requires a different type of operation than that for

    crude oil and will be treated separately.

    Crude Oil Imports

         Reference to Figure 2 will establish that the period between now and

    1977 will be particularly critical with respect to domestic supply. Even

    with a greatly expanded domestic effort., because of the time required,

    domestic production rate will decrease during this period. Beyond that

    time with continued effort it will slowly increase but not commensurate

    with the increase in demand. A projection of anticipated crude oil import

    requirements is provided in Figure 7. It will be noted that overland imports

    from Canada are projected to rise from a present value of approximately

    3/4 million barrels per day to 2.8 million by 1985. This, of course, will

    depend upon developments in Canada in the intervening period. Changes in

    Canadian domestic needs, supply, import availability and export policy can

    markedly affect the projection. Thus, the need for foreign waterborne

    imports could be higher than projected.

                                                                            10.

                   Just to handle the waterborne crude indicated in Figure 7 will require

              a great increase in maritime shipments into U. S. ports. In order to handle

              these increasing volumes of imports, the transportation system made up of

              very large crude carriers (VLCC's) and modern deepwater terminals is both

              environmentally preferable and economically superior to alternative

              transportation methods.

                   In the past, most waterborne imports have come from Latin America.

              This relatively short haul has been accomplished with tankers mostly

              within the range of 35,000 to 70,000 deadweight tons. As a consequence,

              only a few ports exist at present in the U. S. capable of handling ships

              larger than 70,000 dwt capacity. While a "tight" definition of port

              capability depends on more than tonnage specifications, e.g., draft and

              mooring equipment, the following ports have some ability to handle larger

              ships.

                                    Portland, MA
                                    New York Harbor (Stableton Anchorage)
                                    Northville, L.I.
                                    Norfolk, VA
                                    Corpus Christi, TX
         *                          ~~~~~~~~Estero Bay, CA
                                    Huntington Beach, CA
                                    El Segundo, CA
                                    Long Beach, CA
                                    Los Angeles, CA
                                    Anacortes, WA
         *                          ~~~~~~~~Ferndale, WA

                   The prospects are that oil from Latin America will decrease in the

              future and that the bulk of imports will come from the Middle East and Asia.

    *         ~~Because of the economics in transportation cost it is expected that the bulk

              of the ships used for this purpose will average 250,000 dwt and range up to

              400,000 dwt or larger. Unless port facilities are provided to handle vessels

    *         ~~of this size, crude will have to be transferred from them at nearby foreign

              ports to the smaller tankers for reshipment into U. S. ports. The use of

    combined large and small vessels or transshipping would require an amount

    over the use of large vessels between $0.05 and $0.15 per barrel.

         Continued use of small tankers could increase traffic in U. S. ports

    threefold by 1985. This would impose a severe burden on already congested

    harbors with greatly increased probability of collision and spills. On the

    other hand, the use of large vessels could keep the number of unloadings

    estimated for 1985 at about present day levels. Further, these large vessels

    would call at separate, specially designed terminals, away from existing

    harbors and congested areas, further reducing the risk of accidential collision.

         In view of the significant economies to be had and the marked increase

    in safety which would result, it appears imperative that the development

    of facilities to handle larger vessels should proceed as rapidly as possible.

         The single point mooring techniques for unloading tankers are a proven

    technology, with over 100 such facilities in service around the world.

    It is not only possible to install such facilities in association with

    current port activities, thus relieving inner port congestion, but a new

    dimension has been provided in that such facilities can be installed close

    to a center of usage for which no natural port exists or for which expansion

    of existing ports to accommodate larger vessels is not feasible. Recently

    the U. S. Corps of Engineers has thoroughly studied the relative advantages

    of offshore facilities and endorses their use.

    Liquefied Natural Gas

         A significant increase in imports of natural gas will also be required.

    As indicated earlier, even with a several fold increase in imports, it will

    not be possible to fully supply potential demand. It is expected that some

         5Brig. Gen. J. L. Kelly, "Offshore Terminals and the National Perspective."
    Presented before the annual meeting of the Marine Technology Society, Sept.
    10-13, 1973, Washington, D.C.
                                                                              12.

    of the demand can be supplied by pipeline from Canada, but the same factors

    which can be expected to control Canadian oil exports will affect natural gas,

    too. These factors revolve around such items as the amount and location of

    both supply and demand, energy alternatives available, economics, environmental

    considerations, and most importantly, Canadian, U. S., and other governments'

    policy considerations. A small amount of gas imported at present from Mexico

    is expected to become unavailable by 1975. Thus, a significant increase

    in waterborne liquefied natural gas imports is projected to 1985. only a

    very small amount of LNG is imported at present. Because of lack of ships

    and handling facilities, it is expected that the amount imported by 1975

    will not exceed 0.25 trillion cubic feet per year. However, the amount

    shipped in is expected to rise at a much faster rate after that time, reaching

    a level of about 4.5 TCF by 1985. This will not adequately meet demand because

    imports will be primarily controlled by the rate at which adequate facilities

    can be provided assuming that foreign supplies will be made available at an

    acceptable cost.

        While liquefied natural gas plant technology is fairly well established,

    the optimum means of shipping LNG is still being actively researched. At

    least four different types of containment systems are being routinely used

    or considered at present. Again, port restrictions may prove to be a more

    important factor than technological development. Since virtually a new

    fleet will have to be developed for LNG shipment, much consideration is

    being given to optimum vessel characteristics. At present it appears that

    a ship having a capacity of about I million barrels and possessing about a

    20 knot speed will be best suited for the anticipated conditions. If the

    projected imports are to be achieved, about 44 such vessels together with

    the necessary port facilities at each end of the voyage will be required by 1985.

                                                                              13.

         Because the unloading of LNG requires a very substantial plant for the

    vaporization of the low temperature liquid, the relatively simple offshore

    unloading systems envisaged for crude oil handling will not suffice for LNG.

    Thus, unless substantial fixed offshore structures upon which the necessary

    vaporization facilities can be placed prove economically feasible, present

    port facilities will have to be modified or new onshore facilities built to

    provide for LNG imports.

         By now it should be sufficiently apparent to all that we must move

    without delay to alleviate our energy shortage by all reasonable means. To

    delay action can only mean a more aggravated problem in the future.

                                                                               14.

           0                                 ~~~~~~~~~~CHAPTER III

                          THE RESPECTIVE ROLES OF GOVERNMENT AND INDUSTRY

     0            ~~~~If our country is to develop and maintain an adequate energy self-

             sufficiency in a reasonable timeall segments of our society will have to

             work effectively together. Every reasonable effort to conserve energy must

    0        ~~be pursued.  All avenues of communication must assume greater responsibility

             for informing the public as to the facts, the nature of the problem, and the

             alternative solutions available to us. A closer relationship between industry

    0        ~~and government must be developed--one in which the respective parts which

             each can best play are fully recognized and in which the necessary cooperation

             and encouragement are provided.

                  Of overriding importance is the necessity for the government to provide

             national direction, articulating national priorities and goals, providing

             legal safeguards, encouraging economic growth, maintaining and enhancing

             this country's appropriate conservative use of its natural resources and its

             optimum environmental and social amenities. It should foster an informed

             and unbiased political climate. The government should develop needed technical

              information where it is best suited to do it, and to encourage its development

             by others whenever development can be done more effectively, appropriately,

             or economically by them. The government should serve to collect and make

              available to users such information as is essential for achieving national

              goals.

             Development of Required Technical Information

                   In general, the country's interests will be best served if members of

              industry are encouraged to undertake that research and development essential

                                                                                       15.

    to the maintenance of an economically viable and competitive industry.

    The petroleum industry has amply demonstrated its willingness and capacity

    to conduct the necessary R and D effort given a favorable economic and

    political climate. It can be counted upon to continue its efforts if

    favorable conditions prevail. Indeed, its research staffs and facilities

    for this purpose are unexcelled in the world. On the other hand, the industry

    has relied heavily upon R and D and technical information developed by

    others both in academic and government circles where such has been available.

    Closer cooperation between those responsible for government, industry, and

    academic research activities will enhance greater understanding of the

    part each can best play and, under optimum conditions, should result in each

    performing that portion of the task which the most efficient and expeditious

    course of action dictates. Unnecessary and costly duplication of effort could

    thereby be eliminated while still allowing for that freedom to pursue new

    ideas regardless of source so essential to scientific progress.

         In the past, much of offshore operations were evolutionary extensions

    of onshore efforts and the technology developed over many years has sufficed

    with only nominal change to provide for near-land operations in shallow water.

    In the future, the number of operations-conducted in frontier areas will

    increase. Much of the necessary knowledge and technology for successful

    resource recovery for these frontier conditions awaits development. Moreover,

    these resources will be more difficult and costly to find and produce. Thus,

    more precise and abundant knowledge will be required and will have greater

    relative value than heretofore. Specific suggestions as to needed information

    will be presented and discussed in more detail in Chapter IV.

    Scheduling of Lease Sales

         A great and immediate aid the government can provide is a firm and

    orderly scheduling of lease sales of greatly expanded acreage. The industry
                                                                            16.

              is encouraged by the recent releases by the Department of the Interior of

              its five-year lease schedule for certain offshore areas. Greatest efficiencies

              can be achieved if all proposed sales up to two years in the future are firm

              with sales two to five years in the future on a semi-firm basis. Both

              government and industry can achieve mutual benefits by working closely together

    0         ~~in a cooperative annual updating of the schedule.  Industry can certainly

              best conduct its operations if it has at least a two-year notice of a sale,

              and this time lead will also probably allow all interested government offices

    0         ~~sufficient time to properly plan.  The offshore areas that are of greatest

              immediate interest to the offshore industry are the Gulf of Mexico, Baltimore

              Canyon, Gulf of Alaska, Bristol Bay, Offshore North Slope, Chukchi Sea,

    0         ~~Southern California, Blake Plateau, and Georges Bank.  Industry, environmentalists,

              and government are working together in selecting provinces for future nominations

              both by point in time and sequence. This will allow industry to utilize to

              the fullest extent its imminent or current technological capabilities. This

              cooperation will also encourage a logical development of the total resources

              within general geographic areas rather than providing what appears to be a

    0         ~~less efficient procedure as in the present approach.  It seems quite likely

              that future events resulting from the latest Arab-Israeli conflict may warrant

              the nation to adopt as a matter of policy the exploration and development

    0         ~~of its most promising offshore areas at the earliest feasible time.

              Consolidation of Federal Energy Activities

                   Another step which would appear to enhance the direct communication

              and-cooperation required to develop and carry out national goals is the

              incorporation of those parts of the many government agency activities that

              pertain to energy into one or a very few highly coordinated focal points.

              A difficulty which harasses all those in government concerned with establishment

              and implementation of federal policy is lack of an integrated source of

                      0                                                                   ~~~~~~~~~~~~~~~~~~~~~~~~~17.

    necessary information. This arises not so much from lack of provision of

    the needed information by industry as it does from the fact that portions of

    the information are collected by many agencies. Each agency or office collects

    that data needed for its own special purposes or needs but nowhere in government

    Is a timely composite accumulation made. Consolidation of federal energy

    activities should greatly aid representatives of industry and government to

    consult effectively relative to offshore matters, thus enhancing expeditious

    accomplishment of necessary goals.

    Priorities

         The Petroleum Panel suggests that the benefits to this nation of steady

    and orderly recovery of the petroleum resources of its outer continental

    shelf are too great to allow for any unnecessary impediments. While properly

    recognizing the legitimate rights and desires of individuals, and of local

    and state governments, the federal government also has the obligation to

    recognize the equally legitimate regional and national rights and needs. The

    delicate balancing of these sometimes apparently opposing interests should be

    accomplished by the democratic processes and the federal government is the

    proper focal point for the resolution of these conflicts. Coastal zone

    planning and management implemented at the state level but with federal

    involvement is a natural and desired consequence of these democratic processes.

         Finally, it is realized that the National Energy Policy must stand in

    legitimate competition with and be reconciled among other equally valid

    national policies, programs, and goals dealing with such subjects as tax

    reform, national defense, environmental protection, marine and estuarine

    sanctuaries, clean air and water, coastal zone management, land use, and

    optimization of federal revenues and expenditures.  The fact that only

    the government can make the final decision on the priorities of these and

    other national goals is fully appreciated and concurred with by industry.

    Industry is most willing to fully cooperate with government in any and

    every legitimate way and will accommodate all other interests in every

    reasonable manner.

             0~~~~~~~~~~~~~~~~~~~~~~~~~~9

                                  CHAPTER IV

                    RECOMMENDATIONS CONCERNING INDUSTRY AND
                GOVERNMENT ACTIVITIES IN THE MARINE ENVIRONMENT

         Commensurate with the general observations made in the preceding

    chapter, the Petroleum Panel has listed in this chapter those areas of

    ocean activity which the government now performs or which we feel the

    government could perform, the undertaking of which would greatly assist the

    offshore industry to find and produce the additional domestic petroleum so

    greatly needed by this country. As an example, industry has benefited from

    continued improvement in navigation and oceanographic data. Continued

    improvement of such information in frontier areas would be of great technical

    assistance. It is recognized that certain government activities naturally

    are closely aligned with lease sales and that, in general, should continue

    wherever possible.  Other data could be more useful to industry if provided

    as far in advance of pending lease sales as possible. Certain oceanographic

    data fall into this classificaiton. Not only would early provision of such

    data allow industry to better preplan exploration, production, and transportation          0

    activities and programs, it should allow government offices involved with

    offshore activities to better preplan also.

        The Petroleum Panel recognizes that federal agencies serve the needs of

    many segments of society as well as industry and that data of only marginal

    value to the offshore petroleum industry may have great value for other purposes

    and users. The report only addresses the interests of the offshore petroleum

    industry. The Petroleum Panel is also cognizant of the fact that the setting

    of priorities of government agency activities is a matter solely to be

                                                                               20.

             decided by government. Nevertheless, it hopes that a lack of provision by

             government of information which would be of use to the industry will not

    0        ~~result in the postponement or impedance of planned offshore petroleum efforts.

             This is to say that industry is not solely dependent upon government data or

             assistance for successful offshore activities but that the additional inf or-

             mation may make for safer and more economical operations. The petroleum

             industry feels that the government's primary emphasis should be on activities

             traditionally performed for the benefit of broadly based user groups.

     0             ~~~~The following list of government marine activities is divided into two

             categories. These are activities considered by the industry to be: 1) both

             appropriate and important to the offshore petroleum industry; and 2) activities

    0        ~~considered to be less important to marginal as far as use to the offshore

             Industry is concerned. It will be noted that some items represent data which

             have been made available in some form in the past. Others represent information

             which may be new, improved or extended in scope. In this connection it should

             be observed that industry has many offshore structures which offer in a number

             of instances the opportunity to improve the gathering of data or to make

             possible the obtaining of new information heretofore inaccessible or not

              feasible to acquire. Many companies have a standing policy of permitting

             and encouraging use of these platforms by qualified government and academic

              representatives for selective scientific and research purposes. The primary

              conditions upon their use are that the additional activity will not endanger

              lives or property and that it not unduly interfere with the principal purpose

    S        ~~of the structure.

              Activities Considered Appropriate and Important

     *             ~~~~Following are those activities considered by the Petroleum Panel of

              OSTAC to be both appropriate and important to the offshore petroleum industry.

                                                                                          21.

          1. Pate and effects of oil in the marine environment.

             The fate and effects of oil discharged into the world's oceans is

    one of the most pervasive environmental concerns facing the petroleum industry

    and the U. S. government. It is an inter-regional matter and one that affects

    many segments of government, industry, and society. Even though we have learned

    a lot about the effects of oil in the marine environment, there is much more

    to know.

             It is essential to determine as rapidly as possible the facts with

    regard to the fate and effects of oil in the ocean so that all concerned can

    make decisions which truly represent what is in the best national interest.

    Based on inadequate information and sheer speculation, a number of individuals

    have predicted very dire consequences of oil entering into the sea. These

    conclusions which we believe to be largely premature or unfounded, coupled

    with adverse publicity given to major spills, have greatly exaggerated the

    proportions of the problem and have unduly aroused the concern of the public,0

    industry, and government. In response, government and industry have adopted

    new regulations and expensive procedures in the conduct of marine oil operations

    without adequate knowledge that they are either necessary or justifiable. These0

    regulations, plus those currently being formulated, will have far reaching effects

    on the petroleum industry's marine operations. Not only do they deprive the

    country of much needed petroleum but they greatly increase its cost.

             Government and industry should cooperate in determining the total

    overall needs and the extent to which they are currently being met. A

    possible effective way to do this might be to compile a list of needs as

    seen by both government and industry. It would be possible then to determine

    whether these needs were being satisfied on the basis of currently available

    knowledge and ongoing research. If not, programs and optimum means of

    implementing them could be recommended to fill in the gaps or extend the

    range of knowledge.
                                                                              22.

                    Two big question marks here that need to be answered are what

    *      ~~parameters or items to measure and then what techniques, standards, and

           equipment should be employed for those measurements. Investigations

           should be conducted and compared for coastal areas with and without

    *      ~various types of petroleum activity and with the open oceans.  Determination

           of petroleum inputs by source and activity should be developed including the

           location of natural seeps. Inexpensive and accurate techniques for distin-

    *      ~guishing man-associated petroleum hydrocarbons versus naturally occurring

           petroleum hydrocarbons and biologically produced hydrocarbons must be

           developed.

      *             ~~~~It would be valuable if government were to increase its research

           emphasis on the long-term sublethal effects of low level petroleum hydro-

           carbons rather than concentrating predominately on the well-known, short-term

    *     ~consequences of oil spills.  Specific emphasis should be placed on determining

           whether or not and to what extent and for what duration of time oil pollution

           poses a hazard. Needed projects under category of fate of oil include studies

    *     ~dealing with natural bacterial degradation, weathering, solubilization, and

           mass balance investigations of oil in the oceans.

                    The scope and importance of the subject of fate and effect of oil

    *      ~in the marine environment require the utmost of cooperation, coordination,

           and planning among and between the various segments of industry and government.

           Each aspect of the problem should be considered in light of how it can best

    *     ~be handled and every effort should be made to enlist the services of those

           best able to carry out the various specific parts of the undertaking.

                 2. Coastal Zone Planning and Management

                    Regardless of the degree to which it actually impacts its surroundings,

           the effect of any activity in the coastal zone is greater than it would be

                                                                                       23.

    in the open sea simply because it is within the scope of the concentrated

    number of people who live in the coastal zone. Thus, state and local coastal

    zone legislation and regulation against onshore and nearshore petroleum-

    related endeavors can dramatically affect federal and industry offshore plans

    and operations. While the states in cooperation with their local communities

    are the logical entities to research, plan and manage their valuable and

    limited resources of the coastal zone, it is in the interest of all segments

    of our country that the regional and national interests not be ignored.

    Thus, the federal government has here a significant role to play. The time

    has long since passed when an isolated community can satisfy the needs of

    its citizens without recourse to supplies and services beyond its pale.

    Thus, all must cooperate, each making some sacrifice, so that everyone will

    be better served. In ascertaining the regional and national interests that

    must be incorporated into the state planning and management programs, the

    various federal agencies must work together to assure a balanced input of

    social, environmental, technical, economic, defense, etc., considerations.

    The federal government should also cooperate fully with the states in the

    collecting, sharing and interpreting of the oceanographic and environmental

    data collected in the coastal and offshore areas.

             A specific effort that logically falls within the scope of federal

    government activity that could be very useful in high use offshore areas is

    the compilation of all principal uses and intensities by month or season.

    Potential conflicts between users of the sea might thus be avoided if patterns

    of use could be established. For instance, the petroleum industry could

    schedule geophysical surveys to avoid overlap as to area and season for

    specific fishing activities.  Likewise, activities undertaken by others

    might reasonably be rescheduled by them with little or no loss to permit

    optimization of petroleum industry activity.
                                                                                24.

                   3. Measuring and forecasting marine conditions in frontier areas.

                       Oceanographic data currently used by or of greatest potential

    0         ~~use to industry for design and planning are as follows:

                      a. Sea states. Sea state, including swell and waves, giving

              significant heights, significant periods, and energy spectra.

                      b. Winds. Sustained winds at 10-meter height including speed and

              direction.

                       c. Currents. Surface and vertical profiles of speed and direction

              of tidal, wind driven, and general circulation currents.

                      d. Tides. Sea surface elevation changes caused by astronomical

              and storm tides.

                       e. Other meteorological data. Air temperature, precipitation,

             visibility, humidity, icing tendency.

                       f. Water temperatures. Surface and bottom temperatures (recording

              frequency to be daily or weekly, as appropriate).

                       g. Reliability of communication. Data on ionospheric conditions

              and guidance in selecting radio communication frequencies.

                       h. Sea ice. Occurrence, motion, strengths, salinities, and

              dimensions. This should cover bergs, pack ice, large ice ridges, and

              shore-fast ice.

                       i. Ice scour and bottom sediment scour. Occurrence and intensity

              on sea floor in applicable places such as the offshore North Coast of Alaska.

                       J. Seismic activity. Occurrence and magnitude of earthquakes;

              associated geologic information in seismic active regions.

                       k. Data atlas. Assemble for specific areas historical and new

              information covering all items above and make available in summary form,

              either by computer filing and recall or by frequently updated "encyclopedias."

                                                                                        25.

            The frequency of obtaining the readings above on a three-or six-hour

    basis would be most useful unless rates of change are slow. The extremes

    of storms should be based on 1, 2, 5, 10, 25, 50, 75, and 100 year occurrences.

             Such data as those listed above are essential to baseline studies

    if valid results are to be obtained. Future efforts should primarily be

    directed towards filling gaps and in extending knowledge rather than

    duplicating prior data, unless there is reason to believe that such data

    are significantly in error. This data will not only aid industry in their

    planning and daily operations but it is essential to understanding biological

    relationships and the development of environmental baseline studies.

             Forecasts and warnings of hurricanes and severe storms and or

    critical values of other parameters mentioned above are required to support

    safe day to day operations of all ocean users.

         4. Bathymetry, surface geologic mapping of the sea floor using
             grab samples, shallow core data, reconnaissance gravity,
             magnetic, seismic surveys, regional geologic mapping, and
             broad basin type mineral resource potential studies.

             The government can be of great assistance if it collects and

    assimilates accurate bathymetric data. Where these data do not now exist,

    or could be justifiably improved, they should be obtained and compiled.

    The scale mapping of bathymetry should be correlated to diversity and

    intensity of map usage. Normally, areas around population centers and other

    areas of high use should receive priority attention and greater detail.

    Primary use by the petroleum industry of this data would be associated with

    seismic line layout, gravity corrections, pipeline laying, and determination

    of unstable conditions. Specific areas of interest are dictated by offshore

    fields and deep water terminals and onshore facilities. Detailed surveys

    of bathymetry for specific projects and single users such as deep water

    oil terminals and offshore pipelines should be the responsibility of the user.

                                                                               26.

                      Specific geophysical and geological assessments by government

    *        ~~would be of greatest use if it provided general regional information with

             respect to the following: location, general outline, and configuration of

              sedimentary basins; determination of age and thickness of stratigraphic

    0        ~~sections; location of major intrabasin structural features such as rift

             zones and arches; surface faults; subsea soils characteristics and location

             of geologically unstable sea floor conditions. Determination of these various

    *        ~~features can be provided by regional reconnaissance gravity, magnetic, and

             seismic surveys, bathymetric mapping, and ocean bottom sampling. Such

             programs will provide government with the information necessary to outline

    *        ~~potentially productive areas and to determine the problems associated

             with the exploitation of those areas. Government-conducted and government-

             supported regional geologic mapping and broad basin-type mineral resource

             potential studies are of interest and use to many scientific, governmental,

             and commercial interests.

                      The exact point of demarcation between regional reconnaissance

    0        ~~surveys and detailed prospective surveys is irrelevant as long as the

             terms are conceptually compatible among interested parties. Petroleum

             industry companies generally agree that geophysical grid surveys of 20 miles

             by 20 miles or greater are reconnaissance and everything as dense as 5 by

             5 miles is prospective. Industry recognizes and encourages the efficiencies

              that may be obtained by government conducting several scientific and

    *        ~~oceanographic shipboard investigations concurrently.  The net values derived,

             however, are dependent upon associated needs, benefits, and costs. For

             example, the required density of line spacing for bathymetry, gravity and

    S        ~~magnetics, and deep seismic data surveys differ considerably.  Industry needs

             detailed geophysical data for prospective evaluations while government

                                                                                         27.

    uses geophysical data f or outlining regional geology including the definition

    of large sedimentary basins, general management decisions, and for filing

    environmental impact statements. The different needs by different users

    require varying degrees of data accuracy and completeness and do not signify

    inherent incompatabilities.

             Because of the inherent risks and uncertainty in determining the

    potential of exploration ventures, even with extensive geological and

    geophysical work, individual members of the offshore industry interested

    in acquiring leases must of necessity conduct their own detailed surveys.

    One need only consider the wide range in bidding at lease sales now to

    recognize the great latitude for differences in interpretation that

    exists within the framework of the best obtainable data. The necessity

    to acquire reserves to continue to stay in business and the high degree

    of competition existing among oil and gas producers will assure that bonus

    bids on sales tracts will provide the government more than adequate rennneration

    for the value of the federal leases. Thus, it would appear that the optimum

    use of the limited available funds, both federal and private, would be made

    if the effort continues to be divided. Accordingly, it appears the national

    interests would be best served if the government programs were directed

    primarily to reconnaissance of the vast reach of the U. S. continental

    margins, leaving the detailed prospecting to the individual companies.

    There is little if any chance that the government will lose by this

    policy and by minimizing the duplication of effort more funds should be

    available for the needed reconnaissance and other needed oceanographic

    data.

             Much offshore geologic and geophysical data collected by the

    petroleum companies is also valuable for achieving national goals. While

                                                                                28.

               some of this data is exceptionally confidential to individual companies,

               other data fall into categories of lesser confidentiality and nonconfidentiality.

               Efforts by industry are being increased to transfer data of these latter

               categories to government archives such as NOAA's Environmental Data Services.

                    5. Measuring and locating the mean low-water line along
                        the shore, charting of offshore areas tied into geodetic
                        markers, and establishment of precise positioning capability.

                        Geodetic markers placed offshore are a logical extension of

    *         ~~~government responsibility traditionally performed onshore.  It is highly

               desirable that the government take whatever steps it can at the earliest

               date to establish or bring about settlements of all boundaries between

    *         ~~~private citizens, local, state, and federal, and/or international governments.

              Under present procedures this will require measuring and locating of the

              mean low-water line along this shore and the charting of offshore areas.

               It would be highly desirable if a more permanent base system for boundary

               lines and offshore charting could be adopted.

                        In 1963, the former U. S. Coast and Geodetic Survey established

    *         ~~~some horizontal control off the Louisiana coastline.  The financing of this

               effort was done jointly by the government and the petroleum industry.

               Since 1963, the system has been extended by industry to include virtually

               all platforms. This supplemental control, while not as accurate as the

              USC&GS work, is adequate for drilling operations.

                        Although the industry system is available to most users, additional

    *         ~~~surveys and placement of markers by government would be of great value.

               The East Main Pass, South Extension of West Cameron, East Cameron, Vermilion,

              South Marsh Island, and Eugene Island areas of Louisiana are areas of great

                                                                                           29.

    need at present. Other areas of prime importance would be the Texas,

    Mississippi, Alabama, and Florida offshore areas, as well as other areas

    previously mentioned and under consideration for tract sales. Ideally,

    the sequence of plotting the frontier areas should generally coincide with

    but adequately precede in time the tract sales. Geodetic control along

    the continental shelf of all prospective areas will be a necessity in order

    to properly operate beyond the shelf in deeper water and long distances from

    shore.

             In all probability, there will be many significant differences

    in future petroleum operations in frontier areas than in those of the Gulf of

    Mexico in the past. The Gulf of Mexico petroleum development was an

    evolutionary stepping stone occurrence starting from the shore utilizing

    onshore techniques and equipment. Frontier areas will probably begin

    development 50-100 miles or more offshore employing specialized equipment.

             Geodetic control of platforms in the Gulf of Mexico went seaward from

    known onshore positions. Each fix is believed to be at least + 50' in accuracy.

    While the compounded error of several fixes may be potentially large, the

    significance of the error can be easily minimized. To avoid any possible

    illegal drainage of hydrocarbons from adjacent tracts, platforms are placed

    within the boundaries of the tracts to compensate for possible errors of

    positioning. Most tracts are either 5,000 or 5,760 square acres. Navigation

    hazards due to errors in plotting are minimized by establishing shipping

    fairways as well as platform warning devices such as lights and horns. The

    Geneva Convention on the Continental Shelf stipulates that ships in transit

    allow at least 500 meters clearance from the periphery of artificial islands.

            The ability to determine precise locations with low-cost, on-board

    equipment will be of substantial benefit to petroleum exploration efforts

                                                                              30.

            as well as to sports and commercial fishing vessels, aircraft, pleasure

            craft, and commercial transport vessels. Such an ability could add greatly

            to rescue and safety-at-sea efforts, too. Ultimately, a traffic control

            computer system would greatly enhance safety and operations by providing

            detailed information at the time of need relative to all vessels and fixed

            structures in a particular area.

                     Industry is most interested in the positioning test project now

            being undertaken by NOAA's Satellite and Marine Applications Section of

            the National Geodetic Survey. Hopefully, the test will result in the ability

            to locate platforms or other objects anywhere offshore to at least six

            feet of true position. Further, this accuracy may be obtainable at less

            costs then current methods of surveying. Markers of this accuracy in frontier

            petroleum areas would be of tremendous assistance and benefit.

    *            ~~~6.  Intensify efforts on the possibilities and
                     consequences of weather mociification.

                     Prediction, alteration, and modification of the physical elements

            are of considerable interest to the offshore industries. Better prediction

            of path and intensity of hurricanes could significantly reduce operational

            costs where these are prevalent, particularly on the East and Gulf Coasts.

            The Petroleum Panel strongly supports NOAA's hurricane research programs

            and especially Project STORMFURY which was developed to explore the structure

            and dynamics of hurricanes, potential for modification, and verification

            of results after seeding with silver iodide. Due to the potential benefits to

            our industry as well as to all society accruing from hurricane modification,

            we would encourage substantial amplification and intensification of this project.

                     Another project to be considered would be the fixing or control

            of the location of the ice sheer zone offshore the Alaskan North Slope.

                                                                                       31.

    The development of a means for predicting and modifying the direction of

    movement of large ice islands and ridge formations in the same area would

    also be of benefit. Likewise, rerouting or destruction of icebergs in any

    higher latitude area would aid in the design and operation of any platform

    expected to be exposed to icebergs.

    Activities Considered to be of Less Importance,,
    of Marginal Value,or More Appropriately Performed by Others

         It has been recognized earlier in this report that the Petroleum Panel

    is not in a position to assess the relative value of all government activities

    to all users. Hence, it must consider the value of government-provided services

    within the framework of its own expertise and experience. From this viewpoint

    and with a sincere desire to put forth recommendations which it believes to be

    in the best national interest it makes the following observations:

         1. Individual tract evaluation

             The opinion has already been expressed above that the detailed

    surveys necessary for individual tract evaluation are best left up to

    industry. The only method of accurately ascertaining the presence of

    petroleum hydrocarbons in an underground formation is by exploratory

    drilling. Preliminary efforts utilizing geophysical interpretations, while

    they give some idea of structure, provide at best only educated guesses

    as to the real worth of a tract. For the government to gather the detailed

    information to duplicate that obtained by the industry would not only be

    expensive and drain away funds from more useful government enterprise, it

    would not really satisfy the purpose for which it is claimed that it is

    needed. The principal justification advanced for its collection is that

    it would permit government to independently assess the value of the tract and

    thus keep industry from getting a parcel for less than its worth. The

    thought being here that if bids did not equal or exceed the value placed

                                                                               32.

    on the tract by government it would be withheld. There is very little

    chance, if any, that this will increase the government's revenue over that

    which it now gets. Indeed, this practice has a good chance of being contrary

    to the national interest. There are several reasons for this. First, in

    view of the limitations of the data, the government's evaluation is as likely

    to be as erroneous as that of any of the individual bidders. If the government

    appraisal places a higher value on the tract than that of even the most

    optimistic bidder, as has often been the case, the individual tract will

    not be sold. While this tract might subsequently be sold in some future sale,

    the odds are good that it will not unless government places a lower value

    on it in a future sale. In either case, the government loses or postpones

    receipt of money it could have received and, more important, the opportunity

    for early development of much needed petroleum reserves. Second, since

    the fair market value of any item being sold is what the market will bear,

    the government's appraisal, being unknown to the bidders, does not protect

    the nation's citizens from any "loss of heritage." The prevention of this

    theoretical loss of value is the rationale for the tract evaluation.

         2. Production and drilling technology

             Experienced research personnel know that the closer the research

    and development problems approach operations the more they require actual

    experience with operations for their optimum solution. Thus, as a matter

    of policy and experience, it has been found advantageous in the development

    of such things as new and improved exploration, drilling, and production

    equipment to encourage the suppliers to perform the research and development.

    In those instances when for one or another reason it has seemed appropriate

    to pursue such research within the petroleum industry laboratories, the

    knowledge and experience of those intimately acquainted with the operation

                                                                               33.

    have been heavily drawn upon. In fact, the required research and development

    have been of such a magnitude that many companies, both operators and suppliers,

    have jointly sponsored the R & D projects.

             Often suggested projects require major auxiliary research requiring

    intimate knowledge of the significance of the many variables involved. As an

    example may be cited the development of a system for use of continuous

    drill pipe. Variables to be satisfied range all the way from space limitations

    which must be met to development of new metallurgy. Ultimately such develop-

    ments must be tested under actual operating conditions usually with a prolonged,

    extensive and costly pilot stage.

             For these reasons, the Petroleum Panel would recommend against0

    government undertaking of this type of work. Both industry as well as

    government experience gained in defense, NASA and Atomic Energy agencies as

    well as others indicate it is better to arrange for experienced people and

    firms to perform such research. It should also be mentioned that industry

    itself has always been willing to provide the necessary technology as its

    potential need has become apparent. Were it not for technology developed by

    the U. S. petroleum industry many of the 70 countries around the world now

    enjoying the fruits of petroleum developments in their offshore waters

    would not even know they had such a resource.  Almost every country has

    benefited from the petroleum produced from these foreign areas including the

    United States. It is unfortunate to say the least that the technology

    the petroleum industry has exported has not been as effectively used to

    develop domestic offshore resources because of inhibitions imposed upon

    the industry at home.

             The industry supports the need of government to confirm the fact

    that new techniques and equipment employed on OCS platforms are in the

                                                                              34.

               nation's best interests. Since various government agencies must inspect OCS

              drilling and production operations for safety, reliability, pollution, and

    L         ~~~other factors, they must be aware of new industry developments prior to
    WJ1    ~~  adoption for proper evaluation.  For this reason, the appropriate federal

              bodies are generally consulted by industry during the research and development

               stages.

                   3. Performance of studies and acquisition of data, the purposes
                       for which and/or the manner in which the results can be
                       effectively used are not known or poorly delineated.

                        It is very easy under pressure from poorly conceived legislation

              or public emotionalism to mount studies which appear to have potential

              value if successfully pursued but which in fact, even if successful,

              have little value or little chance to provide the answer to the problem

               that needs be answered. While many instances can be cited, a number of

              current ones fall into a class which might be called ecological or

              environmental. Some of these fall into a subcategory which might loosely

              be called baseline studies. The importance of establishing unequivocably

              the impact of petroleum in the ecosphere has been covered earlier. Unless

              a project for this purpose considers all of the significant variables and

              provides for their quantitative accountability in the system under study,

               the results of the study are almost certain to be inconclusive. Thus,

               studies of only a limited portion of such a system are doomed to be of

               little value unless they have been carefully planned to provide conclusive,

              useful results or are designed to usefully fit into a comprehensive

               framework of similar useful researches. In future research on ecological

              matters it is hoped that all sources of existing valid knowledge and ongoing

               research will be used as a base upon which to build projects which augment

                                                                                         35.

    the base and extend the frontier of useful knowledge as opposed to replication.

    Such studies would be of greatest help if they were conceived and executed

    in anticipation of lease sales and preceded them sufficiently as to not

    interfere with their timely availability.

         The petroleum industry supports the purposes of the National Environ-

    mental Act of 1969 which are in part: "To declare a national policy which

    will encourage productive and enjoyable harmony between man and his environ-

    ment; to promote efforts which will prevent or eliminate damage to the

    environment and biosphere and stimulate the health and welfare of man;

    to enrich the understanding of the ecological systems and natural resources

    important to the Nation ..." Conversely, we are opposed to those endeavors

    that do not support this balanced viewpoint of which there are an unfortunately

    significant and growing number.

         For many reasons, the Petroleum Panel feels it is imperative that

    the government soon develop guidelines concerning baseline studies. This

    effort is needed to help eliminate the current confusion which now surrounds

    this subject. These guidelines should insure the satisfaction of NEPA's

    concern for the balance between man, nature, and the Nation.

                                                                             36.

                                  FIGURE 1

               UNITED STATES FOSSIL ENERGY RESOURCES (1973)

                                         QUADRILLION BTU
                                    RECOVERABLE                   TOTAL*
                       RESOURCE    BY TODAY S                    YEARLY
                       IN PLACE    TECHNOLOGY      RESERVES    PRODUCTION

    COAL                74,400         3,600          3,600        14.56

    OIL SHALE            10,440          313            -             -

    CRUDE OIL            4,100           415            226        20.12

    NATURAL GAS           1,510          295            295        22.66

    TAR SANDS               162           29*

          0~~~~~~~~~~~~~~~~~~~~~~~~~

     * ESTIMATED

    JES 3/73

                           FIGURE 2

                                           w

             C21~~~~~

    LLJ

                                 0~~~~~~~0

                             FIGURE 3

    *~PIMR EEGCOSMTION  BY SECTORS

         200                    -

              0~~~~~~~~~~~~~~~~~~~~0

          100 -

       *  5O~~~~   TRANSPORTATI         O     - -

                    ELECTRICITY

             20INDUSTRIL         mo-o

    ~20
                     5                   -~~~~~~~~~~~~~~~o

              0~~~~~~~~~~~~~~~~~~~0

                                     FIGURE 4

                      COMPARISON OF UNITED STATES CRUDE OIL
                       RESOURCES, RESERVES, AND PRODUCTION

                        BILLIONS OF BARRELS OF OIL IN PLACE

                                             DISCOVERED    PRODUCED    RESERVES
                               ULTIMATE           TO            TO          AT
                             DISCOVERABLE       1-1-73        1-1-73       1-1-73

    UNITED STATES                810.4            434.0         99.9        36.3

       ONSHORE                  633.9            409.1         94.6         32.3

       OFFSHORE                 176.5              24.9         5.3          4.0

    OFFSHORE

       ALASKA                    73.9               2.7         0.5          0.6

       ATLANTIC COAST            14.4               0           0            0

       GULF COAST                38.6              12.6         3.4          2.6

       PACIFIC COAST             49.6               9.7         1.4          0.9

    SOURCE: NPC, API, CALIFORNIA CONSERVATION COMMITTEE.

    JES 10/73

                            FIGURE 5
                           0    ~00
                                                   0 (

    0~~~~W0i

               -J~~~~~~~~~~~~~~~~~~J
    *~~~L ago
                 C-,~~~o

               *~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~u

            wvAu.aoeo  osori.

                                        FIGURE 6

                        COMPARISON OF UNITED STATES NATURAL GAS
                          RESOURCES, RESERVES, AND PRODUCTION

                                TRILLIONS OF CUBIC FEET

                                                 DISCOVERED    PRODUCED    RESERVES
                                   ULTIMATE          TO            TO           TO
                                DISCOVERABLE       1-1-73       1-1-73       1-1-73

    UNITED STATES                  1857.3           698.8          432.7       266.1

    LOWER 48 ONSHORE                963.1           603.6          408.1       195.5

    LOWER 48 OFFSHORE               260.1            63.1           24.0        39.1

    LOWER 48 OFFSHORE:

       ATLANTIC COAST                54.5             0              0           0

       GULF COAST                   201.8            62.6           23.8        38.8

       PACIFIC COAST                  3.8             0.5            0.2         0.3

    ALASKA                          277.4            32.1            0.6        31.5

    ASSOCIATED AND DISSOLVED        356.7           217.7            *           75.5

    � NO SEPARATE RECORD PRIOR TO 1966.

    SOURCE: AMERICAN GAS ASSOCIATION

    JES:11/73

                               FIGURE 7

                PROJECTED CRUDE OIL IMPORT REQUIREMENTS

                     MILLIONS OF BARRELS PER DAY

                                         1975      1980      1985

    TOTAL IMPORT REQUIREMENT              8.5        9.5      11.7

    POTENTIAL SOURCE OF IMPORTS

       CANADIAN OVERLAND                  1.3        1.9       2.8

       FOREIGN WATERBORNE                 7.2        7.6       8.9

    JES 11/26/73