404 



approach in financing multi-million dollar drilling vessels despite the relatively 

 high interest rates. Obviously, insurance is a financial consideration for man- 

 agement and these rates have increased. Some self-insurance may be used in 

 minimizing these expenses. 



It is clear that more stringent offshore drilling regulations are going to be 

 adopted as a result of the well publicized oil spill in the Santa Barbara Channel 

 in federal waters off the coast of California. We anticipate that offshore op- 

 erations in' the Channel, which have been temporarily suspended in the federal 

 area, will be resumed, at least in some sections. The service and supply 

 companies should be the main beneficiaries of these new regulations which will, 

 undoubtedly, involve the use of more casing, cement, mud and blow-out preventers. 



The discovery in Alaska's North Slope bordering the Arctic Ocean of sub- 

 stantial oil reserves is developing a big market for firms which can operate and 

 transport supplies in an extremely cold climate. There will be a market for 

 platform installations in and through very deep ice formations overlaying the 

 Arctic Ocean and the earth. We, therefore, would recommend that offshore 

 construction firms develop an expertise in Arctic operations. 



2. Mining Offshore , we agree, is relatively unattractive for some years to come 

 and should be regarded as in a very preliminary exploratory stage. It is still 

 considerably cheaper to mine hard minerals from the land as opposed to the ocean 

 bed. Companies willing and able to be patient, as some are doing, might accu- 

 mulate acreage positions in prospective coastal areas where the water depth is 

 minimal. 



3. Marine Construction , we consider to have considerable potential, not only in 

 view of the petroleum industry's growing operations offshore and its substantially 

 larger and deeper draft 200, 000-to- 300, 000-ton tankers now being launched, but 

 particularly because of the need to improve our harbor and dock areas tied in 

 with the urban renewal programs of many of the large coastal cities. Planning 

 should provide for city transportation centers for air, land and sea service. 

 Furthermore, security considerations \indoubtedly will provide a requirement 

 for some sort of underwater installations on our continental shelves. Thus, we 

 would encourage shore- oriented construction firms to enter and expand their 

 marine construction business. 



4. Marine Recreation is a rapidly growing sector of the oceanic market. Scuba 

 diving has become very popular and house boats are the rage rather than trailers. 

 An excellent example of the profit motive in marine recreation working to support 

 research efforts is Tap Pryor's Oceanic Institute in Hawaii. Here, a seaquarium, 

 with popular shows for the public, is supporting a growing research institute and 

 test range for marine science and technology. Companies might consider enter- 

 ing into such ventures in other coastal sectors of the Mainland. There are already 

 examples of such activities in Southern California, for instance, at least on the 

 recreation side. Yesterday, Vice President Agnew referred to public-private 

 partnerships for coastal development. California, and also Florida, have been 



