RL33493 - Outer Continental Shelf: Debate Over Oil and Gas Leasing and Revenue Sharing
27-Oct-2008; Marc Humphries; 23 p.
Update: Previous Releases:
September 17, 2009
January 22, 2008
August 28, 2006
MOST RECENT DEVELOPMENTS:
President Bush announced on June 18, 2008, that he would like to open areas of the Outer Continental Shelf (OCS) for oil and gas development currently under presidential and congressional moratoria (discussed in more detail below). However, the President stated that he would lift the executive branch moratoria only after Congress did so legislatively. But, on July 14, 2008, President Bush reversed his position and lifted the executive ban on the OCS imposed in 1990 by President George H.W. Bush. Senator John McCain, among others, has called on Congress to lift the offshore drilling moratoria as well. Further, the Administration proposes to begin planning its next five-year leasing program now that would, if approved, be implemented as early as 2010 — two years ahead of schedule. The proposed new five-year program would supercede the current five-year leasing program from 2007- 2012. The Administration argues that a new five-year lease program beginning in 2010 would allow any newly opened OCS areas (e.g., if the congressional moratoria is lifted this year) to be offered in a lease sale sooner than if they remained on their current schedule.
Since the President lifted the executive ban members of Congress have introduced legislation that would lift the congressional prohibition (in part or completely) against leasing and development of oil and natural gas in the OCS. The legislation section of this report summarizes several of those bills and proposals, including House-passed H.R. 6899. On September 16, 2008, the House passed H.R. 6899 by a vote of 236-189. Many in Congress, however, oppose lifting the offshore ban. They argue that there are still several million acres leased onshore and offshore but not yet producing and that production from these lands could increase U.S. oil supply. How much oil could be brought into production in the short-term (from nonproducing leased lands or those under the moratoria) and its impact on price is uncertain. An attempt to lift the offshore moratoria with an amendment to the FY2009 Interior, Environment, and Related Agencies Appropriations bill during the House subcommittee markup was defeated by a vote of 6-9. Meanwhile, on June 26, 2008, under suspension of the rules (which requires a two-thirds majority for passage), the House defeated a measure (H.R. 6251) that would have increased rental fees on non-producing oil and gas leases, and denied new federal leases to those not diligently developing the leases they have.
Abstract: Oil and gas leasing in the Outer Continental Shelf (OCS) has been an important issue in the debate over energy security and domestic energy resources. The Department of the Interior (DOI) released a comprehensive inventory of OCS resources in February 2006 that estimated reserves of 8.5 billion barrels of oil and 29.3 trillion cubic feet (tcf) of natural gas. Another 86 billion barrels of oil and 420 tcf of natural gas are classified as undiscovered resources. Congress has imposed moratoria on much of the OCS since 1982 through the annual Interior appropriation bills. Proponents of the moratoria contend that offshore drilling would pose unacceptable environmental risks and threaten coastal tourism industries.
Several bills related to oil and gas leasing in the OCS have been introduced in the 109th Congress. On June 29, 2006, the House approved H.R. 4761, the Deep Ocean Energy Resources Act of 2006, to allow states, using specified criteria, to petition the Secretary of the Interior to lease in the federal OCS offshore the state. The bill would also provide coastal states with a share of revenues generated from offshore oil and gas production. 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.
On February 16, 2006, the Senate Energy Committee held a hearing on Senator Domenici’s bill, S. 2253, which would require controversial Lease Sale 181 in the eastern Gulf of Mexico 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 argued 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. Because of the various interests, Senate leaders agreed to new language on July 12, 2006, that would increase the amount of acreage made available for lease (about 8.3 million acres), provide coastal states with a share of the revenues generated from offshore leases (37.5%), and extend the buffer zone within which leasing would not be allowed to 125 miles from Florida. The new bill S. 3711 is described below.
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 DOI not to conduct offshore leasing or preleasing activity in places other than Texas, Louisiana, Alabama, and parts of Alaska — areas not covered by the annual legislative moratoria — until 2000. In 1998, President Clinton extended the prohibition until 2012. Leasing procedures are specified by the Outer Continental Shelf Lands Act (OCSLA) of 1953, as amended.
This report replaces CRS Issue Brief IB10149, Outer Continental Shelf: Debate Over Oil and Gas Leasing and Revenue Sharing, by Marc Humphries.