barrels and 17 trillion cubic feet. These estimates 

 were not meant to be interpreted as limits (the 

 actual production could be either greater or less), 

 but merely as a range within which reasonable 

 estimates could be made at that time based on 

 reasonable geological extrapolations and interpre- 

 tations. 



The most recent exhaustive study of offshore 

 domestic reserve estimates was made in 1968 by 

 the Geological Survey for the PubUc Land Law 

 Review Commission.' ' This report concluded that 

 to the end of 1966 proved reserves of 4.3 biUion 

 barrels of petroleum and 31 triUion cubic feet of 

 natural gas remained to be produced from the U.S. 

 continental shelves, and that recoverable reserves 

 might range from 35 bilUon barrels of petroleum 

 and 170 triUion cubic feet of gas, as estimated by 

 Nelson and Burk, to something approaching 

 180-220 biUion barrels and 820-1,100 trillion 

 cubic feet. Although the Geological Survey study 

 covered the seabed to a depth of 2,500 meters, the 

 resources beyond a depth of 200 meters were not 

 considered to be recoverable now. 



There is nearly an order of magnitude of 

 difference between the reserve estimates in the 

 two careful studies just noted, but as McKelvey et 

 al. observe,*^ this is 



a difference that may be frustrating if not unset- 

 tling to those who are unaccustomed to the 

 uncertainties that inescapably accompany at- 

 tempts to appraise potential mineral resources- 

 however, an order of magnitude difference among 

 such estimates is a good deal less than the range in 

 the individual parameters involved, and the won- 

 der is that the estimates agree so well. 



The estimate by Nelson and Burk considered only 

 the continental shelves to water depths of 200 

 meters, while the Geological Survey report also 

 included the continental slope to 2,500 meters of 

 depth. 



The earlier study by Nelson and Burk relied 

 entirely on extrapolations and interpretations 

 based on comparisons of the known geology of 



V. E. McKelvey et al, "Potential Mineral Resources 

 of the United States Outer Continental Shelves," unpub- 

 lished report of the Geological Survey to the Public Land 

 Law Review Commission, March 1968. 



^^Ibid., p. 39. 



various offshore areas with the productive charac- 

 teristics of similar onshore areas. The Geological 

 Survey study compromised the results of two 

 other types of approaches. One was purely statisti- 

 cal, based on the historical amount of oil found as 

 related to the cumulative footage of drilling, and 

 an assumption that all unexplored sedimentary 

 rocks contain on the average half as much petro- 

 leum as those akeady explored by drilling. The 

 second approach modifies the first by assigning 

 "favorabihty factors" to various parts of the 

 shelves according to their supposed similarity to 

 well-known producing areas. 



It is unlikely that anywhere near the density of 

 wells will ever be drilled offshore as compared to 

 the onshore, as is assumed in both Geological 

 Survey approaches; the cost of drilling is much 

 greater offshore, and many of the small fields now 

 being developed onshore (accounting for a very 

 large number of wells) could never be produced 

 economically offshore. Also, the largest share of 

 our domestic reserves is trapped in a relatively few 

 giant-sized fields, which required only a relatively 

 few wells for discovery. These and other factors 

 tend to compUcate such a purely statistical ap- 

 proach to estimates of undiscovered reserves, and 

 also tend to make the results too high. In their 

 second approach it would appear that the Geologi- 

 cal Survey was much more optimistic in their geo- 

 logic interpretations than were Nelson and Burk. 



In this regard, such geological extrapolations 

 carmot be done without tempering them with 

 economic reaUties; as the depth of water increases 

 so does the cost of developing the petroleum, as 

 well as the minimum size of field that can be 

 economically developed. Industry cannot afford to 

 drill as many wells offshore as on land and find 

 only the same amount of oil. It would appear that 

 the Geological Survey estimates of ultimate off- 

 shore reserves must in practice be considered as 

 overly optrmisfic (Table 9). 



However, it is obvious that two major oppor- 

 tunities are available to increase our domestic 

 reserves of oil and gas. One is by improving and 

 developing methods to increase the amount of 

 petroleum that can be recovered from fields 

 akeady knovm, and the other is by exploring for 

 oil in our virgin continental margins. Both of these 

 approaches are being vigorously pursued by the 

 petroleum industry, and the success to date has 

 been significant. 



Vll-200 



