Federal leasing of petroleum on the outer Continental Shelf


Material Information

Federal leasing of petroleum on the outer Continental Shelf
Physical Description:
v, 75 p. : maps ; 24 cm.
Library of Congress -- Congressional Research Service
Lindahl, David M
Useem, Howard
United States -- Congress. -- Senate. -- Committee on Interior and Insular Affairs
U.S. Govt. Print. Off.
Place of Publication:
Publication Date:


Subjects / Keywords:
Oil and gas leases -- United States   ( lcsh )
Offshore oil well drilling -- Law and legislation -- United States   ( lcsh )
Continental shelf   ( lcsh )
bibliography   ( marcgt )
federal government publication   ( marcgt )
non-fiction   ( marcgt )


Bibliography: p. 49-75.
General Note:
At head of title: 94th Congress, 2d session. Committee print.
General Note:
"January 1976."
General Note:
Reuse of record except for individual research requires license from Congressional Information Service, Inc.
Statement of Responsibility:
prepared by the Congressional Research Service, Library of Congress by David M. Lindahl and Howard Useem at the request of Henry M. Jackson, chairman, Committee on Interior and Insular Affairs, United States Senate.

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
oclc - 02819983
lccn - 76600914
lcc - KF1865 .A25 1976
ddc - 346/.73/04682
System ID:

Table of Contents
    Front Cover
        Page i
        Page ii
        Page iii
        Page iv
    Table of Contents
        Page v
        Page vi
    Title Page
        Page 1
        Page 2
    I. Introduction
        Page 3
        Page 4
    II. History of OCS leasing
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
    III. Current procedure
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
    IV. Alternative leasing methods
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
    V. Alternatives to leasing
        Page 43
        Page 44
    VI. Conclusion
        Page 45
        Page 46
    Appendix. Offshore oil: Selected references 1969-75
        Page 47
        Page 48
        Page 49
        Page 50
        Page 51
        Page 52
        Page 53
        Page 54
        Page 55
        Page 56
        Page 57
        Page 58
        Page 59
        Page 60
        Page 61
        Page 62
        Page 63
        Page 64
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        Page 73
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        Page 75
        Page 76
    Back Cover
        Page 77
        Page 78
Full Text

A) ~/

94th Congress }
2d Session J











FEB 7 .:,,,





~4 J



63-M 0


HENRY M. JACKSON, Washington, Chairnan

JAMES ABO U REZK, South Dakota


GRENVILLE GARSIDE, Special Counel and Staff Director
DANIEL A. DRErrus, Deputy Staff Director for
WILLAM J. VAN NESS, Chief Counsel
D. MICHAEL HARVEY, Deputy Chief Counel
OWEN J. MALONE, Senior Counel
HARRISON LOESCH, Minority Counsel



To Members of the Senate Committee on Interior and Insular Affairs:
On July 30, 1975, the Senate passed the Outer Continental Shelf
Management Act of 1975 (S. 521). It makes many much needed
changes in the Outer Continental Shelf Lands Act of 1953. The major
changes would: (1) establish policy guidelines, (2) require a 5-year
leasing program, (3) give the coastal States an increased role in
Federal OCS decisions, (4) provide Federal compensation to coastal
States adversely affected by OCS development, (5) improve safety
requirements, (6) establish unlimited absolute liability for oil spill
damage with payments from a liability fund, (7) provide for a two-
step decision process to separate exploration from development and
production, and (8) authorize new leasing systems and require their
use on an experimental basis.
This study, by the Library of Congress, focuses on the issues pre-
sented by the various new leasing systems which have been included
in S. 521 or have been proposed elsewhere. I believe that it will be
helpful to the Committee as we continue our work on this vital


Digitized by the Internet Archive
in 2013



Memorandum of the Chairman ------------------------------------ III
I. Introduction ------------------------------------------------3
11. History of OCS leasing ---------------------------------------- 5
III. Current procedure -------------------------------------------15
Background --------------------------------------------15
Proposed schedule-Provisional OCS leasing ------------------ 20
Call for nominations --------------------------------------21
Tract selection ------------------------------------------21
Environmental analyses -----------------------------------22
Program decision option document --------------------------23
Presale evaluations ---------------------------------------23
Sale -------------------------------------------------- 24
Postsale analysis ----------------------------------------24
Competition --------------------------------------------26
Disadvantages of current system ----------------------------31
IV. Alternative leasing methods -----------------------------------33
General considerations ------------------------------------33
Fixed royalty with bonus bidding ---------------------------35
Fixed bonus with royalty bidding ---------------------------36
Fixed bonus with rental bidding -----------------------------36
Fixed bonus with profit-share bidding ------------------------37
Declining royalty schedule --------------------------------- 38
Performance system --------------------------------------38
Fixed bonus with oil payment bidding ----------------------- 38
Staggered bonus bidding ----------------------------------39
Share bidding -------------------------------------------39
Summary of alternative leasing methods --------------------- 39
V. Alternatives to leasing ----------------------------------------43
VI. Conclusion ------------------------------------------------45
Offshore ofl: Selected references 1969-75 -----------------------------49


Prepared by
Analyst in Energy Policy

Analyst in Economic Policy
Congressional Research Service
Library of Congress

at the request of
Committee on Interior and Insular Affairs
United States Senate


In the 22 years that have elapsed since the first Federal lease of
petroleum on the Outer Continental Shelf (OCS) was granted in 1954,
this source of oil and gas has risen to a position of major importance in
domestic energy production. It is likely that this trend will continue
as onshore production declines and the demand for accelerated leasing
of the OCS increases. Because of its importance, OCS leasing policy
has become the subject of intense controversy in recent years. In-
volved in the leasing decisions are a wide range of issues which are
beyond the scope of this report. These considerations include political
and environmental factors that can figure significantly in the basic
policy decision to lease or not to lease. The controversy does not end
there, however, for the allocation of the leases remains as a difficult
and complex problem. It is toward that aspect of leasing that this
report is addressed.
The current leasing system reflects an earlier period when the United
States was relatively independent of foreign oil and when the major
leasing consideration was in maximizing the revenues to the Federal
Government, regardless of the value of the resource to society. Under
this system, which has not changed significantly since its inception,
-the resources are allocated on the basis of a single variable-the
initial cash bonus. Within this framework, the present leasing system
has proven to be both workable and effective.
In recent years, however, Federal OCS leasing policy has been
seriously questioned. There has been considerable concern that to the
Nation's detriment this policy may not be encouraging the maximum
production of the resource, may not be distributing the leases in the
most equitable manner, and may be limiting the financial ability of
the operators to develop the leases. The advantages and disadvantages
of alternative leasing arrangements, therefore, need to be considered
in any attempt to correct the shortcomings of the present system.
This paper is intended to provide not a comprehensive analysis of
all aspects of Federal leasing policy but a perspective on the subject of
lease allocation. To deal effectively with the issue, it is necessary to
understand both the evolution of the current policy and the alter-
natives that have been proposed for the future. There can be little
doubt that the current system has deficiencies, but there is always the
possibility that uninformed policy decisions might inadvertently
produce something worse. The following description of the system,
analysis of its strengths and weaknesses, and assessment of proposed
alternatives may provide a useful context for future congressional
deliberations on this issue.

63-732 0 76 2


Geographically, the continental margin extends from the mean
low-water line to the deep seabed and consists of three parts. Extend-
ing seaward they are (1) the continental shelf, (2) the continental
slope, and (3) the continental rise. The continental shelf is that portion
of the continental margin that lies between the mean low-water line
and is the change in the inclination of the ocean floor that marks the
beginning of the continental slope (see fig. 1). The Outer Continental
Shelf (OCS), the area of concern here, is the portion of the continental
shelf that is under the jurisdiction of the Federal Government.

Land Ocean

Shelf edge

0 -130 m
slope 1.400-3,200 m
65 km- 6-1-15-830 km
1*1-0k -4000 m

- Continental terrace Continental rise Deep sea bed
Continental margin

FIGURE 1.-Programmatic Profile of Continental Margin
Numbers shown (metres and kilometres) are world-wide averages. The world's
continental terrace, which includes the continental shelf and the continental
slope, covers an area of about 21,400,000 square miles. The 1,332,000 square
miles adjacent to the United States amounts to 6.22 percent of the world total.
Source: Department of the Interior.
By legislation and subsequent Supreme Court decisions the shore-
ward boundary of the OCS is fixed at 3 nautical miles (3.5 statute
miles) from shore, except along Texas and the Gulf Coast of Florida
where, due to historical precedent, it is fixed at three leagues (10.5

statute miles).1 Article I of
Continental Shelf attempted
Outer Continental Shelf. It
to refer:

the 1958 Geneva Convention on the
to establish the seaward limit of the
defined the Outer Continental Shelf

(a) to the seabed and submarine areas adjacent to the coast but
outside the area of the territorial sea to a depth of 200 meters,
or, beyond that limit, to where the depth of the superjacent
waters admits of the exploitation of the natural resources of
the said areas; and
(b) to the seabed and subsoil of similar submarine areas ad-
jacent to the coasts of islands.
Between the shoreward boundary and the 200-meter depth contour
line, 560,000 square statute miles of OCS lie off the coast of Alaska,
107,500 off the Gulf Coast, 122,000 off the Atlantic Coast and 15,400
off the combined coasts of Washington, Oregon, and California.2
The OCS of the United States consists of about 805,000 square miles
or 515 million acres, of which only about 3 percent is presently under
lease. Although there are significant recoverable petroleum reserves off
the Alaska and California coasts, throughout the Gulf of Mexico and
adjacent to much of the Eastern seaboard (see figs. 2-6), most of the

Figure 2

L ....

Department of the Interior
Bureau of Land Management
'U.S. Congress. Senate. Committee on Interior and Insular Affairs. Outer Continental Shelf Policy
Issues. Hearings, 92d Congress, 2d session. March 23, 24, and April 11, 18, 1972. Washington, U.S. Govern-
ment Printing Office, 1972. p. 173.
2 Ibid, p. 174.





Figure 3
0 50 100 200 300 0 Mi..
0 100 200 300 400 500 600 loml..l-
Department of the Interior
Bureau of Land Management


Figure 4

Department of the Interior


Figure 5 BE AU Of, r 8AS4N

Department of the Interior
Ureau oft stand Mdnagement







*7, tsr



S. 00 500 5 1U 1 4t

Department of the Interior
Buirea, of Land Managemen







current OCS petroleum production takes place off the Louisiana Coast.

In 1975 the OCS provided 332 million (approximately 11 percent) of

the 3. 1 billion barrels of oil that the United States produced. In 1975

U.S. domestic production of natural gas was approximately 20.1


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trillion cubic feet, of which the OCS contributed about 3.5 triton cubic
feet (approximately 17 percent).
The U.S. Geological Survey (USGS) recently estimated that there
are approximately 58 billion barrels of oil and natural gas liquids on
the OCS that are recoverable at the present time (see fig. 7). This was
a drastic downward revision from previous estimates. It should be
noted that in many of these areas no drilling has yet taken place and
that the data is preliminary at best.

DEC. 31, 1974

Undiscovered recoverable
Demonstrated cumulative Estimated
reserves production rangell
Cumula- plus dem- Inferred Statis-
tive pro- Meas- Indi- onstrated re- tical 95 per- 5 per-
Regions duction ured cated reserves serves mean cent con

Crude oil (billions of barrels):
IA. Alaska -------------- 0.456 0.150 (3) 0.606 40.1 15 3 31
2A. Pacific Coastal States.. 1. 499 0. 858 0. 258 2.616 0.2 3 2 5
Gulf of Mexico -------- 4.135 2.212 0.050 6.397 2.4 5 3 8
Atlantic Coastal States- 0.000 0.000 0.000 0.000 0.0 3 '2 4
Total lower 48 off-
shore ------------ 5.634 3.070 0.308 9.012 2.6 11 5 18
Total offshore United
States -----------6.090 3.220 0.308 9.618 2.7 26 10 49
Natural gas (trillions of cubic
1A. Alaska -------------- 0.423 0.145 ---------- 0.568 $0.1 44 8 80
2A. Pacific Coastal States-- 1.415 0.463 ---------- 1.878 0.4 3 2 6
Gulf of Mexico -------- 32. 138 35. 348 ---------- 67.486 67.0 50 18 91
Atlantic Coastal States. 0.000 0.000 0.000 0.000 0.0 10 7 5 14
Total lower 48 off-
shore ----------- 33.553 35.811 ---------- 69.364 67.4 63 26 114
Total offshore United
States ---------- 33.976 35.956 ---------- 69. 932 67.5 107 42 181
Natural gas liquids (billions of
IA. Alaska ------------------------------------------------------------------- 1.1 --------------
2A. Pacific Coastal States ----------------------------------------------------- 0.1-
Gulf of Mexico ---------------- 1.3 --------------
Atlantic Coastal States-------------------------------------- --0.3 -------------
Total lower 48 off-
shore ---------------------------------------------------------------- 1.7 ................
Total offshore United
States -------------------------------.----------------------------- 2.8 _-------------
I Inferred reserves were derived for all regions based on historical data.
2 The low value of the range is the quantity associated with a 95 percent probability (19 to 20 chance) that
there is at least this amount. The high value is the quantity with a 5 percent probability (1 to 20 chance)
that there is at least this amount. Totals for the low and high values are not obtained by arithmetic sum-
mation; they are derived by statistical methods.
3 Negligible-less than 0.001 billion barrels.
4 Inferred reserves based on national onshore average.
5 Estimates reported at the 75 and 25 percent probability levels because, in this area, these levels are
judged to be more applicable for some planning purposes. It can also be noted that in frontier areas, lacking
discovered indigenous or adjacent recoverable hydrocarbons, uncertainty is sufficiently great as to weaken
probability estimates at extreme ranges. For purposes of comparison with other recorded ranges, the 95-5
percent probability range in offshore Atlantic is 0-6 billion barrels of oil.
'Inferred reserves based on national onshore average.
Estimates reported at the 75 and 25 percent probability levels because, in this area, these levels are
judged to be more applicable for some planning purposes. It can also be noted that io frontier areas, lacking
discovered indigenous or adjacent recoverable hydrocarbons, uncertainty is sufficiently greet as to weaken
probability estimates at extreme ranges. For purposes of comparison with other recorded ranges, the 95-
percent probability range in offshore Atlantic is 0-22 trillion cubic feet of gas.
Source: U.S. Geological Survey, "Geological Estimates of Undiscovered Recoverable Oil and Gas Reores
in the United States," circular 725, Department of the Interior, 1975.

By compiling responses to a recent survey, the Department of the
Interior has ranked the economic value and order of industry pref-
erence of the various sections of the OCS.3 In order of preference they
were as follows: st-the Central Gulf of Mexico, 2nd-The Gulf of
Alaska, 3rd-the West Gulf of Mexico, 4th-the Southern California
borderland, 5th-the Mid-Atlantic, 6th-the East Gulf of Mexico,
7th- the North Atlantic, 8th-the Bristol Bay, 9th-the Beaufort
Sea, 10th-Santa Barbara, 11th-the Cook Inlet, 12th-the Bering
Sea, 13th-the South Atlantic, 14th-the Chukchi Sea, 15th-the
Southern Aleutian Shelf, 16th-Northern-Central California, and
17th-Washington and Oregon.
During the early 1940's coastal States began leasing offshore lands
to the oil industry. Texas had passed an offshore leasing act in 1913,
Louisiana in 1915, and California in 1921. A jurisdictional dispute soon
arose between the States and the Federal Government over leasing
authority for these areas and the extent of State and Federal control.4
The two Mineral Leasing Acts of 1920 and 1937 did not cover the issue
and the States claimed the authority. A House Joint Resolution would
have given these rights to the Federal Government, but the bill was
vetoed by President Truman and the House did not have enough votes
to override. The issue was forced when a suit was brought against the
Pacific Western Oil Corporation by the Federal Government to
recover submerged lands that had been leased by the State of Cali-
fornia to the oil company. The question of submerged land owner-
ship was settled when President Truman proclaimed on September 28,
1945 that the continental shelf belonged to the United States. The
Supreme Court, in decisions against California, Texas and Louisiana,
upheld the proclamation in ruling that the States did not own the
three-mile marginal belts along their coasts.
The issue was not closed by those decisions, however, and clarifying
legislation was sought in Congress.-House Resolution 4198 was signed
into law as the Submerged Lands Act on May 22, 1953.1 This act gave
the States title to the lands beneath navigable waters within their
boundaries and permitted the coastal States to resume leasing. The
boundary between State and Federal canals, therefore, was transferred
from the "ordinary low-water mark and the seaward limits of inland
waters" to "the seaward boundaries of the states." This was a mini-
mum of three nautical miles (3.5 statute miles) for all States, although
the act extended to each of the States bordering the Gulf of Mexico
the opportunity to prove entitlement in judicial proceedings to a
greater grant up to three marine leagues (approximately 10.5 statute
miles) through proof that it had a boundary extending more than three
nautical miles from its coast when it came into the Union, or if such
an extended boundary had been approved by Congress prior to enact-
ment of the Submerged Lands Act.
After enactment of the Submerged Lands Act, each of the States
bordering on the Gulf of Mexico claimed historic boundaries extending
three leagues into the Gulf of Mexico from its coastline. The Federal
Government reached an interim agreement with the State of Louisiana
3 U.S. Department of the Interior, Bureau of Land Management. Report On The Responses Received In
Reply To The Request For Comments On Potential Future Outer Continental Shelf Oil And Gas Leasing.
June 5, 1974: p. 9.
4 Bass, D. M., ed., State and Federal Regulations Pertaining to the Petroleum Industry, Quarterly of
Colorado School of Mines, v. 65, n. 3, July 1970, p.2.
5 Public Law 31, Submerged Lands Act (67 Stat. 29, U.S.C. 1301 et seq.).

63-732 0 76 5

under which mineral development in the contested area could proceed
pending final determination of the controversy in the courts. Under the
agreement, income from mineral leases in the disputed areas has been
held in an escrow fund.
In litigation involving all five Gulf States, the Supreme Court in
1960 rendered decisions holding that under the Submerged Lands
Act the States of Louisiana, Mississippi, and Alabama were entitled
to juridical boundaries extending no more than three nautical miles
from their coastline. The Court also concluded that the three-league
boundary claimed by Texas when it entered the Union was entitled
to recognition under the Submerged Lands Act. It also held that
Florida's Gulf Coast boundary (but not its Atlantic Coast boundary)
extends to three leagues because of Congressional approval of a
boundary claimed in Florida's new constitution upon its readmission
to the Union after the Civil War. These decisions, however, did not
determine the location of the coastlines of the States involved.
In 1965, the Supreme Court adopted the definitions expressed in
the Geneva Convention on the Territorial Sea and Contiguous Zone
for the purpose of determining the location of the coast of the
coastal States under the Submerged Lands Act. This resulted in a
substantial settlement of certain areas in dispute between the Federal
Government and the State of California, and led to a stipulated
supplementary decree adjudicating the respective rights of the United
States and the State of Louisiana to a small part of the contested
area in the Gulf of Mexico.
On March 3, 1969, the Supreme Court rendered another decision
regarding the location of the Louisiana coastline. In this decision the
Court rejected Louisiana's claim that the so-called "Coast Guard
Line" was its "coastline" for the purposes of measuring its entitlement
to submerged lands in the Gulf of Mexico under the Submerged Lands
Act. Resolution of this issue in favor of the United States will ulti-
mately entitle the Federal Government to most of the areas in dispute
off the Louisiana Coast and to a large percentage of the lease revenues
impounded under the 1956 Interim Agreement. The Court, however,
referred the case to a Special Master for consideration of several
other questions relating to the precise location of the coastline.
The litigation concerning the coastline of Texas was resolved in
1967 when the Court ruled that the 3-league belt of submerged lands
in the Gulf of Mexico granted to Texas by the Submerged Lands Act
was to be measured from its coastline as it existed in 1845 when
Texas was admitted to the Union.
Recently some of the States along the East Coast have claimed
submerged lands as far as 80 miles into the Atlantic Ocean, basing
their claims on colonial charter grants from the English Crown. In
April 1969, the United States filed an original action in the Supreme
Court against each of the Atlantic Coast States to establish its right
to the submerged areas of the Atlantic Ocean seaward of the three-mile
line. On March 17, 1975 the U.S. Supreme Court, in U.S. vs Maine,
et al, decided against the coastal States and continued to limit their
jurisdiction to three miles. The International Boundaries between
the United States and Canada, The Bahamas, Cuba and Mexico (in
the Pacific Ocean) are not yet firmly established.

To cover leasing on the Continental Shelf beyond the State jurisdic-
tion, a new leasing law was needed because the existing laws did not
apply. On August 7, 1953, the Outer Continental Shelf Lands Act
was passed.6 It was to be not only the equivalent of the Mineral
Leasing Act for the OCS, but also the legislative authority to acquire
the subsoil and seabed of the OCS beyond the limits of the States. It
set for the Federal Government, therefore, exclusive jurisdiction and
control over this vast area of the Outer Continental Shelf and pro-
vided for the development of its mineral resources. The Outer Con-
tinental Shelf Lands Act gave to the Secretary of the Interior the
authority t o carry out the provisions of the Act. This authority has
since been delegated to the Bureau of Land Management for leasing
and to the United States Geological Survey for regulation of lease
exploration, drilling, and development. This established the frame-
work for Outer Continental Shelf mineral leasing on the basis of
the following provisions:
SEC. 5(a) (1). The Secretary shall administer the provisions of this Act relating
to the leasing of the Outer Continental Shelf, and shall prescribe such rules and
regulations as may be necessary to carry out such provisions. The Secretary may
at any time prescribe and amend such rules and regulations as he determines of
waste and conservation of the natural resources of the Outer Continental Shelf,
and the protection of correlative rights therein, and, notwithstanding any other
provisions herein, such rules and regulations shall apply to all operations conducted
under a lease issued or maintained under the provisions of this Act. In the en-
forcement of conservation laws, rules, and regulations the Secretary is authorized
to cooperate with the conservation agencies of the adjacent States. Without limit-
ing the generality of the foregoing provisions of this section, the rules and regula-
tions prescribed by the Secretary thereunder may provide for the assignment or
relinquishment of leases, for the sale of royalty oil and gas accruing or reserved
to the United States at not less than market value, and, in the interest of conserva-
tion, for unitization, pooling, drilling agreements, suspension of operations or
production, reduction of rentals or royalties, compensatory royalty agreements.
subsurface storage of oil or gas in any said submerged lands, and drilling or other
easements necessary for operations or production.
SEC. 8. LEASING OF OUTER CONTINENTAL SHELF.-(a) In order to meet the
urgent need for further exploration and development of the oil and gas deposits
of the submerged lands of the Outer Continental Shelf, the Secretary is authorized
to grant to the highest responsible qualified bidder by competitive bidding under
regulations promulgated in advance, oil and gas leases on submerged lands of
the Outer Continental Shelf which are not covered by leases meeting the require-
ments of subsection (a) of section 6 of this Act. The bidding shall be (1) by sealed
bids, and (2) at the discretion of the Secretary, on the basis of a cash bonus with
a royalty fixed by the Secretary at not less than 12j per centum in the amount or
value of the production saved, removed or sold or on the basis of royalty, but at
not less than the per centum above mentioned, with a cash bonus fixed by the
(b) An oil and gas lease issued by the Secretary pursuant to this section shan
(1) cover a compact area not exceeding five thousand seven hundred and sixty
acres, as the Secretary may determine, (2) be for a period of five years and as
long thereafter as oil or gas may be produced from the area in paying quantities,
or drilling or well reworking operations as approved by the Secretary are conducted
thereon, (3) require the payment of a royalty of not less than 12Y2 per centum,
on the amount of the production saved, removed, or sold from the lease, and (4)
contain such rental provisions and such other terms and provisions as the Secretary
may prescribe at the time of offering the area for lease.
SEC. 9. DISPOSITION OF REVENUES.-A1 rentals, royalties, and other sums
paid to the Secretary or the Secretary of the Navy under any lease on the Outer
Continental Shelf for the period from June 5, 1950, to date, and thereafter shall
be deposited in the Treasury of the United States and credited to miscellaneous
6 Pub lic Law 212, Outer Continental Shelf Lands Act (67 Stat. 462 43 U.S. C. 1331 et seq.).


Under the Mineral Leasing Act of 1920,1 the Acquired Land Leasina
Act of 1947, and the Outer Continental Shelf Lands Act of 1953, the
Department of the Interior is charged with the responsibility of
leasing public lands for oil and gas development to meet public needs.
Congress directed the Department of the Interior to lease the OCS
"in order to meet the urgent need for exploration," but little other
guidance was offered.
The Department of the Interior has stated that its major goals and
objectives with respect to the management of the publicly owned
mineral resources are:2
(1) to assure orderly and timely resource development;
(2) to protect the environment;
(3) to insure the public a fair market value return on the dis-
position of its resources.
The Department claims that the three major goals and objectives
as applied in its mineral programs are not mutually incompatible. Its
stated goal is to achieve an optimum balance among the three with the
objective of encouraging exploration, development, and production,
while assuring the public a fair market value return for the resource.
Sections six and eight of the OCS Lands Act of 1953 prescribe the
basic criteria and requirements of OCS petroleum leasing. The pri-
mary provisions include the following:
(1) the tracts must not exceed 5,760 acres;
(2) leases will be valid for five years or for as long as oil and gas
is extracted in commercial quantities;
(3) bidding will be by sealed competitive bids and will be, At
the discretion of the Secretary of the Interior, on the basis of one
of the following methods:
(a) a competitively bid bonus with fixed royalty and rental
(b) a competitively bid royalty with a fixed rental rate and
a fixed bonus;
(4) the royalty rate is to be a minimum of 12Y2 percent of
the market value of all petroleum saved, removed, or sold;
(5) a bonus and an annual rental is to be charged for each acre
The act specifies a minimum royalty of 12Y2 percent, but by tra-
dition a; rate of 16Y3 percent (one-sixth) is levied. Even though no
minimum is specified by law, in the past the yearly rental charged
has been $3 per acre on OCS lands in "unproven" regions and $10
per acre in "proven" regions. All rents are now uniform at $3 per acre.
From the first OCS petroleum lease sale in October 1954 through
Public Law 14, Mineral Leasing Act of 1920 (41 Stat. 437, 30 U.S.C. 181 et seq.).
2 U.S. Congress, Senate Committee on Interior and Insular Affairs, Federal Leasing and
Disposal Policies Hearings, 92nd Congress, 2d Session, June 19, 1972. Washington, U.S.
Govt. Print. Off., 1972: p. 38-9.


May of 1975 a total of 5,249 tracts (oil and gas) were offered for lease.
Of these 5,249 tracts, bids were received on 2,816, of which 2,522
received acceptable bids and were leased (see fig. 8). Through 1974
this had produced revenues of about $14.8 billion in bonuses, $3.2
billion in royalties, and $139.1 million in rentals. As shown in fig. 9,
the total cumulative revenue through 1974 roughly totaled $18.2
billion. A bonus bid of $39,110 per acre mi the October 1974 lease sale
was the highest ever received, while in a 1959 sale the highest bid
received was $16.17 per acre. It is evident from figures 8 and 10 that
the average bid per-acre has risen erratically over time and has even
declined in recent sales. Figure 11 shows that OCS lease sales have
not been evenly scheduled. In 1956, 1957, 1958, 1961, and 1965 no
OCS tracts were offered for lease but during 1974 more than 5 million
acres were offered.3 From October 1954 through May 1975, the average
number of bids per tract was 1.8 while the average number of bids per
tract on which bids were received was 3.3.
3 Until 1971 the Department of the Interior had no announced formal future leasing plan. It is reported by
Kash, White, et al., in Energy Under the Oceans (Oklahoma: University of Oklahoma Press: 1973) that
"Successive Seoretaries of the Interior have pursued a policy of pacing the development of OCS oil and gas
resources with leases being parcelled out at a rate that has kept the offshore industry hungry and bonuses
high. Conservation and waste seem to have been treated as antonyms."



Number Number Total Highest
Number of of Number amount of per
of tracts tracts Total Average Total of bids all bids acre
Date of sale State tracts Acres bid on Acres leased Acres bonus per acre rentals I received received bid
Oct. 13, 1954 ------- Louisiana ----------- 199 748,000 97 427, 221 1 90 394, 721 $116,378, 476 $294.84 $1, 184, 175 327 $302,924, 834 $1,220. 00
Nov.9, 1954---.. Texas -------------- 38 111,788 19 67,149 19 67,149 23,357,029 347.84 201,450 90 73,801,896 2,20900
July 12, 1955----------- do ------------- 39 216, 000 27 149, 760 27 149, 760 8, 437, 462 56. 34 449, 280 33 9, 027, 610 177. 00
Do ----------- Louisiana ----------- 171 458,095 94 252, 807 94 252, 807 100, 091,264 395.92 758, 442 351 314, 212, 441 2, 076. 80
May 26, 1959 ------ Florida ------------- 80 458, 000 23 132, 480 23 132 480 1, 711, 872 12. 92 397, 440 23 1, 711, 872 16.17
Aug. 11, 1959-.......-Louisiana---------- 38 81, 813 28 62,967 19 38 820 88, 035, 120 2, 267. 78 388, 200 56 174, 411,628 10, 442. 08
Feb 24, 1960 ------ Texas -------------- 97 437, 760 48 240, 480 48 240, 480 35, 732, 031 148. 59 721, 440 105 56, 400 897 1, 026. 25
Do ----------- Louisiana ----------- 288 1, 173 223 125 710,718 99 464,046 246, 909, 784 532.07 1,392,159 339 518,774,752 2,501.51
Mar. 13, 1962 ----------- do ------------- 401 1, 808 276 212 981, 408 206 951, 806 177, 260, 305 186. 23 2, 855, 433 538 314, 218, 540 3,201. 00
Mar. 16, 1962 ------ Texas -------------- 30 90, 720 10 28, 800 10 28,800 557, 720 19.37 86, 400 10 557, 720 26. 25
Do ----------- Louisiana ----------- 380 1, 780, 265 200 948, 221 195 927, 720 267, 775,677 288. 63 2, 783, 238 656 604, 799, 998 3, 081.00
Oct. 9, 1962 ------------ do ------------- 19 33, 855 14 24, 858 9 16,178 43, 887, 359 2, 712. 79 161, 780 26 66, 265, 290 8, 480. 00
May 14, 1963 ------ California ----------- 129 669, 777 58 312, 976 57 312, 945 12, 807, 587 40.93 938, 838 70 13, 989, 953 454. 80
Apr. 28, 1964 ------ Louisiana ----------- 28 34, 028 23 32, 673 23 32, 673 60, 340, 626 1, 846. 69 326,780 69 93, 850, 051 10, 490. 40
Oct. 1, 1964 -------- Oregon ------------- 149 836,134 74 425,433 74 425,433 27,768,772 65.27 1,276,302 165 43, 049, 543 376.00
Do ------------ Washington --------- 47 253, 940 27 155, 420 27 155, 420 7, 764, 928 49. 96 466, 260 57 10, 530, 210 310. 05
Mar. 29, 1966 ------ Louisiana ----------- 18 35, 993 18 35,993 17 35, 056 88, 845,963 2, 534. 43 350,570 64 275, 384, 739 6,112. 20
Oct. 18,1966---------do ------------- 52 227,898 32 134,717 24 104, 717 99, 164, 930 946. 98 523,600 79 185, 214, 816 3,128. 00
Dec. 15, 1966------California--------------1 1,995 1 1995 1 1,995 21, 189, 000 10,618.49 9,980 7 89, 937, 020 10,618.49
June 13 1967 ------ Louisiana ----------- 206 971, 489 172 812, 202 158 744,456 510, 079, 178 685. 17 2, 233, 458 742 1, 627, 749, 269 6, 500. 00
Feb. 6, 1968------ California ----------- 110 540, 609 75 383, 341 71 363, 181 602, 719, 262 1,659.56 1,089, 543 164 1, 293, 601, 113 11, 373. 70
May 21, 1968 ------ Texas -------------- 169 728,551 141 666,631 110 541,304 593,899,046 1,097.16 1,623,915 556 1, 620, 393, 212 7,602.00
Nov. 19, 1968 ------ Louisiana ----------- 26 46, 824 21 40, 262 16 29, 679 149, 868, 789 5, 049. 58 296, 820 38 398 430, 736 27, 400. 73
Jan. 14, 1969 ----------- do ------------- 38 96, 389 26 61,628 20 48, 504 44, 037, 339 907.90 485, 050 40 71, 036, 938 2, 161. 00
Dec. 16, 1969---------do------------- -27 93, 764 16 60, 153 16 60, 153 66, 908, 196 1, 112, 29 601,550 58 230, 460, 743 6, 600. 00
July 21, 1970 ---------- do ------------- 34 73, 360 21 50, 889 19 44, 642 97, 769, 013 2,190. 06 446, 420 59 163, 451, 158 8,201.00
Dec. 15, 1970---------do------------- 127 593,485 127 593,485 118 551,398 846, 784, 660 1, 535. 70 1, 654, 194 1, 043 2, 877, 429, 559 12,875.00
Nov. 4, 1971 ----------- do ------------- 18 55, 872 13 42, 222 11 37, 222 96, 304, 523 2, 587.30 372, 230 33 172, 735, 981 18, 004.76
Sept. 12, 1972 ---------- do ------------- 78 366, 682 74 346, 693 62 290, 321 585,827,925 2,017.86 870,996 324 1,599,155,464 21, 870.04
Dec.19 1972 ----------- do ------------- 132 604 029 119 548,374 116 535,874 1,665,519,631 3 108.04 1,607,661 690 6,191,018,227 21,630.00
June 19, 1973 ------ Texas-Louisiana ..... 129 697,643 104 566,573 100 547,173 1,591,397,380 2,908.40 1,641,519 551 6,248,160,989 13,490.97
Dec. 20 1973 ------ Mississippi, Alabama, 147 817, 297 89 496, 917 87 485 397 1, 491, 065, 231 3, 071.85 1, 456, 197 373 3, 404, 892, 969 36 805. 13
and Florida.
Mar. 28, 1974 ------ Louisiana ----------- 206 930,918 114 522,397 91 421,218 2,092,510,854 4,967.76 1,263,675 402 6,474,003,574 33,772.20
May 29, 1974 ------ Texas -------------- 245 1,355,678 123 680,335 102 565,112 1,471,851,831 2,604.53 1,695,348 352 3,354,292,556 13,371.85
July 30, 1974 ------- Louisiana-Texas_.... 258 1, 298, 739 49 249, 704 19 100, 241 30, 236, 800 301.64 300, 729 57 88, 799, 354 1, 563. 40
Oct. 16, 1974 ------- Louisiana ----------- 287 1,370, 031 149 693, 172 136 634, 832 1, 427, 242, 455 2, 248. 22 1, 904, 547 330 2, 514, 518, 419 39, 110. 60
Do ---------------- do ------------- 10 51, 515 8 40, 755 8 40, 755 1, 018, 875 25. 00 122, 265 57 7, 238, 500 25. 00
Feb. 4, 1975 ------- Texas -------------- 515 2, 870, 344 143 796, 367 113 626, 585 274, 690, 955 377. 51 1,879, 761 281 484, 721,874 3,565.97
May 28, 1975 ------ Louisiana-Texas ----- 282 1, 345, 432 102 486, 327 86 406, 942 232, 810, 050 572. 36 1, 220, 856 191 402, 752, 335 5, 084. 54
Total --------- 5, 249 24, 336, 211 2, 816 13, 264 503 2, 522 12, 010, 495 15, 272, 293, 001 ----------- 38, 046, 001 9, 406 42, 418, 906, 778 ---------
1I st-yr renta.s only. Source: U.S. Department of the Interior Bureau of Land Management, New Orleans Office, Outer
Continental Shelf Statistical Summary.



Total Total cumulative
Minimum Shut-in gas cumulative production production
Year Bonuses royalties Rentals payments Royalties Total revenue revenue value value Percent

All States:
1953 -------------------------------------------------- $1,359,630 $30, 650 $967, 892 $2, 358, 172 $2, 358, 172 $5, 036, 861 $5, 036 861 47
1954--------------------$140, 969,005--------------3,855,333 86,950 2,748,977 147, 660, 265 150, 018, 437 14, 370, 098 19 406,959 774
1955 ------------------ 108,528, 75-------------- 3, 406, 351 122, 000 5, 140, 006 117, 197, 082 267, 215, 519 27, 060, 679 46, 467,638 575
1956 ---------------------------------------- 4, 006,193 79, 950 7, 629, 383 11, 715, 526 278, 931,045 39, 497, 871 85,965,509 324
1957 ------------------------------------ $68,581 3,270,122 110,268 11,391,245 14,840,216 293,771,261 61,072,588 147,038,097 200
1958 ------------------------------- 184,396 2,420,584 121,218 17,423,878 20,150,076 313,921,337 96, 471,136 243,509,233 129
1959 -------------------- 89,746,993 171,036 2,285,725 84,984 26,539,977 118, 828, 715 432,750,052 150,472,527 393,981,760 110
1960 -------------------- 282, 717, 065 316, 975 3, 603, 140 49, 350 37, 095, 301 323, 781, 831 756, 531,883 200, 969, 615 594, 951,375 127
1961 ------------------------------------ 314,121 3,073,861 37,100 47,920,332 51,345,414 807,877,297 273,636,456 868,587,831 93
1962 ------------------ 489, 481, 111 517, 722 8, 412, 207 62, 200 66, 096, 334 564, 569, 574 1, 372, 446, 871 376, 675, 900 1, 245, 263,731 102
1963 -------------------- 1 2, 807, 587 668, 339 8, 435, 184 52, 950 76, 999, 225 98, 963, 285 1,471, 410, 156 450, 866, 484 1,696,130,215 87
1964 ------------------- 95, 874, 326 820, 343 9, 798, 573 45, 800 88, 400, 230 194,939, 272 1,666, 349, 428 506, 783, 510 2,202,913,725 76
1965 -------------------- 33, 740, 309 1, 072, 699 8, 731,378 38, 450 102, 862, 540 146, 445, 376 1,812, 794, 804 594, 222, 732 2,797,136,457 65
1966 ------------------ 209,199,893 1,367,250 6,869,277 41,700 136,987,537 354,465,657 2,167,260,461 801,724,611 3,598,861,068 60
1967 -------------------- 510,109,742 1, 891,515 6,208,936 41,400 15,607,609 675,859,202 2,843, 119,663 947,214,691 4,546,075,759 63
1968 -------------------- 1,346, 487, 097 2,145,178 8, 230, 787 52, 300 20, 136, 931 1,558, 052, 293 4, 401, 171,956 1, 179, 912, 209 5,725, 987,968 77
1969 ------------------ 111,660,685 1, 923,632 8, 312, 607 41,650 24,090,666 362, 029, 240 4, 763, 201, 196 1,443,870, 472 7,169,858,440 66
1970--------------------945,064,773 1,745,8 64 8, 607, 855 47, 700 283, 494,568 1,238,960, 760 6, 002, 161,956 1,707 593, 450 8,877 451,890 68
1971 -------------------- 96,304,522 1,891,000 7,741,997 32,300 350,042,488 456,012,307 6,458,174,263 2,135,677,078 11 013,128,968 59
1972 -------------------- 2, 251, 347, 556 2, 019,533 7, 984, 897 49, 550 363 56,339 2,624,957,875 9, 083,132,138 2 229,179,121 13,242,308,089 69
1973 --------------------3,082,462,611 2,391,249 8,948,816 52,650 401:i26, 114 3 494,981,440 12, 578, 113, 578 2, 486, 864, 855 15, 729, 172,944 80
1974 -------------------- 5, 022, 860, 815 2, 048, 439 13, 532, 754 32, 550 560, 283, 889 5, 598, 758, 447 18, 176, 872, 025 3, 570, 053, 959 19, 299, 226,903 94
Total all States-.-------- 14, 829, 362, 815 21, 557, 872 139, 096, 207 1, 313, 670 3, 185, 541, 461 18, 176, 872,025 18, 176, 872, 025 19,299, 226, 903 19, 299, 226,903 94

IPercentage accumulated revenue of accumulated production value.
Note: Revenue =charges and/or collection-bonuses and 1st-yr rentals adjusted from book transfer
dates (years) to USGS from BIM, to actual sales dates. Distribution of escrow funds totaling $39,316,-
545 to the State of Louisiana and lessees, pursuant to Supreme Court decree dated Dec. 31,1965 was
not deducted from calendar year 196 revenue charges, nor was the production value of $157.060.000

deducted. 1970 bonuses increased $951,875 and rentals increased $22,500-leases on appeal
Source: U.S. Department of the Interior, U.S. Geological Survey-Conservation Division. Outer
Continental Shelf Statistics 1953 through 1974, June 1975, p. 49.



Groups of
Groups of majors/
Number of Majors majors Independents independents Average bid
Sale date tracts leased (percent) (percent) (percent) (percent) per acre

Oct. 13, 1954 90 70 16 10 4 $295
July 12, 1955 ------------ 121 60 18 14 7 396
Feb. 24, 1960 ----------- 147 75 12 7 5 532
Mar. 13, 1962 206 56 12 25 6 186
Mar. 16, 1962 ----------- 216 69 15 10 6 288
June 13, 1967 158 46 34 11 8 685
May 21 1968 110 24 21 12 43 1,097
Dec. 15 1970 118 35 8 19 39 1,536
Sept. 1 1972 62 31 19 5 45 2, 018
Dec. 19, 1972 119 25 15 25 35 3,108
June 19, 1973 100 8 9 21 62 2,908

Source: U.S. Congress, Senate, Committee on Interior and Insular Affairs. Market performance and competition in the
petroleum industry. Hearings, 93d Cong., 1st sess., Nov. 28, and 29, 1973. Washington, U.S. Government Printing Office,
1974, p. 106.


Percent leased
of acres
Acres offered Acres leased offered

1954 ------------------------------------------------------------ 859,788 461,870 54
1955 ------------------------------------------------- 674,095 402, 567 60
1956 ------------------------------------------------------------ 0 0 --------------
1957 ------------------------------------------------------------ 0 0 --------------
1958 -------------------------------------------------------- 0 0
1959 ------------------------------------------------------------ 539,813 171,300 32
1960 ----------------------------------------------- 1,610,983 704,526 44
1961 ------------------------------------------------------------- 0 0 --------------
1962 ------------------------------------------------------------- 3,713,116 1,924,504 52
1963 ------------------------------------------------------------ 669,777 312,945 47
1964 ----------------------------------------------- 1,124,102 613,526 55
1965 ------------------------------------------------------------ 0 0 ------------
1966 ------------------------------------------------- 265,886 141,768 53
1967 ------------------------------------------------- 971,489 744,456 77
1968 ----------------------------------------------- 1,315,984 934,164 71
19 ------------------------------------------------- 190,153 108,657 57
1970 ------------------------------------------------- 666,845 596,040 89
1971 ---------------------------------------------------- 55,872 37,222 67
1972 ------------------------------------------------------------ 970,711 826,195 85
1973 ------------------------------------------------------------- 1,514,940 1,032,570 68
1974 ------------------------------------------------------------- 5, 005, 881 2, 186, 363 44

Source: U.S. Department of the Interior, Bureau of Land Management,
statistical summary.

New Orleans Office, Outer Continental Shelf

The Bureau of Land Management (BLM) is charged with the
Departmental responsibility to implement the leasing objectives of
the Outer Continental Shelf Lands Act. The BLM has the responsi-
bility of insuring (1) orderly and timely resource development, (2)
protection of environment, and (3) receipt of fair market value.
BLM coordinates its efforts with the United States Geological
Survey (USGS) which provides technical advice throughout several
of the leasing procedures. The USGS is responsible for supervising
and regulating exploration, development, and production activities
on the leaseholds after leases are issued, including the maximum
efficient rate (MER) of production (applicable to the entire reservoir)
and the maximum production rate (MPR) (applicable to individual
wells). The production rates, as well as drilling requirements, plugging,
surface and subsurface safety, pollution, platform structure require-
ments, and inspections, are regulated by OCS orders issued by USGS.


Under section II of the OCS Lands Act, the USGS is authorized
to grant preleasing geological and geophysical exploration permits
on the OCS.
The leasing procedure on the OCS consists of eight major com-
1. Proposed Schedule-Provisional OCS Leasing.
2. Call for Nominations.
3. Tract Selection.
4. Environmental Analyses.
5. Program Decision Option Document.
6. Pre-Sale Evaluations.
7. Sale.
8. Post-Sale Analyses.

The proposed schedule is the framework used to determine the
timing and initiation of individual sale procedures, and it is continually
updated and revised as new resource information becomes available
aid as national energy needs change. An analysis is made in broad
terms of when, where, and how much oil and gas acreage to offer for
lease. This is done through a review of the national energy situation
and the identification of future supply-demand imbalances. Deficits
are identified by matching projections of future non-OCS supplies
of oil and gas and future OCS production from existing leases with
future projected demand. Demand forecasts are made on a regional
basis, using the regions of the Future Requirements Committee for
Lyas and the Petroleum for Administration of Defense districts for oil.
ew OCS sales are proposed in order to meet rising deficits, and alter-
native schedules are tested with respect to the impact on demand.
The different options are also reviewed from the perspective of
receipt of fair market value. The size and frequency of sales can
induce or inhibit competition which in turn can reduce the Govern-
ment's receipt of fair market value. In 1972, two general lease sales
of 300,000-600,000 acres each were scheduled for each fiscal year. In
response to the April 18, 1973, Presidential energy message, this sched-
ule was increased to three sales per fiscal year of up to I million acres
each. New schedules have proposed even larger sales, up to 10 million
acres, but these are subject to regular revisions and modifications as
the level of knowledge expands (see fig. 12). In a recent announce-
ment', the Interior Department increased the offshore leasing schedule
to six sales per year from 1976 through 1978, including at least one
sale in each of the Atlantic, Pacific, and Alaskan offshore frontier
4 .S. Department of the Interior, Bureau of Land Management press release, 1 75.
5 Department of the Interior, News Release "Interior Approves Accelerated Otffsore Oil and Gas Leas-
ing," October 2, 1975.


JUNE 1975

SLE RA1974 975 1 S976 E 1977 1978



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The call for nominations is an official notice to the oil and gas

industry published in the Federal Register to obtain an indication of

industry interest in individual offshore tracts which may subse-

quently be offered for lease. Calls are issued for large contiguous

areas after covering several million acres off the coast of a single state.

Industry is normally allowed a period of 60-90 days to submit tract



After nominations have been received, specific tracts are selected

for possible lease offering. This is a joint responsibility of the BLM

and the USGS. In the tract selection process, the Interior Department

gathers and reviews more detailed geophysical, geological, engineering

and economic resource information and nominations on areas proposed

for sale. The BLM's responsiblity involves an evaluation of (1) the

number of weighted and non-weighted nominations per tract; (2) the

need to initiate leasing in wildcat areas in terms of industry develop-

ment capability, competition, and timely future availability of re-

sources to consumers; (3) tract leasing history; (4) nomination

patterns; (5) consideration of a mix of tracts by water depth, distance

from shore; (6) and identification of tracts deleted from prior sales for

environmental impact reasons or for which special environmental

stipulations have -been developed. The responsibility of the USGS

involves a technical evaluation to ensure proper consideration of the

development of geologic structures and trends and identification of

Bteau of Land Manage t


tracts in imminent danger of drainage, tracts which are most prospec-
tive for production, and tracts demonstrating a need for or suscepti-
bility for prompt drilling and development. Based on these agency
analyses, a joint BLM-USGS field office review is made to prepare
final recommendations of tracts. The Washington offices of BLM and
USGS, after a review of the joint field reports, make the final tract
selection for the sale within existing policy guidelines. A list of the
selected tracts is published in the Federal Register prior to the availa-
bility of the draft Environmental Impact Statement.
The USGS obtains its information from data that it purchases on
the "open market" from geophysical exploration companies as well as
from confidential industry submittals on OCS tracts already in
production.6 The USGS has several other sources and can, if necessary,
produce its own data. Prior to submitting a bid on an OCS tract,
petroleum firms obtain seismic survey data on the tract from the
"open market." Though there is a limited amount of information
trading among oil producers, most production data is not available
to prospective bidders. As a consequence, the USGS tends to have an
information edge over the bidders.
"Open market" seismic survey data on the subterranean geological
formations is gathered by trailing behind ships detection devices that
receive the echoes which are sent out by an energy generating device
and bounced off the floor of the ocean. This may cost anywhere from
$65 to $1,200 per line-mile and on the average 20,000 line miles are
needed per million OCS acres.' As a rule of thumb, OCS data costs
about $350 per line-mile or about $40,000 per standard tract.
The Department of the Interior does not require each petroleum
company exploring the OCS to submit exploratory data and analysis
because, first, the USGS does not have the manpower and equipment
to evaluate all of it, and second, it is argued by the Department of the
Interior that this would be tantamount to forcing a company to
testify against itself.9 However, the Department of the Interior does
have a mandatory reporting system of certain geological and engineer-
ing data obtained by the lessee in the development and production
stages of a tract.
This component involves the preparation of environmental impact
statements under Section 102 (2)(c) of the National Environmental
Policy Act of 1969. A draft Environmental Impact Statement (EIS) is
first prepared, a public hearing is held, and a final EIS is prepared for
all OCS oil and gas lease sales. Consultation and coordination with
interested Federal agencies is routinely undertaken in preparation of
EIS concerning proposed OCS lease sales. The EIS analysis discusses
6 A large part of the data obtained by the USGS is seismic survey data that is purchased on the open
market. There are several commercial survey companies who collect and sell such data. Often prospective
petroleum lease purchasers will join together to hire an exploratory company in order to lower the cost of
data. This can lower the conm any cost of data to as little as $10 per line mile. Due to legal considerations,
the US GS does not join in these ventures but under the usual "new comers" clause the USGS can purchase
the data at a later date.
7 In ot o, the petroleum industry has more information on any particular tract than does the USGS. How
ever, because firis do not freely exchange their information, on the average each petroleum firm has less
information on any particular tract than dos the USGS.
N A line-mile is one ship traveling in a line for one mile.
U.S. Congress. House. Committee on the Judiciary, Subcommittee on Immigration, Citizenship, and
International Law. Outer Continental Shelf Oil and Gas. Hearings, 93rd Congress, 2d Session. January 24,
30, February 7, March 6 and 14, 1974. Washington, U.S. Govt. Print. Off., 1974: p. 404.


the impact of a proposed sale on a tract-by-tract basis, and it contains
the following information:
1. Description of the proposed action.
2. Description of the environment.
3. Environmental impact of proposed action.
4. Mitigating measures included in the proposed action.
5. Any unavoidable adverse environmental effects.
6. The relation between local short-term use and maintenance
and enhancement of long-term productivity.
7. Any irreversible or irretrievable commitment of resources.
8. Alternatives to the proposed action (including alternate
sources or resources).
9. Coordination and consultation with others.
The draft EIS is made available to the public and is sent out for
comment by Federal agencies with jurisdiction or expertise, by
State and local agencies authorized to develop or enforce environmental
standards, and by anyone else requesting a copy. Thirty days after
the draft has been made available, a public hearing is held. Anyone
who wishes to do so may comment on the proposed action at the
The Final EIS is then prepared after comments on the draft (solic-
ited and unsolicited) and testimony from the hearing are analyzed.
After the incorporation of any new relevant information, unresolved
issues, or attitudes toward the proposed action, the necessary revisions
are made on the draft and the final EIS is then submitted to the
Council on Environmental Quality (CEQ).
At the time the final statement is being prepared, a Program De-
cision Option Document (PDOD) is also prepared. The PDOD brings
to the decision-maker's attention the non-environmental factors
associated with the proposed action. The non-environmental factors
discussed in a PDOD include the economic, social, and political impact
of the proposal and its effect on the Department's budget and pro-
grams. This document, in conjunction with the final environmental
impact statement, provides the Secretary of the Interior with infor-
mation necessary to evaluate the total impact of the proposed action.
Prior to a lease sale, the USGS calculates pre-sale values of the OCS
tracts offered for lease with BLM performing an audit and review
function. USGS provides the geologic, geophysical and engineering
inputs which are obtained through analysis of industry data submitted
to the Government and through the purchase of seismic information.
BLM provides certain economic inputs including estimates of capital
and operating expenses, discount rates, and procedures to follow in
calculating taxes.
A formal evaluation agreement, signed December 1971, between
BLM and USGS, established the responsibilities of each organization
in the evaluation process. Under this agreement the Geological Survey
field office furnishes to the BLM Washington office, at least 3 weeks
prior to the sale, detailed reliability categories for each tract indicating


the adequacy of available technical data. At the same time it also
indicates other factors that will be used in the resource evaluation.
Prior to the sale, the USGS field office gathers data on all the tracts
in the sale and then places on each tract one or more potential value
estimates, normally calculated using a discounted cash flow.
In estimating the fair market value of petroleum, USGS examines
the data gathered on the tracts to be leased, as well as data from nearby
areas already in production, before setting a minimum acceptable bid.
The evaluation takes place in secrecy, and the value of the minimum
acceptable bid may be released only after the leasing process is
completed. Because of the imprecision in evaluating this type of data,
and often due to the lack of "hard" production data, there is occasion-
ally a great difference between the evaluation given by the USGS to
a particular tract and the evaluation given by the petroleum com-
panies. For example, in the December 1973 sale, tract number 032005
had a presale USGS evaluation of $3,625,432 but the winning bonus
bid was $32,232,000 (the next highest bid was $8,067,600). In the
same sale, tract number 032077 was valued at $144,000 but sold
for $76,827,600.
At least 1 week prior to the sale, the USGS field office provides the
BLM evaluation review team with the tract values that have been
calculated. The review team receives the reserve estimates and all
pertinent data used in the evaluation process. On the day before the
sale, the review team submits to the responsible USGS and BLM
officials a report indicating the team's findings with respect to its
review of the USGS presale evaluation procedures and discusses any
area of possible concern regarding selected evaluation inputs such as
price, discount factors, and taxation methods.
Ninety days after a sale, BLM reviews and analyzes the manner in
which the presale evaluation procedures were implemented. This
analytical review identifies areas where research is needed and sug-
gests changes in the presale evaluation process for use in succeeding
lease sales. As needed, the Interior Department further reviews and
analyzes its sales operations and procedures in order to improve the
conduct of future sales.
The terms and conditions of each lease sale are published in the
Federal Register at least 30 days prior to the sale date. Sales are
conducted by the manager of the appropriate BLM leasing office
pursuant to the detailed procedures that are issued by him prior to
each sale. Following the opening of sealed bids each is checked for
technical and legal adequacy, qualifications of bidders, sufficient
advance bonus (20 percent at time of bidding), powers of attorney,
compliance certificates, and bonds. Foreign companies are not per-
mitted to buy OCS leases, although domestic subsidiaries of the
companies are eligible.
Following a sale, the Bureau of Land Management conducts a
procedural review of the high bids to assist the manager in his deter-
mination of whether particular leases should be granted. The primary
emphasis in the post sale analysis is on the receipt of fair market value


The factors considered in the analysis of the sale are:10
(1) the type of tract-whether the tract is drainage, develop-
ment or wildcat;
(2) the total high bid;
(3) the Geological Survey's reliability rating-this refers to the
quantity and quality of the USGS data;
(4) mean range of values (ROV)-the mean ROV is the Survey's
undiscounted estimate of the value of the tract and is obtained
by averaging the 500 tract values obtained from the computer
run "Monte Carlo" simulation;
(5) the high bid as a percent of the mean ROV;
(6) discounted mean ROV-the mean ROV is discounted at
10 percent for two years;
(7) high bid as a percent of discounted mean ROV;
(8) average evaluation of tract-the sum of the bids on the
tract plus the government's pre-sale value which is divided by
the number of bids plus one;
(9) high bid as a percent of the average evaluation of tract;
(10) number of bids on the tract;
(11) average number of bids per tract by type of tract;
(12) the tract's deviation from the average/mean deviation by
type of tract-indicates whether there is concensus on the tract
(13) bidding performances of high bidder by quartiles-shows
how the high bidder bid on other tracts in the sale;
(14) average number of bids on tracts on which the high
bidder bid;
(15) potential environmental hazard;
(16) geologic/bottom hazards;
(17) history of the tract-whether the tract has been leased,
offered or nominated before;
(18) miles tract is from shore;
(19) miles tract is from pipeline;
(20) water depth;
(21) other considerations-any other factors which may have
an impact on the decision (i.e. special stipulations to be imposed
on tract if leased).
Analysis of each sale is necessary in order to provide the following
information to the manager to aid in the determination of whether
particular leases should be issued: (1) leasing history of the tract, such
as information concerning the number of times a tract has been nom-
inated and offered, including bids submitted and rejected and (2)
status of production in the area. If some tracts are being drained or
could be drained by production from adjoining tracts on the same struc-
ture, an analysis of the effect of not leasing a tract on the initial or
ultimate development of the structure is required.
Protection of the environment is more heavily weighted in the earlier
phases of an OCS leasing action. In the postsale analysis, however, new
or additional environmental information is considered along with in-
formation developed in the environmental impat statement.
Following the review, recommendations to accept or reject high bids
that were submitted at the sale are made by the BLM OCS field office
manager. Normally this entire procedure, starting with a call for
nominations, usually takes approximately 12 months.
10 U.S. Department of the Interior, Bureau of Land Management.


In order for the highest bid to be accepted as the g bid it
usually must be equal to, or greater than, the minimum acceptable bid
set by the USGS as well as meeting certain other criteria. In the
July 1974 Louisiana and Texas OCS lease sale, 49 tracts were bid on
but only 19 received acceptable bids and were leased. Rejected bids
are not always insubstantial. For example, in the July 1974 sale a
per-acre bonus bid of $65.62 won the lease for tract number oslO05
while the highest per-acre bonus bid on tract number os1039, $439.58,
was rejected as being insufficient. The Department of the Interior
reports that in no case has a bid been rejected on the grounds of
increasing the market share of a firm or of beiag anticompetitive.
The minimum bid considered is $25.00 for each acre leased, but
BLM is not required to accept such a bid. In addition to the cash
bonus, the lessee must pay in advance an annual rental of $3.00 per
acre to BLM. The rental is suspended at any time the royalty payment
exceeds the equivalent of $3.00 per acre.
By law, any tract that is not in production five years after the actual
date of leasing reverts to the Federal Government. If development
progress can be shown, however, the production deadline can be ex-
tended up to an additional five years. The lease-reversion rate is sub-
stantial. Of the almost 1,600 leases sold prior to 1974, nearly 40 percent
had been relinquished. On tracts that had been leased more than five
years earlier, the reversion rate reached 60 percent. Although the
bonus is not refundable if a lease proves unproductive, the tax laws
do permit the bidder, once the tract is abandoned, to deduct the bonus
for a tax savings of 48 percent of the amount of the bonus.
On the initial exploratory well, which can be drilled only after the
lease is awarded, the chance of finding petroleum in economically
recoverable quantities is about one out of six. In "wildcat" regions
of the OCS the success ratio is even lower." Exclusive of contracting
and information costs, the estimated cost per exploratory well drilled
on the OCS is $1,000,000. The cost of a single drilling rig or platform
can range from $10 million to $40 million, depending on the type of
rig and the depth of the water in which drilling is to take place.

The OCS leasing system has inadvertently allowed the majority of
leases to be captured by the larger oil companies, and some economists
assert that this has led to increased market concentration and in-
creased oligopolistic power. Until November 1, 1975, OCS leasing
regulations did not prohibit joint bidding and, as a result, it was
common practice for the major oil concerns to join together in order
to capture a lease (see fig. 13). On that date, however, the Interior
Department established new regulations that prohibit joint ventures
between companies that produce more than 1.6 million b/d of crude
oil, natural gas, or liquefied petroleum products worldwide between
January 1 and June 30, 1975. This list will be reviewed every six
months, at which time it will be updated and a new "bidding period"
will begin. Iitially, 9 of the 126 companies that have filed production
statements will be barred from joint bidding in offshore oil and gas
1 The risk involved is well illustrated by the Washington-Oregon OCS experience. After investing nearly
100 million dollars and five years of drilling on 6OXO(XO OCS acres, the oil companies were unable to locate
any oil or gas.


lease sales, although they will be allowed to bid jointly with smaller
companies that are not on the restricted list.12



Source: U.S. Congress. Senate. Committee on the Judiciary. Subcommittee on
Antitrust and Monopoly. The natural gas industry. Hearings, 93rd Congress, 1st
session. June 26, 27 and 28, 1973. Washington, U.S. Govt. Print. Off., 1973. pt. 1,
p. 489.
12 The 9 companies prohibited from joint bidding are the Amoco Production Company, BP Alaska Ex-
ploration, Inc., Chevron Oil Company, Exxon Corporation, Gulf OHl Corporation, Mobil OH Corporation,
Shell Oil Company, Standard Oil Company of California, and Texaco, Inc.

63-732 0 76 3


This concentration of oil lease ownership is evidenced by the fact
that nine of the largest oil producing firms in the United States are
also among the ten largest OCS lease holders and that these ten firms
hold 62 percent of the total OCS acres leased (see. fig. 14).11 Shell,
Texaco, Gulf, Exxon, Chevron, and Continental account for about 70
percent of the oil produced from all offshore oil wells (State and Federal
lands) in the Gulf of Mexico (see fig. 15). The 17 largest operators own
90% of all producing Federal OCS leases and produce 92% of the oil
from those leases (see fig. 16). The probability of a large company
winning an OCS )ease, therefore, appears to be significantly higher
than that of a small company (see fig. 17). On the average, in four
sales between September 1972 and December 1973, the major petro-
leum firms acquired more than 61 percent of the OCS acreage leased.
On October 16, 1974, the Department of the Interior experimentally
tested for the first time the royalty bidding method on 10 of the 300
tracts that it offered. The purpose of this experiment was to determine
the extent to which royalty bidding leads to greater competition,
government revenues and production efficiency in OCS petroleum
production. Of the ten tracts offered, eight received bids and were
subsequently leased. The highest winning royalty bid was 82.165 per-
cent (of the market value of the petroleum saved, sold or removed), the
lowest winning bid was 51.7979 percent, and the average wining
royalty bid rate was 68.2 percent. This experiment will take some time
to evaluate, for up to five years may elapse before production begins
and several additional years may pass before the data is gathered and
Percent of U.S.
OCS lease production
acreage ranking
Chevron ---------------------------------------------------------------------- 10.6 5
Texaco ------------------------------------------------------------------------ 9.5 2
Exxon ------------------------------------------------------------------------- 9.4 1
Shell -------------------------------------------------------------------------- 7.5 4
Union ------------------------------------------------------------------------- 4.7 9
Atlantic-Richfield -------------------------------------------------------------- 4.6 7
Gulf --------------------------------------------------------------------------- 4.4 3
Continental ------------------------------------------------------------------- 4. 1 13
Mobil ----------------------------------------------------------------------- 3.8 8
Amoco ---------------------------------------------------------------------- 3.4 6
Largest 10 -------------------------------------------------------------- 62.0 .............
Source: Leland, Hayne E., Richard B. Norgaard, Scott R. Pearson. "An Economic Analysis of Alternative Outer Con-
tinental Shelf Petroleum Leasing Policies," National Science Foundation, 1974. p. 17.
13 Leland, Hlayne E., Richard B. Norgaard, Scott R. Pearson. An Economic Analysis of Altrnative
Outer Continental Shelf Petroleum Leasing Policies, National Science Foundation, 1974: p. 9-20.


IDollar amounts in millions!

Production in Federal
Gulf of Mexico production, waters through 1968
State and Federal, 1971 1 Corporate income 19722 cumulative
Oil and Oil and
condensate Percent condensate
(thousands of total Gross Net (thousands
Producer of barrels) production income income of barrels) Bonus paid

Shell Oil Co ----------------------- 105, 496 17. 1 $4, 591 $245 221, 5ao $284
Texaco, Inc --------------------- 96, 959 15. 7 7, 529 9C4 16, 800 407
Gulf Oil Corp ---------------------- 95, 428 15.5 5,940 561 162,800 271
Exxon Co., U.S.A ------------------- 73, 719 11.9 18, 700 1,466 244, 900 519
Chevron Oil Co ------------------- 72,698 11.8 5,143 511 275,400 198
Continental Oil Co ----------------- 44, 520 7.2 3, 262 109 65, 300 75
Signal Oil & Gas Co ----------------16, 646 2.7 1,315 29 (6) 22
Placid Oil Co ---------------------- 16,620 2.7 (4) (4) (6) ------------
Kerr-McGee Corp ------------------ 15, 131 2.5 603 51 7, 108 ------------
Union Oil Co. of California ------------ 14, 367 2.3 1,873 115 53, 000 81
Mobil Oil Corp -------------------- 12, 596 2. 0 8, 243 541 38, 600 188
Tenneco Oil Co ------------------- 10, 902 1. 8 2, 841 184 23, 400 105
Ocean Drilling & Exploration ---------- 9, 907 1.6 61 11 4, 800 120
Lake Washington, Inc ---------------- 7, 148 1.2 (4) (4) (5)------
Amoco Products, Co ----------------- 5, 444 .9 4,054 342 16, 4C0 48
Atlantic Richfield Co ----------------- 3, 897 .6 3, 658 199 40, 000 85
Sun Oil Co ------------------------ 3,414 .6 1,939 152 (6) 16
Southern National Gas Co ------------ 1, 515 .2 (4) (4) 8, 500
Superior Oil Co--- 1, 104 .2 135 4 3,200 16
Phillips Petroleum Co-.- 1,086 .2 2,363 132 34,400 68
Skelly Oil Co ---------------------- 1,031 .2 555 38 (6) 24
Pennzoil Products Co ---------------- 1,020 .2 731 33 (6)

'Clean Gulf Associates Oil Spill Contingency Agreement; exhibit B, percentage participation of members (July, 1972).
2 Moody's Industrial Manual-1972, Moody's Investors Service, Inc. New York, N.Y.
3 Offshore petroleum studies, Bureau of Mines Information Circular-IC 8557.
4 Not available.
& Not in top 20 producers; top 20 produced 97.7 percent of total.
Source: Kash, Don E. and Irvin L. White et. al. "Energy Under the Oceans," University of Oklahoma Press, 1973, p. 94.


Federal OCS leases Federal OCS production
Producing Nonproducing Total OCS Oil Gas Liquids
thousands millions of thousands
Operator and or lessee Number Acres Number Acres Number Acres of barrels cubic feet of barrels

Atlantic Richfield --------------------------------------- 29 32, 620 35 180, 029 64 212, 649 11, 186 5,230 70
Continental Oil --..-------------------------............. 73 301, 154 59 249, 103 132 550, 257 45, 503 485, 290 7, 358
El Paso Natural Gas -------------------------------------.. ...----------------------------------------------------------------------------------------------------------------------.
Exxon ------------------------------------------------ 49 223,317 64 332,358 113 555,675 51,541 185,443 158
Gulf Oil ------------------------------------------------ 38 149,978 40 207, 752 78 357, 730 30, 203 219, 417 3, 788
Kerr-McGee ---------.. ------------------------..........19 76,967 28 136,724 47 213,691 10,598 104,145 1, 859
Marathon Oil ----------------------------------------- 6 19,375 10 51,520 16 70,895 17,722 49,929 1,949
Mobil Oil -----------.-------------------------------- 44 140,597 27 135,138 71 275,735 9,949 250,986 2,893
Phillips Petroleum -------------------------------------- 5 16,995 27 138, 230 32 155, 225 2,231 51, 793 39
Placid Oil --------------------------------------------- 8 40,000 3 13,974 11 53,974 11,692 112,050 1, 891
Shell Oil -------------.------------------------------ 87 242, 236 43 204, 189 130 446, 425 70, 946 263, 528 6, 374
Standard Oil of California ------------------------------- 70 237, 071 88 417 730 158 654, 801 46, 440 171, 019 331
Standard Oil of Indiana ---------------------------------- 17 76, 848 42 194,987 59 271,835 8,655 118, 570 1,899
Sun Oil ------------.--------------------------------- 4 21,081 37 169 264 41 190,345 5,935 5,085 35
Tenneco Oil ------------------------------------------ 22 81, 401 19 82 008 41 163, 409 7, 775 233, 242 2, 103
Texaco --------------------------------------------- 20 88,761 42 197,653 62 286,414 8,835 220,572 3,418
Union Oil of California ----------------------------------- 34 126, 385 27 145, 934 61 272, 319 22, 072 271, 094 4, 107
Total companies ---------------------------------- 525 1, 874, 786 591 2, 856, 593 1,116 4, 731,379 361,283 2, 747, 393 38, 272
Percent of grand total ----------------------------- 90 83 79 79 84 81 92 77 88
Grand total all companies -------------------------- 583 2, 256,910 751 3, 615, 847 1,334 5, 872, 757 391,923 3, 548, 143 43, 359

Note: Oil includes condensate. Exxon includes Humble; Standard
ton; Standard Oil of Indiana includes Amoco and Pan American.

Oil of California includes Chev-

Source: ADP printouts-Operator and/or lessee production. Anchorage, Alaska; Casper, Wyoming;
Los Angeles, California; Metairie, Louisiana; Roswell, New Mexico; Tulsa, Oklahoma; Washington, D.C.
and FY Grand Total.

. ... ........ .........
............ ........... .... ..
... ......... ...... ..... ...... ... ...... ... .::..k :: ..: :::.
........... .... ..... ................................... ... .... ...... A .
.. .... ... ... ...... ..... .. ... W
... .. ... .. ..... ... ............ ......

[Based on acreage: percent participation considered for bidding combines]
Number of
Sale date Majors Others tracts
Sept. 12, 1972 ---------------------------------------------- 73.8 26.2 62
Dec. 19, 1972 ---------------------------------------------------- 57.2 42.8 116
June 19,1973 --------------------------------------------- 28.7 71.3 97
Dec. 20, 1973 ---------------------------------------------------- 85. 0 15. 0 87
Unweighted average ------------------------------------ 61.2 38.8 90. 5
Source: U.S. Congress. House. Committee on the Judiciary. Subcommittee on Immigration, Citizenship, and International
Law. Outer Continental Shelf Oil and Gas. Hearings, 93d Cong., 2d sess., Jan. 24,30; Feb. 7; Mar. 6 and 14, 1974. Washington,
U.S. Government Printing Office 1974. p. 437
On January 23, 1974, President Nixon announced in his energy
message that the 1975 target for OCS leasing would be 10 million acres.
This was a significant increase in the rate of OCS development and
would have been comparable in size to the total of OCS acres leased
as of July 1974 (10,101,000 acres). Based on previous lease-sale
experience, this would have necessitated a total offering of 20 million
of OCS acres. The Department of the Interior had tentative plans to
offer a total of 16.1 million OCS acres for lease in 1975, including 3.0
million acres off of South Texas, 2.9 million acres in the Central Gulf,
1.5 million acres off of Southern California, 1.7 million acres in the
Cook Inlet, 3.5 million acres in the Gulf of Alaska and 3.5 million
acres in the Mid-Atlantic region. Critics charged, however, that such
a large area could not be effectively developed and that the only
result would be diluted bidding and reduced Federal revenue. In its
revised schedule (fig. 12), the Interior Department now plans to offer
considerably less than ten million acres.
It has been stated that the Federal OCS leasing policy should
be designed to maximize the present value of the natural resource to
society. Under this concept, maximizing the net present social value of
petroleum requires consideration of more factors than just the level of
Government revenues.
In a paper prepared for the National Science Foundation on Federal
Outer Continental Shelf leasing policies, it was pointed out that bonus
bid leasing has been accompanied by the following five fundamental
changes: 14
1. A Switch from Private to Public Lands.-Initially large firms
or groups of individuals leased oil land primarily from small
landowners. Clearly, the lessees were more capable of bearing
risk than were the lessors. In that situation leasing strategies
which shifted risk to the firms were desirable. OCS leasing policy
followed the historical precedent even though the situation with
respect to risks has been reversed. As the lessor, the Government
can bear risk more easily than potential lessees.
14 Leland, olp. cit., pp. 2-3.


2. Greater Costs of Drilling.-The OCS requires massive ex-
penditures for drilling rigs which can be many times more expen-
sive than onshore rigs. Together with the rising costs of leases
mentioned below, "front-end" capital costs have risen to the
point where only the largest firms can diversify their leasing
activities. Yet, simultaneously, there is a rising policy interest
in increasing competition in the petroleum industry.
3. Ibse in the Price of Oil.-The "energy crisis" and uncertain
supplies have led to a doubling in the price per barrel of crude.
Consequently, bonus bids on desirable lease tracts have soared.
Bonus payments have risen relative to royalties, creating an
undesirable transfer of risk from the public lessor to the private
4. Greater Market and Environmental Uncertainties.-Con-
curretly with the increase in leasing outlays, the riskiness of
return has increased. Fluctuations in oil prices have been magni-
fied in changing profits. Market uncertainties have become
perhaps the greatest source of risk because appropriate diversi-
fication is difficult. A further source of uncertainty is the en-
vironmental hazard associated with OCS drilling. Leaks and
ruptures can lead to large clean-up or reparation costs, further
increasing the riskiness of OCS operations.
5. Greater Reliance on OCS Resoiurces.-Historically, petroleum
from the OCS has been a small portion of U.S. production
amounting to only 5 percent of total U.S. output two decades
ago. Crude oil reserves on the OCS, however, amounted to about
21 percent of U.S. reserves. The percentage of OCS production
and reserves will increase in the future simply because virtually
all of the petroleum provinces in the continental U.S. have been
explored and developed, whereas only about 10 million acres of
the more than 500 million acres (200-meter contour) of the
OCS have been leased and explored with the drill. The recent
monopolistic behavior of the Organization of Petroleum Ex-
porting Countries (OPEC) has increased the value and im-
portance of domestic resources and greatly increased interest
in accelerating production from our OCS.


It has been argued that the current leasing system has resulted in
a situation that is not consistent with the goal of maximizing the net
social value of our OCS petroleum resources. As a result, alternative
methods of leasing are being given increasingly serious consideration.
In evaluating alternative leasing methods there are five general
policy objectives that can be considered in maximizing the social bene-
fits of the resource. They are (1) generating adequate Government
revenues, (2) preserving the environment, (3) promoting competition,
(4) discovering resources at the optimum rate, and (5) developing the
resources at the optimum rate. In general, it will not be possible to
meet all of these policy objectives with the same leasing method, so
trade-offs and compromises must be made.
Risk is the crucial factor affecting the economic efficiency of all
leasing methods. In a theoretical case in which there is no uncertainty,
the amount and location of resources in each OCS tract, as well as
production costs and the market value of the resource, are known
with certainty. The winning bid, therefore, will come from the firm
that has the lowest costs. Large firms will not have the advantage
of being able to spread risk over several tracts, and consequently
all firms will be able to compete on the basis of efficiency for funds
in the capital market. The Government will obtain the maximum
amount of revenues possible because all firms will be willing to pay
the full amount of the value of the resources less the "normal" rate of
return on investment. Consequently, no firms will receive "wind-
fall" profits either because of lack of competition or because of "luck."
Because conditions are known with certainty, resources will be
discovered and developed at the socially optimal rate; there will be
no rush to overdevelop nor any reason to underinvest in equipment
or in exploration. Theoretically, with perfect knowledge the socially
optimal level of environmental preservation will also be achieved.
Under the theoretical situation of no uncertainty, a royalty increases
the per-unit costs and, therefore, it alters the production decision and
leads to a sub-optimal utilization of the resource. A bonus, however,
is extracted prior to production and consequently has no direct effect
on the production, decision. A firm will normally extract the resource
until the cost of production equals or exceeds the value of the re-
source produced. Royalties increase the cost per unit of production,
therefore, the royalty bidding method can lead to an earlier shutdown
than would be likely with the bonus bid system. Instead of producing
quantity OQ1 in figure 18 (as would be the case with the bonus bia
lease), the firm will limit production to OQ2 with the royalty lease.
Because the production cost per unit increases (or revenue per unit
decreases) as the royalty percentage increases, the greater royalty
rate the earlier the shutdown.








"I I


I t

Q;2 q Quantity

Marginal Revenue

Marginal Cost

-- The revenue from an additional

barrel of petroleum

-- The cost of producing an additional barrel of


MC i

MC 2

-- Marginal Cost with bonus bidding

-- Marginal Cost with royalty bidding


It can be argued that in a world without uncertainty or risk, a
royalty lease is economically less efficient than is a bonus lease. A
royalty reduces the revenue from each additional barrel produced,
which decreases the incentive to explore and to produce and will
ultimately lead to lower Government revenues, to a smaller petroleum
supply, and to higher costs to the consumer. Even though the U.S.
Code of Federal Regulations does provide for reduction of royalties
or rentals to promote development of leases which would otherwise
be uneconomic, the provision has never been invoked.'
The "real world", however, is not risk-free. As noted earlier, the
probability of finding petroleum in commercially recoverable quanti-
ties In an exploratory well is about one out of six. The four major

I U.S. Code of Federal Regulations, section 2.50. 12, title 30.


sources of risk involved in leasing on the OCS are (1) the amount of
recoverable resources located in the tract, (2) the cost of exploration,
(3) the cost of production, and (4) the future market value of the
resources. The uncertain nature of the petroleum market has been
recently illustrated by sharply rising prices, foreign production cut-
backs and price increases, proposed new energy taxes, and the elim-
ination of special tax provisions. In addition, companies operating on
the OCS face unlimited liability for oil spills. These factors and others
have contributed to making OCS petroleum and exploration and devel-
opment a high-risk venture, while the lack of a significant futures
market in petroleum has prevented firms from "insuring" against some
of the inherent risk.

This leasing method is provided for under the OCS Lands Act of
1953 and is to date the only method that has been employed to any
significant degree in leasing the OCS.2 Under this act the royalty is a
stated percentage of the value of production and can be paid in cash
or in kind. Although the OCS Lands Act stipulates a minimum rate
of 121Y percent, the royalty rate is usually set at 162/3 percent.
Each tract is usually awarded on the basis of the highest bonus
bid; if the highest bid submitted meets or exceeds the pre-determined
mn um acceptable level, as well as certain other criteria, then a lease
is awarded. However, if the highest bid falls below the miuminm
acceptable level, then the BLM institutes a reevaluation process in
which all bids are reviewed in terms of geological information, data
reliability, and other factors in order to determine which of the bids,
if any, will be accepted.'
In the past, the royalty has been set at a rate such that the bonus
tends to be a large component of total investment.4 This poses partic-
ular hazards for the smaller firms because the bonus payment is
contingent upon the award of the lease and not upon the presence of
recoverable petroleum, and it is made long before the firm can be
assured of any return on its investment. Because there is a low proba-
bility of finding a recoverable pool in any one area, a small firm
investing a large portion of its resources in a few tracts will run a
greater risk of bankruptcy than would a large company. Many
economists argue, therefore, that the only way a firm can "buy insur-
ance" under this leasing arrangement and current market conditions
is to purchase a large number of tracts in order to spread the risk.
These factors are indicative of the problems small firms have in
competing with larger firms in the capital market and in absorbing
the high interest rates that they must pay.
Since the royalty payment is based on the market value of the
petroleum produced, a portion of the market risk is shifted from the
firm to the Government (i.e., society). Thus the economic effect of any
change in either the market value of petroleum or the quantity
produced is borne by both parties. Theoretically, the higher the fixed
2 As noted earlier, an experimental royalty lease sale of 10 tracts took place on October 16, 1974.
3 As reported by the Bureau of Land Management some of the "other" factors taken into consideration
are: (1) bidding performance of high bidder; (2) average number of bids on tracts on which the high bidder
bid; (3) potential environmental hazard; and (4) geologic and bottom hazards.
4 According to Kash, White, et al. Energy Under the Oceans, prior to development the bonus payment
amounts for almost 65 percent of the petroleum firms costs; after development it accounts for more than 14
percent of its costs.

63-732 0 76 4


royalty rate, the lower xv-ii be the winning bonus bid and the greater
will be the sharing of risk. Of the four types of risk-discovery,
exploration cost, production cost and maket price-royalty pay-
ments directly transfer only market-price risk.
There are, however, distinct disadvantages to having a royalty
payment included in any lease. As noted earlier, the major problem
is that of early shutdown; the higher the fixed royalty, the earlier the
termination of production and the greater the amount of petroleum
left in the OCS. Because of high start-up costs it is doubtful that
under present conditions an abandoned field would ever be reopened.
Further, because royalties affect per-unit output costs, they tend to
decrease the firm's investment in exploration and total amount of
tract development. Overall, this can result in lower Governmental
revenues, smaller supplies, and higher costs to the consumer than
would be expected without a royalty payment.
A fixed royalty will cause additional problems if it is set too high for
firms to make a "normal" rate of return on their investment. This
could result either in non-development of a field or in bankruptcy of
the unwary firm.

The fixed bonus with royalty bidding method is also permitted under
the provisions of the OCS Lands Act. In this case, a fixed bonus (to be
paid on award of the lease) is stipulated prior, to bidding, and compe-
tition is based on the royalty to be paid to the Government. Except
for ten experimental leases offered in late 1974 this method has never
been employed on the OCS.
Royalty bidding can cause some additional problems due to exces-
sive speculation. If the fixed bonus is set too low, firms have little to
lose by bidding high royalties, which could lead to early shutdowns
and incomplete extraction of the petroleum. Theoretically, the lower
the fixed bonus, the higher will be the winning royalty bid. Royalty
bidding has the additional disadvantage that it may attract bidders
who are not as well qualified to develop the lease because of in-
experience in offshore oil development.
The primary advantage of a royalty is that it transfers a portion of
the firm's risk to the Government and indirectly to society. If the
lease tract turns out to be "dry", then both the petroleum firm and
the Government share the loss. An increase in risk sharing could help
enable small firms to enter the field and increase competition, increase
Government revenues, and promote a more efficient allocation of
Techniques such as a declining royalty schedule could be imple-
mented in order to help alleviate the early shutdown problems. This
would lower the cost of production over time and could be expected
to result in greater extraction of the resource. Any royalty, however,
will still lead to soie early shutdown and could result in the non-
development of some tracts (an extreme case of early shutdown).

Under the (CS Lands Act of 1953, rental bidding with a fixed
bonus is not permitted (a minimum royalty of 12Y2 percent is


mandatory), and consequently an amendment to the law would be
necessary to implement this method. This system calls for a fixed
bonus with competitive bidding based on the size of the rental pay-
ments. If the firm that wins the lease fails to pay the rent, it loses
the lease. This leasing method also tends to transfer some risk to the
Government from the firms; if there are no recoverable resources,
then the firm can drop the lease and lose its "sunk" costs (the drilling,
bonus and rent costs that have already been paid). Theoretically, it
can be expected that the lower the fixed bonus, the higher will be the
winning rent bid. The higher the rental, the greater will be the risk-
The rental method does appear to share some risk, but not as much
as with royalty payments. Rental payments are contingent upon con-
tinued production and not upon market conditions or production costs.
If the lease is executed during periods of high profitability the rental
would probably be high. If profitability declines, however, the size of
the payment would remain the same and could lead to early shut-
downs. Unlike a royalty scheme in which the shutdown decision is
made on the basis of production, the rental shutdown decision is
made on the basis of the rental period. Thus, the yearly marginal cost
of production, rather than the per-barrel marginal cost of production, is
the decision variable that is affected. Once the decision is made to
pay the rent and proceed with production, the rental is viewed as a
sunk cost not affecting marginal production costs. Since the rental
payments are made at periodic intervals, however, firms would proba-
bly attempt to maximize the extraction of petroleum in between pay-
ments. This could lead to additional problems because the total amount
of petroleum that can be recovered is diminished if attempts to extract
it too quickly reduce reservoir pressures.
As with rental bidding, profit-share bidding would necessitate a
change in current law. Under this leasing arrangement, a fixed bonus
would be stipulated and the petroleum firms would compete on the
basis of the percentage of the profit to be shared with the Government.
This system, unlike any other, shares all of the risks associated with
petroleum recovery. Pool-size risk, exploration-cost risk, production-
cost risk, and market-value risk are shared in proportion to the profit
share. The lower the fixed bonus, the higher will be the percent profit
share of the Government. The higher the Government's profit-share,
the less risk will be borne by the individual petroleum firms and the
greater it will be borne by the government.
The sharing would be negative as well as positive; losses as well as
profits would be shared between the industry and the Government,
which would be a very effective means of reducing development risk.
As a consequence, an increase in competition, government revenues,
and an efficient allocation and utilization of resources could be
expected .5
There are, however, several major difficulties associated with this
system of leasing. For example, this system would necessitate the
6 For a mathematical analysis see: Kalter, Robert, Thomas H. Stevens and Oren A. Bloom. The Eco-
nomics of Accelerated Outer Continental Shelf Leasing, Cornell Agricultural Economics Staff Paper, 74-18,
August 1974.


institution of procedures for uniform accounting and profit determina-
tion. In order to establish uniform accounting procedures and insure
proper reporting of profits, a Federal regulatory agency would probably
be necessary. In addition, the definition of profits is a very difficult
question both economically as well as politically, and if defined incor-
rectly incentives could result which might lead to inadequate produc-
tion efforts.
To discourage the early shutdowns which are inherent in a royalty
leasing system, the Government could employ a declining royalty
schedule. Initially the royalty rate would be high; with the passage of
time the cost of extracting a barrel of oil would increase due to lower
production rates, while the royalty rate would decline at a predeter-
mined pace. Even though a declining royalty rate could alleviate some
of the early shutdown problems, it could not completely prevent them.
There would still be some small or marginal petroleum fields which
would be abandoned early because of the royalty, even if the per-
centage is reduced. These early shutdowns would adversely affect
petroleum production and Federal revenues.
Compared to the non-declining royalty lease, the declining royalty
lease adds little to the sharing of risk. The firm would still be liable for
all of the risks and costs inherent in the exploration, development,
and production stages. Even though the royalty would apportion the
market-price risk between the firm and the government, as the
royalty declines the burden of the risk shifts back to the firm.
In addition to these drawbacks, a royalty system imposes additional
administrative costs for the monitoring of production and the collection
of royalties. Furthermore, as the royalty tends to lessen the capital
requirements of operators, participation by unqualified, marginal or
speculative operators may be encouraged.
The performance system of leasing OCS lands for resource develop-
ment has been employed by other countries, most notably Canada and
Great Britain. The performance system substitutes administrative
evaluations for the competitive market place. Under this system, the
authorized leasing agent specifies the amount of work to be done on
each tract, the rate at which the work is to be performed, the amount
of capital expenditures, as well as other performance criteria.
The primary ad vantage of this system is that it provides the Govern-
ment with tight control over the development and use of its resources.
The government would have the authority to specify the exact rate and
exten t of resource development, and it could recall the lease if the firm
fails to comply. In addition, this system could give smaller operators,
at the discretion of the leasing authority, greater access to the
In this leasing system, the fixed bonus (to be paid when the lease is
awarded) is specified in dollars, while the oil payment bid is specified
in barrels. The oil payment could be either on the basis of the number
of barrels to be paid each year of the lease or on the basis of a per-


centage of production. The primary advantage of this system is that
it helps to share the market price risk of petroleum between the firm
and the Government; changes in the market price are felt by both
If the oil payment is specified in terms of the number of barrels to
be paid per year, then this system is, in effect, a rental system and
has all of the associated problems. If, on the other hand, the payment
is specified in terms of a percentage of production, then the system is
a royalty system with all of its associated disadvantages. Thus, there
are no clear advantages in having an oil-payment bidding system.
This system would require the bonus to be paid in several stages
instead of all at once. This might be devised so that one-third of the
bonus bid would be paid at the time of the sale, another one-third
when petroleum is found in paying quantities, and the final one-third
when production begins. Less capital would be tied up by this system
thereby freeing more funds for exploration and development. If no
petroleum were found, the cost to the company would be smaller and
would therefore reduce the financial risk of OCS development. The
disadvantage would be that it would reduce revenues to the Federal
Government and might provide less incentive for thorough exploration
of the tract.
This system, sometimes known as the "Phillips Plan" for the com-
pany that proposed it, recommends the leasing of entire structures
regardless of their size instead of the arbitrary 5700-acre tract limit
now in effect. Companies would enter bonus bids as they do now, only
each bid would be for the entire field and not for a specific tract.
Each company would then receive, based on its equity, a percentage
of the profits (or losses) from the development of the field. There
would be a maximum of 20 percent on the participation by any one
company in the development. A corporation would be formed with
each participating company exercising control relative to the size of his
bid up to the maximum of 20 percent. One operator would be desig-
nated to develop the structure and the corporation would be billed by
the developer, even if the operator were one of the participants in the
corporation. This bill would be paid by drawing from a fund estab-
lished for that purpose, possibly from bonus bids held in escrow for
that purpose. In this way the bonus money would be used not as
front-end money but as working capital. The major disadvantage of
the plan is that its administrative complexity would require a very
large Federal bureaucracy to oversee the operations of these

These leasing arrangements are, of course, only a few of the many
possible alternatives. Because of the risk and uncertainty, the ad-
vantages of bonus bidding are inconsequential. Although the bonus
bids are held "hostage" and are development incentives, firms facing
high risks tend to be overly conservative about the future, and


consequently they tend to under-invest in exploration and develop-
ment. Risk decreases the supply and increases the cost of capital funds.
This is particularly true for small companies which are unable to
diversify their operations and thereby decrease their risk. As a conse-
quence, small firms are at a disadvantage in this respect when competing
with large firms-a fact that is confirmed by statistics. The higher
the risk and more uncertain the market, the greater will be the ad-
vantage to the larger firms under present leasing arrangements. A
study by the Department of the Interior has shown that "Federal
offshore areas have been explored, developed and produced primarily
by major oil companies because the capital requirements . exceed
the capabilities of most independents." I It can be argued that risk
is not effectively shared between industry and Government under the
present arrangements. On the assumption that operators tend to bear
more than their share of risk, there is also a tendency for OCS resources
to be underutilized.
In a world of risk, the bonus-bidding method currently employed
has been criticized as being the least desirable of the alternatives
discussed on the grounds that it leads to 1) inefficient use of resources,
2) industrial concentration, 3) reduced competition and 4) lower
Government revenues. Royalty-bid leasing may encourage the sharing
of some forms of risk between firms and the government and it may
increase competition, but it also creates a problem of premature
abandonment when production levels begin to decline and potentially
significant production is shut-in because the cost of oil extraction is
high relative to its value.
Profit-sharing appears to be the most economically efficient system
available. Because it effectively shares all forms of risk, it will tend to
promote competition, to increase Federal revenues, and to insure
optimal development of the resources. The major drawbacks are
technical in nature-problems such as defining profit, cost, and
revenue, as well as difficulty in passing the necessary legislation over
likely industry resistance.
A leasing arrangement is only one method of apportioning risk
between the petroleum firm and the Government, and many other
techniques are available. For example, the expensing of exploration
and intangible drilling costs for tax purposes shifts an additional share
of exploration and development risks to the Government. If it were to
provide firms with additional data which would enable them to more
accurately establish the tract's potential value, then another portion
of the risk would be transferred away from the firm. The Government
could contract with exploration companies to produce the data needed
for tract evaluation, and then provide it (without any evaluation) to
interested petroleum firms at a price just high enough to cover costs.
The Government could also provide interested bidders with production
data on nearby tracts; at present the Government does not release this
information. Pre-bid exploration need not be limited to seismic survey-
ing but could also include the drilling of exploratory wells.
'ihe present method of setting a minimum acceptable bid in secrecy
brings little discernible benefit, but it does contribute substantially to
I Kash, Don E., Trvin L. White et al. Energy Under The Oceans. University of Oklahoma Press, 1978:
P. 93.

a firm's risk. If the USGS evaluation of the value of the tract is above
the value perceived by the oil companies, then none will submit an
acceptable bid. If the minimum acceptable bid is known in advance,
the industry could warn the Department of the Interior that they
believe the USGS evaluation is excessive and should be reviewed. If,
however, the minimum acceptable bid is below what the industry
believes to be the market value of the resource, competition will assure
that the maximum bid will be obtained. This, of course, presupposes
that competition exists (whether actual or potential), and that anti-
collusive antitrust laws are enforced. With the secret minimum
acceptable bid, even the firm that bids the highest amount is not
assured that it will win the bid. This is costly to the winning bidder
because of large investments in acquiring and analyzing exploration
Other proposals to promote risk apportionment include 1) leasing
of larger tracts, 2) exploration leases with the option to develop all
or part of the tract, 3) checkerboard leasing, 4) additional tax pro-
visions for exploration and development, and 5) contract exploration.
7 Leland, op. cit., p. 60.


The Federal Oil and Gas Corporation (as proposed in H.R. 12104,
93d Congress) has also been suggested as a possible alternative to
some of the problems that exist under the current leasing system. As
stated by the sponsor of the bill, the goals of the Corporation are:1
First, the Corporation would develop publicly owned oil and gas resources in
order to satisfy national energy rather than to maximize private sector profits.
Second, the Corporation would develop oil and gas rights to stimulate maximum
economic competition in various aspects of the petroleum business. Third, the
Corporation would provide the public and the Government with knowledge of
the actual cost of producing oil and gas, so that appropriate public policy can be
set to best manage the Nation's energy resources. Fourth, the Corporation
would provide the public and the Government with accurate indications of the
extent of our energy reserves so that any future attempts to trigger public panic
by under-reporting available supplies could be -met with reliable information.
In addition to its charter, which would effectively grant it the power
to operate as if it were a private firm, the Corporation would have
some extraordinary privileges. On Federal lands the Corporation would
have the power to explore to the extent necessary to carry out its
authorized activities. It could request up to 50 percent of any tracts
offered, and it would not be required to make any lease payments.
The Corporation would receive annual appropriations from Congress
for the first 10 years, after which it would be expected to be self-
sufficient. Though the Corporation would be expected to pay State
and local taxes, it would be free from any Federal income tax. The
Corporation would also be exempted from State and local laws and
court jurisdiction if the laws impeded its ability to operate as Con-
gress directed. Critics of the proposal doubt that the Corporation
could fulfill the goals set for it and that it would not be the least costly
means of achieving these objectives. They also object to the Federal
Government competing directly with private industry.
Private petroleum corporations, as all other economic units, attempt
to maximize their profits as much as existing market conditions and
Government regulations permit. By altering the market conditions or
Government regulations, different output mixes may be obtained.
Theoretically, it is possible for the Government to obtain any mix
of products it desires by changing laws and regulations. If petrol-
eum development in a certain region is desired (or not desired) then
that area can be offered for lease (or withheld). If a certain product
is desired (or nor desired) the Government could stimulate (or re-
strict) its production through appropriate tax laws and other regula-
tions. If the Government feels that firms should make certain data
public, then it need only pass legislation requiring such disclosure.
Since it is not necessarily true that a Government corporation is more
efficient than a private corporation, it is not necessarily true that the
Government corporation can provide a product at a lower cost.
'Harrington, Michael. The Federal Oil and Gas Corporation. Remarks in the House. Congressional
Record (daily ed.), March 28, 1974: H 331-2332.


However, because of its preferential treatment (such as an exemption
from the Federal corporate income tax) it may appear that the
Government corporation is more efficient.
Advocates of the proposal claim that "public ownership aimed at
increasing competition, together with vigorous antitrust action of the
kind formally initiated against the oil companies by the Federal Trade
Commission * would protect against the effects of monopoly alto-
gether." 2
It has been argued, therefore, that the proposed Corporation would
be effective in fostering competition in the petroleum industry.
However, serious problems might arise from this situation. If the
Corporation were to be truly competitive then it can be expected
that all of the private firms would be eliminated from OSC develop-
ment. Assuming that the Corporation would be at least as efficient as
is the most efficient petroleum company, because of its tax, legal, and
financial advantages it would be able to produce petroleum at a lower
cost than any other firm. Consequently, if the Corporation were com-
petitive and offered petroleum at the lowest possible price that would
still provide a normal rate of return on capital, then it would probably
eliminate most or all of its competitors. Rather than fostering compe-
tition, therefore, it might well destroy it. It could, on the other hand,
price its petroleum so that even the most inefficient firm could stay in
usiness, but that action would not be consistent with the original
purpose of the Corporation.
A Corporation is likely to be desirable only when the market system
cannot, or will not, appropriately incorporate the desires of the society
it serves. For example, this may occur when the production or dis-
tribution of a particular product is controlled by a single firm or by a
few collusive firms (monopoly or oligopoly). It also may occur when
the political or social desires of a society are not the same as those
expressed by the consumers through the market. For example, it may
be politically or strategically prudent to restrict or cut off petroleum
imports but not economically desirable to do so.
M. Harrington, op. cit., p. 1 2332.


It is apparent that after nearly a quarter of a century, the policy
of leasing Federal oil and gas on the OCS needs a thorough review.
In the re-evaluation of national energy goals that has been precipitated
by a series of "energy crises," this policy must be given priority
consideration because OCS petroleum represents one of the few
remaining domestic sources of energy for the United States. The present
system has proven useful but has deficiencies that are considered by
many to be counterproductive. There can be little doubt that the
present system can be improved, even if the modifications are not as
sweeping as some have suggested. The present system should be
compared to the alternatives, as outlined in this report, and the best
features taken from each to the extent that they are compatible and
with the objective of encouraging exploration and development,
improving competition, and reducing the associated environmental
hazards. A revised leasing policy, incorporating these elements,
would be a major contribution toward the establishment of a national
energy policy.



63-732 0- 76 6 v


&aqaard, P. i. Besse, C. P.
A review of the offshore environment--25 years of
progress. Journal of petroleum technology, v. 25, Dec. 1973:
"Offshore operations began in earnest only about 25 years
ago. The authors review developments to date, discussing such
aspects as wave heights, wave forces, piling capacity, soil
problems, arctic ice forces, and protection of the environment."

Adams, Matthew T.
U.S. tax aspects of seabed operations: Internal Revenue
Code Section 638 in perspective. Law & policy in international
business, v. 2, summer 1970: 443-478.

Aitkens, Arthur.
The new outer continental shelf operations and leasing
regulations and oil and gas lease form. Natural resources
lawyer, v. 3, May 1970: 298-314.
"On August 22, 1969, new regulations governing oil and gas
operations and leasing in the entire United States outer
continental shelf were issued by the Department of the Interior
and published that same date in volume 34, no. 161, of the

Allen, Alan A. Schlueter, Roger S. Mikolaj, Paul G.
Natural oil seepage of Coal oil Point, Santa Barbara,
California. Science, v. 170, Nov. 27, 1970: 975-977.
"Aerial, surface, and underwater investigations reveal
that natural seeps off Coal Oil Point, California, introduce
about 50 to 70 barrels (approximately 8,000 to 11,000 liters)
of oil per day into the Santa Barbara Channel. The resulting
slicks are several hundred meters wide...tarry masses within
these slicks frequently wash ashore."

Bakke, Donald R.
Soviet Union won't even concede that Mainland China has
huge offshore oil. Offshore, v. 34, Sept. 1974: 64-65.

Baldwin, Alan. Cowell, Eric.
Protecting the North Sea environment. New scientist, v.
63, Sept. 26, 1974: 792-794.
"Development of the North Sea's oil reserves is as much an
environmental problem as an engineering one. Environmental
protection techroloqy now costs the oil industry more than 5
per cent of the capital it invests."



Baldwin, Malcolm F.
Public policy on oil--an ecological perspective. Ecology
law quarterly, v. 1, spring 1971: 245-303.
"In this article, Malcolm Baldwin of the Conservation
Foundation, attempts to show that environmental problems caused
by petroleum and its ultimate scarcity are far more complex
than most of us realize. The oil policy of the United States
has not reflected the ecological ramifications of oil
production and consumption. Furthermore, the governmental
decision-makers do not presently have sufficient information to
make sound environmental policies concerning oil."

Baldwin, Malcolm F.
The Santa Barbara oil spill. University of Colorado law
review, v. 42, May 1970: 33-76.
Contents.--Before and after the spill, a brief chronology.-
-The spill--magnitude, effects, cleanup.--Santa Barbara
setting.--Pressures for and against leasing--the Budget Bureau,
the oil companies, public opposition.--Federal statutes,
procedures and agencies involved in offshore leasing decisions.
Who protects the public? After the spill. Legal actions and
suits pending.

Ball, Eldon.
Gulf of Mexico: after 25 years drillers are still learning
how to cope with the Gulf. Offshore, v. 32, Feb. 1972: 35-40,
42, 44, 47.
"The Gulf of Mexico has become, among other things, the
leader of offshore oil. It leads the world in exploration,
development drilling and production. Among offshore areas it
boasts an impressive list of superlatives--most oil and gas
wells completed, most fields discovered, most platforms
installed, most oil produced, most gas produced, most dry
holes, most acres refused as worthless, most tracts returned as

Battelle Memorial Institute, Columbus, Ohio. Pacific Northwest
Laboratory, Richland, Wash.
Review of Santa Barbara Channel oil pollution incident to
Department of Interior, Federal Water Pollution Control
Administration and Department of Transportation, United States
Coast Guard, Washington, D.C. Pichland (available from NTIS,
19f91 1 v. (various pagings).
"PB 191 712"
At head of title: Research report.

Bendiner, Robert.
Taking oil off the shelf. New York times magazine, June
29, 1975: 12-14, 16, 18, 20.
Examines the social and environmental changes occurring
when offshore drilling takes place.


Bentsen, Lloyd.
Is production sharing ahead for U.S. offshore operations;
an interview. World oil, v. 178, Feb. 1, 1974: 23-26.
"Sen. Lloyd Bentsen thinks so. The senator explains his
recent proposals to increase government revenues from federal
lands and eliminate percentage depletion on domestic company
operations outside North America."

Berardeli, Phil.
East coast states ask leasing ban. Offshore, v. 31, Dec.
1971: 77, 79-80.
Describes efforts currently in progress by Atlantic
coastline states to ban the leasing of offshore lands on the
Atlantic outer continental shelf for oil exploration.

Berkson, Harold.
Marine sanctuaries in California. Prepared at the request
of Henry M. Jackson, Chairman, Committee on Interior and
Insular Affairs, United States Senate, pursuant to S. Res. 45--
A National Fuels and Energy Policy Study. Washington, U.S.
Govt. Print. Off., 1972. 21 p.
"Serial no. 92-25.1

Bernstein, Peter J.
Atlantic offshore oil: preparing to take the plunge.
Nation, v. 217, Sept. 10, 1973: 203-207.
Notes that far-reaching commercial exploitation of coastal
waters is at hand. Questions promoting offshore drilling to
solve the fuel crisis before additional exploration of the
structure of the ocean floor, movement of sediment, erosion,
bottom life, and the ocean's capacity to assimilate wastes.

Bibliography of marine affairs, II; D: mineral resources
of the sea. Ocean management, v. 2, Apr. 1975: 267-280.

Bleakley, W. B.
OCS orders 8 and "'--producers discuss benefits, costs, and
problems. Oil & qas journal, v. 70, Aug. 21, 1972: 59-66.
"There is no quarrel with the aims of the regulations.
Offshore operators claim, however, that the same ends could
have been achieved with less regulation and at less cost."


Boring, Philip.
Malaysia's Petronas: a legislative overkill. Par 'astern
economic review, v. 88, say 16, 1975: 63-66.
"The Government has effectively given Malaysia's infant
State-owned oil enterprise the power to nationalise companies
marketing and processing petrol and petrochemicals. The move
has already drawn criticism, and could upset the climate for
foreign investment."

Canada. Dept. of Energy, Mines and Resources. Resource
Administration Division.
Offshore exploration; information and procedures. Ottawa,
1970. 21 p.
"...to outline the responsibilities and requirements of
Federal agencies concerned with the offshore for operating
companies who may be familiar with them; to note some of the
services available through these agencies; and, to list the
persons who may be contacted for assistance."

Canada. Dept. of Energy, Mines and Resources. Resource
Management and Conservation Branch.
Offshore exploration: information and procedures for
offshore operators. Ottawa, 1973. 66 p.

Canada's "frontier" search. Petroleum press service, v.
40, July 1973: 246-249.
Exploration interest is now concentrated on Canada's
"frontier" regions--the Mackenzie Delta and Arctic Islands in
the far north and the Atlantic offshore shelf in the east.
Major reserves of natural gas have been established in the
first two areas and oil discoveries are north lacking.

Canfield, Monte, Jr.
Oil and gas leasing of the outer continental shelf. GAO
review, v. 10, spring 1975: 33-40.
Views the issue of leasing the outer continental shelf
from the standpoint of how we, as a nation, can balance our
supply and demand for energy at minimum cost in dollars and at
minimum cost to the environment.

Carmichael, Jim.
March offering of Louisiana blocks becomes landmark sale.
Offshore, v. 34, May 1974: 71-79.
Reviews the leases on tracts offered and sold in the area
offshore Louisiana in March 1974.


Chernow, Pon.
The new sheikdom off the Jersey shore. Philadelphia, v.
66, June 1975: 162-164, 166-176, 178.
Article discusses desire of American oil industry to
obtain the offshore oil of the East Coast and to build a
superport in Delaware Bay. Views of environmentalists are also

Chilton, J.R., and others.
Arctic Islands development may require $8 billion. World
oil, v. 174, may 1972: 118-119.
"The Arctic Islands of northern Canada contain more 250
malor geologic structures and boast an attractive wildcat
success ratio. But if gas and oil production is to be moved to
Canadian and U.S. markets to the south, the required investment
will severely strain industry financial resources.$#

Conservative Party (Gt. Brit.). Research Dept.
Energy. (London, Conservative Central Officel 1975. 17-
32 p. (Notes on current politics, no. 2)
Partial contents.--Energy conservation.--Development of
offshore oil.--Other sources of energy.--Energy supplies in the

Corrigan, Richard.
Demand for more oil and gas prompts review of offshore
leasir.q. National journal, v. 4, July 8, 1972: 1109-1116.
The leasing system for OCS lands is only one item in the
administration's current study of policies affecting energy
development. The OCS study is concerned with prospects for
expanding the acreage and speeding the pace of offshore
leasing, including the system by which these lands are leased.

Coulter, Raymond C.
The Outer Continental Shelf Lands Act--its adequacies and
limitations. Natural resources lawyer, v. 4, Nov. 1971: 725-

Crommelin, Michael.
Offshore oil and gas rights: a comparative study. Natural
resources journal, v. .14, Oct. 1974: 457-500.
Article considers the offshore oil and gas regimes of four
countries: the U.S., the United Kingdom, Canada, and Australia.


Curlin, James W.
Outer continental shelf oil and gas leasing off southern
California: analysis of issues. Prepared at the request of
Hon. Warren G. Magnuson, chairman, for the use of the Committee
on Commerce, pursuant to S. Res. 222, National Ocean Policy
Study. Washington, U.S. Govt. Print. Off., 1974. 100 p.
At head of title: 93d Cong., 2d sess. Committee print.

Dam, Kenneth W.
The evolution of North Sea licensing policy in Britain and
Norway. Journal of law & economics, v. 17, Oct. 1974: 213-263.
Focuses on the economic dimensions of licensing policy.
Discusses the 1971 auction experiment, the effect of the 1968
gas contracts on subsequent exploration, the Norwegian system
on which British participation proposals were patterned, and
the economic and financial effects of various techniques for
capturing the economic rent where licenses are issued under a
discretionary system.

Deans, Ralph C.
Offshore oil search. (Vashington] Editorial Research
Reports, 1973. 539-536 p. (Editorial research reports, v. 2,
1973, no. 3)
Contents.--New interest in offshore drilling.--
Jurisdiction over seabed development.--Concerns over energy and

Devanney, John W., III.
Key issues in offshore oil. Technology review, vo 76,
Jan. 1974: 20-25.
"The development of offshore oil resources is enmeshed in
technological uncertainties and policy contradictions. But by
any rationale, exploitation of these resources must be
profitable both for their developers and for the nation."

Dillin, John.
Offshore oil: America's trillion-dollar decision.
Christian Science monitor, Apr. 15, 1974, p. 1, F4; Apr. 16, p.
F; Apr. 17, p. F5; Apr. 18, p. 7; Apr. 19, p. Fl.
A series of five articles on the future of offshore oil
drilling in the United States.

Doumari, George A. Dyas, Norma V.
Development of oil and gas on the continental shelf;
report to the Ccmmittee on Commerce, United States Senate,
pursuant to S. Pes. 222; national ocean policy study.
Washinqton, U.S. Govt. Print. Off., 1974. 12 p.
At head of title: 93d Cong., 2d sess. Senate. Committee


Drew, Jean Talley.
Continental shelf law: outdistanced by science and
technology. Louisiana law review, v. 31, Dec. 1970: 108-120.
Discusses the United Nations Convention on the Continental
Shelf and recommends amendments to the Outer Continental Shelf
Lands Act to assure the United States maximum utilization of
the shelf with the minimum of friction with other nations.

Drilling technology keeps pace with deep water. Offshore,
v. 35, June 5, 1975: 46-47, 49-60.
Article discusses offshore oil drilling developments and
includes a complete list of all wells drilled in waters beyond
the 600 ft. mark.

Edsall, Thomas B.
State not ready for onshore upheaval an offshore oil
strike would bring. In Extensions of remarks of Robert E.
Bauman. Congressional record (daily ed.] v. 121, Feb. 13,
1975: E525-E528.
Writes about the problems that Atlantic Coastal states
would face if there is an offshore oil strike.

Emery, K. 0. Uchupi, Elazar.
Caribe's oil potential is boundless. Oil & gas journal,
v. 70, Dec. 11, 1972: 156, 158, 160, 162.
"Most favorable areas for oil can be identified along the
coast and in the waters of the Gulf of Mexico and Caribe."

Emery, K. 0.
Latitudinal aspects of the law of the sea and of petroleum
production. Ocean development and international law journal,
v. 2, summer 1974: 137-149.
Points out the variation with latitude of the areas of
continents and of the ocean-floor subdivisions that have been
proposed. Includes diagrams of interest to those concerned
with the potential ocean-floor revenues and their disposition.

Emery, K. 0.
Provinces of promise. Oceans, v. 17, summer 1974: 15-19.
Speculates on the magnitude and location of oil and gas
reserves in offshore locations worldwide.

Emery, Kenneth 0.
New opportunities for offshore petroleum exploration.
Technology review, v. 77, Har.-Ipr. 1975: 30-33.
"The continental shelves, marginal basins, and continental
rises may hold generous petroleum resources. Their exploration
will depend as such on political as on technological genius."


Energy crisis focuses on Gulf. South magazine, v. ..
winter 1974: 6-10.
"The Gulf is the scene of two controversial efforts--
buildings of a Superport(s) for foreign oil unloading and
expansion of offshore drillings."

Energy Supply Act of 1974. (Debate and vote in the
Senate Congressional record (daily ed.1 v. 120, Sept. 18,
1974-: S16924-$16993.

Environmental control: environmental impact statements
must include discussion of alternatives beyond scope of
authority of reporting body. Minnesota law review, v. 57, Jan.
1973: 632-638.
Defendant Sec. of the Interior proposed to sell oil and
natural gas leases in the Gulf of Mexico. In Natural Resources
Defense Council v. Norton, 458F.2d827 (D.C. Cir. 1972), the
Court of Appeals held that the environmental impact statement
required by NEPA must consider the consequences of all
alternatives currently practiced in sufficient detail to make a
reasonable choice possible.
A case note.

Feller, Peter Buck.
U.S. customs aspects of seabed operations. Law and policy
in international business, v. 2, summer 1970: 402-442.

Finlay, Luke V.
Riqhts of coastal nations to the continental margins.
Natural resources lawyer, v. 4, July 1971: 668-675.
Urqes modification of international law of the sea to
allow for maximum advantage to U.S. petroleum interests.

Gardner, Frank J., and others.
Offshore exploration. oil & gas journal, v. 71, Dec. 10,
1973: 77-83, 86-88, 90, 92.
Partial contents.--North Sea today: where tomorrow?--
Attaka still larqest Indonesia offshore field.--St. Lawrence
Gulf--an offshore promise.

Griswold, Lawrence.
Worth Sea oil: NATO's refuge or ruin? Air Force magazine,
v. 58, Feb. 1975: 49-54.
Discusses the economic and strategic significance of Worth
Sea petroleum and also possible oil and gas finds in the
Svalbard/Barents Sea area. Questions policies being pursued by
Norway and Enqland. Says the situation may be a bigger
temptation to military solutions than the Middle East.


Guttentag, Joseph H. Wilson, Michael G.
The continental shelf and.foreign tax credit under the Tax
Reform Act of 1969. Wayne law review, v. 16, fall 1970: 1379-

Hall, William.
The coming crisis in North Sea finance. Banker, v. 125,
Feb. 1975: 125-130.
"...shows how finance for the development of many North
Sea oil fields has dried up, why this has happened, and how
Government policy must change if Britain is to have any change
of attaining self-sufficiency in oil by the early 1980s."

Hamsett, Dillard.
Two primary problems face the offshore--men and money and
material shortages. Offshore, v. 35, Feb. 1975: 110-112, 114,
117-118, 120, 122.
Defines the capital items, the services, and the
consumables used in offshore drilling. Says two primary
problems are money and people.

Heise, Horst.
Canada's first offshore oil--what now? oil & gas journal,
v. 69, Dec. 13, 1971: 108, 110, 112, 114, 119-120.
Describes efforts to develop Canada's offshore oil
industry and presents an estimate of that industry's potential.

Henri, William P.
The Atlantic states' claim to offshore oil rights: United
States v. Maine. Environmental affairs, v. 2, spring 1973: 827-
"The original thirteen colonies are claiming for
themselves the right to ownership and control of the seabed and
subsoil of the Atlantic Coast in excess of three geographic
miles from their coast lines. These claims are based on grants
from the British Crown to the colonies in the colonial
charters. The federal government, on the other hand, claims
ownership of this area on the basis of the Submerged Lands Act."

Hooper, Mark W.
Sound waste management cuts offshore costs. World oil, v.
175, Sept. 1972: 41-44.
"Offshore operators now must comply with a multitude of
contradictory and confusing pollution regulations issued
hastily by a variety of government agencies. Here's how to
satisfy these generally unnecessary requirements at minimum


Horiqan, James E.
Unitization of petroleum reservoirs extending across sub-
sea boundary lines of bordering states in the North Sea.
Natural resources lawyer, v. 7, winter 1974: 67-76.

Indian Ocean, a closer look: a new day may be drawing for
the Indian Ocean. Offshore, v. 35, Apr. 1975: 117-134.
"...to point out that the Indian Ocean has a certain
potential as an exploration area. It has good geology. It
already has a taste of oil. Coastal nations seem willing,
perhaps even eager, to encourage largescale exploratory

Interior will offer 2.3 million acres in the Gulf of
Mexico. Offshore, v. 34, Mar. 1974: 31-34.
Discusses and presents a map of oil and gas lands off the
coast of Louisiana, soon (March and September, 1974) to be
opened for bidding.

Janos, Leo.
Offshore. Atlantic, v. 230, Aug. 1972: 74-79.
"Of oil riq drillers, roustabouts, and roughnecks, and a
life that resembles a cross between the Navy and a penal

Jenninqs, R. Y.
The limits of Continental Shelf jurisdiction: some
possible implications of the North Sea case judgment.
International and comparative law quarterly, v. 18, Oct. 1969:

Johnston, Lowell P.
The high cost of offshore oil. Offshore oil, V I, Jan.
1975: 20-24.
"Oil and water have never mixed easily. Now North Sea
drillers and producers are finding new dimensions of the

Joseph, William.
Offshore petroleum: where the industry is headed. Under
sea technology, v. 11, Sept. 1970: 22-25, 36, 38.
Following the Santa Barbara disaster, the petroleum
industry has been attempting to improve drilling and
tranErortation methods.


Kalman, Paul.
Oil & water: can they mix? Yield & stream, v. 79, Mar.
1975: 55, 149-150, 152, 154-156.
"Despite raging fires and subsequent oil spills off the
Louisiana coast, the expected damage to marine life never
materialized. Today, the fishing around oil rigs is excellent."

Kamer, Hansrudolf.
Norway and the USSR square off in the Arctic. Swiss
review of world affairs, v. 24, Oct. 1974: 4-7.
Background on the Norwegian-Soviet rift over the
potentially resource-rich continental shelf in the Barents Sea
of f Spitsbergen.

Kennedy, John L.
Despite success, S.E. Asia oil hunt just started: a
special report. Oil and gas journal, v. 73, Mar. 3, 1975: 69-
76, 93-100, 105-106, 108, 110, 112.
"...most countries in Southeast Asia are still in the
early stages of exploration and it makes the area one with
heavy emphasis still on exploration and development."

Kniqht, H. Gary.
Shipping safety fairways: conflict amelioration in the
Gulf of Mexico. Journal of maritime law and commerce, v. 1,
Oct. 1969: 1-20.
"It is the purpose of this article to examine the conflict
of interest which arose between the shipping industry and the
offshore mineral industry in the Gulf of Mexico, and the use of
shipping safety fairways as an attempt to ameliorate the
adverse effects of that conflict."

Krueger, Robert B.
The background of the doctrine of the continental shelf
and the Outer Continental Shelf Lands Act. Natural resources
journal, v. 10, July 1970: 442-494.

Lewis, Austin W.
A capsule history and the present status of the tidelands
controversy. Natural resources lawyer, v. 3, Nov. 1970: 620-
A brief discussion of the ownership and control of
offshore submerged lands is followed with a discussion of the
administrative actions and judicial rulings that followed the
passage of the Submerged Lands Act and the Outer Continental
Shelf Lands Act.


Lewis, Austin W.
Offshore boundary and title issues. Natural resources
lawyer, v. 4, Nov. 1971: 737-746.
Sketches the history of the tidelands controversy state by

Lineup of top oil and gas producers in Gulf of Mexico.
Offshore, v. 32, Sept. 1972: 52-54.'
"The Gulf of Mexico, site of the world's first well out of
sight from land, is still a strong producer after 25 years. As
a producer of both oil and gas, the Gulf of Mexico produces a
majority of U.S. domestic offshore hydrocarbon energy and will
probably continue to do so for a number of years."

Londenberq, Ronald.
Man, oil and the sea. Offshore, v. 32, Oct. 1972: 54-56,
59-60, 62, 64, 66, 71-72, 75-76, 79.
Traces the history of the offshore petroleum industry, on
the occasion of the industry's 25th anniversary.

Longvorth, Richard C.
The North Sea oil rush is on but Britain and Norway's
European neighbors shouldn't count on an energy bonanza.
European Community, no. 185, Apr. 1975: 3-6.
The fist North Sea oil field is soon scheduled to go into
full production. Takes a look at what this means for Britain
and Norway and for Europe as a whole.

The Looming oil battle off the East Coast. Business week,
no. 2328, Apr. 27, 1974: 80, 83-84.
Comments on the findings of the President's Council on
Environmental Quality in its report on oil and gas exploration
in the Atlantic and the Gulf of Alaska.

Louisiana Offshore Oil Scouts Association.
Status of the Louisiana offshore oil industry as of
January 1, 1S73; statistical review of events between July 1.
1972 and January 1, 1973. (n.p., 19731 1 v. (various pagings)

MacDonald, Ross. Easton, Robert.
Santa Barbarans cite an llth commandment: 'thou shalt not
abuse the earth.' New York times magazine, Oct 12, 1969: 32-
33, 142-149, 151, 156.
Discusses the oil spill or the Continental Shelf off Santa
Barbara earlier this year, including environmental aspects.


vacleod, Greig. Boardman, Robert.
Nationalism comes of age with discovery of North Sea oil.
International perspectives, Mar.-Apr. 1975: 36-39.
"The existence of large, exploitable resources off the
Scottish coast has now lent credibility to the argument of the
Scottish National Party that an independent Scotland would be
economically viable."

Magida, Arthur J.
coastal states seek changes in OCS leasing policy.
National journal reports, v. 7, Feb. 15, 1975: 229-239.
"Coastal states are exploring a variety of methods to
revise the federal governments's policies of leasing underwater
areas along the Outer Continental Shelf for oil and natural gas

Massachusetts Institute of Technology. Offshore Oil Task Group.
The Georges Bank petroleum study: volume I, impact on New
England real income of hypothetical regional petroleum
development. [Cambridge, Mass. 1 1973. 284 p. (Massachusetts
Institute of Technology. Report no. MITSG 73-5)
"This study is an attempt to aid New England's decision-
makers in determining what should be the region's response to
the possibility of a petroleum discovery on the New England
continental shelf through the application of some very specific
quantitative techniques to some of the issues raised by this

Massachusetts Institute of Technology. Sea Grant Project
Office. Offshore Oil Task Group.
The Georges Bank petroleum study: summary. (Cambridge,
19731 84 p. (Massachusetts Institute of Technology. Sea
Grant Project Office. MITSG 73-5)
Summarizes the findings of the study, which investigated
"the regional implications of petroleum developments on the New
Enqland continental shelf."

Massachusetts Institute of Technology. Sea Grant Project
Office. Offshore Oil Task Group.
The Georges Bank petroleum study, volume II: impact on New
Enqland environmental quality of hypothetical regional
petroleum developments. (Cambridge, 1973] 311 p.
(Massachusetts Institute of Technology. Sea Grant Project
Office. Report no. MITSG 73-5)
Examines the possible "changes in water and air quality
effected by opting for one development hypothesis rather than
another and the presently identifiable effects these changes
will have on the biota." Gives special attention to the
possibility of oil spills.


Matthews, Charles D.
Let's put oil-spill risks in perspective. oil 9 gas
journal, v. 72, Sept. 9, 1974: 65-67.
Attempts to put into perspective the risks of crude oil
coming onshore if spilled from an offshore platform near the
East coast. The president of National Ocean Industries
Association urges reason in making offshore policies.

Mattson, Hedy.
Georges Bank under scrutiny. NOAA (National Oceanic and
Atmospheric Administrationi v. 3, July 1973: 4-9.
The Nev England Regional Commission and New England Rivers
Basins commission solicited the help of the Massachusetts
Institute of Technology to study the implications of an oil
find in the Georges Bank area (also a famous fishing grounds)
on regional income and environmental quality.

Mayne, W. Harry.
Marine seismic energy sources: a status report. Undersea
technology and oceanology international offshore technology, v.
13, Aug. 1972: 24-27.
"...reviews the types of energy sources available for full-
scale oil and gas exploration in the marine environment.
Included is a discussion of the unwanted secondary energy
pulses generated underwater..."

McKelvey, V. E.
Environmental protection in offshore petroleum operations.
Ocean management, v. 1, Mar. 1973: 119-128.
Discusses USGS safety systems for offshore drilling and

McKelvey, V. E.
Prospects and problems of OCS development. American Gas
Association monthly, v. 55, Nov. 1973: 7-11.
"A geological review and an estimation of petroleum
potential along the United States Outer Continental Shelf."

McNabb, Dan.
Bidders snub most deepwater tracts. Oil and gas journal,
v. 72, Apr. 8, 1974: 36-40.
"Operators commit a record $2.176 billion in Offshore
Louisiana lease sale--mostly for geologically attractive close-
in tracts. Top tract went for $168,861,000, and Exxon was big
spender--$245,011,600 on six tracts."

Mn, T'ang.
Exploration for offshore oil in Asia. Issues & studies,
v. 10, Dec. 1974: 32-4.
Describes current operations in offshore drilling in the
South China Sea and in East Asia.

Muron, George.
The outer continental shelf--managing (or mismanaging) its
resources. Journal of maritime law and commerce, v. 2, Jan.
1971: 267-288.
"The resources of the outer continental shelf of the
United States most be managed so as to protect the environment.
That objective cannot be achieved unless the Department of the
Interior recognizes the right of the public to participate
meaningfully in proceedings to determine whether exploration
permits should be issued and obtains data on explored tracts
before they are leased. If the interests of consumers and
taxpayers are to be served, and national productivity improved,
the leasing strategy of the Department of the Interior must be
changed; the 'tacit working agreement' for imposition of state
market-demand prorationing should be abandoned..."

Mitchell, John G.
The selling of the shelf. Audubon, v. 77, May 1975: 44-63.
Notes that the real question is when and where and under
what conditions we shall drill for new oil and gas offshore.
Questions the rush to develop offshore oil, the role of oil
companies and the Interior Department. Feels the environmental
impact statement was inadequate.

Molotch, Harvey.
Santa Barbara: oil in the velvet playground. Ramparts, v.
8, Nov. 1969: 43-51.
The oil spill that erupted in the Santa Barbara Channel
last January..."provided Santa Barbarans with sharp insights
ii to the way our society is governed and into the power
relationships that dictate its functions.",

Moreland, Douglas H.
Recovery for injuries or death on offshore drilling
platforms: a problem of applicable law under the Lands Act.
Oreqon law review, v. 51, summer 1972: 813-825.
Comment holds that solving the problems involved in
wrongful death and personal injury recoveries on the outer
continental shelf requires legislative revision of section 4 of
the Outer Continental Shelf Lands Act.


National Academy of Engineering. Panel on Operational Safety
in Offshore Resource Development.
Outer continental shelf resource development safety: a
review of technology and regulation for the systematic
minimization of environmental intrusion from petroleum
products. tWashington, available from NTIS] 1972. 197 p.
"PB-215 629"
"The subject of offshore oil resource development safety
is considered from the standpoint of minimizing the potential
for sudden massive and small continued releases of oil to the

National Petroleum Council. Committee on Ocean Petroleum
Ocean petroleum resources; an interim report.
f Washington) 19741. 39 p.

National Petroleum Council. Committee on Petroleum Resources
Under the Ocean Floor.
Law of the sea: particular aspects affecting the petroleum
industry. riashington?] 1973. 90 p.

Noone, James A.
rLeasinq of the outer continental shelf] National journal
reports, v. 6, Apr. 6, 1974: 512-521; Apr. 20: 592-598.
Two reports on Federal plans to lease OCS land for oil and
gas exploration; the first "analyzes environmental aspects of
the expansion program, which would result in a 10-fold increase
of the current leasing effort." The second "discusses other
facets of the program, including the government's OCS
management practices and response to the expansion plan by the
oil industry."

North Sea action takes lead from Gulf of Mexico.
Offshore, v. 32, Nov. 1972: 33-37.
The North Sea is being developed much faster than has any
other part of the world. Explains how the British Government
encouraged maximum development in minimum time and kept
governmental policy and interference in the petroleum industry
on a low profile.

Off-shore oil drilling: a question of pace. Congressional
quarterly weekly report, v. 32, July 27, 1974: 1967-1970.
"The debate over the new off-shore areas does not focus on
whether they should be developed at all, but only how fast."


Offshore oil and gas production: annual review. Offshore,
v. 33. June 20, 1973: 84-198.
Contents.--Western Hemisphere--Gulf of Mexico, offshore
Louisiana, U.S. West coast, Latin America, Canada.--Eastert
Hemisphere--Africa, Australia, Middle East, Mediterranean,
Mainland China, North Sea, Scotland, England, Southeast Asia,

Offshore oil: Western Europe and Southeast Asia.
Offshore, v. 35, Feb. 1975: 61A, 64D, 65-76, 79-80, 85-86, 88,
90-91, 93-94, 97, 99-100.
Partial contents.--Southeast Asia is no sleeping giant.--
Everyone works to bring North Sea into production.--Energy
policynakers influence the Worth Sea.--Oil affects Norway's
policy: Norwegian policy affects oil.

Oklahoma. University. Science and Public Policy Program.
Technology Assessment Group.
Energy under the oceans: a technology assessment of outer
continental shelf oil and gas operations. (1st ed. Norman,
University of Oklahoma Press, 19731 378 p.

Oklahoma. University. Science and Public Policy Program.
Technology Assessment Group.
Energy under the oceans: a summary report of a technology
assessment of OCS oil and gas operations. (1st ed. Norman,
University of Oklahoma Press, 19731 31 p.
"The complete report, Energy Under the Oceans: A
Technology Assessment of Outer Continental Shelf Oil and Gas
Operations, was published by the University of Oklahoma Press
in September, 1973."

Petersen, Erik.
Canadians strong in North Sea. Oilveek, v. 26, Apr.7,1975:
12-13, 15-16, 18, 20, 2,, 30, 35, 37-38.
"Bore than 50 Canadian companies are participating in the
exploration play in the North Sea and off the UK west coast.
Exploration editor...highlights major current and future
activity in this exciting petroleum search.".

Petersen, Erik V.
New offshore plays developing. Oilweek, v. 26, May 19,
1975: 12-14, 16, 24, 28, 30, 36, 39-40, 42, 47.
"The Labrador Sea, the Beaufort Sea and high Arctic waters
hold the spotlight in Canada's offshore exploration."


Peterson, Russell.
CEQ's Peterson takes on industry. Environmental action,
v. 5, Apr. 13, 1974: 3-7.
"Delaware's ex-governor fights to protect its coast."

Pimlott, Douglas H.
The arctic offshore gamble. Living wilderness, v. 38,
autumn 1974: 16-25.
"The limited scientific knowledge about the arctic marine
environment and the possibly high vulnerability of that
environment to pollution gives special interest to offshore
drilling activities in arctic Canada."

The Politics behind the new oil hunt. Business week, no.
2166, Mar. 6, 1971: 104-106.
A brief discussion indicating that the oil companies are
making an intense search for oil in Africa, Latin America,
Indonesia, South China Sea off South Vietnam, Alaska and Canada
to provide leverage for bargaining with middle Eastern

The Promise from the deep. Houston, v. 45, May 1974: 18-
19, 22, 59-62.
"As onshore production continues to dwindle, offshore oil
offers the best change for the U.S. to lessen its dependence on
foreign petroleum supplies."

Public participation in rulemaking procedures under the
outer Continental Shelf Lands Act. Iowa law review, v. 56,
Feb. 1971: 696-706.
"The OCSLA grants exclusive jurisdiction over the issuance
of mineral leases on the outer continental shelf (OCS) to the
Federal Government. The administration of all OCS leases is
the responsibility of the Secretary of the Interior."
Discussion considers the legal status and desirability of
public participation in the promulgation of rules issued
pursuant to the OCSLA.

Quintrelle, Nixon.
Offshore gains take sting frcm onshore loss. Offshore, v.
32, Sept. 1972: 29-33.
"Domestic offshore production makes fat gain to offset
dwindling onshore flow. An exclusive study, by company, of
what's now being produced."


Reid, Alastair.
Letter from Scotland. New Yorker, v. 50, Oct. 7, 1974:
76, 81-83, 86, 88, 93-94, 96, 98, 100, 104, 106, 108-112, 117.
Reports on the conflict in Scotland over oil off
Scotland's coast, with elements of conservation and Scottish
nationalism involved.

Rintoulp Bill.
Alaska hears sounds of forthcoming boom. Offshore, v. 34,
Sept. 1974: 67-70.
"Alaska is on the threshold of an exploration era
unprecedented in the state's oil history." "Not surprisingly,
the greatest concentration of geophysical activity is in the
Gulf of Alaska..."

Rintoul, Bill.
Offshore California begins to stir with plans to resume
new drilling. Offshore, v. 33, Sept. 1973: 40-41.
"Adequate safeguards against oil spills are now available,
industry tells state and Federal regulators in effort to lift

Rogers, William B. Fakundiny, Robert H. Kreidler, W. Lynn.
Petroleum exploration offshore from New York. Albany,
University of the State of New York, State Education Dept.,
1973. 25 p. (New York (State). State Museum and Science
Service. Circular 46)
Evaluates the potential geologic hazards that might
contribute to an oil spill while drilling and developing
petroleum and natural gas reserves offshore from the New York

Ross-Skinner, Jean.
Norwegian oil: the 'blue-eyed Arabs.' Dun's review, v.
104v, Aug. 1974: 62-64, 66.
Dun's European Editor interviewed two men who are playing
key roles in shaping Norway's oil industry: Minister Ingwald
Ulveseth, the man responsible to Parliament for the oil
industry; and Arve Johnsen, who is the chief executive of
Norway's newly launched state oil company.

Buckelshaus, William Doyle.
In an exclusive interview with Offshore, EPA's Ruckelshaus
outlines his environmental goals for the offshore. Offshore,
v. 32, May 1972: 36-38, 40.


Rudon, Frank f.
Investment potential of offshore drilling industry.
commercial and financial chronicle, v. 212, Oct. 29, 1970: 3,
"Up-to-date review of offshore oil and natural gas
developments takes exception to the investment commRunity's
disenchantment with offshore drilling and related marine
construction. Mr. Rudon briefly describes many of the smaller
and larger companies associated in one way or another with
offshore drilling."

Sanders, Norman.
Worth Sea oil: can the technology cope? New scientist, v.
56, Nov. 16, 1972: 380-382.
"So far, there has been relatively little unease about the
ecological consequences of North Sea oil exploitation.
American experience suggests that the oil industry is not yet
technologically capable of avoiding sfills, and undersea
exploitation has been halted by court action in many parts of
the Urited States."

Schneider, Eric D.
The deep sea--a habitat for petroleum. Undersea
technology, v. 10, Oct. 1969: 32-34, 54, 56-57.
"...examines the potential for oil deposits beneath the
deep ocean floor."

Scott, R. W. Snyder, R. E.
According to Louisiana Gov. Edwin V. Edwards.. opposition
to OCS'leasing is sincere, but misguided. World oil, v. 180,
Apr. 1975: 67-70.
Governor Edwin V. Edwards of Louisiana comments on current
oil and gas energy problems in the U.S. Subjects discussed
include energy legislation, OCS development, and general energy
related topics.

Shaw, Elmer V.
A review of the energy resources of the public lands,
based on studies sponsored by the Public Land Law Review
Commission. Prepared at the request of Henry M. Jackson,
chairman, Committee on Interior and Insular Affairs, United
States Senate, pursuant to S. Res. 45; a national fuels and
energy policy study. Washington, U.S. Govt. Print. 0ff., 1971.
160 p.
"Serial no. 92-5"
At head of title, 92d Conq., 1st sess. Committee print.


Sheets, Kenneth R.
Is oil off East coast one answer to fuel shortage? U.S.
news 9 world report, v4 75, Dec. 24, 1973: 56-58.
"Many geologists feel certain that vast pools of oil and
qas are hidden under Atlantic waters. For a survey of the
potential and the problems... Author talked to the experts,
visited rigs in the Gulf of Mexico where offshore drilling has
lonq been under way."

Smith, Robert E., ed.
Proceedings of marine environmental implications of
offshore drilling in the eastern Gulf of Mexico;
conference/workshops. St. Petersburg, State University System,
Florida Institute of oceanography, 1974. 455 p.

Solanas, Donald V.
Update--outer continental shelf lease management program.
Journal of petroleum technology, v. 26, Apr. 1974: 388-394.
The U.S. Geological Survey is the organization that bears
the responsibility for seeing that offshore petroleum
exploration and production are conducted properly. Discusses
two general questions; how accidents are kept to a minimum and
how to take care of accidents to save human life and protect
environment from oil spills.

Southeast Asia has 26 shows this year. Offshore, v. 34,
Oct. 1974: 65-70.
A country-by-country description of oil finds in 1974 in
Southeast Asia.

Stone, Oliver.
Petroleum development under the Outer Continental Shelf
Lands Act--its future and problems. Natural resources lawyer,
v. 4, Nov. 1971: 732-736.

Stone, Oliver L.
Some aspects of jurisdiction over natural resources under
the ocean floor, Natural resources lawyer, v. 3, May 1970: 155-
This paper isconcerned with "...the natural resources,
particularly petroleum, of the continental shelf and the seabed
and subsoil of the deep oceans beyond national jurisdiction
under the continental shelf regime."


Student Council on Pollution and the Environment. Pacific
Southwest Reqicn.
Oil drilling in the Santa Barbara Channel. (Santa
Barbara? Calif., 197071 8, (8] p.
A review of the Santa Barbara Channel oil spill with
recommendations on future oil drilling activities.

Symposium on marine Pollution, Lcndon, 1973.
Proceedings. London, Royal Institution of Naval
Architects, 1973. 106 p.
Partial contents.--What is marine pollution?, by K.
Brummaqe.--The prevention of pollution from chemical tankers,
by R. Page.--Ship sewage treatment and holding systems, by J.
Stokes.--Vays and means of dealing with oil pollution, by A.
Stanford and B. Jarvis.--Pollution risks in offshore oil
drilling, production and storage, by F. Didier.

To drill or not to drill. BioScience, v. 24, June 1974:
Examines offshore sites in Alaska and the Atlantic Coast.

U.S. Bureau of Land Management.
Final environmental statement, FPS 73-19, proposed 1973
outer continental shelf east Texas general oil and gas lease
sale. rWashington, For sale by the Supt. of Docs., U.S. Govt.
Print. Off., 19731 599 p.

U.S. Bureau of Land Management.
Final environmental statement proposed 1974 outer
continental shelf oil and gas general lease sale, offshore
Louisiana. (Washington, For sale by the Supt. of Dos., U.S.
Govt. Print. Off., 19741 3 v.

U.S. Bureau of Land Management.
Final environmental statement, proposed 1974 outer
continental shelf oil and gas general lease sale offshore
Texas. (Washington, For sale by the Supt. of Docs,, U Govt.
Print. Off., 19741 2 v.
Vol. 2--Mitiqating measures; unavoidable adverse
environmental effects. Vol. 3--Ccnsultation and coordination
with others; attachments.

U.S. Congress. House. Committee on Appropriations.
Subcommittee on Dept. of the Interior and Related Agencies.
Outer continental shelf leasing program. Hearings, 93d
Cong., 2d sess. Washington, U.S. Govt. Print. Off., 1974. 170


U.S. Congress, House. Committee on Government Operations.
Our threatened environment Florida and the Gulf of
Mexico; nineteenth report together with additional views.
Washington, U.S. Govt. Print. Off., 1974. 100 p. (93d Cong.,
2d sess. House. Report no. 93-1396)

U.S. Congress. House. Permanent Select Committee on Small
Business. Subcommittee on Activities of Regulatory Agencies.
Eergy data requirements of the Federal Government: (part
I--energy crisis and small business), (part Il--oil shale),
(part III--Federal offshore oil and gas leasing policies),
(part IV--crude oil and propane/conflicts of interest); a
report. Washington, U.S. Govt. Print. Off., 1974. 103 p.
(93d Cong., 2d seas. House. Report no. 93-1648)

U.S. Congress. Senate. Committee on Commerce. National
Ocean Policy Study Subcommittee.
The state role in outer continental shelf development: the
California experience. Hearings, 93d Cong., 2d sess. Sept. 27
and 28, 1974. Washington, U.S. Govt. Print. Off., 1974. 192 p.
"Serial no. 93-1214"

U.S. Congress. Senate. Committee on Interior and Insular
Outer Continental Shelf Lands Act amendments and Coastal
Zone Management Act amendments. Joint hearings before the
Committees on Interior and Insular Affairs and Commerce, United
States Senate, pursuant to S. Res. 45, the national fuels and
energy policy study and S. Res. 222, the National Ocean Policy
Study, Ninety-fourth Cong., first sess. Washington, U.S. Govt.
Print. Off., 1975. 2 v.
."Serial no. 94-14 (92-104)"
Hearings held Mar. 14...Apr. 9, 1975.

U.S. Congress. Senate. Committee on Interior and Insular
Affairs. Subcommittee on Minerals, Materials, and Fuels.
Santa Barbara oil pollution. Hearings, 91st Cong., 2d
sees., on S. 1219, S. 2516, S. 3351, S. 3516, and S. 4017,
Santa Barbara offshore oil leasing bills and S. 3093, creating
marine sanctuaries. Part 2. July 21, and 22, 1970.
Washington, U.S. Govt. Print. Off., 1970. 187-446 p.

U.S. Congress. Senate. Committee on Interior and Insular
Affairs. Subcommittee on Hinerals, Materials, and Fuels.
Santa Barbara oil spill. Hearings, 91st Cong., 1st sess.
on S. 1219. May 19 and 20, 1969. Washington, U.S. Govt.
Print. Off., 1969. 186 p.


U.S. Congress. Senate. Committee on Interior and Insular
Affairs. Subcommittee on Minerals, Materials and Fuels.
Santa Barbara Channel. Hearing, 93d Cong., 1st se s., on
S. 1951 randl S. 2339. Nov. 13, 1973. Washington, U.S. Govt.
Print. Off., 1973. 49 p.

U.S. Congress. Senate. National Ocean Policy Study.
Soviet ocean activities: a preliminary survey. Prepared
at the request of Hon. Warren G. Magnuson, Chairman Committee
on Commerce and Hon. Ernest F. Hollings, Chairman N.ational
Ocean Policy Study for the use of the Committee on Commerce and
the National Ocean Study Policy pursuant to S. Rea. 222.
Washington* U.S. Govt. Print. Off., 1975. 81 p.
At bead of title: 94th Cong., 1st sess. Committee print.
"The report includes most of the important salient aspects
of Soviet ocean activities such as: fisheries, transportation,
oceanography, deep-sea mining, underwater activities, oil and
gas developments on the outer continental shelf and Soviet
response to marine pollution problems. The report concludes
with a chapter on the implications of Soviet ocean policy on
U.S. policy."

U.S. Council on Environmental Quality.
OCS oil and gas--an environmental assessment; a report to
the President. (Washington, For sale by the Supt. of Docs.,
U.S. Govt. Print. Off.] 1974. 5 v..

U.S. General Accounting Office.
Improved inspection and regulation could reduce the
possibility of oil spills on the outer continental shelf,
Geological Survey, Deparment of the Interior; report to the
Conservation and Natural Resources Subcommittee, Committee on
Government Operations, House of Representatives by the
Comptroller General of the United States. (Washington] 1973.
14 1.
"B-146333, June 29, 1973"

U.S. General Accounting Office.
Outlook for Federal goals tc accelerate leasing of oil and
gas resources on the Outer Continental Shelf, Department of the
Interior, Federal Energy Administration; report to the Congress
by the Comptroller General of the United States. (Washington]
1975. 40 p.
"5-118678, Mar. 19, 1975"
"This report, first of a series on Federal leasing
policies and practices, focuses on how Interior determined its
goal for accelerating leasing of oil and gas resources on the
Shelf, how this goal is related tc Project Independence, and
constraints which may hinder its accomplishment."

U.S. Geological Survey.
Environmental impact statement (draft). (Washington]
1971. 29 p.
"Issued by the U.S. Geological Survey in connection with
exploratory drilling operations on Federal oil an d gas leases
issued under the Outer Continental Shelf Lands Act, Santa
Barbara Channel area off the Coast of California."

U.S. Office of Technology Assessment.
An analysis of the feasibility of separating exploration
from production of oil and gas on the outer continental shelf.
Washington, U.S. Govt. Print. Off., 1975. 290 p.
Prepared for the use of the Senate Committee on Commerce.

U.S. President, 1969- (Nixon).
Santa Barbara Channel Oil Leases, etc.;
message...requesting passage of legislation to terminate oil
exploration leases in the Santa Barbara Channel and to create a
Marine Sanctuary. [Washington. U.S. Govt. Print. Off., 1970]
2 p. (91st Conq., 2d sess. House. Document no. 91-349)

Utton, Albert E.
A survey of national laws on the control of pollution from
oil and gas operations on the continental shelf. Columbia
journal of transnational law, v. 9, fall 1970: 331-361.
Examines and points out weaknesses of existing laws and
regulations affecting pollution from offshore oil operations in
various coastal states, including the United States. Makes
recommendations for future action.

Verschure, P. J. M.
How long will offshore drilling be American-dominated?
Oil & gas journal, v. 71, Dec. 31, 1973: 136-138v 140-141.
Concludes that U.S. domination is likely to continue for
quite some time.

Walker (G. 1.) Co.,
A comprehensive study of the offshore contract drilling
industry. New York, 1969. 31 p.

Weaver, L. K. Jirik, C. J. Pierce, H. P.
Offshore petroleum studies. (Washington] U.S. Bureau of
Mines [for sale by the Supt. of Docs., U.S. Govt. Print. Off.,
19731 30 p. (U.S. Dept. of the Interior. Information
circular 8575)
"The objective of this study is to provide an estimate of
future oil supply from U.S. offshore areas to 1985."

Weaver, L. K. Pierce, H. F. Jirik, C. J.
Offshore petroleum studies: composition of the offshore
U.S. petroleum industry and estimated costs of producing
petroleum in the Gulf of Mexico. (Washington) U.S. Bureau of
mines rfor sale by the Supt. of Docs., U.S. Govt. Print. Off,
19731 168 p. (U.S. Dept. of the Interior. Information
circular 8557)

Weaver, Levis K., and others.
Offshore petroleum studies: ,noimograph for estimating
hydrocarbon lease bonus bids in the Gulf of Mexico.
rwashingtonl U.S. Bureau of Mines (for sale by the Supt. of
Docs., U.S. Govt. Print. Off., 19731 12 p. (U.S. Bureau of
Mines. Information Circular 8609)
"Supplement to Information circular 8557."

Whitnhey, Steve.
Nixon sells too soon: the undersea chase. Sierra Club
bulletin, v. 59, may 1974: 15-16, 22-23.
Expresses concern about -the whole complex of
environmental problems--both onshore and offshore--that are
associated with the OCS leasing program."

Wilsor., Howard.
Federal rules open new era in gulf. Oil & gas journal, v.
67, Oct. 20, 1969: 44-46....
"This is the second in a three-part series...on t'e new
federal offshore regulations for the Gulf of Mexico. The first
article last week dealt with confidential data. Next week's
will cover the pollution aspect."

Wilson, Howard M.
Offshore California drilling ban costly. Oil & gas
lournal, v. 69, July 26, 1971: 64-66.
"California and the nation will suffer an enormous loss of
oil and revenue if the offshore provinces of that state are not
reopened to new drilling. This is the conclusion drawn from an
exhaustive offshore survey made jointly by several California
agencies and released in a thick volume entitled 'The Offshore
Petroleum Resource.$"

Wilson, James E.
Potential reserves of domestic oil and gas. Journal of
petrcleum technology, v. 26, Feb. 1974: 150-156.

World energy and the oceans. (Cambridge] Sea Grant
Proqram, Massachusetts Institute of Technology, 1973. (421 p.
(Massachusetts Institute of Technology. Sea Grant Program.
Report no. MITSG 74-7)
Contents.--World energy and the oceans, by Dr. W. E.
Sboupp.--Key issues in of shore oil, by Dr. J. W. Devanney III.--
Innovations in beat disposal in the oceans, by D. R. F.

The Worldvide search for oil. Business week, no. 2366,
Feb. 3, 1975: 38-44.
"High prices of crude have spurred an unprecedented hunt
by oil producers."

Young# Warren R.
Possible solutions to oil spillaqe, a growing problem.
Suithsonian, v. 1, Nov. 1970: 19-27.
The author suggests that the only way to avoid oil spills
would be to have a non-petroleum econcy.


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