Gas Lease Research Articles

The Number of Bids Received per U.S. Offshore Oil and Gas Lease Offered: More or Less?

First, we develop a distribution giving the frequency with which U.S. offshore oil and gas leases have received 0, 1, 2, . . ., bids per lease offered. Then, we use that distribution to assess whether leases offered under different bidding alternatives actually received more bids or less.If there were M potential bidders for a lease, each of whom bids with probability, p, the expected number of bids would be pM, and the frequency with which a lease received 0, 1, 2, . . ., bids would be given by the binomial distribution. If M is large and p is small, the binomial distribution can be approximated by the Poisson distribution. Poisson distribution. The binomial or Poisson distribution may not always describe the variation in the number of bids received for a lease in U.S. offshore oil and gas lease sales. For example, the Louisiana sale held Dec. 15, 1970, shows multiple modes. This observation led us to consider a mixture of distributions.We considered the following mixture of three Poisson distributions: (1) F1 is the fraction of leases offered on which no bidder considered bidding, F2 is the fraction that received modest bidder attention, and F3 is the fraction that attracted the greatest interest. There are five unknown parameters in Eq. 1: F1, F2, F3, n2, and n3, among parameters in Eq. 1: F1, F2, F3, n2, and n3, among which there are two constraints: (2)(3) We determined the parameters under these constraints so that (4) was minmized for each U.S. offshore oil and gas lease sale. Low, noise bids were deleted in each sale. Table 1 shows results for selected sales. Note that for the sale held Dec. 15, 1970, the parameter values are n2 = 3.0 and n3 = 9.9. Fig. 1 compares Pn*, shown as data points, and Pn for this sale.Table 1 also shows cases in which F3 = 0, with no leases appearing to draw the strong bidder interest. The Oregon/Washington sale held Oct. 1, 1964, is an example. Table 1 also shows a case, the California sale held May 14, 1963, in which F1 = F3 = 0 with the bid variation being described by a single Poisson distribution.We cannot prove Eq. 1 is supported statistically by the data. However, we cannot disprove it either. For example, using the Kolmogorov-Smirnov one-sample test, the maximum deviation of the sale held Dec. 15, 1970, is 5%. The allowable maximum deviation is 35% at the 1% level of significance (n = 21). These values soundly reject the hypothesis that the results in Fig. 1 could be a statistically "lucky" fit. Our probability model (Eq. 1) can be used to analyze bidding for leases offered under different bidding alternatives, seven of which are cited in the Outer Continental Shelf Lands Act Amendments of 1978. Which bidding alternative tends to attract more bids? We presume that more bids would be advantageous to the presume that more bids would be advantageous to the seller (the government). Indeed, the Federal Trade Commission has concluded that the applicable statutes and regulations "reflect a policy that the number of bidders at a sale be as large as possible." P. 697

CLEAN ATLANTIC ASSOCIATES: AN OIL SPILL CLEANUP COOPERATIVE FOR THE ATLANTIC OFFSHORE AREA

ABSTRACT Clean Atlantic Associates was established by the petroleum operating companies with oil and gas leases in the Mid-Atlantic and South Atlantic areas of the outer continental shelf. As lease sales are held in other Atlantic OCS areas, Clean Atlantic Associates will expand into these areas. The purpose of this association is to provide a stockpile of equipment for member companies to use in the event of an oil spill emergency, and to provide trained manpower to maintain and operate the equipment. To date, about $1.4 million has been spent for containment and cleanup equipment for the Mid-Atlantic area. Another $2.9 million has been authorized for the purchase of additional equipment for the North and South Atlantic lease areas. A base has been established at Davisville, Rhode Island, for the Mid-Atlantic equipment already purchased. Additional bases will be established as needed. The organizational structure of Clean Atlantic Associates and the description and operation of the equipment stockpiled are discussed. New open-sea containment booms, boat spray systems, and modified skimming systems are described in detail. Also discussed are the contingency manual prepared to assist member companies in their planning and training programs, and the training programs held to help assure the availability of trained manpower.

U.S. Geological Survey Methods for OCS Tract Evaluations: ABSTRACT

In deciding whether to accept or to reject high bids for offshore oil and gas leases, the Secretary of the Interior relies in large part on the U.S. Geological Survey (USGS) presale estimate of the resource potential and monetary of each tract. The information on which the USGS evaluation is based is essentially the same as that used by industry--geologic and geophysical data collected by industry under permit and well data from stratigraphic tests and from any wells drilled on leases in the sale area. Engineering and economic analyses are made for each tract, and probabilistic methods are used to treat uncertainties in the data. Monte Carlo simulation of discounted cash flows is used to derive an net present monetary value. Probabilistic discounted cash-flow methods are commonly used by industry in evaluating projects. Any major differences between USGS methods and those used by most bidders in tract evaluations lie in the level of detail at which the geology, engineering, and economics are modeled and in the scope of factors considered. The USGS model can accept over 100 parameters for a relatively simple tract and many more for a tract in a complex setting. However, the USGS model is strictly an expected value model, based on the net worth of the tract to a taxpaying corporation as an independent business venture or as a partner in a logical production unit. None of the elements of evaluation relate to corporate financial positions or corporate bidding strategies. End_of_Article - Last_Page 475------------

OCS development and commercial and recreational fishing

As the controversy over Outer Continental Shelf (OCS) oil and gas leasing continues, with environmentalists and fishermen seeking to block or delay leasing decisions that they think will adversely affect their interests, the need for better estimates of the environmental costs associated with OCS development becomes increasingly apparent. Although high degrees of precision in such estimates may never be economic, let alone feasible, better knowledge would reduce the uncertainty surrounding the magnitude of such costs, and would make it easier to come to grips with the problem and reduce, if not resolve, the controversy.

Optimal Risk Sharing and the Leasing of Natural Resources, with Application to Oil and Gas Leasing on the Ocs

Journal Article Optimal Risk Sharing and the Leasing of Natural Resources, with Application to Oil and Gas Leasing on the OCS Get access Hayne E. Leland Hayne E. Leland University of California, Berkeley Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 92, Issue 3, August 1978, Pages 413–437, https://doi.org/10.2307/1883152 Published: 01 August 1978

Statistical Analyses of Solo and Joint Bids for Federal Offshore Oil and Gas Leases

Abstract This study of Outer Continental Shelf (OCS) bid data, plus a critical analysis of other such studies, was made to determine the impact of joint bidding on competitiveness of OCS lease sales, It concludes that no class of joint bids has been shown to reduce the level of competition. Banning joint bidding by two or more major oil companies did result in an abrupt increase in the number of pint bids that included one major. Introduction Sealed, competitive bids for U.S. offshore oil and gas leases are classed as either solo or joint bids. Solo bids are submitted by one bidder with 100-percent ownership. Joint bids are submitted by several bidders who divide ownership among themselves. The pragmatic question that triggered this study was, "Is there a kind of solo or joint bid whose occurrence tends to decrease the number of sealed, competitive bids?" Such a bid would lower the level of competition. This study reports the results of a statistical analysis to measure the impact of joint bidding on the level of competition in sales of U.S. oil and gas leases. The study first presumed that the level of competition increases as the number of competing bids increases. This presumption while not unassailable, also was not unreasonable. Three previous studies of solo and joint bidding were reviewed first, revealing that conclusions drawn by two of the studies are statistically unsupported. Our study of the pragmatic question found no consistent correlation supporting a positive answer to the question. The U.S. policy regulation proscribing joint bids involving two or more majors tended to broaden the proportion and number of bids involving majors. REVIEW OF PREVIOUS STUDIES OF FEDERAL OFFSHORE SOLO AND JOINT BIDS Joint bidding for U.S. offshore oil and gas leases has been seated in previous studies of which three will be reviewed in detail. GASKINS AND VANN Gaskins and Vann computed values of the ratio of the sum of the highest bids to the sum of the U.S. presale estimates, Fmax/est, for leases that presale estimates, Fmax/est, for leases that received the same number(s) of bids. Precise definition of Fmax/est is given in the Nomenclature. Gaskins and Vann observed that values of F increased with n, from which they concluded the "government gets a larger percentage of its estimated value when there are more bidders." For the March 28, 1974, sale, Gaskins and Vann calculated Fmax/est for four different categories of highest bids:all bids,bids in which only nonmajors were involved,bids in which one or more majors were involved, andbids in which Mobil Oil Corp. was a participant. (No list was given of which bidders are classed as major.) Values of Fmax/est when majors and/or Mobil were involved in the highest bid were more often lower than for the other categories of highest bids. From this, Gaskins and Vann concluded that the "data support the hypothesis that major oil companies, and Mobil in particular, were able to attain lower winning bids..." We recalculated values of F,../est for the March 28, 1974, sale. These are shown in Table 12 along with comparable values of Fm../mean and Fmean/est. The agreement between values of Fmax/est presented by Gaskins and Vann and in Table 1 is excellent in most cases. Some of the differences, however, may be explained by differing definitions of majors. We considered these eight companies as major: Amoco International Oil Co., British Petroleum Ltd., Chevron U.S.A. Inc., Exxon Corp., Gulf Oil Corp., Mobil Oil Corp., Shell Oil Co., Texaco Inc. Other differences may be caused by disagreements in source data and/or computations.

Coastal zone maps to be published

A series of coastal zone maps of U.S. areas showing both the topography of the land and the bathymetry of the ocean and other water areas is to be published jointly by the U.S. Geological Survey and the National Ocean Survey. The multicolor maps are designed for use mainly by coastal zone planners and administrators as well as conservationists, environmentalists, and others interested in programs, projects, and activities from the coastal wetlands to the outer continental shelf (OCS).The joint announcement by the USGS and NOS stated that effective administration of coastal zone activities such as federal OCS oil and gas leasing and development, nearshore and onshore oil and gas programs administered by states, federal water pollution activities, and the new coastal energy impact program requires maps that accurately delineate the land and ocean bottom characteristics.

A Method To Estimate the Pollution Risk and Cost of OCS Oil Transportation

Energy developers are concerned with the potential added development expenses resulting from environmental restrictions in transporting Outer Continental Shelf oil. This paper presents a method for combining the available cost and spill risk data into a format that can be used for rational decision-making. Introduction Since the Arab oil embargo, considerable attention has been focused on our Outer Continental Shelf (OCS) lease sales. The Dept. of the Interior's Bureau of Land Management and the several affected states have spent a great deal of time and effort on assessing the environmental impact associated with developing the oil and gas lease areas. An area that has not been treated extensively in an analytical fashion is the transportation component of the over-all system. No objective and thorough comparison has been made of the economic and environmental merits and risks of these alternatives. This paper presents the method used during a study of four hypothetical production sites in the Gulf of Alaska, as shown in Fig. 1. In addition, the results of one site analysis are presented relative to the environmental and economic trade-offs that must be considered by those involved with OCS planning and development. Description of the Scenario Site 3 in the Gulf of Alaska is used in this paper to demonstrate the approach used to evaluate the options available for transporting the energy products produced offshore. Site 3 is about 13 miles offshore in water 95 fathoms deep. Reserve estimates for the lease area are highly uncertain, so a range of reserves from 25 million to 2 billion bbl of oil recoverable over 20 years was investigated. It is not contemplated that oil produced in the Gulf of Alaska will be refined or consumed in Alaska or adjoining parts of Canada, nor is it anticipated that the oil will parts of Canada, nor is it anticipated that the oil will be moved to refining or consuming areas over land. This implies that Gulf of Alaska oil will be transported by tanker over sea routes to locations as distant as the U.S. West Coast. However, the use of tankers entails a requirement for substantial offshore storage capability that is not necessary if pipelines are used for transfer to shore, because production continues while the tanker is in transit. Thus, costs and spill risks associated with offshore storage must be considered when evaluating tanker alternatives, and such storage facilities effectively become part of the tanker transportation subsystem. Hence, integrated transportation and storage systems were designed for each hypothetical production site. Three general concepts of transportation and storage systems were utilized: tanker transshipment, pipeline transshipment, and direct shipment. Each of these concepts is outlined below.Tanker transshipment. Offshore oil is stored temporarily at the production site, where it is picked up by a small shuttle taken This tanker carries the picked up by a small shuttle taken This tanker carries the oil to a port facility near the Gulf, and offloads to shore storage. Next, the oil is loaded aboard a 90,000-DWT tanker for shipment to the U.S. West Coast.Pipeline transshipment. A pipeline links the production site to a shore port facility. Oil is production site to a shore port facility. Oil is produced offshore and pumped through the pipeline to onshore produced offshore and pumped through the pipeline to onshore storage at the port. It is then transported to the U.S. West Coast by a 90,000-DWT tanker. JPT P. 639

Business Systems For Hydrocarbon Resources: Their Credibility In Retrospect And In Prospect

Abstract The business system used in the management of exploration and production of hydrocarbons in Canada is believed to be based on four "cornerstones". They are: the risk-reward relationship; the percentage royalty oil and gas lease; the competition for exploration position; and a public communications strategy. Looking retrospectively at this system it appears that the traditional oil and gas lease has been rejected by most government-lessors. These leases once had a considerable degree of sanctity, but a series of unilateral government adjustments has virtually destroyed the original concept of this lease. Today, the lessee revenue from production is completely dependent on these government adjustments; thus, industry has failed to find a method that is self-adjusting and not government-adjusting. In the future, the lessee-lessor relationship must be substantially changed. Public confidence, or industry credibility, has sunk to a low level. Industry has been unable to effectively counter accusations of cartels and large-scale tax avoidance. Although the risk-reward relationship, another cornerstone, must be retained to attract the risk investor, in the future the incentives to risk might better be built into the administration of mineral rights and removed from the taxation system. In a new system, it is suggested that, immediately after discovery, pre-1970 basic royalties be levied, and that they be reduced on an exploration-earned basis. After payout, the lessee and the Crown-lessor would participate in the production revenue and the costs. Thus, the lessee could receive an early attractive cash flow, and the Crown would get a large share of the production after payout. If public relations strategy is revised, the program should include more effective emphasis on the principle that the more exploration competition that exists in the industry, the better will be the hopes for future supplies of hydrocarbon energy. Introduction In this paper, the author will advocate some changes in the business systems used in Canada for the management of production and exploration of hydrocarbons. The author believes that there will be some who will take exception to a suggestion of change. However, many who are involved in the industry today will agree that the general public acceptance, or credibility, of the industry is at an exceptionally low ebb. This industry could be in danger of being legislated out of business. Thus, the issue of change really amounts to two opinions on a much-needed remedy. There are those who hold to the view that the systems are sound and, if we persevere, We will eventually prevail; thus, people involved in political life will come to support industry contentions instead of attacking them. The other opinion, held by the author and others, is that the credibility problem has become steadily worse and some aspects of the system must be changed to regain an acceptable degree of public confidence. The business systems used in the general management of the resource phase of the oil industry should be examined retrospectively, in order to emphasize some of the fundamentals which might be changed or modified in the future.

On Competitive Bidding

This paper develops a model for describing some aspects of competitive bidding. The motivating purpose of the model was that of formally examining the hypothesis put forward by Capen, Clapp and Campbell: In a competitive oil and gas lease sale, or indeed in any bidding situation in which the ultimate value of the object to be won is subject to uncertainty, the highest bidder tends to be one who has overvalued the prize. As a result, any company tends to win tracts (or prizes) which it has overvalued and tends to lose those which it has undervalued. Therefore, even if the pre-sale value estimates, on the average, turn out to be correct for each of the tracts bid on, the estimates for those that are actually won will tend to prove to have been too high. The model developed not only supports the hypothesis as set forth, but also establishes its validity much more generally.

SEG SPECIAL REPORT: GOVERNMENT LEGISLATION AFFECTING GEOPHYSICS OPEN LETTER TO SEG MEMBERS

SEG members should be alerted to proposed legislation under consideration by the U.S. government which could have a profound effect on the geophysical profession and, indirectly, on geophysical technology advancement. The rationale for being concerned about this legislation is set forth in the statement by the SEG on the Proposed Increase in Oil and Gas Leasing on the Outer Continental Shelf, beginning on p. 541. The three bills examined here are: S-426 (Senator Hollings—Brooke, Case, Chiles, Cranston, Humphrey, Kennedy, McIntyre, Magnuson, Mathias, Pell, Ribicoff, Tunney, and Williams); S-521 (Senator Jackson—Johnston, Metcalf, and Randolph); and S-740 (Senator Jackson).

SEG STATEMENT ON PROPOSED INCREASE IN LEASING ON THE OCS

This Statement was submitted February 19, 1975 to the Bureau of Land Management by the SEG concerning the hearings on the Proposed Increase in Oil and Gas Leasing on the Outer Continental Shelf: The Society of Exploration Geophysicists (SEG) is a professional and scientific organization of 9000 geophysicists from 100 countries. Two‐thirds of the membership reside in the U.S. Twenty‐four Section organizations are affiliated with SEG; 20 are in the U.S. The SEG is the primary international geophysics professional organization. Its members are engaged in exploration for both petroleum and minerals, involving approximately $1 billion of geophysical surveys worldwide; $390 million of this effort is in the U.S. In the Draft Environmental Statement and at the hearings themselves, several proposals were discussed which would have a detrimental short and long term effect on the vital search for oil and gas in the Outer Continental Shelf (OCS). In addition, these proposals could seriously impede the present unparalleled advance of technology in geophysical exploration. These undesirable proposals are discussed in the following paragraphs.

Analysis of Appalachian Basin Economics

With improved wellhead prices, substantial risk capital is now available for developing modest per-well reserves in the Appalachian Basin. The leasing of tangible well equipment can, in instances where wells are better than marginal, provide additional economic incentives by improving the discounted cash flow rate of return. Introduction The increase in oil and gas drilling activity in the Appalachian Basin continues unabated and shows signs of gaining strength. This can be attributed directly to the improvement in realized prices for oil and gas that has occurred during the past 18 to 36 months. Risk capital is being attracted to the Basin, particularly through drilling funds and other types of particularly through drilling funds and other types of joint ventures. The concept of direct leasing of tangible well equipment has also been introduced in an attempt to spread the risk capital over more wells and to enhance the total investment profitability. An analysis of average oil and gas well profitability, on both a before-tax and an after-tax basis, is generally very favorable. The leasing of tangible well equipment, however, is attractive principally on an after-tax basis and only in terms of improving the discounted cash flow rate of return. Considerations in Determining Appalachian Basin Investments and Profitability In undertaking an analysis of Appalachian Basin economics, several key factors must be recognized. It seems to have become fashionable in the literature of the industry to present somewhat academic dissertations on methods of profitability analysis that invariably get into the question of the ranking of investment opportunity. Certainly at the major-company level such rankings have validity. The fact remains, however, that the vast majority of wells drilled in this country are drilled by independents and many of those are small operators. The average company or individual considering drilling a well in Armstrong County, Pa., does not have, as a practical matter, the alternative of putting the same dollars in a North Sea or Gulf of Mexico or Indonesian venture. For many, this may not be all bad. Attractive factors in the Appalachian area include modest costs of acquiring oil and gas leases; reasonable drilling expenses; few drilling problems in terms of depth or pressures; rapid evaluation of a given prospect, especially if drilled by a rotary rig; unusually low dry-hole risk, although substantial small- or marginal-well risk exists; good wellhead price for both oil and gas; immediate access to markets; and few if any restrictions on rates of production. The matter to be considered here is not whether or not to invest in the Appalachian area, but rather what the profitability of the investment might turn out to be. Therefore, certain methods of measuring profitability for investment opportunity ranking are profitability for investment opportunity ranking are generally not applicable. For example, the concept of discounting profit at the average investment opportunity rate is an abstraction for the small operator in the Appalachian area since his only other investment opportunity may be a savings account at the local bank. Even the idea of measuring everything against his "cost of money" may not be entirely valid. JPT P. 717

Developments in North-Central Texas in 1973

North-central Texas has been prospected and exploited for oil and gas for more than 70 years. In 1973, gas-well discoveries exceeded new-oil discoveries for the first time. Total wells drilled decreased 3.7% compared to 1972, but exploratory drilling was up 21%. The exploratory-well success ratio rose markedly from 15.8% in 1972 to 29.5% in 1973. Rising gas prices in the intrastate market spurred gas exploration and leasing activity in the Fort Worth basin. Oil production declined 6%, a decrease of 5,412,200 bbl from 1972.

Developments in Alaska in 1973

Alaska petroleum exploration activity during 1973 continued at about the same low level as in the previous 2 years. Of the 11 exploratory wells, 8 were drilled in the Cook Inlet region and 3 in the Arctic North Slope region. One of the Cook Inlet tests resulted in a new deep-pool oil discovery. Federal oil and gas lease acreage continued to decline. State oil and gas lease acreage increased 5.3% as a result of 2 competitive lease sales held in the Cook Inlet region. Combined geologic and geophysical field activity increased 5% over the previous year. Geophysical activity increased in the Arctic North Slope and Gulf of Alaska offshore regions in anticipation of federal, native, and/or state lands becoming available for leasing in the near future. Development drilling durin 1973 continued at about the same low level as in 1972. A total of 21 development wells was drilled, 12 in the Cook Inlet region and 9 in the Arctic North Slope region. Oil and gas production at 73,139,415 bbl and 224,507 MMcf respectively was virtually unchanged from the previous year.

Some Implications of Land Ownership Patterns for Petroleum Policy

In past Outer Continental Shelf oil and gas lease sales, winners of drainage tracts have tended to realize a higher economic return than winners of wildcat tracts. This paper finds empirical support for the hypothesis that adjacent lessees have an ...

Problems Related to the Registration in Western Canada of Foreign Limited Partnerships and the Ownership by Such Partnerships of Interests in Oil and Gas Leases Issued Pursuant to Section 55 of the Canada Oil and Gas Land Regulations

This article analyzes the practical problems of the drilling fund—which is becoming an increasingly common method of obtaining financing for the exploration and production of oil and gas. The article discusses whether or not it is necessary to register limited partnership drilling fund formed in the United States under the legislation of Canadian oil and gas jurisdictions, the ability of such limited partnership to carry on business in these jurisdic tions without jeopardizing the limited liability of its limited partners, the number of members that the drilling fund partnerships may have and the name that it may use under the said legislation. The article also considers whether or not drilling fund qualifies under Section 55 of the Canada Oil and Gas Land Regulations.

Selected Cases, Legislation and Developments in Oil and Gas Law

The topic of Recent Cases and Developments in Oil and Gas Law was introduced at the Canadian Petroleum Law Foundation Ninth Annual Research Seminar in Oil and Gas Law. This article is the paper on the topic, extended to deal with recent legislation, delivered at the Tenth Annual Research Seminar. The article concentrates its comments and discussions on two areas of recent developments in oil and gas law, namely, the attitude of Canadian Courts to the interpretation of the freehold petroleum and natural gas lease and the applicability of the doctrine of estoppel to terminated petroleum and natural gas lease.

Developments in Alaska in 1971

Alaska's petroleum exploration and development activity was virtually at a standstill during 1971. Only 6 exploratory and 29 development wells were drilled for declines of 78.6% and 49.2%, respectively. One discovery was made on the Arctic Slope; for the third consecutive year, none was made in the Cook Inlet basin. No wells were drilled in Alaska's other major basins. Geophysical and surface geologic investigations totaled 94.5 crew-months, down 45.7% from 1970. Oil production decreased 5.8% and gas production increased 4.7%. Cumulative state production at year end totaled approximately 396,396,757 bbl of oil and 884,992,139 Mcf of gas, of which 356,854,769 Mcf is casinghead gas. Cumulative petroleum industry investments in Alaska through 1971 are estimated to be in excess of $3 billion; 24 competitive state oil and gas lease sales alone have brought bonus payments of $998,107,679. No federal lease sales were conducted, and at year end total Federal land under oil and gas lease was 5,326,815 acres, down 13.7%. Two new Arctic Slope federal units were approved. One competitive state lease sale was held in the Cook Inlet basin. State lands under oil and gas lease at year end totaled 3,945,222 acres, down 5.0%. Vigorous industry opposition by the many conservation and environmental groups throughout the country is the cause of this sharp decline in activity. Over 95% of Alaska's 375 million acres remain locked up by the Federal land freeze, and construction on the proposed trans-Alaska pipeline had not started at year end because of lack of a construction permit. The forecast for 1972 is for a twofold increase in exploratory drilling, a slight decline in development drilling, and a sharp drop in surface geologic and geophysical investigations. Production should remain near the 1971 level with no real increase to be expected until Prudhoe Bay field wells go on production. State and federal lands under oil and gas lease will also decline during 1972. Additional geologic and geophysical investigations directly or largely applicable to petroleum resource evaluation in Alaska during 1971 included 12 crew-months by the U. S. Geological Survey and a 43,932-sq mi aeromagnetic survey by the Alaska Division of Geological Survey.

Developments in Michigan in 1970

In spite of the widely publicized reef discoveries in Michigan's Northern District during the latter part of 1969, overall oil and gas statistics indicated no radical changes for 1970. Exploratory well completions were slightly below the 1969 level but development well completion increased about 23%. Facility wells and other types increased over 60%. Exploratory drilling in the Northern District about doubled from the previous year. The results were extraordinary--9 new reefs and 1 new reef pool were found. Also of major importance, new reef discoveries in the southern part of the basin open up a large area for new exploration. There were 18 new discoveries during 1970. Exploratory and development well footage, figured from final CSD printouts, amounted to 1,073,765 ft compared with 1,111,198 ft in 1969. Of the 1970 total, 614,781 ft is credited to exploratory wells and 458,984 ft to development well drilling. Geological Survey records show an additional 162,344 ft drilled in connection with gas storage and other types of service wells. Total oil production dropped from 12,212,882 bbl to 11,693,488 bbl. Gas production increased from 36,162,173 to 39,252,013 Mcf during the year. Production from new 1970 discoveries should be reflected in next year's figures. The Albion-Scipio trend field produced 5,443,528 bbl of the oil or about 47% of the state's production. It also produced 11,434,407 Mcf of gas, or about 29% of the annual gas production. Though no figures are available, geophysical activity probably reached an all time high during the year. Objectives were primarily Silurian reefs. Leasing activity increased considerably. From 6 to 8 million acres, including state lands, are estimated to be under oil and gas lease. Environmental issues, mainly in the Northern District, led to a cancellation of a lease sale of state-owned mineral lands, and to a moratorium on drilling of wells on certain state lands already under lease. Leasing and drilling policies on state lands were reviewed and changed, and parts of the general drilling regulations were changed. In addition, proposals have been made in the Michigan legislature to change certain features of the state's 1939 oil and gas act. A new law, Act 127, Environmental Protection Act, became effective in October 1970. This law could have an adverse impact on oil and gas developments in the state.