report could be helpful in developing such a 
mechanism. Further discussion on multiple use 
conflicts is also found in Chapter 3 with a more 
detailed discussion in the report on the Coastal 
Zone. 
7. Major Oil Spills 
The Nation is well aware of the deleterious 
effects of the grounding of the Torrey Canyon and 
other tankers. The subject of prevention and 
control of major oil spills is presently receiving a 
great deal of attention such as the joint pollution 
study conducted by the Departments of Interior 
and Transportation. A major part of the research is 
being done by petroleum companies. Nevertheless, 
the problem is far from solved and Government 
and industry attention is encouraged to develop 
technology to prevent, detect, and nullify the 
effects of oil spills from offshore production and 
transportation operations. 
Government regulations and enforcement are 
necessary to define responsibility and liability, and 
to ensure equitable distribution of costs of preven- 
tion and cure. Because the problem is complex, 
and great knowledge of the subject is held by 
industry, such technology development and legisla- 
tive action must be worked out by a combination 
of Federal, State, and industry experts. Emergency 
plans should be established to permit rapid action 
to contain and clean up major oil spills. 
8. Other Problem Areas 
Because of detailed treatment in other sections 
of this report and in other panel reports, sur- 
veys,!° technology programs,'! jurisdictional clar- 
ification’? and insurance problems!? will not be 
discussed here. However, all these areas are of 
interest and importance to the petroleum industry. 
lll. NATURAL GAS 
A. Present Status 
The sequence of operation in bringing natural 
gas to the consumer involves three functions: 
10 cee Chapter 3 of this report and the Report of the 
Panel on Marine Resources. 
11 56¢ Chapter 3 of this report and the Report of the 
Panel on Marine Engineering and Technology. 
12 See Chapter 3 of this report and the Report of the 
International Panel. 
13. See Chapter 3 of this report. 
333-091 O-69—3 
production, transmission, and distribution. Petro- 
leum companies normally explore for and produce 
the gas. Transportation is handled by the trans- 
mission companies regulated by the Federal Power 
Commission (FPC) in all matters of interstate 
commerce. Distribution to consumers usually in- 
volves a separate group of independent companies 
regulated at the State level. Although the three 
functions commonly are carried on by independ- 
ent companies, a combination may be performed 
by one company through subsidiaries. Both the 
transmission and distribution industries are among 
the 10 largest U.S. industries in terms of capital 
investment. 
Sales of natural gas are expected to increase at 
an annual rate of about four per cent in the next 
decade. In fact, the percentage of total energy 
consumption represented by natural gas is ex- 
pected to increase slightly, in spite of the growth 
of new competitive primary sources of energy, 
particularly nuclear. As with oil, the offshore areas 
offer great potential for new reserves, and gas 
producers as well as transmission companies are 
making heavy commitments here. In 1967, over 
$300 million was paid to petroleum companies for 
natural gas produced offshore. 
Occurring in the same environment, offshore oil 
and natural gas operations share many technical 
and regulatory problems. But beyond that the gas 
industry faces a special set of constraints associ- 
ated with FPC regulatory policy. The growth of 
gas supply is closely tied to such policy not only 
through FPC regulation of gas transmission 
companies, but also regulation of the production 
companies to the extent of controlling the maxi- 
mum price at which natural gas can be sold to the 
transmission companies. 
B. Problems and Recommendations 
1. Reserves 
The National reserve-to-production ratio (R/P) 
of natural gas has been declining steadily since 
1950, falling from nearly 27 years to slightly less 
than 16 years in 1968.'* The optimum level of 
reserves cannot be authoritatively stated. Some 
companies believe that the national R/P ratio can 
14The R/P ratio is the proven reserves divided by the 
current rate of annual production, a level of reserves 
stated in years. 
