US oil and gas leasing policy: what the law says vs. the current reality

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US oil and gas leasing policy: what the law says vs. the current reality

May 4, 2022 by offshoreenergy

OCS Lands Act, 43 U.S. Code § 1332 – Congressional declaration of policy

(3) the outer Continental Shelf is a vital national resource reserve held by the Federal Government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner which is consistent with the maintenance of competition and other national needs;

Current reality:

International energy markets (and consumers) are under stress
US is withdrawing 1 million BOPD from the Strategic Petroleum Reserve
Very limited access to offshore land for oil and gas operations
- 1.7 billion acres on the US OCS
- Currently only 2057 active offshore leases nationwide covering 8.3 million acres (0.5% of total area), the fewest leases in > 40 years
- Only 499 producing leases covering 2.65 million acres ( 0.155% of total area)
182 lease sales since 1954, but none since 2020
- 2021 was the first year since 1958 without a single lease sale;
- 2022 will likely be the second year without a sale
Gulf of Mexico operations history
- 55,000 wells drilled
- 23 billion bbls of oil produced
- 192 trillion cu ft of gas produced
Gulf of Mexico – current status
- Oil production remains relatively stable (1.7 million BOPD) owing to past deepwater discoveries
- Drilling is at historic low levels – only 31 well starts YTD (5/4/2022), only 8 of which were deepwater exploratory wells
- Current levels of production are not sustainable without new leases and increased exploration