New Orleans, Louisiana Question-and-Answer Session With Reporters.

THE PRESIDENT. This morning we're going to confine the press conference to the visit to the offshore drilling rig, or to the energy package that's before the Congress.

I have long wanted to visit one of these remarkable installations and I have been very pleased not only at the quality of the machinery, the technology, the electronics controls, but also with the training of the crew and the obvious dedication of those who are searching for oil or gas off our shores to prevent any recurrence of the environmental damage that occurred off the Santa Barbara coast, and recently in the North Sea.

There has been an enormous amount of time and effort and engineering skills in safety devices and controls for potential spills. And I think that we have made good progress in that area. I've also been convinced that American technology in the drilling exploration for oil is a very valuable national possession. Throughout the world, even in other countries there is a great need for this capability, and I think that we need to understand as best we can how the worldwide energy resources can be both husbanded, discovered and used, and distributed in the best way.

I hope that the progress of our energy policy legislation through the Congress will continue. I'm convinced that it's a well-balanced program, and I believe that an understanding of both the problems and potentials of offshore oil drilling can be understood by the rest of the Nation who haven't had a chance to observe it in person.

As Governor of Georgia, for instance, I joined with the Governors of North and South Carolina in laying plans for aggressive oil exploration and drilling and extraction off the coast of our Atlantic seaboard.

And we still have hopes that oil might be discovered there. And if so, working with environmental groups, university systems, State and local officials, we have already identified the places where we might bring the oil ashore or natural gas ashore, where the refineries might be located with a minimum adverse impact on the environmental quality, or recreation area or beauty of our shorelands.

I hope that the States north of us will take the same approach and make careful plans accordingly and that we can continue with an aggressive exploration policy on the Atlantic seaboard, as has been the case in the Gulf area.

The last point I'd like to make before I answer your questions is we need to have a good balanced Federal support program to the areas that are highly impacted by the consequences of oil production.

Senator Johnston and Senator Long have been leaders in this particular area and a bill has already been passed before the Senate and is now before the House.

We have made some progress in this already in the coal leases. We need to make the same type of progress in oil as well. And I believe that the distribution formulas that have already been established for coastal development and planning funds is the one the Governors prefer and one that's certainly suitable with me.

I don't have any way to know yet what the final action of the House will be on this legislation, but the Office of Management and Budget has worked, I think, a satisfactory understanding with the Senate leaders on this particular subject.

So, to summarize, I've been well educated this morning, have been pleased at what I have learned, and believe that the future of oil exploration in our country is assured to be both successful and compatible with the preservation of the quality of our life style.

I would be glad to answer any questions or refer the questions to these distinguished men and women behind me.

OIL AND NATURAL GAS PRODUCTION

Q. Mr. President, did you see anything this morning that would cause you to consider greater production incentives for the oil and natural gas industries than those you have already proposed, the $15 billion figure?

THE PRESIDENT. No, I didn't. I know that some of the leaders in the oil industry and certainly some political leaders from the oil-producing States think that higher production incentives are necessary. I do not. I believe that the incentives that we have put into the package devised by me, Dr. Schlesinger, and others, that those incentives are adequate.

Q. Mr. President, are you any more impressed with Governor Edwards' views on the energy situation than you were before?

THE PRESIDENT. I have always been strongly impressed by Governor Edwards' views. I think that the leaders from Texas, Louisiana, Mississippi, Oklahoma, Alabama, who represent States that are producing States, obviously have a different perspective from some of the parts of the Nation where we are primarily consuming States like Georgia. But I think all those views that are strongly held need to be understood, debated, and of course the Congress and myself together will make the final judgments from the Federal viewpoint. But I respect Governor Edwards' views. He's knowledgeable about the subject and I think he represents accurately the feeling of the Louisiana people.

But I have scheduled, along with Dr. Schlesinger and the Governors' conference, an additional meeting at the request of Governor Edwards and others just on the question of production, enhanced production of oil, gas, coal, nuclear, solar energy. And, I think, this is a very good suggestion that we received from him and it will be done within the next few weeks.

OFFSHORE DRILLING

Q. Mr. President, did you see anything on the rig that could be determined negative as far as persuading other areas of the United States for offshore drilling?

THE PRESIDENT. No. I didn't. I think it's accurate to say that this was one of the most advanced drilling rigs in existence in the world. It was obviously spotless and I asked them if it was always that clean, and they said that yes, every time they had a President visit--[laughter]-that it was. But it was superlative and the design of the rig, the control of the mechanisms for safety, the constant scanning of the bottom of the sea with television and other mechanisms, the obviously hightrained crew long experienced in this realm, the ability to drill at a depth of about 1,000 feet, the rapidity of drilling, which yesterday was 1,100 feet, drilled in one day, sometimes as high as 2,000 feet, I thought it was extraordinary.

And many of the advances that have taken place in the technology were a very pleasant surprise to me. I did not see anything there that caused me concern. I think at the present time because of a slowdown in exploration on the east coast, because of reluctance on the part of some political leaders in the northern part of the Eastern Coast and other reasons, that we have an excessive capacity now for drilling and I hope to do what I can, working with Dr. Schlesinger and the Congress and others, to expedite the drilling rate, particularly on the eastern seaboard. But I saw nothing that caused me concern this morning.

EXPLORATORY DRILLING

Q. Mr. President, there is a bill before Congress expanding the OCS act which will put the Federal Government into exploration and also put 3 to 5 years' delay into the timetable of finding and producing oil. This is going to affect and hurt the service companies and the contractors such as the people you visited today. What is your position on this bill as it stands now?

THE PRESIDENT. Well, there are two different bills that I know about. Now, I don't approve of either one of them. But I think that it's legitimate for the Federal Government to have the right, the authority for exploratory drilling in areas to be leased to the oil companies.

I think one of the bills, however, permits the Federal Government to drill on private property and State-owned property and also the Federal lands. And the other one makes it mandatory that the Federal Government drill in an area before it's leased. I don't like any one of those approaches.

But to give the Federal Government the authority when it's decided to be needed by the Secretary of the Interior and the Secretary of Energy, I do favor that legislation.

GASOLINE TAX INCREASE

Q. Mr. President, I have a question on your energy package. What is your position on the recent proposal to increase the gasoline tax by 5 cents a gallon and use the revenue primarily for mass transit?

THE PRESIDENT. We have taken a position not to oppose the legislation. It is not part of the energy package that we put forward.

My understanding was that the proposal was 4 cents a gallon, 1 1/2 cents of which would be used for a metropolitan rapid transit. One-half cent would go to the States. One-half cent would be used for research and development on energy, and the other 1 1/2 cents could be used either for transportation or energy production.

I don't necessarily agree with the formula. I would rather see at least 1 cent returned to the States for maintenance on existing transportation systems. And I personally would prefer more flexibility in how the money should be paid.

This receipt of funds from gasoline taxes alone, if mandated to go into rapid transit, may not be fair. It also means that 1 1/2 cents out of 4 cents would go to urban areas where rapid transit systems are needed, and the rural people who are paying part of the taxes would not benefit at all.

So, I have no objections to the allocation of additional tax on gasoline to be used on the highways, but I would like more flexibility in how the funds might be used.

TRANSPORTATION OF OIL AND NATURAL GAS

Q. Mr. President, I'd like to know if you saw the tanker that's on fire in the river this morning and if you considered that this is the latest in a series of accidents, involving long-distance transportation of oil, we've had tankers, the Alaskan pipeline, and if perhaps someone hasn't suggested that maybe it's better, rather than transporting fuels long distances, to use them closer to the area in which they are produced--to use the coal and such on the east coast, and use gas and oil down on the gulf coast?

THE PRESIDENT. Well, I did not see the tanker on fire. We left the airport nearby here and followed the route of the river to the sea. I did not see the tanker on fire.

Q. Were you aware of it, sir?

THE PRESIDENT. I was not. But I think it's obvious that whenever one can, it's better to use the fuel in the area where it's produced. That's obviously not possible in all respects. For instance, the northeastern part of our country, in its electrical requirements, might very well derive them from coal mine areas from West Virginia, Pennsylvania, Virginia, and other States, and then their electricity transmitted by powerlines.

But I don't think it is possible for us to use, for instance, Alaskan oil and natural gas in Alaska. It would be unreasonable to expect to burn those fuels in Alaska and transmit their electricity down to this country by power line.

But we have a great problem in how to distribute oil and gas. We had anticipated, as you know, the Alaskan oil and gas coming in, perhaps, in major quantities to California, as one place, and being distributed throughout the country in either existing pipelines or those where the flow might be reversed to new ones.

There is a great opposition among the public officials in California environmental groups and others against the off loading of large quantities of either liquefied natural gas or oil on the California coast. This means there's more of a pressure to bring the oil down through the Panama Canal and up the gulf coast or eastern seaboard area.

So, I think we just have to keep an open mind as circumstances change and use the distribution systems that we have now and accommodate changing times. But I would be glad to have a followup question from you.

Q. If you would. Let me perhaps summarize. Does it make sense to build pipelines and such to bring slurry coal from West Virginia to Louisiana while at the same time we're sending gas from Louisiana to West Virginia? Wouldn't it make more sense to use the energy closer to where it is produced?

THE PRESIDENT. If there was a complete exchangeability among energy sources, I would agree with you instantly. I don't know how to answer your question definitively at this point. But there is a need in this country to use coal for stationary major powerplants and to use the much more valuable natural gas where it alone can be used.

Obviously, a balance has to be reached between transportation costs and the necessity to do as you originally suggest-use fuels where they are near their source. But we can't make, at this point, economically, nitrogen fertilizers out of coal. And many chemical processes require extremely clean-burning fuels. Natural gas fills the bill.

Coal can be used to produce electric power, and it might be advisable--I think it is necessary--to shift away from the use of natural gas for simple heat production and substitute coal. In Georgia, we produce about 85 percent of our electricity from coal-burning plants.

So, I would like to reserve the right now and in the future, whenever I think it advisable, as a President, to use any influence to transport coal even into areas which produce oil and natural gas in order to save the natural gas for more specific and a higher use.

PANAMA CANAL CONSTRUCTION

Q. Mr. President, last night you talked about the possible construction of the new Panama Canal primarily to transport oil. But you didn't go very far in telling us what your thinking, detailed thinking, of that might be.

THE PRESIDENT. I told you at least as much as I know. [Laughter]

Q. Let me ask you: Do you have any idea at this point how much it might cost, when you would start it, where it would be built, and just how far along your thinking on this subject is at this point?

THE PRESIDENT. No, I can't. I'll try to answer your questions briefly.

When President Johnson was in office, there was a very expensive analysis made--I think it cost about $22 million at that time--to determine the feasibility of a canal across the Isthmus of Central America. The outcome of that report was that the best location for a sea-level canal would be a little further north in Panama. I think the estimated cost at that time was about $7 billion.

We did not have the additional problem then of very serious disputes with Panama on continued management of the Canal under the 1907 treaty. We also did not have the additional problem of how to distribute Alaskan oil and natural gas to the eastern part of our country. I think at that time that price was considered to be shocking and unreasonable.

We have just spent $8 billion on the pipeline for oil in Alaska. We're now considering the construction of a natural gas pipeline that would cost maybe $12 billion. So, a new sea-level canal would not be unreasonable or exorbitant when compared with other alternative transmission capabilities.

The other part of the question is about its need. I have only mentioned the oil and natural gas transportation, but as you know, our major warships, large tankers and cargo ships cannot presently use the Panama Canal at all. And I would guess that before the year 2000 comes and the existing treaty with Panama and our control of the Panama Canal might expire, that the need for this larger, wider, deeper canal without the multiple locks might be in the interest of our national security, militarily as well as economically.

But all of these are conjectural points. I've not gone into the question in any depth and I'm not prepared to answer any further.

Go ahead.

Q. Are you planning to make any specific presentation to Congress or to start further study for expanding President Johnson's report?

THE PRESIDENT. Yes. We've begun to look now at the report that was prepared when President Johnson was in office to see its applicability now under the new circumstances that I've described. The two new factors that I've mentioned are the dispute with Panama with continued operation of the Canal under the existing treaty, and the other one is the need to transport Alaskan oil and natural gas. But those two new factors will be assessed, and I can't predict the outcome of it. I've not spent much time on it myself.

Q. [Inaudible]

THE PRESIDENT. I might see if the Senators or the Congress Members or the Governor have an additional comment to make, and then I'm going to have to leave. Senator? Senator Johnston.

SENATOR JOHNSTON. Mr. President, we are very pleased at the action you've taken lately that pertains to energy, and that is, to give us what we think is a favorable statement on our offshore impact fund, and also the agreement to sign the bill that approves all of the Louisiana water projects, including the Boeuf, Black and Chene, which is the bayou that comes down from Morgan City, that through which the largest construction platform in the world just came this week. We think that is progress. We haven't gone all the way we want to go with you, but you're making progress.

THE PRESIDENT. I knew I made a mistake. [Laughter]

SENATOR LONG. I want to thank you for coming and seeing what our situation is here, Mr. President. You've been very kind to hear our views. I'm not one of those who complains about not being able to explain our position to you. I wish we could be sure you are going to agree with us after you heard it. But you're most kind to come and see what the situation is and decide this for yourself, and we very much appreciate it. Thanks for coming.

GOVERNOR EDWARDS. I want to personally express my appreciation to the President for coming to Louisiana, and for viewing firsthand the technology that exists in this area, and how we can produce oil and gas without doing any damage to the environment. And I think it shows a great willingness on his part to learn and to be involved and to be concerned, and I want to personally say how pleased and proud I am on behalf of the people of the State that he has chosen Louisiana this date to visit this facility.

So much of what's gone on in the world in the field of oil and gas, especially where water is concerned, came about as a result of the technology and the efforts and dedication of men and women in Louisiana. And we are very proud of that.

Mr. President, today you are where it's at. When you get to the East Coast you will be where it's going to be.

REPRESENTATIVE BOGGS. Mr. President, it was a joy and a privilege to have a President who was so well prepared, technically, to pose the right questions and then understand the answers on the rig. And I was especially pleased that you recognize the expertness with which the workers were performing their duties, because our onshore capabilities in Louisiana should help us in being able to acquire some of the research and development funds for the alternative sources of energy such as the o-tech (ocean technology) problems, and also geopressure (geopressurized brine). So that I hope you have been well impressed with the workmanship and with our capability.