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EMD-82-14 1 (1981-10-26)

handle is hein.gao/gaobabcpy0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE , WASHINGTON, D.C. Z0548 ENtpZ AMC M1,E S October 26, 1981 O~vISiCN 2-200780 The Honorable Philip R. Sharp Chairman, Subcommittee on Fossil and Synthetic Fuels RELEASED Committee on Energy and Commerce House of Representatives 116825 Dear Mr. Chairman: Subject: Issues Affecting Shutdown or Continued Production of the Elk Hills Naval Petroleum Reserve (EMD-82-14) This is in response to your request of September 15, 1981, that we examine the consequences of the continued production or shutdown of the Elk Hills, California, Naval Petroleum Re- serve, a decision called for in provisions of the Naval Petroleum Reserves Production Act of 1976 (P.L. 94-258). (See enc. II.) Although our analysis was limited by time constraints and delays in obtaining certain key documents, we did identify several issues that should be useful to your Subcommittee in its hearings and deliberations on continued Elk Hills pro- duction. We considered impacts on national security, the local economy, and the budget. Summarized below, and dis- cussed in more detail beginning on page 10 of enclosure I, are the pros and cons of what we believe to be major options. In developing these options, we considered the following points: --Elk Hills, if used for reserve purposes, could help meet vital national security needs and supplement the Strategic Petroleum Reserve (SPP). --If production continues at the current maximum ef- ficient rate (MEP) of 170,000 to 180,000 barrels per day (bpd), Elk Hills will decline quickly as an in-place reserve. Only a full or partial shut-in or allocation to the SPR would maintain the integrity o-f the reserve concept. --Compared to a partial shut-in, a full shut-in would cut day-to-day maintenance costs, but would increase startup costs and delay full production in an emer- gency. Present law authorizes production only at MER or a level sufficient to preserve ultimate reservoir recoverability, which the Department of Energy (DOE) (008981)

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