Republican News

Republican News

Jul 08 2008

Oil and Gas Leasing on the Outercontinental Shelf

Background and Impacts

PREPARED BY THE SENATE ENERGY COMMITTEE – REPUBLICAN STAFF
 
Oil and Gas Leasing on the Outer Continental Shelf
Background and Impacts
 
How much oil is produced on the Outer Continental Shelf?
·        Oil and gas leasing activities take place on approximately 43 million acres on the OCS, which amounts to just 2.4 percent of the federally-managed portion of these submerged lands.  A total of 8,000 leases combine to produce about 15 percent of America’s natural gas supply and about 27 percent of America’s oil supply.
·        According to the Minerals Management Service, “the OCS is projected to contribute nearly 40 percent of U.S. domestic oil production” by 2011.
 
How much oil does the Outer Continental Shelf contain? 
·        A February 2006 report released by the Department of the Interior estimated OCS reserves to be 8.5 billion barrels of oil, and 29 trillion cubic feet of natural gas.  Undiscovered resources may total 86 billion barrels of oil and 420 trillion cubic feet of natural gas.  Altogether, this resource potential represents 60 percent of America’s undiscovered oil, and 40 percent of our undiscovered natural gas.
·        The Pacific and Atlantic regions of the OCS, which would be eligible for leasing activities under the Gas Price Reduction Act of 2008, hold an estimated 14 billion barrels of oil and 55 trillion cubic feet of natural gas.  Exploration and production activities are currently prohibited in these areas.     
 
How would OCS development impact domestic production?
·        U.S. oil production has steadily declined since 1970, when it was nearly 10 million barrels per day, to 5.1 million barrels per day in 2007. 
·        The U.S. consumed an average of 20.7 million barrels of oil per day in 2007, and the EIA projects that total U.S. liquid fuels consumption will increase to 22.8 million barrels per day by 2030. 
·        If 1 million barrels of oil are produced per day, undiscovered OCS resources could produce a stable, reliable, and affordable supply of domestic oil for decades.    
·        Producing an additional 1 million barrels per day from the Atlantic and Pacific OCS would increase domestic oil production by nearly 20 percent for nearly 40 years.
 
How would OCS development impact oil imports?
·        In 1973, the U.S. imported 6.0 million barrels of oil per day, or 34.8 percent of its total supply.  By 2007, these numbers had risen dramatically: the U.S. imported 12.0 million barrels of oil per day, or 58.2 percent of its total supply.  
·        The EIA projects that net domestic oil imports will be 11.1 million barrels per day in 2030.  Producing an additional 1 million barrels per day from the OCS could reduce this dependence by 9 percent.
 
How would OCS development impact the American economy?
·        The domestic oil and gas industry directly and indirectly employs nearly 8 million Americans.  Oil and gas development in the Pacific and Atlantic regions of the OCS would help sustain those jobs, and create thousands more, while contributing billions of dollars to our economy.
·        According to the MMS, federal revenues from offshore activities exceeded $7 billion in Fiscal Year 2007.  These revenues were distributed to the U.S. Treasury; state governments; the Land and Water Conservation Fund; and the National Historic Preservation Fund.
·        OCS lease sales also generate substantial revenues.  Three major sales for OCS oil and gas leases have taken place in the past six months, and together raised more than $9 billion in federal revenues.