Implementation schedule for new and revised OCS regulations required by the OCS Lands Act Amendments.

ACCOMPLISHMENTS UNDER THE NATURAL GAS POLICY ACT OF 1978

The Geological Survey began developing procedures to implement the Natural Gas Policy Act (NGPA) in late 1978. The NGPA allows lessees and operators to receive higher prices for natural gas produced from certain oil and gas wells requires that the Survey, as the jurisdictional agency for regulation of operations for OCS, Feral, and Indian lands, determine whether a given well is in a category that permits a higher price for gas. Once the determination is made, the Survey then forwards the application and determination to the Federal Energy Regulatory Commission (FERC) for concurrence. In the same manner, respective State agencies make determinations on the applications submitted for State and private lands under their jurisdiction. Through this process, the pricing policy set forth in the NGPA becomes a reality.

To implement the NGPA and the associated FERC regulations, the Geological Survey issued a "Notice to Lessees" to provide lessees and operators with the format to apply to have a well classified in a category that would have a higher gas price.

From December 1978 through September 1979, the first 10 months under the NGPA, the Geological Survey processed 7,598 applications and made 4,469 determinations. Operators of approximately one-ninth of the producing wells on OCS, Federal, and Indian lands have submitted requests for a determination decision. Currently, 300 additional applications are being submitted each month.

In addition to the determinations work, the NGPA makes necessary a change in traditional pricing for royalty purposes. Under the old Natural Gas Act, the price of gas was calculated for a producing area. Under the NGPA, pricing of gas is calculated for individual wells with an inflation factor that changes monthly. Thus, calculations for production royalty become more complex. A single lease may have many producing wells, with gas from each well being assigned a different price. Such a pricing method means that the Geological Survey must install a system whereby it can determine what the royalty price should be for a given lease under Title 30 CFR Part 250.66 by considering every well on the lease and the respective prices being paid by the buyers as against what the NGPA provides. Such a system is being developed but will require several months for implementation.

OIL AND GAS

Oil and gas produced from onshore Federal and Indian lands comprised about 6.4 percent of the oil and 5.9 percent of the gas produced in the United States last year. Production of oil and condensate and gas from Federal onshore and Indian lands for 1973 to 1979 is shown in the graph. The Geological Survey conducted geological investigations, environmental analyses, and other studies related to safety requirements, legal matters, and socioeconomic aspects related to carrying out the regulatory responsibilities related to producing this oil and gas.

During fiscal year 1979, the Geological Survey approved 3,550 Applications for a Permit to Drill (APD) (fig. 1) for exploratory (fig. 2) and development wells on Federal leases. The Survey prepared 3,660 environmental analyses (fig. 3) to consider the potential environmental impacts that might result from operations on Federal lands. This level of activity was the same as the previous fiscal year.

During fiscal year 1979, 2,610 new wells on Federal leases were started. Of these wells, 1,810 were completed as usable holes either for the production of oil and gas or for the injection or disposal of fluids.

The number of wells on Federal and Indian lands, the number of Federal and Indian leases, and the royalties collected from oil and gas production on these leases have continued to increase, even though the total domestic production of oil and gas is declining. Private companies are attempting to offset this decline in production by exploring in frontier areas such as the overthrust belt of Utah, Wyoming, Idaho, and Montana. They are also conducting research and trying new or improved methods of increasing the amount of oil and gas recovered from depleted and depleting reservoirs. Formerly unattractive source rocks for oil and gas, such as the "tight gas sands" that occur in northwestern Colorado, eastern Utah, and northern Montana, have become attractive prospects because the present prices of oil and gas have made drilling for and producing oil and gas from these reservoirs economically feasible. Some "shut-in" remote areas will become producible when processing facilities and pipelines are built in these areas. The development and use of improved primary methods and secondary and tertiary enhanced recovery processes have restored production at many oil fields that were produced by using primary methods only. Secondary recovery methods include repressuring or flooding with gas or water. Tertiary methods include flooding with chemical solvents or stimulation with heat to continue production after secondary recovery becomes uneconomic. In addition, well completion techniques and formation stimulation processes constantly are being improved and will continue to add increments of production to the total amount of oil and gas produced. During this period of uncertainty about the continued uninterrupted supply of energy minerals, industry is using every means available to explore for and develop new sources of oil.

Steam injection.