Offshore oil and gas in the United States

Offshore oil and gas in the United States provides a large portion of the nation’s oil and gas supply. Large oil and gas reservoirs are found under the sea offshore from Louisiana, Texas, California, and Alaska. Environmental concerns have prevented or restricted offshore drilling in some areas, and the issue has been hotly debated at the local and national levels.

Production

From 1954 to 2023, federal offshore tracts produced of oil and of natural gas.

In recent years, the Gulf of Mexico alone accounted for about 15% of all domestic oil production (14.5% in 2022) and 2% of domestic natural gas production. Despite some fluctuations due to new deep-water discoveries and technological advancements, offshore production continues to play a crucial role in the U.S. energy landscape.

In 2023, federal offshore tracts produced approximately 15% of the oil and 2% of the natural gas in the United States. The Gulf of Mexico remains a critical area for offshore production, housing several of the nation's largest oil fields. Notable fields include Mars-Ursa, Thunder Horse, and Atlantis, which continue to contribute significantly to the country's oil reserves.

The oil production in the offshore area owned by the federal government reached approximately in 2023, reflecting a significant recovery and surpassing previous records.

Ownership of offshore oil and gas The issue of state versus federal ownership has a long and contentious history (see Tidelands). The US Supreme Court ruled in 1947 that the federal government owned all the seabed off the California coast; the court applied the same doctrine against Louisiana and Texas in 1950. The court ruling invalidated existing state leases over producing offshore oil fields in the three states. However, the US Congress passed the Submerged Land Act in 1953, which recognized state ownership of the seabed within of the shore.Edgar Wesley Owen (1975) Trek of the Oil Finders, American Association of Petroleum Geologists, Memoir 6, p.801. That same year Congress also passed the Outer Continental Shelf Act, which gave the federal government jurisdiction over minerals on and under the seabed farther offshore from state waters.

The first federal offshore lease sale was held in 1954, to offer oil production rights under federal seabed in offshore Louisiana.

State ownership

Each coastal state owns the territory extending from the shore at mean low tide, and has jurisdiction to decide whether or not, and under what terms, to lease the territory for oil and gas. Exceptions include Texas and the west coast of Florida, which for historical reasons own the seabed out to from the shore. Louisiana is included in the 3 nautical mile rule, but because it had active offshore leases defined before 1950 (and before most other states), its territory is measured using the Admiralty Nautical Mile, while other states use the International Nautical Mile, adopted by the United States in 1954.

The exact definition of the shoreline, dividing state waters offshore and potential private land onshore, depends on state law. Shifting shorelines in the vicinity of oil fields have been a thorny issue. In the Goose Creek field along the coast in Harris County, Texas, so much oil was produced that the ground elevation sank ten or more feet, putting some privately owned oil-producing lands below sea level. The state of Texas then declared that the newly submerged land, along with its oil revenue, was state property.

Federal ownership Traditionally, nations owned the territory extending from shore. In 1945, President Harry Truman issued a proclamation extending US jurisdiction over mineral resources to the edge of the continental shelf; the proclamation was codified by Outer Continental Shelf Lands Act of 1953. The Geneva Convention on the continental shelf in 1958 recognized the right of each nation to the mineral resources on its adjacent continental shelf, out to a water depth of 200 meters. In 1983, President Ronald Reagan issued a proclamation extending the US Exclusive Economic Zone to from the shore.D. James Baker (1987) “The Exclusive Economic Zone - resources for the future,” in Proceedings of the 1987 Exclusive Economic Zone Symposium on mapping and research: planning for the next 10 years, US Geological Survey, Circular 1018, p.7-9.

By virtue of the Law of the Sea, which the U.S. has signed but not ratified, each nation controls an Exclusive Economic Zone (EEZ) that extends from its shore. The EEZ confers exclusive rights to a nation to explore and produce minerals, including oil and gas. In areas within 200 nautical miles of two or more nations, the territorial line is drawn equidistant from the shores of the two nations. The US and Canada referred a dispute over the EEZ boundary in the Atlantic Ocean to the International Court of Justice, which decided the matter (see Georges Bank). Article 76 of the Law of the Sea provides that nations may under certain circumstances extend their EEZs beyond the 200 nautical mile limit, to up to from shore.

The 200 nautical mile EEZ left a small area in the western Gulf of Mexico enclosed by the EEZs of the United States and Mexico, but outside the EEZ of either nation (the "doughnut hole"). The US and Mexico concluded a treaty to divide the area between them. A second, and as yet unresolved "doughnut hole" exists in the eastern Gulf of Mexico, bordered by the EEZs of the US, Mexico, and Cuba.

Leasing and drilling on federal offshore seabed is controlled by the Bureau of Ocean Energy Management (BOEM), and the Bureau of Safety and Environmental Enforcement (BSEE), formerly named the Minerals Management Service (MMS). The BOEM issues leases through competitive bidding by sealed bids. The oil and gas company offering the highest up-front payment to the government (called a bonus) wins the lease. The government also receives a fixed annual rental based on the area for non-producing leases, and a percentage of the market value of any oil or gas produced and sold (royalty). The leases expire after a set number of years, or continue however long afterward that oil and gas are continually produced from the lease. Individual tracts are generally . Current leases being offered in the Gulf of Mexico have 5-year terms for tracts in water depths of less than 400 m, and 8 years for tracts in water greater than 400 m. Royalty rates are 18.75% regardless of water depth.Federal Register, 13 February 2008, v.73, n.30, p.8349-8350. From 1954 through 2004, the federal government received $64 billion in bonuses, $3 billion in rentals, $89 billion in royalties, and $3 billion in taken-in-kind oil deliveries in lieu of royalties.US Minerals Management Service: Leasing oil and natural gas resources, outer continental shelf, p.37-38 , PDF file, retrieved 13 March 2009.

International ownership Some potential petroleum deposits underlie areas outside the EEZ. For example, the North Chuckchi Basin in the Arctic Ocean is partly inside and partly outside the US EEZ.

Offshore drilling by area Historically, offshore drilling began by extending known coastal oil- and gas-producing trends out into the ocean. For this reason, most US offshore drilling has taken place offshore Louisiana, Texas, California, and Alaska, areas with coastal onshore oil and gas fields.

"Possibly in some future age, when all known petroleum fields shall have been drained of their richness, oil men may seek refuge in King Neptune's realm." - Oil & Gas Journal, 24 June 1915"Oil prospects in deep seas," Oil & Gas Journal, 24 June 1915, p.3.

Alaska The first federal lease sale offshore Alaska was held in 1976. Alaska produces oil and gas from offshore areas in the Cook Inlet and the Arctic Ocean.US Minerals Management Service: Exploratory drilling by sale area , accessed 13 February 2009. Endicott Island is an artificial island built to produce oil from beneath the Beaufort Sea. There are currently four artificial islands being used for drilling.

By Executive Order dated April 28, 2017, the Bureau of Ocean Energy Management will begin selling offshore leases in 2019.

California

Offshore drilling began in California in 1896, when operators in the Summerland Oil Field in Santa Barbara County followed the field into the ocean by drilling from piers built out over the ocean.

Leasing California state seabed is controlled by the State Lands Commission, which halted further leasing of state offshore tracts after the Santa Barbara oil spill in 1969.California State Lands Commission: Chiand issues statement on new Tranquillon Ridge offshore oil development, PDF file, retrieved 19 February 2009. In 1994 the California legislature codified the ban on new leases by passing the California Coastal Sanctuary Act, which prohibited new leasing of state offshore tracts. The federal government has had no new lease sales for offshore California since 1982. Offshore drilling has continued from existing platforms in state and federal waters.

State offshore seabed in California produced of oil per day, and federal offshore tracts produced of oil per day in November 2008. State and federal offshore tracts together made up 16% of the state's oil production.California Department of Conservation: Monthly oil and gas production and injection report, November 2008, PDF file, downloaded 17 February 2009. Notable offshore fields include the Ellwood Oil Field, which is partially onshore and partially offshore, and the Dos Cuadras Field, source of the 1969 spill, which is entirely within the federal zone.

Gulf of Mexico See Offshore oil and gas in the US Gulf of Mexico

The western and central Gulf of Mexico, which includes offshore Texas, Louisiana, Mississippi, and Alabama, is one of the major petroleum-producing areas of the United States. In 2007, federal leases in the western and central Gulf of Mexico produced 25% of the nation's oil and 14% of the nation's natural gas.US Minerals Management Service, May 2009, Deepwater Gulf of Mexico 2009: Interim Report of 2008 highlights , OCS Report MMS-2009-016, PDF file, p.51, downloaded 3 July 2009. In 2008, federal leases in the Gulf of Mexico produced of oil, down from in 2002; however, due to new deep-water discoveries, the MMS projects that oil production from the Gulf of Mexico will increase to per year by 2013.US Minerals Management Service, May 2009, Gulf of Mexico Oil and Gas Production Forecast: 2009-2018 , OCS Report MMS 2009-012, PDF file, p.21, downloaded 3 July 2009.

Major fields include Atlantis Oil Field, and the Tiber oilfield (discovered 2009) and others in the Keathley Canyon protraction area. Notable oil platforms include Baldpate, Bullwinkle, Mad Dog, Magnolia, Mars, Petronius, and Thunder Horse. Notable individual wells include Jack 2 and Knotty Head.

The eastern Gulf of Mexico, which includes offshore Gulf Coast Florida, has never been a petroleum-producing area due to federal and state restrictions on exploration. Offshore platforms currently exist as far east as to near the Florida-Alabama border.

East Coast

In the late 1970s and early 1980s oil companies drilled 51 exploratory wells on federal leases on the outer continental shelf of the Atlantic coast. All the leases have now reverted to the government. A 1996 study by the MMS estimated undiscovered conventionally recoverable resources in Atlantic federal waters to be of oil and gas.US Minerals Management Service (1996) An Assessment of the Undiscovered Hydrocarbon Potential of the Nation's Outer Continental Shelf , PDF file, retrieved 19 February 2009.

Pacific Northwest Coast