electric utilities ("public utilities") which it regulates economically in respect to rates, services, accounts, reports, mergers and securities. The Commission's regulatory jurisdiction under the Natural Gas Act over "natural gas companies" is of a generally similar type to that exercised over electric utilities, but it does include facility certification authority. Most electric utilities are also subject to state regulatory commission authority since these utilities tend to be vertically integrated (generation, transmission and distribution). State agencies control retail service to utility consumers, gas and electric. Natural gas distributors are subject to state regulatory requirements.

In addition to Federal Power Act and state regulatory requirements, electric utilities owning nuclear reactors must secure licensing authorization therefor under the Atomic Energy Act of 1954, as amended, 42 U.S.C. 2011 et seq. Recently, the Congress authorized that agency to undertake certain interim licensing actions to meet emergency power supply conditions, Public Law 92-307 (H.R. 14655), June 2, 1972.2 The Congress has before it various legislative proposals dealing with the power plant siting question. See Hearings, Subcommittee on Communications and Power of the Committee on Interstate and Foreign Commerce, House of Representatives, H.R. 5277 et al., 92nd Cong., 1st Sess. Most recently, the Federal Power Commission members testified in support of the Administration's power plant siting proposal, S. 1684 (H.R. 5277), in hearings before the Senate Committee on Commerce, June 1, 1972.3

Energy Questions.-Overall, the problems which the Nation is now experiencing in energy supply (both natural gas and electric) are those of meeting existing loads and load growth from resources and facilities, some of whose developments have been delayed or deferred by governmental factors and others by non-governmental considerations.

Gas. In the natural gas industry, the short-range or immediate problem is a shortage of developed deliverable gas resources. Contributing causal factors include the effect of past Federal Power Commission pricing policies, the tax law policies, antitrust considerations, governmental policies relative to the development of gas reserves in the Federal public domain, public policies reflected in various environmental regulations, underestimation of demand by the natural gas industry, including shifts in fuel use (coal and oil to gas) which have been induced by air quality considerations, alternative investment opportunities and inadequate capital commitment to the development of natural gas resources.

As a result of the shortage of developed deliverable natural gas reserves, physical curtailments of service to existing natural gas customers in widespread areas of the Nation are occurring. Most major natural gas pipeline systems are additionally experiencing reduced growth in sales to existing customers. Other

On March 13, 1972, I submitted a statement to the Joint Committee on Atomic Energy, Congress of the United States, in support of interim operation of nuclear plants licensed by the United States Atomic Energy Commission, Report by the Joint Committee on H.R. 14655, 92nd Cong., 2nd Sess., House Report No. 92-1027, pp. 13-15. H.R. 14655 passed the House on May 3, 1972, and the Senate, S. 3543, on May 17, 1972, 118 Cong. Rec. H4048 (daily ed.) and 118 Cong. Rec. S8064 (daily ed.). On March 7, 1972, I reviewed underlying factual conditions and problems associated with near-term, mid-range and longterm power supply problems in Joint Hearings on the National Environmental Policy Act before the Committee on Public Works, Committee on Interior and Insular Affairs, United States Senate. On May 1, 1972, I submitted a statement in Hearings Before the Subcommittee on Fisheries and Wildlife Conservation, Committee on Merchant Marine and Fisheries, House of Representatives, in support of interim operation of electric facili ties under the Refuse Permit Program, H.R. 14103, 92nd Cong., 2nd Sess. On March 27, 1972. I testified before that Committee in Hearings on H.R. 13752, with respect to interim licensing authorization both under the nuclear plant licensing program of the Atomic Energy Commission and the Refuse Permit Program of the Corps of Engineers. On April 17, 1972, the House of Representatives passed H.R. 13752, an interim licensing authoriza tion for nuclear plants, 118 Cong. Rec. H3100 (daily ed.), April 17, 1972. That proposal has been referred to the Committee on Interior and Insular Affairs, United States Senate. On April 27, 1972. I submitted a statement to that Committee on that bill.

My statement in support of the House version (H.R. 5277), appears at pp. 406 et seq., of the Committee Print (May 6, 1971). Plant siting authority of the type contemplated in these bills is long-range in its curative effect. Its enactment would not solve the nearterm power supply problems which can ensue from recent judicial interpretations of the National Environmental Policy Act of 1969, 42 U.S.C. 4321 et seq., the Atomic Energy Act of 1954, as amended, 42 U.S.C. 2011 et seq., and the Refuse Act, 33 U.S.C. 407. See Calvert Cliffs' Coordinating Committee, Inc., et al. v. United States Atomic Energy Commission, et al.. 449 F.2d 1109 (CADC, 1971): Izaak Walton League v. Schlesinger, 337 F. Supp. 287 (DCDC, 1971); Kalur, et al. v. Resor, et al., 335 F. Supp. 1 (DCDC, 1971). Those short-range problems are matters for legislative consideration and action authorizing interim or temporary operation of critically needed bulk power supply facilities which, although physically available for use, are inoperable due to legal constraints. Public Law 92-307 is legislation of the latter kind.

manifestations of the natural gas supply-demand imbalance are seen in the economic shifts in cost of energy to the natural gas consumers affected and impacts upon other fuel resources, including upward price pressures resulting from increased demand therefor, general impacts upon governmental tax revenues from increased costs of doing business, and general environmental impacts resulting from the use of less clean-burning fuels. Collectively, these results affect directly the continued capability of the Nation's industrial base and economy to serve the growth needs of our society in accordance with the Nation's full-employment goals as stated by the Congress in the Employment Act of 1946, 60 Stat. 23, 15 U.S.C. 1021 et seq., to serve the purposes of the National Environmental Policy Act of 1969, 83 Stat. 852, 42 U.S.C. 4321 et seq., and the purposes of the Economic Stabilization Act Amendment of 1971, 85 Stat. 743. Being an industrialized society, this Nation is energy dependent and energy sensitive. The well being of its citizens rests upon an energy production base which drives the economy and provides the means to accomplish other national objectives. The amounts of energy required are currently large and increase exponentially over the next two decades. See attached Table I.

These are near-term consequences (1972-1975) which could well continue into the mid-term (1975-1985) and long-term (1985-). And, in stating them, I emphasize that what the Nation is now experiencing is a shortage of developed deliverable gas resources, not a shortage of physical gas resources.*

Over the long-range, the natural gas problems are those of meeting deliverable gas resource needs on a current basis and developing new gas resources. For this there must be an increased and continuous exploration and development of new natural gas resources, including the development of new technologies of gas supply, such as coal gasification, tar sands and oil shale hydrogasification, and nuclear stimulation, the development and utilization, Nation-wide, of gas resources within the Federal public domain (off-shore and on-shore) through a workable leasing program, the development and utilization, throughout the Nation, of Alaskan natural gas resources, and the development and importation of non-domestic natural gas resources through conventional transportation means or liquefaction and cryogenic transshipment methods.

Near-Term (1972-1975) Gas Supplies.-In 1971, the natural gas reserves for the contiguous states decreased for the fourth consecutive year to 247.4 trillion cubic feet, the lowest level recorded since 1957.5 This decrease was due to relatively low reserve additions of 9.4 trillion cubic feet during 1971, combined with an all-time high production of 21.9 trillion cubic feet. The reserve to production ratio continued to decline and was 11.3 at the end of 1971.

The historical gas supply position of the contiguous states is summarized in attached Table II. From this Table it may be seen that recorded reserve additions lower than the 1971 reserve additions occurred only once, in 1969. However, the American Gas Association (A.G.A.) reported that "some reserves resulting from drilling on acreage leased in the December, 1970 Federal Lease Sale in Offshore Louisiana are not included because the A.G.A. Reserves Committee did not have sufficient data upon which it could base an estimate of proved reserves as of December 31, 1971." This could be a significant amount since the American Petroleum Institute reported 25 gas discoveries during 1971 in Offshore Louisi

The Potential Gas Committee, sponsored by The Potential Gas Agency of the Colorado School of Mines and composed of members from the transmission, distribution and production segments of the gas industry, along with members and observers from State and Federal agencies, Canada, Mexico, and the National Association of Regulatory Utility Commissioners, in their report of October 1971, estimates that the total undiscovered natural gas potential of the United States is 1,178 trillion cubic feet. An independent estimate by the United States Geological Survey places the Nation's undiscovered potential gas at about 2,100 trillion cubic feet. Regardless of which estimate may ultimately prove to be more nearly correct, theoretically our potential gas resource should be adequate to meet demand for several decades if the development rate could be sufficiently accelerated. However, the realities of the constraints on potential gas supply preclude the realization of a domestic development rate in the required order of magnitude on a timely basis to meet consumer demands. More than 60 percent of this gas is located in areas which will be difficult and expensive to explore and develop: 14 percent of the total lies below a depth of 15,000 feet, 20 percent is attributed to offshore areas and about 28 percent is thought to occur in Alaska. The technological, economic and environmental challenges presented by the development of these resources will, thus, be formidable indeed,

Report of the Committee on Natural Gas Reserves of the American Gas AssociationPart II Reserves of Crude Oil, Natural Gas Liquids, and Natural Gas in the United States and Canada and United States Productive Capacity as of December 31. 1971, Vol. 26, May 1972, published jointly by: American Gas Association, American Petroleum Institute and Canadian Petroleum Association.

ana as compared to 11 during 1970. Unreported reserve additions from these new discoveries will be included in the future A.G.A. statistics as the fields are developed.

Although annual production continued to increase in 1971, the rate of increase was much lower than it has been historically. In 1971, annual production increased less than one percent over 1970 compared to an average annual increase of over five percent for the 1961 through 1970 period. A part of the decrease in the rate of annual growth in production may be attributed to the fact that interstate pipeline companies did not increase sales to old customers and did not attach new customers as they have in the past. Moreover, the unusually warm winter that occurred in some portions of the United States undoubtedly reduced the use of natural gas during November and December. The actual effect of the warm weather on the annual production is not quantifiable.

The total United States natural gas supply, including Alaska, experienced a decrease in year-end gas reserves for the third time since 1967 and was 278.8 trillion cubic feet at the end of 1971, attached Table III. The only increase in year-end reserves recorded during the past four years occurred during 1970 and resulted from record high reserve additions of 37.2 trillion cubic feet which included the 26.0 trillion cubic feet of gas reserves estimated to be contained in the Prudhoe Bay Field on the North Slope of Alaska. Gas from this large new supply source will not be available to markets in the lower 48 States until after 1976. The 1971 gas reserve and production data of the interstate pipeline companies are not yet available. But, some indications may be drawn from national trends exhibited by the gas supplies dedicated to the interstate pipeline companies. The latter have historically paralleled the trends of the total gas supply of the lower 48 states as reported by A.G.A., Table IV. Preliminary 1971 data on interstate production and reserves indicates a continuation of this relationship. In 1970, the interstate reserves declined for the third straight year to 173.6 trillion cubic feet. Analysis indicates that these reported reserves declined by 14 trillion cubic feet in 1970. During 1970, production from interstate reserves reached an all-time high of 14.1 trillion cubic feet. This combination of high production and a low level of discovery of new reserves resulted in a decline of the reserve to production or R/P ratio of the interstate companies to 12.3 by the end of 1970 (compared to an R/P ratio of 11.9 for the lower 48 states as reported by A.G.A.).

Since 1956, when drilling for oil and gas in this country reached a peak, the number of wells drilled annually has trended generally downward while the average depth per well has been increasing. In 1956, a total of 57,170 wells were drilled, compared to 26,784 in 1970, a decline of about 53 percent. During this same period, the average depth of all wells increased almost 25 percent, from 4,080 feet to 5,076 feet. Total gas wells drilled reached a peak in 1961, when 5,459 were completed. Historical drilling trends from 1945-1970 are summarized in the following tabulation:

* See Table 17, National Gas Supply and Demand 1971-1990, Staff Report No. 2, prepared by the Commission's Bureau of Natural Gas, p. 134, February 1972.

Subsequent to 1961, there has been a generally declining trend in the number of gas wells drilled, reaching a low point in 1970 of 3,225 gas wells drilled or a decline of about 41 percent. Following 1961, the average depth of gas well completions increased from 5,345 to 6,149 feet. The Federal Power Commission's Staff Report No. 2, supra, p. 10, analyzes exploratory wells drilled in comparison to total wells drilled in the following terms:

The total number of exploratory wells drilled, which in general has closely paralleled the trend for all wells, also peaked in 1956 when 16,207 were drilled (Table 18, page 134). Exploratory wells have decreased annually since then except for minor upward fluctuations in 1964, 1966, and 1969. Only 7,693 exploratory wells were drilled in 1970, for a decrease of about 53 percent from the peak year. The depth of the average exploratory well increased from 4,587 feet in 1956 to 5,882 feet in 1970. Gas well discoveries did not reach a peak until 1959 when 912 were recorded. Gas discoveries have declined each year since then except for slight increases in 1966 and 1969. In 1970 only 481 gas discoveries were made, slightly more than half the discovery rate of 1959. The average depth for exploratory gas wells, which historically has exhibited an erratic trend, reached a peak of 8,445 feet in 1966 but declined to 7,639 feet in 1970.

The exploratory well figures are summarized in the Staff Report, supra, p. 134, as set forth in the following tabulation: