Section 3 Oil and Gas 



FINDINGS AND RECOMMENDATIONS 



Petroleum and natural gas will be critical 

 components of the energy needs of our country 

 throughout the foreseeable future. The continental 

 margins of the United States offer an important 

 opportunity to increase significantly our domestic 

 reserves of these fossil fuels and to help offset the 

 forecasted widening gap between domestic de- 

 mand and production. 



These marine resources can continue to be 

 developed economically and efficiently provided 

 that reserves of sufficiently large size continue to 

 be found and that administrative policies recognize 

 the greatly increased cost of working in the 

 oceans. The system of competitive sealed-bidding 

 has served well for assigning offshore drilling and 

 production rights. 



It is possible that added incentives or admini- 

 strative changes will be necessary if we are to 

 encourage early exploration and production in the 

 deeper waters and more remote areas offshore. 

 Examples might include an increase in the primary 

 lease term and lease size, and a reflection in higher 

 production rates of the very high cost of develop- 

 ing such areas. 



A. Resource Management 



It is difficult for many companies to maintain a 

 broad base in exploration and production activities 

 with the large budgetary and manpower commit- 

 ments presently imposed by the irregular offshore 

 lease sales. 



Recommendation : 



A firm schedule of lease sales, fairly evenly spaced 

 and with more advance notice than at present, 

 would permit more orderly, longer range planning 

 by the industry. Within limits dictated by its own 

 need for flexibility, the Federal Government 

 should provide such advance information. 



Proposals to set aside large areas of the ocean 

 for single-use purposes, such as marine wilderness 

 reserves, drilling sanctuaries, or Defense-restricted 

 areas, may uimecessarily and without real justifica- 



tion restrict the development of nationally valu- 

 able marine resources. It is recognized, however, 

 that single use areas reserved for scientific inquiry, 

 preservation of unique species, or unique scenic 

 value may be optimal. 



Recommendation : 



Due consideration should be given to the total 

 resource potential of a given area before it is set 

 aside for any single specific use. Additional co- 

 operation and understanding between industry and 

 the Federal and State governments are necessary 

 to facilitate the multiple-use approach to all 

 offshore areas. 



B. Legal 



There appear to be three basic areas of legal 

 problems; Federal-State jurisdiction, seaward ex- 

 tension of international boundaries, and seaward 

 limits of national jurisdiction. 



State-Federal jurisdictional problems have in 

 the past seriously delayed effective development 

 of marine resources, and some disputes still con- 

 tinue. 



Recommendation : 



The continuing efforts to solve Federal-State 

 offshore jurisdictional problems by negotiation or 

 court settlement should be accelerated. 



The lack of negotiation to determine the 

 location of our borders with adjacent nations on 

 our continental margins has not yet affected 

 marine resources development; however, there is 

 no doubt that it will become important in the near 

 future. 



Recommendation: 



The Federal Government should determine as soon 

 as possible the seaward boundaries between the 

 United States and adjacent nations. 



The continental slopes and rises adjacent to our 

 Continental Shelf may contain potentially valuable 

 reserves of oil and gas. 



Vll-187 



