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As you know, Mr. Chairman, probably this committee more than any other committee of the Congress has wrestled and dealt with the question of what the expected payoff of basic research will be. It is not possible, of course, in any way to organize cost-benefit analyses for this kind of a project. We are simply moving into an area where we have limited knowledge at the present time, the results are quite literally on the frontier of knowledge.

So it is not possible to work out precisely cost-benefit analyses. We would hope that the scientific community and industry and the public as well as the Congress would all approve the program on the basis that this is a basic research program in which we are investing in fact in information that will accrue in many different ways, unexpected ways, to the benefit of the nation in the future.

Thank you.

[The prepared statement of Mr. Smith follows:]

TESTIMONY OF PHILIP M. SMITH
ASSOCIATE DIRECTOR, OFFICE OF SCIENCE AND TECHNOLOGY POLICY
EXECUTIVE OFFICE OF THE PRESIDENT

ON THE
OCEAN MARGIN DRILLING PROGRAM

BEFORE THE
SUBCOMMITTEE ON SCIENCE, RESEARCH AND TECHLOLOGY

COMMITTEE ON SCIENCE AND TECHNOLOGY

HOUSE OF REPRESENTATIVES

February 6, 1980

Mr. Chairman, Members of the Subcommittee, it is a pleasure to testify today on behalf of Dr. Press and our colleagues in the Executive Office of the President on the Ocean Margin Drilling Program. This program is, as you know, directed toward the scientific exploration of one of the earth's last unexplored frontiers -- the ocean margin, the region of the earth's crust between the continental shelf and the deep ocean abyss. It represents a major national commitment of research funds. Estimated costs for the first 10 years of the Ocean Margin Drilling Program are $700 million. It is an ambitious undertaking both scientifically and technologically, one that challenges our best scientific, engineering, and managerial capabilities. The Ocean Margin Drilling Program will, to be successful, require concerted team effort that draws on the scientific and engineering strengths of our universities, and industry, working together in a constructive partnership. If we are successful in creating this partnership we will develop advanced ocean engineering technology including riser technology, deep ocean blow-out prevention, and well control; we will advance the drilling capability to allow recovery of nearly 20,000 feet of margin sediment core in about 13,000 feet of water. Sub-sea bottom technology will also be advanced. These new tools provide the opportunity to gain new understanding of the passive and active ocean margins, including insight into the growth evolution and break-up of continents and ocean basin formation, problems of crust formation and orogenesis and paleo-environment. The data can provide a framework for the future assessment of hydrocarbons and other resources.

Many of the scientific and the engineering aspects of the Ocean Margin Drilling Program will be addressed in detail by other witnesses. The concept has been under discussion in the scientific community for a number of years. Several major reviews and reports have been prepared on it. The project has come from the scientific community. We have found the several reports and their recommendations, including those of the National Science Board, on the future of deep sea drilling and the scientific problems of the ocean margins to be persuasive. The challenge has been to find a way to move forward, taking into account the ocean margin program's scientific objectives and other scientific needs and priorities, the general disciplinary support levels in earth and ocean sciences, overall fiscal constraints and priorities,

the engineering issues requiring further evaluation of feasibility, environmental considerations, and the management and institutional issues. We believe that we are working toward the successful balancing of many important factors related to this range of issues. Accordingly, we are proposing to take the Ocean Margin Drilling Project to the next phase of its consideration -- the detailed engineering and operational assessments and technology development studies of riser technology and the ship modification. We will also commence geophysical surveys of prospective drilling sites, and, geophysical survey work will continue throughout the proposed program. Funds for the government's part of this next phase are included in the budget of the National Science Foundation for fiscal year 1981. We have reached an agreement with a number of oil companies to cost share in the next phase of the program. I know that there are many elements of the Ocean Margin Drilling Program that are of interest to this Subcommittee and I hope that the hearings will effectively address these. The program, as it is now planned, has a number of unique features. Accordingly, I will concentrate most of my remarks on several points where the particular perspective of the Executive Office may be of help in understanding the nature of the proposed program and decisions that have thus far been made. I will discuss: the rationale for and the nature of the agreement with the oil companies that have indicated an interest in participation; Federal budgetary and management considerations including those that resulted in centralizing Federal responsibility at the National Science Foundation; international participation; relation of the Ocean Margin Drilling Program to resource evaluation; and, the costs and benefits of the program. I will conclude with a brief comment on the next steps as we see them.

Industry-Government Agreement

The government, through the discussions led by Drs. Press, Hackerman, Atkinson, and Pimentel, has reached an agreement in principle to share with industry the cost of the first phase and hopefully the overall costs of the Ocean Margin Drilling Program over the next 10 years. While there are several provisions of agreement to be concluded, for example in the matter of liability, a substantial framework of agreement has been developed. This forms the basis for the continuing discussion between the government and the industry participants. Key features of the agreement are:

Cost sharing. The participating companies will share the total
program costs with the government on a 50-50 basis and the companies
will among themselves share the industry part of the overall costs.
Participation in the program and its costs by other governments
will reduce equally the United States industry and government
shares of the costs.

Back-away Provisions. Because the Ocean Margin Drilling Program involves substantial new engineering design and construction, prudent plans for periodic reassessment, back-away, and recommitment to the subsequent phases of the Ocean Margin Drilling Program are included.

Participation in the Scientific and Technical Planning. Industry
scientists, engineers, and executives will participate in the
scientific planning, technical reviews and the overall advisory
review of the program, including the Advisory Committee that will
be established by the National Science Foundation Director. In
addition, the participating companies will have an industry over-
sight committee that will provide them a forum for reviewing their
own participation in the Ocean Margin Drilling.
Rights to Data and Technology. As a basic research program, results
will be published in scientific journals. Industry scientists, as
participants, will share in the normal pre-publication use of
information. Participating companies will have access to samples
along with other institutions and scientists. Participating companies
will have the benefit, along with the government, of a royalty-free
use of technology resulting from the Ocean Margin Drilling Program.
Entry of Additional Companies. For various reasons some companies
have indicated that while they would not make a commitment at this
time, they might participate later. Provisions for later entry are
included.

The Administration believes this agreement to be consistent with its overall research and development policy, and it is consistent with antitrust policy. Because cost sharing of basic research between government and an industrial sector is one of the novel features of the Ocean Margin Drilling Program as it is now planned, it is important for the Subcommittee to understand with some precision the Administration viewpoint on cost-sharing in an endeavor of this kind. Let me try to explain it. The program is one of basic research and advanced technology development. Support of basic research and advanced technology development have become natural and widely accepted roles for the government. As this Subcommittee knows it is often difficult to forecast beforehand in what, if any, ways the results of basic research or expensive, risky, but potentially significant, advanced technology will be useful. Even though the oil industry has quite advanced technology, the project under discussion represents a long-term investment. And, if a project or a program of work such as the Ocean Margin Drilling Program is successful, the knowledge generated will be exploited widely. Due to these inherent characteristics, basic research and advanced technology development is often not adequately supported by the private sector. Hence, it is appropriate for government to assume a role. As such, Federal support of the Ocean Margin Drilling Program parallels the strategy of basic research support that has been followed in many large national programs as well as in the more general support of basic research by the Federal Departments and agencies. On the other hand, the proposed program, through basic research, has particular prospective usefulness to a major industrial sector of our economy. Our current and very incomplete knowledge of the ocean 'margin region suggests that large hydrocarbon deposits might well be found there. Although the proposed program is not intended to explore for hydrocarbons or even produce a resource assessment, it will help provide a geologic framework for later hydrocarbon resource assessment in this

region. Such information will be extremely useful for the long-term planning on the part of oil companies. The advanced ocean drilling technology to be developed in the Ocean Margin Drilling Program will also have long-run usefulness to the nation's oil companies. It is therefore reasonable to seek a cost-sharing partnership between the government and those organizations in the oil industry that wish to share in this research enterprise. At every step of our discussions with the oil companies and in the evolution of the planning within the government, the Office of Science and Technology Policy has had the benefit of advice on this proposed program from the Antitrust Division of the Department of Justice. The proposed program is consistent with antitrust law, and the Department's view concerning cooperation in research by an industrial sector. The Assistant Attorney General for Antitrust is rendering a formal opinion that will document the Department's views for the public record and for the participating industry firms. This cost-sharing approach to research having particular interest in a given industrial sector is one that the Administration hopes to explore further. In another area, research related to automotive technology, a somewhat analogous plan is being developed for initiation in fiscal year 1981. We seek the understanding and encouragement of the Congress in these innovative approaches to research and development.

Budget and Management Considerations

Beyond the policy considerations concerning cooperation with industry on large-scale scientific projects such as those that I have just outlined, the Administration has been very interested in pursuing a cost-sharing arrangement with industry for important fiscal reasons. Given the overall constraints in the budget, including those facing the Departments and agencies funding research and development, there was a very limited prospect that the Ocean Margin Drilling Program could go forward in the near future in the next two to three budget years -- without some sharing of the costs between the public and the private sectors or with other countries. In our planning with the Departments and agencies, with the academic community, and with the industry, we have been very clear about these budget constraints. Thus, we have hoped that by sharing the costs of this endeavor with a sector of American industry that has a mutual interest in and responsibility for basic and applied research and technology development, we could advance by some years activity of mutual interest to industry, government, and the academic community -- a project that is, in short, in the national interest. This committee and the others in the Congress must understand that the alternative of full funding by the Federal government of the Ocean Margin Drilling Program is not a realistic one. Nor should it be assumed that the current program with the Glomar Challenger would, as an alternative, have long-life in the 1980's. The arrangements that are being worked out with industry are to be encouraged if the Ocean Margin Drilling Program is to proceed soon.

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