The State supervises and regulates all drilling and 

 producing operations. Recent leases also require 

 that the State Game and Fish Commission be 

 notified in advance of any proposed geophysical 

 work and of any proposed drilling sites. 



The Oil and Gas Conservation Committee of 

 the State of Washington supervises all drilling and 

 producing operations and issues all rules and 

 regulations considered to be necessary. An inspec- 

 tor is required to be present for all coring and 

 sampling operations. The State Department of 

 Fisheries controls all geophysical exploration 

 which involves explosives and an observer is on 

 board at all times. Similar functions in Oregon are 

 governed by the Department of Geology and 

 Mineral Industries. The Oregon State Land Board 

 conducts lease sales and the Fish and Game 

 Commission is consulted by the Board on all 

 geophysical and geological permits. 



The governing structure and the specific rules 

 and regulations are generally similar between all of 

 the States on the Atlantic seaboard and the west 

 coast States. Each State adjusts the necessary 

 regulation to fit its particular administrative struc- 

 ture; from two to nearly a dozen State agencies 

 may become involved in administering these regu- 

 lations. This of course imposes something of an 

 administrative burden on the operating companies 

 since they must in turn respond to this complex 

 governing structure. 



The existing legal environment in the Gulf of 

 Mexico is more confusing and cumbersome to 

 private industry than it is restrictive. The conflict 

 between Federal and State governments over 

 jurisdiction, bonuses, and royalty has been a 

 problem since offshore oil was first discovered off 

 Louisiana more than two decades ago. The Sub- 

 merged Lands Act and the Outer Continental Shelf 

 Lands Act of 1953 helped alleviate this problem; 

 an interim operating agreement in 1956 between 

 the Department of the Interior and the State of 

 Louisiana provided areas in which oil operations 

 would be allowed without interference, defining 

 two zones as "disputed areas" and expressly 

 reserving the claims of the United States and 

 Louisiana to two other zones. The zone still 

 disputed lies between about three and nine nauti- 

 cal miles from the coast. In this area industry must 

 meet both Federal and State regulations and try to 

 satisfy all of the many agencies involved. Recent 



boundary alterations have changed the configura- 

 tion of this disputed zone as a result of a Supreme 

 Court Supplemental Decree in 1965. The final 

 resolution of jurisdictional boundaries will depend 

 on Supreme Court determination of the base hne 

 along the coast from which to measure these 

 jurisdictional limits. 

 Recommendation: 



The continuing efforts to solve Federal-State 

 offshore jurisdictional problems by negotiation or 

 court settlement should be accelerated. 



Louisiana's Department of Conservation regu- 

 lates offshore petroleum operations in both the 

 disputed and undisputed areas, but all revenue 

 from the disputed zone is being held in escrow 

 until the dispute is resolved. The district manager 

 of the Department of Conservation evaluates all 

 drilling operations, completions, and other func- 

 tions normal to oil field operations. The Depart- 

 ment has inspection teams which move un- 

 announced into offshore fields to check well tests, 

 inspect for pollution, and evaluate safety mea- 

 sures. The Louisiana Mineral Board controls all 

 leasing of State lands, and also makes recommen- 

 dations for unitization (requiring common agree- 

 ment with the Federal Government where leases in 

 the disputed zone are involved). The State Wildlife 

 and Fisheries Commission is concerned primarily 

 with pollution and geophysical activity and agents 

 of the Commission witness all explosive seismic 

 operations. 



The Louisiana Commissioner of Conservation 

 determines the proration of allowable production 

 among all of the wells in the State according to the 

 current market demand. Louisiana and Texas are 

 the only States in which market proration is im- 

 portant since most other States are deficient in pe- 

 troleum or have adequate outlets for all that they 

 produce. The Louisiana Conservation Commission 

 determines the market demand by consumer nomi- 

 nations and sets the total daily allowable accord- 

 ingly. This allowable is then allocated back to the 

 individual wells based upon well capacity and the 

 drilled depth of the well. 



Louisiana recognizes the higher cost of marine 

 development by granting larger production allow- 

 ables for offshore wells according to an equity 

 allowable ratio. Coastal wells have an equity ratio 

 of 1 .3 and offshore wells have an average ratio of 

 1.7. This means that offshore wells can produce 70 



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