to predict changes in production activities resulting from hypothetical oil 

 and gas finds. The model thus compares changes in industrial inter- 

 relationships with and without discovery. Predicted changes are used to 

 forecast such items as employment, earnings, population movements, and 

 overall personal income and expenditures. The forecasts prepared in this 

 way for one year may then be used in preparing forecasts for succeeding 

 years. This incremental process, a component of many economic models, has 

 some practical limits, most notably an increase in the uncertainty of the 

 forecasts as time passes. 



2.1 .3 Scenarios 



Scenarios are the most popular tool for predicting offshore and 

 onshore OCS-related development and its impact. Of published OCS studies, 

 well over half use scenarios. 



Scenarios are descriptions of anticipated future situations that would 

 result from assumed changes in specified components. For example, siting 

 of oil or gas facilities near a community (the assumed change) would probably 

 result in population growth, new political problems, and increased require- 

 ments for community services and facilities (the future situation). The 

 accuracy of the scenario (how many people? which political problems? what 

 facilities?) necessarily depends on the accuracy of estimates of the 

 assumed changes. 



OCS lease sales—actions with potential for far-reaching effects over 

 large areas--have been common subjects for scenarios. These may include 

 assumptions for resource quantities; leases, sales, and lease productivity; 

 industry procedure; and material availability (see Example 1). Many 

 published OCS studies have contained from two to four alternative 

 scenarios based on assumptions associated with no discovery of oil, a low 

 find, a medium find, and a high find. 



Scenarios are used to project change over time. They may be used to 

 picture a sequence of events at varying magnitudes which might include the 

 number of drilling rigs and production platforms employed in each of 

 several consecutive years, the length of time required to complete a single 

 exploratory well, and the predicted development pattern of onshore support 

 facilities (see Example 2). 



Scenarios can be made at many levels of complexity. In OCS studies, 

 they range from verbal descriptions based on a few broad assumptions, to 

 sophisticated computer models where they may be combined with input/output 

 analysis or other economic models, such as the Harris model. 



The need to use scenarios suggests a major problem in planning for OCS- 

 related development: it is impossible to precisely predict development 

 patterns and impacts based on a resource of unknown quantity and 

 characteristics. In addition, oil and gas each require different 



