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CHAPTER I THE FPC REPORT ON OFFSHORE PRODUCIBLE SHUT-IN LEASES FIRST PHASE (MARCH 1974) The main purpose of the first phase of the investigation "was to (1) identify and determine the number of producible shut-in leases, (2) determine the reasons the leases were so classified, and (3) ascertain the availability of the basic reservoir data necessary to estimate the proved reserves attributable to the leases" (FPC I: page 1). In accordance with the stated purposes, the FPC investigators reported a total of 168 leases classified as producible shut-in as of January 1974. The 168 leases were further classified on the basis of the type of hydrocarbon on the lease and the category of the lease term as follows: Producible Shut-In Leases Type of Hydrocarbon Primary Term Extended Term Total Units Gas 128 42 77 9 Oil 30 11 16 3 Oil and Gas 5 3 2 - Undefined 5 4 1 - Total 168 60 96 12 Reasons for the classification status of the 168 leases were identified and described with respect to justification of status under appropriate
10 legislative authority. The third purpose of the first phase report was met by ascertaining that the USGS did maintain in its Metairie, Louisiana offices a large file of logs, test data, maps, and other information necessary to estimate gas reserves on the leases classified as producible shut-in. SECOND PHASE (JULY 1974) The Second Phase report of the FPC investigation involved the estimation of the proved and probable gas "reserves" underlying the 168 producible shut-in leases identified in the First Phase report. Data in the files of the USGS offices in Metairie, Louisiana were utilized to estimate gas "reserves" on 142 of the leases. FPC "reserve" estimates for the remaining 26 leases were obtained from FPC records in Washington, D.C. Total gas "reserves" for the 168 leases as estimated by the FPC staff were reported as 7,992,904 million cubic feet (MMcf) of which 4,719,811 MMcf were categorized as proved "reserves" and 3,273,093 MMcf as probable "reserves." Two teams of FPC geologists and engineers worked on developing estimates for 142 leases at Metairie during the period April 14, 1974 to June 17, 1974. The report states that all reserves were estimated using the standard volumetric method of gas reserve calculation. This involved utilizing electric and other types of well logs, reflection seismograph maps, core analyses, well production tests, formation tests, well completion reports, and other information. Upon request, advice and assistance were given by USGS staff geologists and engineers.
11 As employed in the FPC report, definitions are given for both proved and probable "reserves" of natural gas (FPC II: pages 4,5). These definitions are given an important qualification in a footnote wherein it is stated that "for purposes of this report all volumes physically recoverable are considered to be economically producible" (FPC II: No. 6, page 4). UPDATE OF FPC STUDY STATISTICS In a USGS memorandum of October 9, 1975 to the Chief of the Conservation Division, the Oil and Gas Supervisor of the Resource Evaluation and Analysis Division in the Gulf of Mexico Area summarized subsequent activity on leases included in the FPC study up to June 13, 1975 as follows: Nine leases have commenced production, while 15 additional leases have had one or more platforms constructed thereon, in addition to any before the study. Twenty-one of the leases were dropped, eight of which were in Texas (of only 17 in the study) and nine were in Louisiana. Thirty-seven leases (excluding those in above categories) have had an additional well or wells drilled. Twelve of the 14 leases which had over four reservoirs are either producing or had platforms constructed. Two leases which were dropped had three reservoirs each, three leases had two reservoirs, and 10 leases had only one reservoir. Considering each of the listings to be "significant," over 50 percent (82 of 142) have had developments since the FPC study was made. Of the 33 leases selected for audit, four have been dropped, three are on production, and four (excluding the above) have had platforms constructed. Approximately eight have had additional drilling; however, an exact count considering the actual completion dates has not yet been made. The percentages of these developments are very close to those above for the entire 142-lease study.
