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Oil firms wade into deeper water for offshore deposits

While offshore oil exploration may get a helping hand from the Reagan administration, it continues to receive a cold shoulder from the sea floor. Exploratory wells off the US coasts are not finding much in the way of untapped petroleum. But it seems that hope springs eternal in the boardrooms of the nation's major oil companies. They remain eager to press the search.

In recent years the federal government has opened up several "frontier areas" on the outer continental shelf to oil and natural gas exploration, hoping to find new supplies of domestic energy. US Interior Secretary James Watt recently took a step aimed at speeding the process by proposing an expanded offshore lease sale in California this May.

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(California Gov. Edmund G. Brown Jr. quickly opposed the idea, citing the risk to the environment and the local economy of the area.)

However, history shows increased drilling is no guarantee of success. So far , these frontier areas have yielded virtually no new energy supplies. Thus the United States continues to rely for most of its offshore production on longstanding sources in the Gulf of Mexico and off the southern California coast.

"We have done an awful lot of drilling, but found nothing," concedes Henry C. Hill, an exploration official with Conoco Inc. The disappointing results from new offshore areas are evident in the oil companies' experiences in the Atlantic Ocean. The federal government has held four lease sales and opened more than 3 million acres to drilling in the Baltimore Canyon, or mid-Atlantic region; the Georges Bank off New England; and the south Atlantic, east of Georgia.

There has been no drilling yet in the Georges Bank. But 29 exploratory wells in the other areas have cost the oil companies $321 million in drilling expenses and some $2 billion in lease bonuses paid to the federal government, according to the American Petroleum Institute. In exchange for that investment, the activity as brought no commercial production. Disappointment on the US East Coast as been matched by dismal results in other newly explored areas in the eastern portion of the Gulf of Mexico, in the Gulf of Alaska, and on some tracts off the California coast.Still, geologic assessments continue to point favorably to offshore areas as potential sources of crude oil and natural gas.

"They are becoming a more important source because that is where the largest resource potential appears to be," says O. W. Girard of the US Geological Survey (USGS). The USGS has just completed a new assessment of the nation's energy resources. Although the report is not yet released, Mr. Girard says its estimates of offshore natural gas rose "significantly" and for oil "marginally."

The quest for new sources of offshore energy will take some important turns in 1981. Drilling in the Georges Bank is expected to get under way, perhaps by late summer, after a lengthy battle with environmentalists that ended in a settlement late last year. Also, the federal government will lease this year some of the deepest offshore tracts ever offered to the oil industry. They will be in the mid-Atlantic region, further out at sea from the Baltimore Canyon, and in the south Atlantic region.

Some of the tracts offered for lease will be at depths greater than 2,000 feet. The technology exists to drill at that depth, but deep-water production platforms are still in the development stage.

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"It's a completely different environment and for the oil companies it is another order of magnitude in risk," says W. L. Adams, a vice-president with the Amoco production company. Still, exploration officials are enthusiastic about drilling in the deep-water areas, particularly in the mid-Atlantic region.

"It's very attractive geology," says Mr. Hill.

The poor showing from offshore exploration in recent years is all the more reason to accelerate leasing activity, in the view of energy industry officials.

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