425 



2. The quick availability of skimming apparatus, anti-pollution 

 equipment, and booms, in the event of an emergency. 



3. More rigid drilling procedures, especially in cementing, mud 

 handling, and completion techniques. 



4. Additional installation of well casing, sometimes including as 

 many as four strings. 



It appears likely that no further lease sales will be made in the Santa 

 Barbara Channel and that drilling operations may be terminated, at least in 

 certain sections of it. Results to date have been disappointing anyhow. The 

 Interior Department has estimated that if it were to order drilling operations 

 in federal waters in the Channel to be stopped pernnanently that it would cost 

 the Federal Government maybe as much as a billion dollars or more in return 

 of bonuses, prospective royalties and other expenses incurred by the oil companies 

 which have already been awarded leases. We would expect, nevertheless, that 

 offshore operations would be permitted to continue in other areas of the West 

 Coast and for lease sales to be resumed in the Gulf of Mexico and Alaska as soon 

 as the new regulations have been issued. Programs of this nature, no doubt, will 

 increase the operators' costs, but some costs are decreasing. Certain types of 

 seismic work in the Gulf of Mexico now cost as little as $0. 01 a shot, whereas 

 only several years ago the cost was on the order of $0.20 a shot. 



One group of companies will benefit from tighter rules. These are the 

 companies who supply the casing, the drilling muds, the tubing and the cementing 

 services. Although there are a vast assortment of such firms, some of the im- 

 portant ones include Halliburton, Dresser and Fluor 's Republic Supply Company 

 division. 



Robert L. Clark 



Stuart H.Clement, Jr. C.F.A. 



