I think without any doubt the Prudhoe Bay area has proved that production can move forward in an environmentally safe manner. Certainly we could move forward in an environmentally safe manner in ANWR as well. So, Mr. Chairman, I commend you in moving forward.

A couple of things have changed since we had the hearings several months ago. Our energy dependence has risen. Our gross imports are now up to 42 percent. We are marching rapidly towards that 50 percent mark that I predicted would be reached by 1990. I still think it will be the case, even if we have development of ANWR, that we will be importing 60 some percent by the year 1995. So I think it is incumbent upon ourselves to do what we can to ensure domestic production from safe and secure resources. Certainly this is the case in Alaska.

Not to mention the fact that we see now with the Prudhoe Bay area supplying about 24 percent of the domestic production, that production will decline and decline rather rapidly.

Altogether in the Prudhoe Bay area, we are producing about two million barrels per day. That will decline. I think it is estimated to decline by the year 2000, and that will decline to about 600,000 barrels per day.

That is a decline of 1.4 million barrels that have to be made up, and I would hope and think that it could be made up in the ANWR area. We will not know unless we move forward with this project.

So again, I commend you, and I comment Senator Murkowski for his legislation. I would like to ask our panelists if they have some comments on Senator Murkowski's legislation, and if they have ideas on how it might be improved. I think myself and other Members would be quite willing to listen.

Again, I would repeat my earlier comments. I have no qualms that we can move forward in a manner that would both allow exploration and production in the ANWR area, and do it in an environmentally safe manner.

Again, if there are some improvements that should be made in the legislation, I would like to hear those recommendations. And I thank the Chairman.

[A statement for the record from Senator McClure follows:]

STATEMENT

SENATOR JAMES A. McCLURE

HEARING ON S. 1217

OCTOBER 14, 1987

On November 4, the Office of Technological Assessment will hold a workshop in Anchorage, Alaska. The purposes of the workshop will be (1) to explore the status of technologies for Arctic oil and gas exploration and production that may be used in ANWR if such activities are permitted; (2) to discuss technologies and practices that have been developed in the past 15 years of Alaskan oil production and to explore new technologies that are needed or likely to be developed for future Arctic oil production; and (3) to review the status of technologies which have significant impacts associated with their use.

OTA will invite a group of participants who have special or expert knowledge of one or more significant aspects of Arctic oil and gas technologies. The group will include persons from diverse interests as much as possible. The group will be mainly Alaskan-based; another workshop is planned in the lower 48.

OTA has developed a list of questions that I think will help our deliberations, and we need to get a head start on the issues raised. I would ask all witnesses to provide input. Many questions have been partially addressed in testimony during prior hearings.

The questions are:

1.

2.

3.

4.

Attachment 1

Arctic Oil and Gas Technology--Workshop Questions

Which of the major oil and gas technologies for the Arctic are significantly different from that used in temperate climates/regions?

What major technologies required significant research and development for use in Prudhoe Bay when it was built?

What are the best examples of Arctic "state-of-the-art" technologies for each of the categories in the OTA table?

What major technologies are new developments in 1987 and were not
available when Prudhoe was developed in the mid 1970s?

5.

6.

7.

8.

9.

10.

11.

What are the major needs for developing new technologies for future exploration and production in ANWR?

What technologies are now under development and may be available (when?) for future use in ANWR?

What numbers, sizes and configurations of gravel pads for wells, facilities, pipelines, roads, airstrips, marine docks, etc. would be most likely for ANWR development? How do each compare with Prudhoe? Kuparak? Endicott? Are the EIS estimates of gravel requirements reasonable? What are the determining factors in selecting designs for gravel pads?

What drilling muds and mud systems would be most likely to be used in ANWR? What factors determine industry's selection of mud system designs?

What estimates of fresh water needs and sources are available for ANWR operations--exploration through production? What techniques are planned for developing water supplies and where have these been used?

What is the current status of directional drilling technology? What developments may be available in the next 10 years? Where are the best examples of state-of-the-art directional drilling? What factors affect the selection of well spacing and clustering designs in specific field development designs?

What is the status of well design technology to counter problems of
permafrost melting and ground subsidence?

12. What is the status of Arctic pipeline design and construction technology? What examples of pipelining would be most likely for ANWR development? What factors affect selection of winter-only construction practice?

13. What technological changes or improvements may be applied to ANWR that would significantly improve economics of oil production there?

14.

What specific facilities and equipment may be unnecessary to provide for
ANWR development because they are available and useable at Prudhoe?

15.

16.

17.

Are there any special characteristics of ANWR (compared to Prudhoe), that would markedly affect selection of technologies and systems for exploration, development and production?

What technologies are under development or now available to improve recovery from any Arctic oil field? Where and how may these be applied in the Alaskan North Slope?

Of the mitigation measures recommended in the EIS (see attachment 2), which are practicers with economic impacts, and which would require technology improvements?

The CHAIRMAN. Gentlemen, welcome to the panel.

We would like for you to put your, in fact we will put all of the written statements into the record at this time, as if read in full, and will be read. And we would appreciate it if you would give us your advice.

You have got the issue list there. We would like to focus on the those matters that really concern the Committee. Not that this is an exclusive list, but certainly this list of issues will be important to us, and we would like your input on those, or whatever other issues you feel are important.

If you have not otherwise decided who will go first, then we will recognize Thomas Cook of Chevron.

Mr. Cook. Mr. Chairman, we had planned to have Mr. LaGarde go first, if that is agreeable.

The CHAIRMAN. That is just fine.

STATEMENT OF RAYMOND L. LaGARDE, DIRECTOR, INDUSTRY AND REGULATORY AFFAIRS, NORTH AMERICAN EXPLORATION DEPARTMENT, CONOCO, INC.

Mr. LAGARDE. Thank you, Mr. Chairman. I am Raymond L. LaGarde, Director of Industry and Regulatory Affairs for the North American Exploration Department of Conoco, Inc., the DuPont Company.

Following my remarks on an appropriate leasing system for the Coastal Plain of the Arctic National Wildlife Refuge, which I will also refer to as the 1002 area, they will be describing a likely timetable and techniques for exploring the 1002 area, and an example of development scenarios for the two Coastal Plain prospects.

It is our hope that the 1002 area will be open soon to oil and gas development. And if this comes to pass in the establishment of an effective and efficient leasing program, it will be necessary to begin the process.

I suggest that a leasing system should achieve the following goals. First, encouragement of the early exploration and development of the 1002 area's oil resources to meet the Nation's need for secure oil supplies.

Second, the protection of environmental values.

Third, the receipt of a fair and reasonable right return to the Federal government for leasing rights. Those are pretty basic goals to meet.

And to accomplish those goals, we have three basic concepts that we think ought to be in the leasing process. First, making the entire 1002 area available to leasing from the beginning, without introducing concepts of phasing or withdrawals.

Second, the use of a competitive lease sale held in adherence to a predictable, dependable leasing schedule. And third, the issuance of leases which grant the right to explore and develop oil and gas resources, so that those rights would not be limited.

These goals and basic concepts outline the structure of the system Conoco would propose, and we believe that Senate bill 1217 meets these criteria.