As I have previously mentioned, the primary focus of the hard mineral mining industry is on the manganese nodules of the abyssal ocean floor, with the result that this amendment should create no complications whatever from the standpoint of that industry. At the same time, it would be of distinct advantage from a petroleum industry standpoint in precluding the possibility of application of S. 2801, after its enactment into law, to areas that are already governed by the Outer Continental Shelf Lands Act and should continue to be so

governed.

Our second recommendation relates to Section 8 (a) of the bill, which provides that a licensee must relinquish 75% of any block licensed under the Act within 10 years of the date of the license and not later than the start of commercial recovery. I understand that this is acceptable to the hard mineral mining industry for the reason that after operators in that industry have made a mineral discovery they must engage in extensive testing to outline the extent of the mineral deposit and develop a mining method for that particular deposit before the commencement of commercial recovery can be justified from an economic standpoint.

Contrariwise, a single oil well can be of such

magnitude as to justify the initiation of commercial production of oil before there has been any possibility of development drilling to evaluate the balance of the block on which the discovery is made.

The Outer Continental Shelf Lands Act imposes no requirements whatever

97-898 - 73 - 25

8

for surrender of leased acreage as long as commercial production is

continued.

As for foreign leases and concessions, which are generally for far larger areas than those prescribed under the Outer Continental Shelf Lands Act, the 1971 Supplemental Report of the National Petroleum Council on "Petroleum Resources Under the Ocean Floor," in speaking of a 75% relinquishment requirement for deep seabed operations that was proposed by the Administration in an August 3, 1970 working paper

submitted to the United Nations Committee on the Peaceful Uses of

the Seabed, points out (at p. 28) that:

"This is foreign to the usual relinquishment
obligations calling for giving up, e.g., 25
percent after 5 years; a second 25 percent
after 10 years; and a third 25 percent at a
later date with an ultimate retention of 25
percent of the original area for the balance
of a 20- or 30-year term. A related problem
of this requirement is that oil may be found in
one part of the block before exploration of the
remainder is complete. Arbitrarily to force re-
linquishment as soon as a relatively modest
quantity has been produced is inconsistent with
customary practice and would deter interest in
areas subject to such a provision."

We anticipate that it will only be a matter of time before there will be an active petroleum industry interest in exploration and development of petroleum resources beyond the limits of national jurisdiction and we therefore think it would be most unfortunate if the 75% relinquishment requirement of Section 8 (a) were to become a precedent for other branches of the mineral industry not now covered by the

provisions of S. 2801. To avoid this possibility, we request that the Committee make it clear from the outset that it is not the intent of

Congress that this should become the case. An appropriate way to accomplish this would be to redesignate Section 3 of the bill as Section 3 (a) and to add a new Section 3 (b) as follows:

" (b)

The provisions of this Act have been designed with a specific view to the needs for hard mineral development in the deep seabed minerals. Accordingly, the provisions of this Act shall not be construed as a precedent either for or against future legislation applicable to the development of other deep seabed minerals. Instead, the needs for such development shall be considered on their own legislative merits when the occasion arises."

We request that S. 2801 be amended in this manner.

Our third and final recommendation is also based on the view that the time will come when the petroleum industry is engaged in active operations beyond the limits of national jurisdiction. We therefore wish to be assured of the benefit of the Secretary of the Interior's authority under Section 4 (c) to prescribe as conditions for every license issued pursuant to the Act requirements to prevent unreasonable interference with "other ocean uses." To eliminate any possible doubt as to whether petroleum activities on the seabed would come within the ambit of "other ocean uses," we request that this phrase be expanded to read "other ocean and seabed uses" by the insertion of the words

10

"and seabed" after the words "other ocean" at the end of line 16 of page

5 of the Committee Print of S. 2801.

Mr. Chairman, may I express my gratitude for the opportunity

to make this presentation on behalf of the American Petroleum Institute.

Now HOWARD HUGHES MINES THE OCEAN FLOOR

HIS HUSH-HUSH FLEET IS HEADING FOR THE FIRST WORK ON A COMMERCIAL SCALE

Around July 4th, a ship crammed with strange-looking equipment will drop down the Delaware River from the Sun Shipbuilding & Dry Dock Co.'s yard at Chester, Pa. The 618-ft. vessel, named the Hughes Glomar Explorer for its owner and sponsor, billionaire recluse Howard Hughes, is part of a super-secret venture into a new and potentially extremely profitable industry: ocean mining. Spokesmen for Summa Corp., a corporate umbrella for several Hughes enterprises, refuse to discuss the mission of the Glomar Explorer. They say only that it will be operated by Global Marine, Inc., and that it is heading for several months of shakedown cruising in the Pacific Ocean before buckling down to work.

But people in the mining industry have little doubt as to what Hughes is up to: He is putting $250-million into the Glomar Explorer and its big submersible barge so he can scoop up the manganese nodules that oceanographers say lie in profusion in some parts of the ocean floor. If they can be mined, these nodules may be a rich source of copper, nickel, molybdenum, and cobalt as well as manganese.

Neither Sun, builder of the Glomar Explorer, nor Lockheed Aircraft Corp., whose Oceans Systems Div. designed the submersible barge, will talk about details. But, from other sources, BUSINESS WEEK has gleaned most of the essentials.

Mystery vessels. Bristling with masts and booms, the Glomar Explorer looks bulky and perhaps awkward. But, more important than its modest cruising speed of about 12 knots, it has the ability to move very slowly on an extremely precise path above the ocean floor. "It's just loaded with navigation and stability control systems," says one source.

The ship's most prominent deck features are a 200-ft. derrick, a pair of 150ft. so-called docking legs, and an array of massive booms. The derrick's chief job will be to control a 16-in.-diameter steel pipe that will be fed down through a well in the ship's hull to a depth of perhaps 16,000 ft. for recovery of the nodules. The docking legs help to hold the submerged barge in place under the ship as equipment is passed down to it.

The Lockheed-designed barge, which was built by National Steel Shipbuilding Co. in San Diego, is surrounded by almost as much mystery as the Glomar Explorer. Its main mission is to carry the huge dredge head, which resembles the head of a vacuum cleaner but is reportedly about 50 ft. wide. This unit is too big to be lowered through the well of the Glomar Explorer, and too heavy to be handled safely over the ship's side. It is carried to the operating site in a 75-ft.-diameter horizontal cylinder atop the barge.

The Hughes system of ocean mining will apparently work like this:

The Glomar Explorer, the barge (pulled by a tug), and a freighter to bring back the mined nodules will move to a location staked out by transducers planted on the ocean floor.

The barge will submerge, like a drydock, and its four tubelike stability controls will be raised.

The ship will maneuver into position over the barge, put its docking legs into place, and lower the first section of pipe through the well into the now-opened cylinder on the barge. Divers will go down to the barge to attach the dredge head to the pipe.

The ship will then move clear and start lowering the pipe, as sections are added at the upper end, much as in oil drilling on land, until the dredge head is only inches from the sea bottom. It will then move forward at about 11⁄2 knots, with the head sucking up the nodules. Compressed air injected in the pipe about 2.000 ft. below the surface will create the pressure differential to force the nodules, usually less than 2 in. in diameter, up the pipe. Aboard the ship, the nodules will be caught in a giant sieve and then loaded aboard the freighter for the trip to shore.

DUBS: 'THE BIG LURE IS COPPER. YEARS AND YEARS OF MINING OPERATIONS THERE' So far as is known, Hughes has not yet built a plant on shore to receive the mountains of nodules-the Glomar Explorer is expected to be able to suck up nearly 5,000 tons of them per day-that could start coming in as early as next