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HomeMy WebLinkAbout5136 RESOLUTION NO. 5136 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA SUPPORTING THE EXPLORATION AND DEVELOPMENT OF OFFSHORE ENERGY SOURCES. WHEREAS, America and California face a long term need for greater energy self-sufficiency, and it is essential for America to be independent of foreign sources of energy and secure in its own . future, and the exploration and development of America's offshore energy sources would help reduce our dependence on foreign powers; and vlliEREAS, the development of new technologies to increase supplies and efficient use of traditional domestic and renewable energy resources are not enough to reduce our dependence on insecure and financially draining foreign energy supplies; and WHEREAS, events of recent years have shown that our growing dependence on foreign energy supplies presents a serious threat to the national security of the United States and to the health, safety, and welfare of its citizens; and WHEREAS, this same dependence on foreign energy sources has created inflation, unemployment and has had a serious detri- mental effect on the economy of our nation and on the economy of the State of California; and \~EREAS, an orderly development of domestic energy resources is essential to restore America's economic vitality and assure a growing level of employment in the future; and WHEREAS, exploration and development of America's offshore energy resources will ensure a safe and secure domestic supply of oil and gas and lessen the possibility of an energy shortfall and the concommitant social and economic consequences which would be devastating to all &~ericans, threatening and eliminating jobs and interrupting vital fuel supplies; and WHEREAS, the City of Arcadia is the location of many recreational and sports facilities from which the City derives substantial revenues from the tourists who visit them, and it is necessary to have adequate and reasonably priced fuel supplies in order for them to continue to visit these facilities; and WHEREAS, the potential economic contraction which results from energy shortages affects the inland communities first, these communities should have an equally important voice in determining public policy on the exploration and development of our nation's energy resources; NOW, THEREFORE, BE IT RESOLVED, that the City of Arcadia SUPPORT the exploration and development of offshore energy sources, and OPPOSE federal or state efforts to impose moratoriums on offshore drilling. The Clerk of the Council shall this resolution and cause the same to be general circulation. certify to the published in a adoption of newspaper of adopted Arcadia vote of I HEREBY CERTIFY that the foregoing resolution was at a regular meeting of the City Council of the City of held on the I~day of~~~~e affirmative at least three Councilmen, to wit: AYES: NOES: ABSENT: Councilmen Dring, Pellegrino, Lojeski None Councilmen Haltom, Hannah ~~i~ -2- SIGNED AND APPROVED this , City Clerk -3- . . Mixner Scott, Inc. " , CIll OF ARCADIA OCT 11 1983 CIlY ~MtAr.FI! October 6, 1983 Mr. George Watts City Manager, Arcadia City Hall 240 W. Huntington Dr. Arcadia, CA 91006 Dear Mr. Watts: I recently net with Mayor Lojeski and Councilman Hannah to discuss the issue of offshore oil rroratorium legislation that has been introduced to Congress. On behalf of the western Oil and Gas Association (MX;A), I am seeking support from the Arcadia City Council opposing the rroratorium concept. Mayor Lojeski requested that I forward the draft resolution to you for distribution to Council rrembers. If you have any questions please do not hesitate to call ne. I may be reached at (2l3) 653-6240. The Mayor anticipated that the issue could be heard at the October 18, 1983 Council rreeting. I will call you to confirm. Thank you for y= assistance. Y=s truly, ~~ Marilyn M. Morton . MMM: pm Enclosure . 6' 4t \p , 8150 Beverly Boulevard. Suite 302 . Los Angeles' California 90048 . (213) 653-6240 133 . . May 11, 1963 OCS MORATORIUM LEGISLATION Issue By ,t:leclaring moratoriums on OCS oil ancl gas leasing and by eliminating appropriations for leasing activities the Congress would legislate away an important source of revenues to the treasury, create Increased reliance on foreign sources of oil and aggravate the balance of trade deficit. The legIslation would (?rovide no significant increase in ..(?rotection for the environment. Bacl<.qt"ound On May 16, 1963,.the House A(?(?ro(?riations Committee will mark up the Supplemental f"{ 63 budget for the Interior De(?artment. Without benefit of hearings, the Interior A(?(?ro(?riations Subcommittee approved an amendment to this su(?(?lemental request which will (?rohibit OCS leasing offshore North Carolina,.Sp~u:th Carolina, Georgia and Florida. The FY 63 budget for Interror already (?rohibits', leasing offshore Central and Nor,th~rn California and in specified areas. offshore New Jersey. Secretary Watt is currently negotiating' with the governor~ of North CarolIna and Florida and with NASA over tract deletions~ In early June,l963, the subcommitte~ on I'nt:erior,'House Appropriation~ Committee, will marl<. up -t.he FY' 64 Interior Department a(?(?ro(?t:iat ions' bill. It is ex(?e.cted that amendments will be introduced' to declill:e an additional one-yei!r ,morat.o,rium on OCS leasing' for', Centl:aLandNorthern'California '({or',the.tl'!.ird consecutive year), (?6rtions of Southern CalifornL-a';'on lea,s-ing offshore Massachusetts, New Jersey, Maryland,' vi~ginia, North Carolina, Florida and maybe other areas. . . ".- .' Senators Cranston, Kennedy and Tsongas (5.760) and Wilson (s.1103) and Re(?resentatives Lowery (H.R. 27361 and S,tudds and Panetta (".R. 20591 havw introduced legislatlon that would create a moc-atoc-ium on "OCS leasing for: Nor:thern, Central and (?ortions of Southern Califor:nia and offshore Massachusetts for per:iods r:anging between 10 and 16 year:s. These combined e f for:ts oi 1 and gas ar:e based on petroleum r:esour:ces and to ban leasing and drilling for: OCS major: misconceptions of Amer:ica's of the oil industry's offshore 134 . . envi~:lnmental record. The legislation assumes that insufficient oil and gas resources underlie these offsho~e areas to justify the search, and that the search poses an unacceptable environmental danger. Neither assumption is correct. Moreover, if enacted, this legislation could si')nificantly reduce the second largest source of revenues to the Treasury next to the IRS,could make the Uni,ted States more dependent on foreign sources of oil, and increase our balance of trade deficits. This could prove esp.ecially unwise, as the U.S. economy once, 'again gears up its machinery for the move 'from a rec~ssed to a ,progressing economy. OCS Petroleum Resources' The U,.S. Geological drilling will provide discoveries--as much as our future n~tural gas~ survey has estimated th~t offshore 26\ to 41\ of America's' fu~ure oil 43.5 billion barrels--.and 25'\' to 41\ of experience tells us that major petroleum resources are concentrated'.in . a few .highly-productive localities,-'.,.less .than.l \ of tile. ear'th' s tot'al surface area contains :two'-thi"rds'. of .its recoverable,: petroleum. 'though ,thenat ion' s Outer Continental. Shelf (OCS I :,incltides mqrethan one bill.ion act'es,' Conly <a: ,small f t'action. of" ,that vast area has. been evaluated by ',dr'iiling ;'.;"F,hr. OCS mor:a.tor,ium leg:islation .wou,ld lock up some' of,' ,the m~st "romising ',r~gions' the':rebygre,atly hindering the",6t'derly,.and: systematic search f6'r.:,offshoreenergy'- ..,. '....t....',. '.:. '. .'... },.: . . . " : ", . ;"-,'; .......:....' .. ~'.. Re'venues to....the.Treasury Foregone ....-:... ;.il;,.j!." :., Le'a:.se Bonuses.. .. . ~ Relital. i,:' .ita xe s . :~ artdRoy;i'lt ie s "}ji, . ( Total Revenues Fo['egon~. .. .. .. .. . j.. . <0\.. . 'K " . . . i . S220 million from bcinusesal're,'idypid.d. on OCS. Sa le 53 iease's. Sa'n't:a',c~l!r:ia,:Basin:~ . . e1\'- ,.: but vh ii:;h wouldhave':to':''t,'e?'l:'e:tut'n'ed to b~~~e:i;~:. ," " .. ":"):::;;{~:Z:;"'T{;<'r;-;:,}:.: $100, mIll ioil .in bonuses ,(;a'ppr9~im~t.ef from'Od;' Sale 711, if ,thiS' Sou':th:M'laritic is not heLd.. .. SlO.2 billion ft'om resout'ces not offet'ed for lease offshot'e CalifoC'ni.. under moC'atol:'ium legislation. S350 million fC'om resouC'ces not offere" for lease offshore ~he North~tlantic under moC'atorium legislation. .. SlO.6 billion 13~ 2 . . Domestic Oil and Gas Resources that "'ould r.,main untapped for National S~curity Needs in an Emergency Recognizing that the lead time to bring newly discovered OCS oil and gas to production from first discovery is 8-12 years the fOllo..ing est imated eesoueces would be una va i lable in time of national emeegency: Noeth Atlantic - 140 million baeeels of oil equivalent South Atlantic - 228 million baeeels of oil equivalent Noeth, Centcal South Calif. 1.6 billion baccels of oil equivalent 2.168 billion ba~cels of oil equivalent Total........ . Balance of Tcade Deficits Will Inccease The Unite,d States would have to spend at least S56 billion excluding the tcanspoetation costs to impact the estimated 2.2 billion, in ccude oil. ( Envieonmental Recocd Excellent OCS Oi.l and Gas 'Leasing Activities - In the last eight yeac~, 1975-1982, since the cegulato.ey. and technological impeovemen,ts made aftec the Sant'a Bachacaoil spill of 1969 have been fully implemented the offshore oil and gas industcy has pcoduced 3.52 billion barrels of oil with a spill cate of 5 bacrels foe, every one million barrels produced. In"fY80,and a1, barrels respectively. . ". ".1,. .' vear. .':, . '.: ~ . . . the iargest ocs spi~1s wece 60 and 83 The ne~t 1acgest was 50 bacce1s for each 3 18)~ 00 . . ()CS operations contribute 1. 2 percent. S~eps from the Coal oil Point ar~a offshore Santa Barbara range from 10 to 250 barrels per day \lith the average over time being 50.-70 barrels per day. for the eight year period, 1975-19A2, natural seeps in this One geogra;:>hic aC"ea (7 square mi les) has contribut~d appC"oximately bet\leen 146,000 and 204,400 baC"rels of cC"ude oi 1 into the marine environment. The total for all OCS spills fC"om production opeC"3tions foC" this peC"iod amounted to appC"oximately 9,000 baC"C"els. Conclusion Congcess mandated the OCS leasing pcocess as cecently as 1976. OCS leasing continu.es to be in the national intecest.. It pcovides an impoctant soucce of cevenues to the Tceasucy, ceduces celiance on foreign soucces of oil and contributes to an improvea trade balance with no significant cisk to the environment. Legislating the OCS leasing progcam through the appro[lriations process and OCS moratoriums is not in the best interest of the nation. ( The OCS Lands Act and Coastal Zone Hanagement Act pcovide for lengthy, and elaborate consultation and coordination procedur.es between th.e states affected by OCS leasing and the Secretacy of the Interior. This pcocess is working. These pC"ocedures cesulted in the deletion of many tracts and the addition of several lease stipulations at the request of state governors ;in OCS sales 53 - California; 57 - Norton Basin, Alaska; 70 - St. George Basin,' AlaSka; and 76 - Hid-!\tlantic. when the states were not satisfied with the Secretary's decision it has been challenged in court. Re fer to misconceptions of t.he issueS,. the attached questions and answers regarding about' the OCS leasing progcam. foc mOce discussion Attachments i \. 4 l;J',' ,,' . IN F'V84 INTERIOR IINO RELIITED I\GENCIES I\PPRWRIATIONS BILL GENE RilL IIRGUHENTS i 0 If th~ trend toward regional moratorium legislation is successful and continues, the entire offshore leasing program could be jeopardized. In accordance with section 18 of the OCS Lands Act, the five-year leasing program provides for an equitable sharing of developmental benefits and environmental risks among all regions. Arhitrary congressional prohibitiqns place an undue burden on certaIn regions of the country. Coastal states in the Gulf of Mexico and IIlaska could be faced with .providing far more than their,fair share of the Nation's energy needs. o The OCS Lands Act and Coastal Zone Management Act provide for lengthy and elaborate congultation and coordination procedures between the states affected by OCS leasing and the Secretary of the Interior. These procedures have resulted in the deletion of many tracts and the addition of lease stipulations at th~ request of state governors in several OCS sales. When states are not satisfied with the Secretary's decisions, there, is ample opportunity to challenge them in the courts. This is the process provided by the Congress to resolve conflicts and it is work i ng . o It is in the national interest to reduce this nation's continuing dependence on unstahle foreign energy supplies. Expedient'de~elopment of our OCS energy reserves is one of the best solutions to this problem. The U.S. Geologic~l Survey has estimated that offshore drilling will provide 26% to 59% of America's future oil discoveries and 25% to 36% of our future natural gas. ( ~conomic IIrguments o Secretary Watt's five-year OCS leasing program is designed to improve the pace at which the highest quality acreage is made available for l~asing. The companies will only lease, and exploratory operations advance, at th~ pace that the demand and supply forces will allow arid that the coastal states will permit through their review of all operations plans before they can commence. o OCS leasing is an important source of revenues to the Treasury in offsetting growing deficits and balance of trade problems. From the inception of OCS leasing in 1954 through the end of calendar year 1982, the,s,e activitles have contributed $56.5 billion to the U.S. Treasury through honuses, royalties, and rental payments alone. not to mention significant additional federal revenues derived through income and windfall profit taxes. The recent sale In the Central Gulf of Mexico garnered high bids in excess of $3.3 billion. The federal government has projected OCS bonus. royalty, and rent revenues to the treasury of Sll.9 billion in fiscal year 19R4. o Banning offshore activity along much of the IImerican coast would deny citizens and, companies significant economic development and job-creating benefits. 1I1so overlooked is the fact that the petroleum industry is a long-established and respected member of the business community. It is unfair to brush aside the interests of these companies. and the tens of thousands of citizens who are their s~ockholders, employees. and customers. (over) 1<')- , VU . . Environmental Arguments o Over 26,000 well~ have been drilled in state and federal waters since offshore work first began in 1694. There have been only three significant oil well blowouts in U.S. waters: Santa Barbara - 1969; Block 44, Louisiana - 1970; and Bay Marchand, Louisiana - 1970. Only the Santa Barbara spill reached shore and governmental studies have shown that it created only temporary environmental damage. o In the years since the regulatory and technological improvements made after the Santa Barbara oil spill of 1969 were implemented fully, the domestic offshore oil and gas industry has produced 3.52 billion barrels of oil with a spill rate of only 5 barrels for everyone million barrels produced. o The facts are that oes operatiohs have existed side-by-side with fisheries development for decades. The volume and commercial value of the most prOductive commercial and sport fishery in the U.S. have continued to grow in the Gulf of Mexico despite more than 45 years of offshore operations which began in the estuaries and nearshore areas. o The extensive fisheries of the world where oil and gas operations have also taken place have not experienced any significant long-term adverse environmental impacts -- i.e. the North Sea, Cook Inlet (Alaska), Southern California, the Persian Gulf, the Bass Straits of Australia, offshore Indonesia, the Black Sea, Java Sea, and offshore Venezuela. Leasing in these international fisheries is one reason that non-U.S. uffshore production has increased to 92 percent of total offshore production since 1970 while the U.S. share of total production rleclinerl from 21 percent to 7 percent. o Before any drilling or development operations can begin, the companies must go through permitting procedures that involve 74 sets of regulations regarding OCS safety. Up to 17 major permits and plan approvals requiring state CZM consistency review must be obtained before various operations may begin. Secretary Watt's leasing program has not made one change to these environmental protection procenures that have evolved over the last 15 years. AChieving Fair Market Value On OCS Leases o Under the new five-year OCS leasing program, the Administration has increased the minimum bid per acre from S25 to S150 to help assure r.eceipt of fair market value on the many tracts with modest pro~pects that will be included in the larger sales to be held. In addition, the new plan calls for. a shift away from presale tract evaluation to postsale tract evaluation in orner to improve the evaluation effort by. eliminating work on tracts that do not receive bids. A multi-part, two-phase screening process will allow fOr better tract evaluation hy using sophisticated sampling and evaluation techniques. 13~ . . ( MMS CONTACT: Office of Minerals Management Information (202) 343-3983 MINERALS MANAGEMENT SERVICE U.S. OEPARTMENT OF THE INTERIOR July, 1983 FACT SHEET OFFSHORE OIL AND GAS LEASING PROGRAM THE NEW PROGRAM The Department of the Interior's Minerals Management Service (MMS) is cur- rently implementing a S-Year offshore oil and gas leasing program calling for 41 lease offerings bet~een August 1982 and June 1987. The program ~as approved by Secretary James Watt on July 21, 1982, after a 19-month prepara- tion process involving consultation ~ith the Congress, the 23 coastal States, local governments, environmental groups, indus try and the public. ( In a major change from previous programs, which offered only 4 percent of America's offshore acreage for lease in 26 years, the new program will con- sider almost the entire Outer Continental Shelf -- one billion acres -- in 41 lease offerings bet~een 1982 and 1987. The program is making the best prospects available first and giving the private sector a greater opportun- i ty to select the tracts it believes show the most promise for oil and gas. It ~ill reoffer, except those deferred because of :environmental or defense-related problems, unleased tracts in one-, t~o-, and three-year intervals. (NOTE: See sched~les, pages 8 and 9) HISTORY OF OFFSHORE LEASING In the 29-year history of the federally administered offshore 011 and gas leaSing program: . approximately 28 million acres have been leased offshore, . a total of 2,736 leases were in force as of May I, 1983, . 1,322 leases were producing as of May I, 1983, and . . , revenues totaled $58.5 billion by the end of 1982. However: . only 21 percent of the acreage leased has been in frontier areas, outside the producing areas of the Gulf of Mexico and Santa Barbara Channel, and 14J . about 2.2 million acres have been leased in the U.S. Atlantic. . . 2 This compares to 123 million acres of the Canadian Atlantic covered by leases or pennits. Drilling statistics tell a similar story: As of Dece!1lber 31, 1982: . 20,955 ..ells have been drilled in Federal ..aters (another 8,619 in State wacers). . over 20,000 are in the Gulf of Mexico, . 692 are off California (another 3,346 in State ..aters), but . only 66 ..ells drilled ..ere in frontier areas (the Atla'ntic or offshore Alaska) . This compares to over 300 ..ells drilled in the Canadian Arctic, resulting in reserves of up to 3.8 billion barrels of oil and 13 trillion cubic feet of natural gas. OFFSHORE PRODUCTION AND RESERVES Through the end of 1982, United States Federal offshore has produced: . 6.0 billion barrels of oil, and ( . 58.2 trillion cubic feet of gas. It is estimated that there remains in Federal ..aters: . 43.5 billion barrels of oil (more than 7 times ..hat has been produced to date). . 230.6 trillion cubic feet of gas (nearly 4 times ..hat has been produced to date). The natural gas potential offshore is often overshado..ed by concern for increased oil production. Ho..ever, hypothetically, the gas remaining offshore could replace less clean-burning fuels, up to: . 9.8 billion tons of coal, or . 40.5 billion barrels of oil. PRODUCTIO~ TRENDS During 1982, America' s 9ffshore oil and gas production represented about 10 percent of total domestic oil production and 24 percent of domestic natural gas production. During the 1970's despite rapidly increasing oil prices. offshore oil production declined significantly. That trend changed slightly in 1981, ..hen 286 million barrels of oil ..ere produced, up from 277 million in 1980. A record 4.88 trillion cubic feet of gas '..ere also produced in 198L. ~onetheless. the U.S. has a long ..ay 14~ . . J i , to go to lessen the gap between domestic production and demand. and make up for the decrease in U.S. production. While U.S. offshore production was declining, the rest of the non-Communist world was experiencing significant increases. The U.S. share of worldwide offshore production has shrunk from 21. 7 percent in 1970 to only 7.6 per- cent in 1980. O'ther countries with much higher success rates have made offshore acreage much more readily available and have experienced major new finds. Their leasing policies have allowed firms to respond to increas- es in oil prices by increasing their efforts to locate resources which were previously uneconomic. NEED FOR NEI~ FINDS If the U.S. is to achieve similar success in its offshore oil and gas leas- ing program, it must provide firms with access to areas in which new dis- coveries are possible. It must make up for our failure t~ increase leasing in the 1970's when rapid oil price increases created so many new opportun- ities for finding economic resources. It must not put undue constraints on indus try' s ability to determine optimum exploration strategies. This is particularly important when all sectors of the economy are experiencing cash flow problems. With less money to allocate to exploration, it becomes even more important that the money available is spent on the most promising prospects. ( The Department' s. 5-year program, which includes consideration of entire planning areas, will allow companies to determine the focus of their explor- ation efforts. It will provide appropriate access to the most promising offshore areas. The new schedule calls for 41 sales over the 5-year period, an average of 8 per year. The schedule calls for 12 offerings in the Gulf of Mexico, 4 offerings off California, 8 off the Atlantic Coast, 16 off Alaska, and 1 re-offering. MARKET ORIENTED LEASE OFFERINGS The early and frequent offering of promising areas. combined with the areawide approach, provides the flexibility needed to test diverse and unique exploration strategies which could result in major new finds which will benefit all Americans. The past procedure of the Government limiting areas for exploratory activity has clearly not worked. In the last decade, there has been only one commercial discovery of oil in a frontier offshore area. That was off southern California in a general area already known to be oil-producing. This areawide approach is a vital part of the Department's oyerall stream- lining of the leasing process. In addition to changing the approach to determining the appropriate blocks for leasing, the Department has stream- lined its efforts to conduct activities and analyses at the most ap'pro- priate stage in the leasing and development process. This will assure fair market value for leases, protect the marine, coastal, and human envi- ronments t ensure efficient use of resources, and ensure ~ process for public COmment and review. Therefore, while still assuring that adequate 14: . .. 4 ( general environmental information on offshore planning areas is available, the Department is concentrating its efforts to collect detailed site- specific information after identifying specific sites which show the most promise for development. Similarly, the Depancent defers completion of its fair market evaluations until after the sale to avoid the inefficiency of evaluating tracts which do not receive bids. The new system places more reliance on competition in the lease market and includes a phased screening process in order to focus the Department's bid evaluation efforts more effectively. This strea~ining"has been accomplished without reducing the opportunities for consultations with States and other interested parties. Refinements to the areawide offering approach have been made specifically to facilitate the important role the States play in planning for offshore offerings. P05I~IVE E~VIRONMENTAL RECORD ( While all currently availble energy sources involve some level of environ- mental risk, the U.S. offshore program has a remarkable environmental record. From 1956-1982, "20,995 wells were drilled and 6.0 billion barrels of oil and 58.2 trillion cubic feet of gas were produced in Federal waters. The Santa Barbara blowout in 1969 is the only major oilspill resulting in significant amounts of oil reaching shore (a major oilspill is defined as over 1,000 barrels). Since then, the level of technology and regulations have improved enormously. Since 1970, over 4 billion barrels of oil have been produced while only 791 barrels have been lost due to blowouts. The overall safety record offshore is a good one. Its environmental risk is low compared to other contributors to marine pollution. For example, it is estimated that offshore production is responsi:ile for slightly over 1 percent -about 600,000" barrels annually -- of all petroleum entering the world's oceans. The National Academy of Sciences estimates that in the 4-year period from 1975 to 1978, accidental spills of all sizes from e.s. offshore production and transportation activities contri~uted only an average of about 14,250 barrels per year to the ocean. This compares to: o 11.7 million barrels worldwide from river run-off, o 8.8 million barrels worldwide from industrial and municipal wastes, o 13 million barrels worldwide from routine tanker operations, such as tanker washings and loading operations, o 2.3 million barrels worldwide from tanker accidents, o 183,000 barrels -~ three times the ten-year total for oilspills over 50 barrels from o"ffshore operations -- spilled in just one tanker spill, the ARGO XERCHANr off Nantucket, o natural seeps which contribute worldwide over five times as much oil to the oceans as offshore production, and 140 . . 5 o natural seeps of crude oil in the Coal Point area off California alone contribute an estimated 22,000 barrels of oil a year. (NOTE: See charts, pages 10 and 11) REGULATORY REQUIREMENTS Despite the low oilspill rate from offshore operations, the Department continually seeks to improve its regulations and enforcement and to learn more about the environmental effects of offshore operations. Existing regulations require 17 major permits or plan approvals just to begin var- ious exploration and dev.elopment operations. Two of the plan approvals include 32 separate elements related to safety and environmental protec- tion. Additionally, by the end of FY 1982, the Department's OCS environ- mental studies program spent S320 million. The offshore environmental studies are improving the Department's abili ty to predict any possible adverse effects and to design effective measures to limit such effects. The program provides information concerning an array of disciplines, e.g., endangered species, effects of marine pollu- tants, marine ecology, air quality impacts, and socioeconomic impacts, all , of which are associated with offshore oil and gas exploration and develop- ment activities. ( The Minerals Management Service Environmental Studies program is the larg- est, single-agency, mission-oriented oceanographic program in the Federal Gave rnment. In FY 1983 approximately S 12 million has been awarded for environmental studies. An additional S15 million is planned for award prior to FY 1984. Future studies may derive that there is'less concern in certain areas than previously expected as previous studies' have concluded. For example, studies of the Santa Barbara oilspill and developed Gulf of Mexico oil fields have not, to date, shown any significant long-term envi- ,ronmental effects. The actions of coastal States. with regard to their own offshore oil and gas resources indicate that they share the Department' s views about the general safety of offshore oil and gas development. In the summer of 1981, California approved a drilling proposal in the . Santa Barbara Channel which resulted in a find in June 1982; California has also initiated a leasing study of 'an area north of the Channel. The State of Alaska has its own offshore leasing program and schedule. This is in addition to long- standing offshore oil and gas activities .in the Gulf of Mexico. Approxi- mately 8,600 wells have been drilled in State waters, most of which are off Louisiana, Texas, and California. BENEFITS In complying with the ,requirements of the OCS Lands Act, the Department analyzed the net gain to Americans from developing offshore oil and gas resources. As one might imagine, such calculations are subj ect to cons id- erable uncertainty. There is no commonly accepted method for assigning economic values to social and environmental costs external to the market. Certain intrinsic values cannot be assigned dollar costs at all. Neverthe- 144 . . 6 less, the economic value of 011 is so great that the net gain to Americans is quite large. In every offshore planning area, the social and environ- ",ental costs would \lave to be many times larger than estimated in order to reduce society's expected gain to zero. Legal challenges to the 5-year program resulted in judicial affirmation of the analytical methodology used in developing the program and of the program itself. OFFSHORE STATISTICS Bet~een 1954, when Federal leasing began offshore and April 26, 1983: o 84. B ",illion acres of the OCS were of fered for leasing. o 24.4 ",illion acres (4,965 tracts) were actually leased. Of these 24.4 million acres: 17.0 million acres (69.7 percent) or 3,620 tractts, including 59 sulpher and 2 salt tracts, were in the Gulf of ~exico. 2.8 million acres (l1.5 percent) or 512 tracts, including 96 tracts tentatively accepted in Sale 70, were offshore Alaska. 2.2 million acres (9.0 percent) or 399 tracts, were in the Atlantic. 2.4 million acres (9.9 percent) or 434 tracts, were in the Pacific. Of this Pacifi~ acreage, 1.7 million acres are in .Southern Califor- nia, including'the Santa Barbara Channel. Of the 24.4 million acres leased since 1954, 18.6 !Illllion acres (76.2 percent of the leased acreage) were in so-called "developed" areas, while 5.8 million acres (23.8 petcent of the leased acreage) ~ere in undeveloped areas. The new 5-year program will concentrate on more leasing in frontier areas in an effort to find major oil and gas deposits. As of December 31, 1982: o 12.6 million acres (2,627 tracts) 2,123 leases in the Gulf of Mexico, California and 73 offshore Alaska. were unde r lease. These included 247 in the Atlantic, 184 offshore o 1,084 leases (on 4,667,927 acres) were producing; 1,053 of the producing leases were in the Gulf of ~exico and 31 were offshore California. The remainder (1,543 leases on 7,950,845 acres) were non-producing. Drilling Statistics (As of December 31, 1982): o A total of 20,955 wells had been drilled in Federal waters; 8.619 wells had been drilled in State waters. 143 , . . . . 7 o Of the 20,955 wells drilled in Federal waters, 17,606 were off Louis- iana, 2,390 were off Texas, 189 were in the MAFLA (Mississippi-Alabama- Florida) area, 692, were off California, 42 were in the Atlantic, 24 were off Alaska and 12 were off Oregon and ~ashington. o Of the 8,619 wells drilled in State waters, 3,881 were off Louisiana, 3,346 were off California, 1,014 were off Texas, 361 were off Alaska, 15 were off Florida and 2 were off Washington. Offshore Production Through calendar 1982, the U.S. OCS produced: o 6,027,387,991 barrels of oil and 58,182,181,234,000 cubic feet of natur- al gas. o During 1982, offshore oil and gas production represented 10.1 percent of total domestic oil production and 25.4 percent of domestic natural gas production. o After reaching a peak of 419 million barrels in 1971, offshore oil production declined significantly every year until 1980, when it stood at 277 million barrels. The trend turned upward in 1981, when 286 million barrels of oil were produced, and continued upward in 1982, when it reached 321 million barrels. Gas production offshore reached a record 4.88 trillion cubic feet in 1981. It dropped slightly to 4.86 trillion cubic feet in 1982. Revenues (through calendar 1982) R0y~lties (1982): S3,814,739,344 (Since 1954): S17,096,118,737 Bonuses (1982): S3,987,490,009 (Since 1954): S41,.333,926,584 Rentals, first year (1982): S5,874,479 (Since 1954): S 73,182,518 Total Revenue . . . . . . . . . . $58,503,227,839 . . . . . . . . . . . . 143 . . AREAS THAT hDULD BE INCLUDED IN THE MORATORIUM LEGISLATION ,lll:l.lllll :'111"11'.'[ .' (~H t ~ i Lv MendOl: i '10 L ru l ltl~1!lrl ~ I 101ands Mdrine - ~ S,anctuary River Barbara Preserve and Buffer Zone ,-\s"anta Manica Bay NewlJort Beach '\ayu,," Beac" L.ulle ~:lll LJ 1 eqn J\JJelvL' Mil~ Buffel 14'7