Outer Continental Shelf Oil and Gas: Energy Security and Other Major Issues

Publication Date: March 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Energy

Type:

Abstract:

The Outer Continental Shelf (OCS) contains significant energy resources. The principal authority for OCS development is the OCS Lands Act of 1953, as amended (43 USC 1331). The OCS is made available for oil and gas exploration and development subject to environmental protection and competing public needs.1 A number of OCS issues have been addressed through the annual appropriation process, including offshore leasing moratoria, lease sale 181 (a controversial Florida lease sale), and the royalty-in-kind program.

The leasing moratoria, which began in Congress with the FY1982 Interior Appropriations Act (P.L. 97-100), prohibited new offshore California leases. The moratoria were imposed because many coastal states and environmental groups convinced Congress that leasing tracts in environmentally sensitive areas might lead to activities that could cause economic or irreversible environmental damage. Eventually the moratoria were expanded to include New England, the Georges Bank, the mid-Atlantic, the Pacific Northwest, much of Alaska, and a portion of the Eastern Gulf of Mexico. Lease sale 181, in the Eastern Gulf of Mexico, was controversial because of its perceived threat to local economies and the environment. The original leasing area of 5.9 million acres, estimated to contain nearly 8 trillion cubic feet (tcf) of natural gas and 396 million barrels of oil, was reduced to 1.47 million acres after intense pressure from environmentalists and Florida officials. Lease buybacks or lease swaps are particularly important in light of congressional interest in broadening the offshore California moratoria. Companies already unable to develop their California lease holdings were seeking compensation through the Senate version of the energy bill (H.R. 4) in the 107th Congress. Additionally, there was legislative interest related to extending the Deepwater Royalty Relief Act. Environmental concerns from offshore oil and gas development generally include oil spills, drilling discharges, seismic surveys, and onshore damage.

The Gulf of Mexico (GOM) is cited by the Energy Information Administration (EIA) as the most promising region for new additions to U.S. oil reserves because it led the nation in total discoveries with 423 million barrels in 1999 (despite its net loss of reserves)2 and 702 million barrels in 2000. The proposed Minerals Management Service (MMS) 2002-2007 5-Year Program also lists the GOM as the most promising area. Exploring for offshore oil and gas has changed over the past several years. New technology has led to greater exploration and development into deeper water made possible by advances in high-quality 3-dimensional seismic surveying and processing. New drilling technology and new drilling rigs allow for increased drilling at greater depths and accuracy, resulting in higher production rates and lower-cost production.

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