Offshore oil and gas production
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Offshore oil and gas production refers to the exploration and extraction of underwater crude oil and natural gas resources. Production first occurred in the United States in the late 1890s. In 1953, Congress passed the Outer Continental Shelf Lands Act (OCSLA), which reaffirmed federal jurisdiction over all submerged lands (outside state jurisdiction) and their resources, including oil, gas, and minerals. The U.S. Department of the Interior is responsible for regulating offshore oil and gas production for conservation, environmental protection, operational safety, and the distribution of royalties. In 2016, offshore wells produced 594.4 million barrels of crude oil. In 2015, offshore wells produced 1.3 trillion cubic feet of natural gas.
See the tabs below for further information.
- Overview: This tab provides information on the basics of offshore oil and gas production, federal policies on offshore production, and federal regulatory agencies responsible for offshore production.
- Production: This tab provides data about crude oil and natural gas offshore production in the United States.
- Economic impact: This tab outlines information on nationwide economic impacts related to offshore production.
- Environmental impact: This tab outlines information about nationwide environmental impacts related to offshore production.
Overview[edit]
Overview[edit]
Offshore oil and gas production refers to the exploration and extraction of underwater crude oil and natural gas resources. The term offshore production generally refers to extracting energy resources in the ocean, though oil and gas operators can extract resources in lakes and inland seas. Operators can drill exploratory wells to discover new oil or gas deposits and drill development wells in areas with proven oil or gas reserves. Operators also conduct geological surveys to determine potential oil or gas reserves before hiring drilling contractors to establish exploratory wells. A location is then identified for drilling.[1][2][3][4]
In general, drilling occurs 24 hours per day, seven days per week, and drilling can range from two weeks to one year. Wells are drilled at depths from 20 to 400 feet or up to 12,000 feet. The wells are supported by offshore vessels that transport and repair drilling units. Some of these vessels are connected to wells through risers, which are the links that transfer oil from the seabed to the surface.[1][2][3][4]
For oil and gas fields nearer to the shore, offshore vessels install pipelines to bring oil or gas onshore. For oil and gas fields far off the coast, tankers or barges are used to store and deliver oil or gas.[1][2][3][4]
Policies[edit]
The federal government began regulating offshore oil and gas operations in the 1950s. In 1953, Congress passed the Submerged Lands Act, which allowed states to have jurisdiction over any energy resources within 3.45 miles—3 nautical miles—of coastline; Texas and Florida were given jurisdiction over resources within 10.35 miles—9 nautical miles (Florida was given jurisdiction over resources within 10.35 miles only off the state's west coast).
Later in 1953, Congress passed the Outer Continental Shelf Lands Act (OCSLA), which reaffirmed federal jurisdiction over all submerged lands (outside state jurisdiction) and their resources, including oil, gas, and minerals. Additionally, the act allowed the U.S. Department of the Interior to manage offshore leasing for oil and gas development in federally managed waters. Companies were required to pay leasing fees and taxes on all oil or gas extracted. Further, the act required resource-rich areas to be given priority for development. The department made leasing decisions based on the best available information regarding the following:[5]
- The social, economic, and environmental impact of oil and gas drilling in the Outer Continental Shelf (displayed on the right)
- The ecological and geological features of the region
- Any location-specific risks or challenges
- Stakeholder interests
Leasing moratoria[edit]
The first moratorium on new oil and gas production in portions of the Outer Continental Shelf was passed by Congress in 1981. The bill prohibited drilling in approximately 736,000 acres off the California coast for fiscal year 1982. From 1981 to 2008, Congress passed annual moratoria on new oil and gas production in specific areas of the Outer Continental Shelf. For example, Congress enacted annual moratoria on new oil and gas drilling in the following areas from 1982 to 1990:[5][6]
- 35 million acres in central and northern California and the mid-Atlantic (1983)
- 54 million acres in certain portions off the California coast as well as the North Atlantic and the eastern Gulf of Mexico (1984)
- 45 million acres in portions off the California coast as well as the North Atlantic (1985)
- 8 million acres in the North Atlantic (1986-1988)
- 33 million acres in northern California, the North Atlantic, and the eastern Gulf Coast (1989)
- 84 million acres in portions off the California coast, the North and Mid-Atlantic, the eastern Gulf Coast, and the North Aleutian Basin (1990)
In 1990, President George H. W. Bush (R) issued a directive enacting a drilling moratorium on unleased areas in offshore northern, central, and southern California (with exceptions), Washington, Oregon, the North Atlantic coast, and the eastern Gulf of Mexico until the year 2000. In 1998, President Bill Clinton (D) extended this moratorium through the year 2012.[5][6]
In 2008, President George W. Bush (R) lifted the 1990 executive directive banning new drilling in unleased areas. In July 2008, Bush issued a plan for oil and gas leasing in the Outer Continental Shelf for the 2010-2015 period. In October 2008, Congress allowed annual moratoria on new offshore production to expire.[7][6]
In 2011, President Barack Obama (D) issued a moratorium on new offshore drilling from 2012 to 2017 off the Atlantic and Pacific coasts. In December 2016, Obama issued a moratorium on all new oil and gas drilling in approximately 120 million acres in the Arctic and Atlantic oceans.[7][6][8]
In April 2017, President Donald Trump (R) signed an executive order directing the U.S. Department of the Interior to repeal the Obama administration's moratoria on oil and gas drilling in the Arctic, Atlantic, and Pacific coasts.[9]
Federal agencies[edit]
Prior to 2010, the Mineral Management Service, a division of the U.S. Department of the Interior, oversaw offshore oil and gas production. In October 2011, regulatory responsibilities were divided among three newly created federal entities:[10]
- The Bureau of Ocean Energy Management (BOEM) is "responsible for managing [the] development of the nation’s offshore resources in an environmentally and economically responsible way," according to the bureau's website.[11]
- The Bureau of Safety and Environmental Enforcement (BSEE) "enforce[s] safety and environmental regulations," according to the bureau's website.[11]
- The Office of Natural Resource Revenue is responsible for providing "a fair return to the taxpayer from offshore royalty and revenue collection and disbursement activities," according to the office's website.[11]
Production[edit]
Crude oil[edit]
The chart below shows crude oil production from federal offshore wells from 2006 to 2016.[12]
The table below shows crude oil production from offshore wells from 2006 to 2016.
| Crude oil production from federal offshore wells (in thousand barrels) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
| Gulf of Mexico | 472,017 | 467,971 | 423,326 | 570,302 | 480,702 | 463,264 | 458,039 | 509,981 | 552,863 | 587,995 | 588,020 |
| West Coast (Alaska and California) | 25,987 | 24,624 | 24,029 | 22,306 | 21,708 | 19,817 | 17,679 | 18,559 | 18,482 | 11,445 | 6,434 |
| Source: U.S. Energy Information Administration, "Crude Oil Production" | |||||||||||
Natural gas[edit]
The chart below shows natural gas production from federal and state offshore wells from 2005 to 2015.[13]
The tables below show natural gas production from federal and state offshore wells from 2006 to 2015.
| Natural gas production from federal offshore wells (in million cubic feet) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Alabama | -- | -- | -- | -- | -- | -- | 0 | 0 | 0 | 0 |
| Alaska | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| California | 40,407 | 45,516 | 44,902 | 41,229 | 41,200 | 36,579 | 27,262 | 27,454 | 14,515 | 8,397 |
| Gulf of Mexico | 2,914,131 | 2,813,197 | 2,329,955 | 2,444,102 | 2,259,144 | 1,830,913 | 1,527,875 | 1,326,697 | 1,275,738 | 1,309,380 |
| Louisiana | -- | -- | -- | -- | -- | -- | 0 | 0 | 0 | 0 |
| Texas | -- | -- | -- | -- | -- | -- | 0 | 0 | 0 | 0 |
| U.S. total | 2,954,538 | 2,858,713 | 2,374,857 | 2,485,331 | 2,300,344 | 1,867,492 | 1,555,138 | 1,354,151 | 1,303,458 | 1,317,777 |
| Source: U.S. Energy Information Administration, "Offshore Gross Withdrawals of Natural Gas" | ||||||||||
| Natural gas production from state offshore wells (in million cubic feet) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Alabama | 145,762 | 134,451 | 125,502 | 109,214 | 101,487 | 84,270 | 87,398 | 75,660 | 70,829 | 64,184 |
| Alaska | 354,816 | 374,204 | 388,188 | 357,490 | 370,148 | 364,702 | 307,306 | 332,402 | 365,135 | 370,657 |
| California | 6,809 | 7,289 | 7,029 | 6,052 | 5,554 | 5,163 | 5,051 | 5,470 | 5,805 | 5,146 |
| Gulf of Mexico | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Louisiana | 88,657 | 63,357 | 82,061 | 72,278 | 63,222 | 71,226 | 73,244 | 77,750 | 61,322 | 53,117 |
| Texas | 24,785 | 29,229 | 46,786 | 37,811 | 28,574 | 23,791 | 16,506 | 14,036 | 11,200 | 9,321 |
| State total | 629,652 | 618,042 | 653,704 | 586,953 | 575,601 | 549,151 | 489,505 | 505,318 | 514,809 | 502,425 |
| Source: U.S. Energy Information Administration, "Offshore Gross Withdrawals of Natural Gas" | ||||||||||
Economic impact[edit]
The information below summarizes studies and other reports on the nationwide economic impact of offshore oil and gas production in the United States. Links to the studies are provided below.
Interstate Policy Alliance (2014)[edit]
In September 2014, a study commissioned by the Interstate Policy Alliance, a conservative think tank, and the Palmetto Policy Forum concluded that increased offshore oil and gas drilling in Delaware, Georgia, Maryland, Virginia, South Carolina, and North Carolina would produce between $10.8 billion and $60 billion in value added (the market value of all final goods and services produced within a metropolitan area in a given period of time) by the year 2035. The complete study can be accessed here.
The study's authors outlined three scenarios in which offshore oil and gas production would total up to 169,000 barrels of oil per day by 2035 (low production scenario), 484,000 barrels per day by 2035 (medium production scenario), and 943,000 barrels per day by 2035 (high production scenario). These scenarios also assume environmental impacts, including higher air pollutant emissions, higher carbon dioxide (CO2) emissions, and a greater likelihood of oil spills.
The table below shows the value added, state and local tax revenues, average annual full-time equivalent jobs, and total environmental impacts under the three scenarios by the year 2035 (in 2012 dollars).
| Interstate Policy Alliance analysis of economic and environmental impacts of offshore oil and gas (in billion 2012 dollars) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Economic, fiscal, and economic impacts | Low production scenario | Medium production scenario | High production scenario | |||||
| Value added | $10.7 | $30.8 | $60.03 | |||||
| Tax revenues (federal and state) | $2.08 | $5.9 | $11.5 | |||||
| Environmental impacts | $0.395 | $3.2 | $19.01 | |||||
| Average annual full time equivalent jobs* | 12,084 | 34,518 | 67,255 | |||||
| *Estimated number of jobs Source: Interstate Policy Alliance, "Economic and Environmental Impacts of Oil and Gas Development Offshore" | ||||||||
Quest Offshore Resources study (2013)[edit]
In December 2013, Quest Offshore Resources, a consulting firm that analyzes deepwater oil and gas markets, issued a study concluding that increased U.S. offshore oil and gas production in the Atlantic Outer Continental Shelf could produce an additional 1.3 million barrels of oil per day, approximately 280,000 jobs, produce up to $23.5 billion in U.S. economic activity, and raise approximately $51 billion in federal and state tax revenue by the year 2035 (the study assumes that lease sales begin in the year 2018). The study's authors argued that the cost to oil and gas operators (in the form of investment and operation spending) would be approximately $195 billion cumulative from 2017 to 2035. Specifically, the study's authors found that approximately 11,000 jobs and $1 billion in U.S. economic activity would be generated by the year 2020 and approximately 78,000 jobs and $6.4 billion in economic activity by the year 2025. Further, the study's authors stated that the Atlantic Coast region would see approximately 6,000 jobs and $530 million in economic activity generated by the year 2020, approximately 37,800 jobs and $3 billion in economic activity by the year 2025, and approximately 216,000 jobs and $17 billion in economic activity by the year 2035. The study was commissioned by the National Ocean Industries Association (a trade association that represents offshore energy companies) and the American Petroleum Institute (a national trade association that represents the oil and natural gas industry). The full study can be accessed here].[14][15][16]
Environmental impact[edit]
Overview[edit]
As with all oil and natural gas production, offshore oil and gas production can have environmental impacts, such as accidental spills, harm to marine life, and damage to coastlines, among others. For example, according to the National Oceanic and Atmospheric Administration (NOAA), oil spills can harm sea animals and plant life due to potentially poisonous chemicals in the oil.[17]
In its 2016 report on oil spills from offshore production, the Bureau of Ocean Energy Management found that 20.6 billion barrels of oil were produced from 1964 to 2015. Of that total, 5.1 million barrels of oil were spilled. This figure included the oil spilled during the 2010 Deepwater Horizon spill in the Gulf Coast, which resulted in approximately 4.9 million barrels of spilled oil. The number of barrels of oil spilled per barrel of oil produced decreased during from 1964 to 2015 alongside increased crude oil production.[18]
Under the Outer Continental Shelf Lands Act (OCSLA), the U.S. Department of the Interior must regulate offshore oil and gas production for conservation, environmental protection, and operational safety. The department's offshore oil and gas regulations can be accessed here.[5]
Deepwater Horizon spill (2010)[edit]
On April 20, 2010, an explosion caused by a surge in natural gas at the Deepwater Horizon oil rig off the coast of Louisiana resulted in a large marine oil spill. The explosion and subsequent sinking of the oil rig resulted in 11 deaths, 17 people injured, and 5.1 million barrels of crude oil spilled. In addition, the spill resulted in the temporary closure of one-third of federal waters from fishing, between 8,000 and 12,000 temporarily unemployed workers, and a decline in tourism. Under an agreement with the U.S. Department of Justice, BP, the company responsible for the spill, pleaded guilty to 11 counts of felony manslaughter, violations of the Clean Water Act and the Migratory Bird Treaty Act, and other criminal charges. The company spent approximately $20 billion to compensate individuals affected by the spill, $4.5 billion in fines for criminal charges, and an $18.7 billion settlement between BP, affected states, and the federal government.[19][20][21]
Recent news[edit]
The link below is to the most recent stories in a Google news search for the terms offshore oil gas United States. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.
Energy policy in the 50 states[edit]
Click on a state below to read more about that state's energy policy.
See also[edit]
Footnotes[edit]
- ↑ 1.0 1.1 1.2 Diamond Offshore, "Offshore Drilling Basics," accessed April 24, 2017
- ↑ 2.0 2.1 2.2 Marine Insight, "Different Types of Offshore Oil and Gas Production Structures," accessed April 16, 2017
- ↑ 3.0 3.1 3.2 Marine Insight, "Basics of Offshore Drilling: Types of Mobile Drilling Units," July 21, 2016
- ↑ 4.0 4.1 4.2 Planete Energies, "Offshore Oil and Gas Production," accessed April 22, 2017
- ↑ 5.0 5.1 5.2 5.3 U.S. Energy Information Administration, "Overview of U.S. Legislation and Regulations Affecting Offshore Natural Gas and Oil Activity," September 2005 Cite error: Invalid
<ref>tag; name "EIA reg" defined multiple times with different content - ↑ 6.0 6.1 6.2 6.3 House Committee on Natural Resources, "Obama Administration Imposes Five-Year Drilling Ban on Majority of Offshore Areas," November 8, 2011
- ↑ 7.0 7.1 Institute for Energy Research, "Obama's Offshore Plan: One Giant Leap Backwards," May 8, 2012
- ↑ Politico, "Obama restricts offshore drilling in latest poke at Trump," December 20, 2016
- ↑ The Hill, "Trump signs order to roll back Obama's offshore drilling limits," April 28, 2017
- ↑ CS Monitor,"BP oil spill: MMS shortcomings include 'dearth of regulations,'" June 17, 2010
- ↑ 11.0 11.1 11.2 Bureau of Ocean Energy Management, "The Reorganization of the Former MMS," accessed April 1, 2016
- ↑ U.S. Energy Information Administration, "Crude Oil Production," April 4, 2016
- ↑ U.S. Energy Information Administration, "Offshore Gross Withdrawals of Natural Gas," March 31, 2016
- ↑ Quest Offshore, "The Economic Benefits of Increasing U.S. Access to Offshore Oil and Natural Gas Resources in the Eastern Gulf of Mexico," November 2014
- ↑ Quest Offshore, "The Economic Benefits of Increasing U.S. Access to Offshore Oil and Natural Gas Resources in the Atlantic," December 2013
- ↑ Quest Offshore, "The Economic Benefits of Increasing U.S. Access to Offshore Oil and Natural Gas Resources in the Pacific," November 2014
- ↑ National Oceanic and Atmospheric Administration, "How Oil Harms Animals and Plants in Marine Environments," April 5, 2016
- ↑ Bureau of Ocean Energy Management, "2016 Update of Occurrence Rates for Offshore Oil Spills," July 13, 2016
- ↑ Encyclopedia Britannica, "Deepwater Horizon oil spill of 2010," accessed April 2, 2016
- ↑ National Oceanic and Atmospheric Administration, "Oil Budget Calculator Deepwater Horizon," November 2010
- ↑ The New York Times, "U.S. Judge Approves BP Settlement for 2010 Gulf of Mexico Oil Spill," April 4, 2016
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