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to many interrelated issues which are best resolved through

the existing regulatory process and not through legislation.

As to the existing pipelines transportation services, NGSA opposes any form of blanket deregulation at this time. On nearly all existing interstate pipelines, monopoly power over the transportation service still exists. Even in

markets served by more than one pipeline, the market is

simply allocated among or between the pipelines. Market allocation does not equate with market competition.

This is not to say that rates on existing interstate

pipelines for all services must always be cost-based.

However, there still is a need for regulatory oversight of

such rates to assure that they are "just and reasonable" and

that the market power of the pipeline over its

transportation services is not wielded in a discriminatory

manner.

NGSA, through its White Paper on Pipeline Rate

Reform, has suggested numerous ways for developing more

competitive and market-responsive transportation rates and services. However, as was the case with the pipeline sales

service, this is a matter that is much better resolved by

the existing regulatory process rather than legislation.

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This is in response to your letter of March 13, 1991, which requested that we respond to three questions from Senator Murkowski as follow-up to the hearing on Titles VII and VII of S. 341.

Our responses are enclosed. If we can be of further assistance, do not hesitate to contact

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Followup Questions to Hearing on Title VIII, S.341

1. The MMS has proposed 8 lease sales in the Alaska OCS. Could you comment on the importance of the proposed lease sale areas in terms of potential production?

Response: MMS estimates that undiscovered oil resources on the Outer Continental Shelf (OCS) amount to between 3.6 and 24 billion barrels of oil. The Alaska OCS contains between an estimated 2.5 and 8.7 billion barrels of undiscovered oil resources. Within the eight Alaska OCS planning areas, the tracts under consideration for leasing in the Comprehensive Program for 1992-1997 contain between an estimated 1.7 and 3.1 billion barrels of undiscovered oil resources.

The above are conditional estimates and represent the possible range of resources present, given the assumption that hydrocarbons exist in the area of study. Gas on the Alaska OCS is assumed to be uneconomic at the present time.

2. Could you please comment on the oil potential and national significance of leasing and possible developments of the Chukchi and Beaufort Sea lease sale areas?

Response: These are currently viewed as the two most promising offshore areas in Alaska. Conditional mean estimates of undiscovered, economically recoverable resources in the Chukchi and Beaufort Sea planning areas are 5.96 and 1.66 billion barrels of oil, respectively. Conditional estimates are based on the assumption that hydrocarbons exist in planning areas. There may be a substantial range around the mean. These areas hold the potential for some of the largest new oil discoveries predicted anywhere in the United States. For example, the conditional mean estimate for Chukchi Sea oil resources is even larger than the estimates for the Arctic National Wildlife Refuge (ANWR) coastal plain, though the probability of a commercial discovery is lower.

Previous lease sales have already taken place in the Chukchi and Beaufort Seas. Only a small percentage of these areas have been leased, and many of these leases will soon expire. These two planning areas are of particular interest due to their resource potential. In the Comprehensive Program for 1992-1997, lease sales will be considered for the Chukchi Sea planning area in 1994 and 1997 and for the Beaufort Sea planning area in 1993 and 1996.

3. These Alaska OCS areas are nationally important, however, local communities bear the burden of supporting the OCS development and associated impacts. How would impact aid programs from OCS revenues benefit local communities?

Response: President Bush, in his June 26, 1990, statement on offshore leasing and development, directed the Department of the Interior to prepare a legislative initiative that will provide coastal communities directly affected by OCS development with a greater share of the financial benefits of new development and with a larger voice in decision making. The proposal being considered by the Administration would provide impact assistance to local communities in a manner that is proportional to impacts associated with OCS development. We believe it is appropriate to provide communities located near OCS development with a greater share of the benefits derived from such development.

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