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INTRODUCTION HISTORY Aware of the widespread attention in Congress and the media on the subject of gas reserves contained in outer continental shelf shut-in leases, the Federal Power Commission (FPC) initiated a staff analysis of the data and information concerning these leases. During March and July of 1974, the FPC issued the first and second parts of its two-part staff report prepared by the Bureau of Natural Gas. The report dealt with Louisiana and Texas outer continental shelf Federal oil and gas leases classified as producible shut-in by the U. S. Geological Survey. The first part, Offshore Investigation: Producible Shut-In Leases (First Phase) January 1974 (see Appendix A), reported a total of 168 leases classified in the category of producible shut-in. In the second phase of investigation, Offshore Investigation: Producible Shut-In Leases as of January 1974 (Second Phase) (see Appendix A), the FPC staff reported an estimated total of 7,992,904 million cubic feet for proved and probable gas "reserves" contained in the 168 leases identified in the first phase report. Following public release of the report, serious questions were raised by responsible parties regarding the reliability of the reported gas figures. Concern was expressed that the figures were too small and that substantial amounts of gas in these leases were being held off the market improperly. Responding to these concerns, Rogers C. B. Morton, then Secretary of the Interior, directed the U. S. Geological Survey (USGS) to ask the National Research Council (NRC) to review the
gas estimates and the techniques and procedures for estimating gas reserves of the offshore shut-in leases. On January 28, 1975 the National Academy of Sciences received a formal request from Vincent E. McKelvey, Director of the USGS, for the NRC "to conduct an evaluation of the estimating techniques and procedures and of the gas reserve estimates for a representative sample of the OCS shut-in leases reported in the FPC analysis." The Board on Mineral Resources (BMR), a unit operating within the Commission on Natural Resources (CNR), was designated as the appropriate unit within the Academy to respond to this request. FORMATION OF STUDY PANEL During March 1975, in accordance with regular Academy procedures, eight individuals were nominated and appointed to a Panel to conduct the gas reserve estimation study. By design, the Panel membership included individuals with expertise and experience in gas reservoir engineering as well as geologists with a general background that did not include this area of specialty. Charles L. Drake, a member with general background, was appointed Chairman of the Panel.
8 PANEL ASSIGNMENT In reviewing the nature and scope of the gas reserve estimation study at its meeting on March 12, 1975, the BMR defined the tasks of the study Panel as follows: (1) A number of leases considered to be a representative sample of the offshore shut-in leases reported in the FPC analysis would be selected for examination by the Panel. Both the method of lease selection and the number of leases constituting a representative sample would be chosen by the Panel. (2) An evaluation would be made of the techniques and procedures employed to obtain gas reserve estimates for the leases in the FPC analysis. (3) Subcontractor consultants would make estimates of the gas reserves for the leases selected in (1) above from data made available by the USGS. Only those data available to the FPC staff at the time of its analysis were to be utilized. (A) An evaluation would be made of the quality and completeness of the available data used to estimate gas reserves in the leases selected in (1) above. (5) A final report of the findings and recommendations of the Panel would be submitted to the BMR upon completion of the study.
