Whether it be located on a self-contained platform, or on the combination platform and barge, means must be provided for storing and maintaining in supply some 7,000,000 pounds of equipment. Approximately 60 men are required to maintain an offshore well on continuous drilling operation.

All these structures must be built to stand the force of hurricanes which occur from June through November in the Gulf and are particularly prevalent in August and September. Maximum wind speeds of 125 miles per hour have been encountered.

Consider further that these structures must be built on an ocean bottom that is little more than a jellylike ooze. Piles have to be driven as much as 250 feet to have a competent bearing. Even then the competency of the floor of the Gulf remains one of the significant unknown factors in predicting the life of such a structure. Thirty-five-foot waves are probable and 50-foot waves are possible in Gulf costal

waters.

The greatest hazard to structures exists in water 35 to 40 feet deep due to the prevalence of breaking waves at this depth. The pressure exerted by waves 35 feet high on a typical self-contained platform is in excess of 1,000,000 pounds, resulting from a pressure about 1,600 pounds per square foot of surface exposed. A 125-mile wind exerts an estimated 17 pounds per square foot of pressure. Such a wind can exert a pressure of approximately 250,000 pounds against a derrick and the exposed portion of a self-contained platform. All structures built must be designed to meet such peak loads. This adds measurably to the cost of construction.

A radically different type of structure for drilling has been introduced recently. The drilling derrick and equipment, including auxiliaries, are placed upon a platform which in turn, is erected on a submersible barge or pontoon which can be flooded with water so that the barge may be sunk and rested on the ocean floor. The submerged barge is maintained in a stable position by two large adjustable "outrigger" pontoons on each side. Such a drilling barge with drilling equipment aboard weights 1,120 tons and has drilled a well 18 miles from the mainland and 5 miles off Breton Island, La., in the sheltered waters of Breton Sound.

It is important to observe, however, that such a structure is particularly susceptible to the action of currents, and while it offers economies, it can be used only in protected waters. It, therefore, has present limitations and is not adaptable in any wise to drilling in the

open sea.

The problem of constructing a drilling platform on tideland waters has, of course, invited many suggestions about how the job could be accomplished. There is already extensive patent and technical literature on the subject. None of these ideas, whether they be radical or conventional, have offered a good solution to the problem. A great deal of research and engineering investigation must yet be done before the industry can find a satisfactory and economic solution to the problem of setting up and maintaining production operations in open

water.

With respect to transportation, the operator is faced with a difficult problem in transportation and maintenance of supply to a drilling site at offshore locations.

It costs from $4,000 to $7,000 a day to have a drilling rig standing idle at a marine location. It is imperative, therefore, that facilities be provided for maintaining continuous operations. An elaborate and extensive transportation system must, therefore, be maintained from some onshore supply base from which steel pipe, drilling-mud materials, fresh water, food, repair parts, special equipment and personnel must be transported on regular schedule or on special call.

Locations have been drilled that require a water haul of as much as 50 miles from a shore base to a drill site that may be only a few miles in location from the indicated shore line.

Unfortunately, there are but a few places that can be used as shore bases along the entire Gulf coast. Operations are remote in distance and in time due to the roundabout passages for navigation, and the relatively slow speed of boats. A trip by fast boat usually consumes 5 to 12 hours travel for a round trip and longer for cargo vessels. That fact alone makes the job difficult and expensive. The operating personnel can't "run back and forth" from a tideland drill site. Each trip is a voyage or a journey in the real sense. Operating supplies can't be had on short notice, nor can emergencies be met by a quick trip to a supply store. The shore-base distances for fields already developed are shown in the table contained on the map attached.

Each drilling location requires the employment of at least the following vessels:

Three crew boats, which are usually about 80 feet long, having a 50ton cargo capacity, used for transportation of personnel and small supplies, of which one boat must be standing by at the drilling location so long as any men are on the platform, $60,000.

One cargo vessel, usually about 135 feet long, having a capacity of 250 tons gross used for the transportation of heavy equipment, $100,

000.

One drilling tender, if a self-contained platform is not used, which is usually about 325 feet long, having a capacity of 3,800 tons gross, $500,000.

One seagoing stand-by tug for the drill tender not self-propelled, $250,000.

Operators to date have utilized war-surplus equipment in acquiring the necessary fleet of vessels. If in the future such vessels must be built for the particular purpose, the cost of acquisition will be substantially greater than in the past.

Based upon the use of war-surplus equipment, such a minimum fleet requires the investment of from $275,000 to $1,000,000 and involves an estimated daily stand-by operating cost, of from $1,000 to $2,500. A transportation fleet of the type described requires the employment of at least 30 to 50 men of all classifications, depending upon whether a self-contained or a drilling tender type platform is used.

The rules and regulations of the following governmental and marine agencies must be complied with in obtaining and maintaining the drilling site and required transportation facilities: United States Coast Guard, United States Customs, American Bureau of Shipping, United States Corps of Engineers, State oil and gas conservation department, State land department, and State fish and game commission.

Boats, tugs, and barges must be operated and maintained in accordance with all rules governing safe conduct at sea.

With respect to the cost of drilling wells, the drilling operation proceeding in a normal manner, without serious accident or loss, the cost to build an average structure over the drill site, to install the drilling equipment, maintain transportation and supply, and to accomplish the drilling of a well is in the range of the following:

If the well is to be drilled to 5,000 feet. $275.000 to $500,000: to 10,000 feet, $580,000 to $960,000; to 15,000 feet, $1,400,000 to $1,600,000depending upon the number of wells drilled from one platform and the number of operations carried on from one shore base, and the troubles encountered in the drilling.

It costs approximately five times as much to drill a well under present conditions offshore as on upland. It is apparent that the risk of capital in drilling offshore structures for oil is very substantially greater than is the already high risk encountered on land operations.

One may then well ask, under what conditions would the oil industry find such ventures possible?

It is certainly not a venture that would lead operators to offer excessive royalties or bonuses for the privilege of acquiring leases in the face of current development costs. It is certainly not a venture to be undertaken where highly restrictive rules and regulations might operate beyond the bounds of sound business judgment. It is an operation that would not be undertaken unless the best technical advice gained in day-to-day experiences formed in a large part the sole basis on which prevailing decisions were finally based.

As to field development, the testimony before this committee has stressed the point that petroleum production practices on tidelands are different in many respects from the conduct of the business on land surfaces. A particularly good illustration of the fact can be drawn from the way in which fields once discovered will be developed.

In the normal course of the industry, if a discovery well is drilled and commercial production is found, the producer can more or less adopt the view that his major problem is passed with the finding of the oil, and the next step involves the relatively easier task of going forward with the drilling of wells uniformly distributed over the

structure.

On tideland, after drilling the expensive wildcat discovery, the operator faces the most expensive procedure of all, that of drilling sufficient wells at properly located points to conservatively produce the entire common source of supply. Whatever is done by choice of alternatives available involves very costly procedures.

The industry has developed the technique of drilling deflected holes in a controlled manner so that from one platform from 5 to 10 directional wells could be drilled, depending upon the total depth penetrated, the nature of the subsurface rock, and the distance away from the vertical it is desired to "bottom" the deflected hole. When this technique cannot be employed, additional platforms must be built at desired locations.

Mr. Bullard referred to the principal geologic features of salt domes, and called the committee's attention to the fact that even though one location may be found productive on a salt dome, there is substantial uncertainty about the prospective productivity of other locations on the same geological structure. This is due to the fact that salt domes are characterized by extensive faulting forming iso

lated fault-segments, by lenticular sands which render the subsurface irregular and meandering, often resulting in barren areas a few feet from productive spots. A relatively high percentage of dry holes are drilled on otherwise prolific domes.

The problem of the producer does not end with the discovery of production nor with the drilling of sufficient wells to adequately develop a field. Before him lies the also difficult final step, of maintaining wells on production and getting the produced crude to market, The problem is not to be solved by building a wharf from land to the producing well or wells. Only occasionally will a field be found within the Continental Shelf which would be near enough to shore to permit ready access to the location of the producing well or wells. This is a matter of having producing wells in the unprotected waters of the Gulf miles distant from shore, perhaps as much as 30 or 40 miles through open water.

There are no means in sight to operate wells by remote control with. the assurance that all essential and necessary precautions in respect to safety and the protection of property can be maintained. For that reason, it is necessary to station men on platforms to operate producing wells. One man or more must live on each platform to attend the wells.

Through good weather and bad, it is a rigorous and dangerous existence, particularly if there must be travel back and forth from one platform to another or from a platform to a barge being used to store the oil produced. Moving from one object to another under normal wave conditions in the Gulf is not the simple matter of stepping in and out of a truck or automobile on land.

A suitable type boat must be at each platform or in the immediate vicinity as a safety precaution during any time men are stationed there.

It is almost impossible and certainly uneconomical to build or maintain large-volume storage tanks at off-shore location as a convenience for producing oil on regular schedule. Pipe lines to connect wells to storage tanks on shore can be built to solve this problem, in the event a field is found close to shore or if a large enough reserve and potential producing capacity is found in a field that would justify the extremely high investment cost of a marine pipe line. It would cost from $300,000 to $500,000 per mile to lay a pipe line from a distant off-shore field to the shore line.

Prospectively, the bulk of tideland production will be removed from the well location by means of anchoring a barge at the site of the well into which production from the well is accumulated, so that from time to time the barge may be towed to an operating base on land. Such a procedure is expensive and, moreover, is subject to weather and wave conditions that make the operation hazardous to equipment and personnel.

Weather conditions in the Gulf are such that on the average, movement of crude oil from the well cannot be accomplished at least 15 percent of the time.

At the present time it is costing some operators as much as 30 cents to 80 cents per barrel to move oil once produced from an off-shore well to a point of land where it may enter commerce.

In respect to certain summary statistics, maps with summary tables representing the Upper Texas Gulf coast area and the Louisiana Gulf

coast area are presented to show the history of tideland drilling in the Gulf of Mexico. The information is that as of June 30, 1949.

The maps also show the oil and gas fields existing inland from the shore line.

The summary table reflects discovery date, water depth, the number of wells drilled and the result. It gives the accumulated production from respective tideland fields, gives information on productive sands encountered and the distance of the field from the operating base.

It is a matter of interest to call attention to the fact that as of July 1, 1949, six fields within the off-shore area of the Gulf of Mexico had an accumulated production of 456,692 barrels. The monthly production for 1949 from these six fields was as follows:

As a matter of interest, the table on the map includes the Creole field discovered in 1938 with a well about 1 mile from shore and in protected water only 10 feet deep. Ten wells have since been drilled landward and in June, this year, eight wells were on production. In spite of this, only approximately 3,000,000 barrels of oil have been produced in 10 years at a place location much more favorable than in the general tideland area.

In conclusion, I wish to say, in my opinion, no forest of oil wells, and derricks and platforms for drilling and producing is about to spring up in the Gulf of Mexico. The industry has invested some $175,000,000 to $200,000,000 to obtain some 457,000 barrels of accumulated production and some 3,000 to 5,000 barrels per day of current production after drilling 56 wells.

The cost of producing oil, the hazards in producing and bringing the oil to market, and the difficulties of weather and sea associated with petroleum production operations, have all served to cool the enthusiasm first demonstrated in the rush to obtain leases in the Gulf of Mexico.

Discussion that has been presented has emphasized particuluarly the elements of cost and risk and difficulties in operation.

Further consideration should be given to the fact that the investment and cost of tideland drilling makes the problem not one of simply finding an oil field capable of producing oil. The problem also exists of finding an oil field with sufficient potential to produce within conservative rates to yield a daily volume of oil large enough to justify the high cost of operation. Any quantity of production less than 1,000 barrels per day per platform which must be barged 10 to 15 miles to market, would very probably be an uneconomical venture.

Determination of the true worth of Continental Shelf oil and gas properties, therefore, requires consideration of many factors in addition to those ordinarily associated with production operations located on land or in the protective inland water area.

The experience of the industry within the past 3 or 4 years has greatly tempered past attitudes on the future prospects of tideland operations. In the opinion of many, no great boom is in the making. The development of tidelands oil beyond points immediately near the land will proceed slowly in the future, will require substantially more