Opening Up the Canyon

Now, drillers can see what's there

No one really knows how much oil and natural gas lie beneath the choppy Atlantic off the U.S. East Coast. But a year ago, some 40 oil companies were willing to pay $1.1 billion just for the right to find out. They bought leases from the Department of the Interior on half a million choice acres of the Baltimore Canyon. The tracts lie 50 to 90 miles off the coast, far enough over the horizon so that drilling rigs would be invisible from the shore; the main lease area is opposite Atlantic City, N.J. But before drilling could begin, a federal district court voided the lease sales, ruling that Interior had made only a "charade" of complying with environmental requirements.

Last week oilmen, who so far have lost $44 million in interest payments on their lease purchases, were back in business. A federal appeals court threw out the lower-court decision, declaring that the lease sales did not breach any environmental law and that the district-court judge had overstepped his authority. Delighted oilmen predicted that test drilling might start as soon as year's end. The decision presumably will also encourage oil companies to bid on leases scheduled for sale early next year on two other geologically promising areas of the outer continental shelf: Georges Bank off Massachusetts and the Southeast Georgia Embayment (see map).

With the U.S. now importing nearly half the 17.9 million bbl. of oil it consumes each day, the country needs every drop of crude it can squeeze out of the continental shelf. The Baltimore Canyon is hardly the Alaskan North Slope,* though with anywhere from 10 to 50 multistoried drilling rigs directly employing perhaps as many as 3,600 engineers, roughnecks and other workers, it may begin to look a bit like it. Even if the most optimistic guesstimates of the area's reserves (1.4 billion bbl. of oil and 9.4 trillion cu. ft. of gas) are correct, exploiting these deposits would enable the U.S. to cut its oil imports by 4% at most. It will take three to six years before commercial pumping can begin.

Though water depth in the area is a comparatively shallow 600 ft., the most promising oil-bearing strata are anywhere from 8,000 to 13,000 ft. underground. Meanwhile, opponents of the drilling could try to halt the work by appealing to the U.S. Supreme Court.

Such an appeal would not be easy to win. The Carter Administration has been tightening procedures in an effort to eliminate many of the objections that have led environmentalists to oppose offshore drilling. Before the Interior Department will issue commercial drilling permits, it requires all companies that discover offshore oil to file a special environmental-impact statement covering matters like how the oil will be landed ashore. Also, Interior has created a 60-day review period after it announces a decision to offer offshore leases, in order to give states time to judge the impact on their shorelines and forward any objections. Congress is expected to set up a $200 million fund later this year to compensate property owners who suffer from spills, blowouts and other accidents offshore.

Says Democrat William Hughes, who represents a South Jersey waterfront district in the House: "The legislation and procedures being put in place are going to expedite development and minimize litigation. The states and communities will not be looking to the courts because their concerns are being addressed." If so, the only important question remaining is whether there really is oil out there.

* Proven reserves: around 10 billion bbl.

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