PDF _ IB10149 - Outer Continental Shelf: Debate Over Oil and Gas Leasing and Revenue Sharing
7-Apr-2006; Marc Humphries; 16 p.

Update: June 1, 2006

Most Recent Developments:
Several new bills related to oil and gas leasing in the outer continental shelf (OCS) have been introduced in Congress. On February 16, 2006, the Senate Energy Committee held a hearing on its bill S. 2253, which would require Lease Sale 181 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 used the hearing to argue 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.

The Department of the Interior (DOI) conducted a comprehensive inventory of OCS oil and natural gas resources, as required by the Energy Policy Act of 2005 (P.L. 109-58, Section 357). In the inventory, the DOI estimated 8.5 billion barrels (bbo) of known oil reserves (82% in the Gulf of Mexico [GOM]) and 29.3 trillion cubic feet (tcf) of natural gas (95% in the GOM). In the undiscovered resource category, the DOI estimated about 86 bbo (51% in the GOM) and 420 tcf of natural gas (55% in the GOM). The Minerals Management Service (MMS) has introduced its proposed five-year leasing program for 2007-2012. Areas currently in the OCS moratoria along the Atlantic coast, the North Aleutian Basin (Alaska), and the central GOM (under proposed redrawn boundaries) are included in the proposed leasing program. There would be no leases in the redrawn eastern GOM planning area.

Previous Updates:
NLE/CRSreports/Oct05/IB10149.pdf

Abstract: Several new bills related to oil and gas leasing in the outer continental shelf (OCS) have been introduced in Congress. On February 16, 2006, the Senate Energy Committee held a hearing on its bill S. 2253, which would require Lease Sale 181 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 used the hearing to argue 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.

The OCS moratoria, which prohibit leasing on most federal offshore lands, have been an important issue in the debate over energy security and the potential availability of additional domestic oil and gas resources. Congress has enacted the moratoria for each of fiscal years 1982-2006 in the annual Interior Appropriations bill. Proponents of the moratoria contend that offshore drilling would pose unacceptable environmental risks and threaten coastal tourism industries.

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 Department of the Interior not to conduct offshore leasing or preleasing activity in places other than Texas, Louisiana, Alabama, and parts of Alaska — areas covered by the annual legislative moratoria — until 2000. In 1998, President Clinton extended the prohibition until 2012.

The Outer Continental Shelf Lands Act (OCSLA) of 1953, as amended, provides for oil and gas leasing of OCS lands in a manner that protects the environment and returns revenues to the federal government in the way of bonus bids, rents, and royalties. OCSLA requires the Secretary of the Interior to submit five-year leasing programs that specify the time, location, and size of the leases to be offered.

States with offshore energy development have been seeking to receive a direct share of the federal revenues generated by those activities. 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.

The possibility of oil and gas production in offshore areas covered by the moratoria has sparked sharp debate in Congress. A proposal to require the Department of the Interior to conduct a comprehensive inventory of OCS oil and natural gas resources drew heated opposition, although it was ultimately included in the Energy Policy Act of 2005 (P.L. 109-58, Section 357). The report was published in February 2006. Opponents of the OCS inventory saw it as a first step toward lifting the OCS leasing moratoria.

 [read report]

Topics: Marine, Energy, Legislative

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