these are not associated with marine bioactive 
substances. 
To discover a new compound may cost tens of 
thousands of dollars, either by synthesis or refine- 
ment from nature. However, once a drug is found, 
it usually costs millions of dollars to produce it 
commercially. Only one of every two to three 
thousand compounds investigated becomes mar- 
ketable. Because of considerable development 
costs, a drug company must have some assurance 
of exclusive rights (patent or license) before it will 
spend the money, and it is often more difficult to 
obtain exclusive rights to naturally occurring 
products. 
Nevertheless, drug companies continue to look 
to new sources of supply, including the ocean. If a 
marine specimen is found to contain a new 
substance with drug potential, the pharmaceutical 
companies may find it more economical either to 
synthesize the active ingredient, or culture the 
creature in the laboratory. In many cases, there- 
fore, the sea may be an initial source for a given 
drug, but not a continuing one. 
ll. PETROLEUM 
A. Present Status and Outlook 
Demand for oil is expected to increase rapidly 
in the next 20 years. Much of the new domestic 
supply to meet this demand will be from offshore 
areas because a high percentage of the large, easily 
located accumulations on land already have been 
developed, while comparatively few have been 
found offshore. 
The Marine Resources Panel’s report includes 
recent projections of free world energy demand. It 
indicates that during the next 20 years the 
cumulative demand will be about three times the 
total produced throughout the free world during 
the last 100 years. Moreover, it is estimated that, 
between now and the year 2000, three-fourths of 
domestic energy needs will be met by oil and gas, 
despite increasing reliance on nuclear power and 
other new sources of energy. 
Although U.S. production of oil and gas has 
increased rapidly, domestic consumption has 
grown even more dramatically, contributing to a 
steady decline in the ratio of proven domestic 
reserves to annual production from about 13 in 
1950 to 10 in 1967. In addition, North America 
consumes about 45 per cent of free world petro- 
leum production but has only about 13 per cent of 
the proven reserves.* 
Hence a major problem facing the petroleum 
industry is to prove additional reserves. Those who 
forecast that the world soon would be running out 
of oil and gas supplies have seen advancing 
technology employed to find new reserves, and 
have had to revise their original prognostications. 
Today the oil industry is developing new technol- 
ogy that will enable companies to evaluate and 
hopefully develop not only offshore oil deposits, 
but tar sands, oil shale, coal conversion processes 
and other sources on land that are not now 
economically recoverable. 
Petroleum producers are turning to the sea in 
the hope of finding and developing large quantities 
of new reserves more economically than they 
presently can on land. Thus, even though oper- 
ating and capital costs are high offshore, the 
companies are hoping that fields not yet discov- 
ered in the comparatively virgin marine areas will 
be sufficiently large and productive to be highly 
competitive with land sources. 
B. Investment and Sales 
The petroleum industry produced about $1.0 
billion of crude oil in 1967 from the USS. 
Table 1 
DOMESTIC OFFSHORE EXPENDI- 
TURES 
(Billions of Dollars) 
Cumu- 
1968 lative 
(Est.) (Through 
1968) 
Lease Bonus and 
Rental Payments $1.25 $ 4.00 
Royalty Payments 0.25 1.85 
Seismic, Gravity, and 
Magnetic Surveys . 0.10 1.10 
Drilling and 
Completing Wells 0.35 3.10 
Platforms, Production 
Facilities, and Pipelines 0.25 1.85 
Operating Costs . 0.15 0.85 
TOTAL $2.35 $12.75 
Source: Richard J. Howe (Esso Production Research Co.), 
“Petroleum Operations in the Sea—1980 and Beyond,” 
Ocean Industry, August 1968, p. 29. 
4 Oil and Gas Journal, Dec. 25, 1967, p. 119. 
