Summary: A planned and systematic approach to the leasing of the Nation's Outer Continental Shelf (OCS) resources is needed if hydrocarbon production in frontier areas is to be maximized in a manner consistent with environmental and other values. A GAO assessment of the first frontier sale (OCS Sale 35 off the California coast) has demonstrated that (1) the Department of Interior's tract selection and evaluation process were not reliable; (2) the bidding generally was not competitive; and (3) the prelease tract evaluation used by the Department in making accept/reject decisions on industry bids were based on inadequate data. The need for sufficient data is critical not only for selecting and valuing tracts to determine the fair market value for leased lands, but also for identifying where to lease so that domestic oil and gas production can be increased in the near future. The Department should undertake a systematic exploration program to collect data on previously unexplored frontier areas. Such an exploration would also improve the Department's revenue-estimating process and provide the Nation with a better knowledge of the total OCS resource potential. The Department should also encourage private industry to conduct the drilling and share the resulting information with the Department on a confidential basis. The Department should offer for lease sale only those areas for which it has sufficient information to identify the resources' location, estimated value, and potential for development.
