Recommendation: 



A firm schedule of lease sales, fairly evenly spaced 

 and with more advance notice time than at 

 present, would permit more orderly longer range 

 planning by the industry. Within limits dictated by 

 its own need for flexibility, the Federal Govern- 

 ment should provide such advance information. 



The Geological Survey regulates and supervises 

 all drilling operations, including casing programs, 

 completion or abandonment programs, and all 

 production facilities. The Geological Survey also 

 controls weU spacings and all production proce- 

 dures and determines acceptable gas-oil production 

 ratios. This bureau regulates unit agreements be- 

 tween operators for the coordinated production of 

 a single field and collects all lease rentals and 

 production royalties. It controls and issues permits 

 for all offshore geological and geophysical surveys 

 (coring programs presently are not permitted in 

 the Gulf of Mexico in waters less than 600 feet 

 deep) and for all drilling operations. It has 

 responsibility for pollution regulation in explora- 

 tion and production operations as well as for 

 safety regulations and inspections. Federal off- 

 shore production will be controlled by the Geolog- 

 ical Survey off the West Coast by authorizing 

 maximum efficient rates of production. 



Other Federal agencies are also involved in 

 regulating marine petroleum operations. The Coast 

 Guard is responsible for safety at sea and the 

 seaworthiness of vessels, including personnel re- 

 quirements, emergency equipment, warning lights 

 and fog alarm devices. The Coast Guard requires 

 notification of location of drilling and producing 

 platforms and publishes these in the "Notice to 

 Mariners." It also patrols seaways for indications 

 of pollution. 



The Corps of Engineers of the U.S. Army also 

 issues permits for geological and geophysical ex- 

 ploration, as well as for the construction of 

 drilling platforms or islands. The Corps is generally 

 concerned with obstructions to navigation, and 

 requires notification of drilling locations. The 

 Corps also effectively controls the location of 

 shipping fairways and anchorage areas through its 

 supervision of construction permits. 



Although the Bureau of Commercial Fisheries 

 and the Bureau of Sport Fisheries and WUdUfe 

 have no direct voice in marine petroleum opera- 

 tions, their influence is effected by cooperative 



agreements between these bureaus, the Geological 

 Survey, and the Bureau of Land Management. 

 These agencies are concerned primarily with possi- 

 bilities of pollution, use of explosives at sea, and 

 obstructions to fishing. 



The Department of Defense also indirectly 

 exerts control over offshore petroleum operations. 

 Large and irregular amounts of shelf areas are 

 reserved for such military purposes as practice 

 bombing and missile areas. Submarine monitoring 

 systems have been installed along various coasts 

 and the appropriate authorities require notifica- 

 tion of all offshore operations and often require 

 permission for geophysical surveys and drilling 

 operations. 



The Federal Water Pollution Control Admini- 

 stration is concerned with possible pollution from 

 all sources and maintains agreements with similar 

 State groups and other Federal agencies in prevent- 

 ing and treating marine pollution. 



The Federal Power Commission regulates and 

 controls all agreements on prices to the producer, 

 and controls transmission of all natural gas which 

 originates on Federal leases or which passes 

 through interstate pipelines. 



In general, the administrative authority and 

 procedures in Federal offshore areas are merely an 

 extension of similar authorities and procedures 

 onshore. The principal exceptions are that leases 

 can be acquired only by competitive sealed bids 

 and customarily carry a one-sixth royalty. The 

 Federal poHcy has been generally to follow State 

 regulations in waters off those States where there 

 is no conflict in requirements, such as in proration 

 and equity ratios. However, the Federal Govern- 

 ment has recently indicated that it may assume 

 proration regulation of Federal offshore leases, a 

 factor which has led to conflicts with State 

 regulatory agencies. 



As of September 1967, a total of 1,220 Federal 

 offshore oil and gas leases had been issued, 

 aggregating about 5.5 million acres, and yielding 

 lease bonuses of nearly $2 billion and rentals of 

 $17.5 million. Some of the leases are more than 

 100 miles from shore and others are in waters as 

 deep as 1,800 feet. The Department of the Interior 

 has authorized geophysical surveys well beyond 

 the topographic limits of the Continental Shelf and 

 has issued permits for at least 100 core holes to be 

 drilled on the continental slopes of the Gulf of 

 Mexico and Atlantic seaboard in water depths of 



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