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Outer Continental Shelf: Debate Over Oil and Gas Leasing and Revenue Sharing

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Publication Date: January 2008

Publisher(s): Library of Congress. Congressional Research Service

Series: RL33493

Topic: Energy (Petroleum industry)
Environment (Ocean and ocean resources)

Abstract:

Oil and gas leasing in the Outer Continental Shelf (OCS) has been an important issue in the debate over energy security and domestic energy resources. The Department of the Interior (DOI) released a comprehensive inventory of OCS resources in February 2006 that estimated reserves of 8.5 billion barrels of oil and 29.3 trillion cubic feet (tcf) of natural gas. Another 86 billion barrels of oil and 420 tcf of natural gas are classified as undiscovered resources. Congress has imposed moratoria on much of the OCS since 1982 through the annual Interior appropriation bills. Proponents of the moratoria contend that offshore drilling would pose unacceptable environmental risks and threaten coastal tourism industries.

Several bills related to oil and gas leasing in the OCS have been introduced in the 109th Congress. On June 29, 2006, the House approved H.R. 4761, the Deep Ocean Energy Resources Act of 2006, to allow states, using specified criteria, to petition the Secretary of the Interior to lease in the federal OCS offshore the state. The bill would also provide coastal states with a share of revenues generated from offshore oil and gas production. Currently, the affected states receive revenue indirectly from offshore oil and gas leases in federal waters. This is in contrast to states with onshore leases on federal lands, which receive a direct share of the oil and gas leasing revenues.

On February 16, 2006, the Senate Energy Committee held a hearing on Senator Domenici's bill, S. 2253, which would require controversial Lease Sale 181 in the eastern Gulf of Mexico to be offered within one year of passage. The Senate Energy panel passed S. 2253 by a vote of 16-5 on March 8, 2006. Lease Sale 181 has galvanized interest in a number of related concerns. Some Members of Congress argued for greater coastal revenue sharing based on offshore production, others to promote natural gas-only leases in areas now off-limits. Some Members are calling for much more limited access to offshore federal areas. Because of the various interests, Senate leaders agreed to new language on July 12, 2006, that would increase the amount of acreage made available for lease (about 8.3 million acres), provide coastal states with a share of the revenues generated from offshore leases (37.5%), and extend the buffer zone within which leasing would not be allowed to 125 miles from Florida. The new bill S. 3711 is described below.

President George H.W. Bush, in 1990, responding to pressure from the states of Florida and California and others concerned about protecting the ocean and coastal environments, issued a presidential directive ordering the DOI not to conduct offshore leasing or preleasing activity in places other than Texas, Louisiana, Alabama, and parts of Alaska -- areas not covered by the annual legislative moratoria -- until 2000. In 1998, President Clinton extended the prohibition until 2012. Leasing procedures are specified by the Outer Continental Shelf Lands Act (OCSLA) of 1953, as amended.

This report replaces CRS Issue Brief IB10149, Outer Continental Shelf: Debate Over Oil and Gas Leasing and Revenue Sharing, by Marc Humphries.