sponsor must make several crucial decisions in attempting to locate an 

 onshore OCS-related development facility. Subtle issues in the regulatory 

 enforcement process may affect the short and long-term potential a site 

 has for the sponsor's needs. For instance, the existence of a state 

 "large-scale-development" review program may cause delays in initial 

 site approvals, but may provide greater security than simple local 

 zoning approvals to the life of a development. Location in an existing 

 industrial area may eliminate many local approvals because zoning would 

 already permit industry. But land prices for the site may be higher 

 because of the greater simplicity or attractiveness of the site. The 

 decision becomes primarily one of capital availability and carrying 

 costs (primarily interest on borrowed money) rather than site character- 

 istics. 



Information requirements for different public approval programs may 

 differ significantly. Sequential presentations with each specifically 

 tailored to one agency to get one approval have often been more effective 

 than blanket or overview reports that might arouse general interest in 

 the details of a project. The environmental impact assessment process 

 has changed traditional approaches to this problem, as described in 

 Volumes 2, 3, and 4 in this series, each of which deals extensively with 

 the sorts of information commonly presented and with important concepts, 

 definitions, and ecologic factors that come up in either the tailored or 

 general information approach. 



Pre- leasing and exploratory drilling reviews typically proceed 

 independently of sponsor attempts to locate suitable onshore sites for 

 related development. During the field development phase, onshore 

 facilities are also being sited with applications to the Corps of 

 Engineers, who are advised by district and regional representatives of 

 FWS. 



2.1.4 Industry Decision Factors 



The offshore industry's decision process is aimed at finding the 

 optimum balance among a complex set of tradeoffs. The tradeoff elements 

 include technical, environmental, regulatory, community, and direct 

 economic factors. This section focuses on the principal factors that 

 affect the whole OCS development decision process. 



Economic Constraints : Profits from OCS development depend on the 

 costs of recovery, which are a function of the difficulties of exploration 

 and development, which in turn, are dependent upon both the location of 

 the frontier area and the technical difficulties of operating the area 

 in which drilling is planned. 



If the potential for payoff is doubtful and a company's rate of 

 profit is unfavorable, it is extremely risky for the company to engage 

 heavily in exploration activities. If a marginally commercial discovery 



50 



