The oil you are currently importing here will not come here as soon as we bring the Alaskan oil to California. A great portion of it will go to Puget Sound and Oregon.

Mr. CORY. The figures

Senator STEVENS. There will be no surplus into district V because the oil imported here will not come here anymore. I am sure you are familiar with that interesting fight to get the oil to California. Let me preface my remarks by saying, I am a graduate of UCLA and lived a good portion of my life not too many miles from here. It sounds to me like you, and many other Californians, are thinking only in terms of the boundaries of California.

We are trying to deal with national oil problems. Do you think we ought to make the decision as to whether or not to drill offshore in Alaska only on the basis of the needs in Alaska? I would like to have you answer that question.

Senator STEVENS. You heard Mr. Ligon. I know it to be a fact that there is not a place in the United States where it has been proposed to drill offshore that the local people are not objecting, including my State of Alaska.

Mr. CORY. I am not objecting to drilling per se. I am objecting to drilling under these terms and conditions. If I can clarify one point. California is importing 1 million barrels of crude oil a day. That is our total importation. There is a 214 million capacity out of the transAlaskan pipeline.

Senator STEVENS. The initial capacity is 1.6 million barrels of crude oil a day, the maximum is 2 million barrels a day.

Mr. Cony. There are 600,000 barrels a day going somewhere else other than California. With your concept, we will merely replace the imported oil and that will go elsewhere. We will still have 600,000 barrels a day unless it is handled by barge or pipeline or boat out of California.

Menator STEVENS. The projection of growth in this area indicates that even with the 1.6 million barrels a day, you will still have a shortape unless the conservation plans work and people stop using so much, but Congress mandated the equal distribution of Alaskan oil throughout the United States. We are compelled to follow that mandate as we plan for the distribution of that oil.

You will not have any surplus oil here, but the main point is that we are importing over 6 million barrels a day from the Middle East. If they shut that off again, even with the maximum capacity of our pipeline, we will still be short 4 million barrels a day of oil in this country nd that is a lot of oil.

Someone has to plan for additional supplies in the event of that emergency. I was interested in the statement by the lady from Santa Barbarn when she mentioned that twice in their resolutions they took into account the concept of national emergency.

I admire that concept because we are close to a national emergency if the Arabs shut us off once more. We will lose one-third of our economy in 6 months,

Mr. Cony. I am opposed to the absolute total demise of any chance of restoring free enterprise competition in the oil industry which does

not now exist in California. I think it is clear in terms of various reports. What I am most concerned about-we have the Uphill's reserve here which is supposed to help us in time of national emergency.

Senator STEVENS. It would require 6 months to get 200 barrels a day. If you started drilling offshore, as you point out yourself, in any one of the offshore areas, it would be 5 years before it is there. The Arabs aren't going to wait 5 years. You say we don't have a national policy.

I think we do and we are moving strongly toward a concept of selfsufficiency. I didn't know I was attending a Democratic rally-I came to listen to facts on whether or not the people have feelings on Outer Continental Shelf development and to try to assure the people that their thoughts and worries will be considered as Congress moves toward self-sufficiency.

That is a national policy, not just the policy of the FEO or the Secretary of the Interior. The Congress has mandated the development of national self-sufficiency, too.

Mr. CORY. I again renew my hope that you as legislators will reexamine the concept under which the executive branch is trying to proceed. Net profit leasing, the elimination of big bonus bid basing is essential.

Senator STEVENS. We have tried competitive royalties. We tried to bring development under the concept of competition. It did not work. If you are going offshore, I would hope you wouldn't want independents who don't have enough money getting involved to go offshore and drill wells. That is the quickest way to have problems, to put people out there doing it on a shoestring.

The major oil industry made this country the most self-sufficient country in the world until the time when Congress eliminated the whole control system as far as overseas oil is concerned.

I happen to agree with you regarding the foreign tax credit. That was a bad incentive and we will do away with it, but we still have the best system in the world today, and the only way to keep it is to preserve and protect the people just as we do preserve the competition here.

Mr. CORY. If I can give to you anything, I would like to suggest to you that the second largest oil field in the continental United States is an offshore field in Long Beach, developed under a net profit concept under which there had not been a single blowout or spillage. Senator STEVENS. Who developed it?

Mr. CORY. A consortium of companies administered by the city of Long Beach, as trustee, for the State of California.

Senator STEVENS. What companies?

Mr. CORY. Numerous companies.

Senator STEVENS. Part of big industry?

Mr. CORY. Yes, and part of the small ones.

Senator STEVENS. We have innovative things up North, in case you think big industry is running Alaska. Let me disabuse you a bit. The problems we have of dealing with self-sufficiency are part of the energy policy concept, and we are still working on it.

We are ready to announce a billion dollar program for development of solar energy. It is not going to do much good in Alaska, but it might do good here.

We are moving forward on all fronts. As a member of the Appropriations Committee, we have more than tripled the amount of money going into energy research this year alone, and we are moving forward as fast as we can.

This concept of saying to the industry, nominate the area you think has oil potential and then drafting an environmental impact statement that people can comment on doesn't mean development will start immediately. The Alaskan Pipeline case is a good example. We didn't start the Alaskan Pipeline until 1974; the environmental impact statement was completed in 1970. I would hope, if nothing else come out of this hearing, it is Mr. Ligon's statement which my friend thinks is a change of position.

As one of the framers of that bill, I think his statement enunciates the position in the National Environmental Protection Act that the final decision will be made after all the input, comments, and factors have been made. As someone who lived in Manhattan Beach most of his life, I can understand what the people mean when they say they don't want offshore drilling.

As a U.S. Senator, I look at $25 billion of American money going out for Arab oil and that is a hemorrhage, a financial hemorrhage. That is my statement for the day.

Mr. CORY. I appreciate that. I hope you can look carefully at the concept of changing bonus bid because that is what will be done. I think it is important to look at the concept and consider this.

Senator STEVENS. Could I ask you one question. I think you are articulate, and I would like to ask, has the California legislature taken a position on whether or not the State of California should receive a percentage of the Federal income from development of oil and gas from the Outer Continental Shelf?

Mr. CORY. We were approached by Congressman Ed Willis probably 4 or 5 years ago, to have a share of that reserve for environmental protection.

Senator STEVENS. For the whole mechanism?

Mr. CORY. We approached it and didn't get a great deal of reception on it.

Senator STEVENS. We would work together on that.

Senator TUNNEY. As you know, there was a bill passed in the Senate last week, as it relates to Outer Continental Shelf, which provided a $200 million fund from the revenues of Outer Continental Shelf leasing, to protect the coastal area, to be dispersed among the coastal States for that purpose.

Senator STEVENS. That is a beginning.

Mr. CORY. Thank you.

[The report referred to follows:]

WHAT'S THE RUSH?

ECONOMIC AND ENVIRONMENTAL IMPACTS OF FEDERAL OFFSHORE OIL AND GAS LEASES An inquiry into the Impetus for and the Potential Economic and Environmental Impacts of the Proposed Federal Offshore Oil and Gas Leasing Program for the Southern California Borderland of the Outer Continental Shelf.

"I would just like to say at the outset that the Office of Oil and Gas is an institution which is designed to be your institution, and to help you in any way it can. . . .

"In conclusion, let me say that the Department through its Office of Oil and Gas, through the Office of the Secretariat, Our mission is to serve you, not to regulate you. We try to avoid it. I have tried to avoid regulation to the degree that I possibly can. We want to be sure that we come up with guidelines and programs where guidelines are necessary, that have a maximum of input by people who make their living in the marketplace. I pledge to you that the Department is at your service. We cannot be all things to all people. We cannot straddle issues. We have to do business today and tomorrow."

ROGERS C.B. MORTON,
Secretary of Interior.

(White House Briefing of Oil Industry Leaders Aug. 16, 1973)

PREFACE

The major oil companies are current conducting a land grab of publicly held oil resources in the Southern California Borderland of the Outer Continental Shelf (OCS).

This oil resource acquisition is being conducted with the acquiescence of compliant State and Federal agencies which should instead, be regulating the activities of the giant oil companies in the public interest.

Indonesia receives a 70% share of production revenues from its oil.

Burma receives a 70% share and does not relinquish legal title to its oil

resources.

Norway receives a 5% to 40% profit participation and does not relinquish title to its oil resources.

The United Kingdom is proposing to increase its participation share to 51% and retain title.

In the United States we receive an initial cash bonus payment and a token 16%% annual royalty participation. In exchange we grant ownership rights of the public oil resource to private corporations for an indefinite period of time. Additional crude oil for the West Coast will be available in overwhelming quantities from the Alaskan North Slope reserves beginning at a rate of 1.2 million barrels per day in 1977 and reaching capacity of 2 million barrels per day in 1978-79. Standard Oil Company of Ohio, which controls the major portion of the North Slope reserves, has recently announced that it has begun a feasibility study for the construction of a pipeline from California to the Mid-West to dispose of what it already calls the "surplus" Alaskan crude oil. This report examines the public policy objectives and consequences of the proposed May, 1975, lease sale of Southern California OCS oil and gas resources. The report concludes that this proposed lease sale should not proceed as scheduled.

In considering whether and, if so, under what conditions petroleum resource exploration and development activities should ever take place on the Southern California OCS, recommendations are made:

For the development of a comprehensive National Energy Policy to include a consideration of energy conservation measures and a designation of exploration priorities for all OCS areas;

For the consideration of alternate financial and economic arrangements including profit participation contracts; and

For a continued program of data collection by government agencies as a prerequisite to any intelligent decisions on economic and environmental matters.

*Official Text, Published by The Bureau of National Affairs, Washington, D.C., General Policy (No. 2 August 23, 1973 (EUR) pp. B-6 and B-7. (Emphasis added.)