The Natural Resources Committee of the House of Representatives started on February 11 the first of a series of three hearings on the U.S. offshore oil and gas drilling policy. I summarise hereafter the main elements of the current discussion.
Why a ban on offshore drilling? The background for the current discussions is the end of two bans on offshore drilling in most of the U.S. waters. The bans consist of: (1) a presidential ban adopted by President George Bush Senior in 1989, in reaction to the 1989 Exxon Valdez oil spill in Alaska, and lifted by his son G.W. Bush in July 2008; (2) a Congressional ban from 1981, under the form of a moratorium, renewable each September, and which expired in September 2008. These bans restricted areas that could be offered by the Minerals Management Service (MMS) for outer continental shelf (OCS) leasing. The remaining restrictions concern: the “Presidential Withdrawal”, which excludes all marine sanctuaries from oil and gas leasing activities; and the 2006 Gulf of Mexico Energy Security Act (GOMESA) restricting drilling activities in some portions of the Central Gulf of Mexico Planning Area (CPA) and most of the Eastern Gulf of Mexico Planning Area (EPA).
The practice - Even under the regime of the previous bans, offshore drilling occured and occured to a great extent at the large of the U.S. costs by the way of exemptions to the bans. Most of the latter have been approved in the central Gulf of Mexico, and recently off the coast of Florida. According to the Minerals Management Service, ”82% of the oil and 84% of the natural gas in the OCS are in those areas that were already available for drilling before the congressional moratorium expired last year.” Similarly, the currently leased OCS production areas (43 million acres) accounts for approximately 15% of the domestic natural gas production and about 27% of the domestic oil production. Along the coast of California, 78,000 barrels of oil are produced every day. (Ibid) (See Map of Oil and Gas Fields within the OCS along Californian coasts. Source: MMS)
Upcoming challenges: endorsing a new offshore drilling policy - Although the bans are lifted, and offshore drilling made legal, the Obama administration is reserved on the topic. During the first Congress hearing this month, Republicans asked President Obama to endorse a proposal put forward by his predecessor of a five-year plan aimed to expand offshore drilling, i.e. authorise 31 exploration lease sales in the period 2010-2015 off California, Alaska and East Coast. The proposal is opposed by environmental organisations such as the American Oceans Campaign, but also by local politicians such as California Governor Arnold Schwarzenegger.
Follow-up question: what is the repartition of jurisdiction between States and the federal government over offshore resources? It is only several years after the 1945 President Truman Proclamation on the Policy of the United States with Respect to the Natural Resources of the Subsoil and Sea Bed of the Continental Shelf, that the jurisdiction issue has been solved by the Legislature and case law. The main piece of legislation is the Outer Continental Shelf Lands Act (OCS Lands Act), which provides in section 1331 (a) that the Federal Government has jurisdiction over the submerged lands, subsoil, and seabed, lying between the seaward extent of the States' jurisdiction and the seaward extent of Federal jurisdiction (= EEZ, 200 miles). The federal authority is exercised by the Minerals Management Service, part of the Department of the Interior. The States jurisdiction is limited to 3 miles from shores, except in Louisiana (3 imperial nautic miles), and Texas and the Gulf Coast of Florida (9 miles).
Not a short-term strategy – Connecting the freshly drilled petroleum products to the transportation network is a mid-term strategy. It requires permits, investment and construction. The leasing procedure is lengthy (still undergoing for the areas opened in 2006). The U.S. Department of Energy foresees that the offshore resources to be opened for exploitation will fully contribute to the domestic production by 2030.
For the consequences of a forthcoming ratification of the Law of the Sea Convention and offshore drilling, see end of precedent message.
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