Offshore Production

 

Offshore Production

Background

The Minerals Management Service (MMS) of the U.S. Department of the Interior estimates that 480 Tcf of potentially recoverable new supplies of natural gas may lie on the federal Outer Continental Shelf (OCS). A federal moratorium on oil and gas leasing on the OCS, in place for over 25 years, was allowed to elapse on September 30, 2008, although a drilling ban still exists until 2022 in the Eastern Gulf of Mexico under the Gulf of Mexico Energy Security Act of 2006. Generally, coastal states control waters extending for three miles. Texas and Florida have nine miles. Federal waters extend out to 200 miles. In 2006, Congress passed, and President Bush signed into law, the Gulf of Mexico Energy Security Act, which opened 8.3 million acres for oil and natural gas leasing in the Eastern Gulf of Mexico (Lease 181 Area), which had been withdrawn by presidential order. The MMS 5-Year (2007 2012) Oil & Gas Leasing Program also opens additional acreage off the coast of Alaska and in the south central portion of the Gulf of Mexico, and provides for further study, but no leasing, of the area off of the state of Virginia. In the summer of 2008, the President Bush withdrew his Executive Order prohibiting oil and gas leasing on the OCS and Congress allowed moratoria language in the annual appropriations legislation to elapse. Consequently, the MMS has proposed a new 5-Year (2010-2015) Oil & Gas Leasing Program to take into account the newly opened areas of the OCS. Interior Secretary Ken Salazar has extended the comment period for this proposed new plan until September 23, 2009. Finding and producing new gas supplies on the OCS will depend on policies that allow selective development to proceed while addressing the concerns of coastal states.

AGA Viewpoint

AGA supports the permanent removal of leasing moratoria on the OCS for natural gas. Legislation that would do this would also keep all activity far out of sight from shore, unless a coastal state decides to allow production closer to its coast. AGA also supports legislation that would give coastal states the right to decide whether or not to allow gas leasing to proceed and, if leasing moves forward, to share in the bonus bids and production royalties.

AGA Contact: Chris McGill, 202-824-7132, cmcgill@aga.org

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