American Geological Institute

Government Affairs Program


Update on Outer Continental Shelf Issues (11-8-97)

Most Recent Action
On October 23rd, the Senate ratified a 20-year-old US/Mexican boundary treaty by a unanimous voice vote, clearing the way for division of international waters in the Gulf of Mexico known as the western "doughnut hole".

In the mid-1980's the Gulf of Mexico had come to be known as the "Dead Sea" due to the lack of interest in oil and gas exploration. Discovery of subsalt reservoirs in shallow water and production from new deep-water reservoirs, however, has production in the Gulf booming. Flow rates in the latter are comparable to those found in the Persian Gulf. The increased activity has been spurred by a number of factors, pre-eminent among them being technological advances such as 3-D seismic, drilling technology, and deep-water production systems. Continued implementation of the deep-water royalty relief legislation, signed by President Clinton in November of 1995, is beginning to have an effect as well. Lease sales held by the Minerals Management Service (MMS) are reaching record totals. With moratoria on new leasing in effect for the eastern Gulf as well as the Atlantic and Pacific coasts, exploration has focused on the central and western Gulf and on Alaska. Deep-water exploration in the Gulf has sparked renewed interest in Senate ratification of a 1978 US/Mexico boundary treaty in order to divide up an area of international water known as the "western doughnut hole."

Legislation to Expand Moratoria
In addition to these moratoria on new leases, several states -- particularly Florida and California -- are seeking to limit the development of existing leases. When Mobil expressed interest in leases that it held off the coast of Florida, that state's congressional delegation introduced a number of bills designed to block development. On June 19, Senator Connie Mack (R-FL) introduced S. 937, the Florida Coast Protection Act. A companion bill, H.R. 1989, was introduced by Representative Joe Scarborough (R-FL) on the same day. This legislation will cancel the six oil and gas leases closest to Florida's coast. In his opening statement, Sen. Mack expressed his goal, "and the goal of the entire Florida congressional delegation,... to permanently remove this threat from our coastlines." S. 937 has been referred to the Senate Committee on Energy and Natural Resources, and H.R. 1989 has been referred to the House Resource Subcommittee on Energy and Mineral Resources.

Senator Mack believes an offshore drilling mishap could prove disastrous to "Florida's good standing as America's vacationland" and environment. With tourism generating millions of jobs and billions of dollars each year, an accident could have a major impact on the economy of Florida. The legislation cancels the lease tracts 17 miles off of Pensacola, an area that is in the line of sight of vacationers, while providing fair compensation for owners. It also makes permanent the moratorium on any new leasing activity.

A broader bill, H.R. 180, was introduced by Representative Porter Goss (R-FL) in January. The official title, "A bill imposing certain restrictions and requirements on the leasing under the Outer Continental Shelf Lands Act of lands offshore Florida" provides a good description of the bill. It prevents the Secretary of the Interior from permitting oil and gas development activities in certain parts of the Gulf of Mexico, Straits of Florida, and South Atlantic unless environmental impact assessments have been made. The bill currently has 22 cosponsors, which represents the entire Florida delegation. It has been referred to the House Committee on Resources.

Despite these pending bills, MMS is planning to go ahead with a new lease sale (Sale 181) in the eastern Gulf on tracts that are 100 miles off Florida and 15 miles off the coast of Alabama. Planned for 2001, the lease sale includes several fields further out that are believed to be quite promising.

California
In California, no lease sales have been held since 1984. Current production is 184,000 barrels per day, but MMS believes that existing but undeveloped leases hold an additional half a billion barrels of oil and 633 billion cubic feet of gas. In conjunction with the petroleum companies, MMS is seeking to establish positive working relationships with the state, local governments, and other stakeholders. The pro-development stance of MMS is not shared by Californians. Conservative Rep. Duke Cunningham (R-CA) has introduced H.R. 133 to create a temporary moratorium on leasing, exploration, and development on lands of the Outer Continental Shelf off the State of California until environmental studies have been conducted and submitted to Congress. It has been referred to the House Committee on Resources.

Doughnut Holes and Pending Ratification of US/Mexico Treaty
Exploration in the deep waters of the Gulf has now expanded close to a triangular-shaped area that is beyond the 200-nautical-mile limit of US and Mexican territorial waters. Known as the western "doughnut hole," it is one of two such areas in the Gulf. The eastern one lies beyond the territorial waters of the US, Mexico, and Cuba, but it is not currently being considered for exploration. The US would like to negotiate a division of the western doughnut hole with Mexico, but Mexico will not negotiate until the US Senate ratifies a 1978 treaty that defines the maritime boundaries between the US and Mexico in the Gulf of Mexico and the Pacific Ocean. As noted above, the treaty was ratified by the Senate on October 23, 1997. The treaty was taken up and passed by the Senate Foreign Relations Committee in 1980 but never passed by the full Senate due to concerns raised by legendary petroleum geologist Hollis Hedberg about potential oil and gas resources in the Gulf. Hedberg argued for boundary lines that did not rely on the use of offshore islands to determine the countries' 200-mile limits in the Gulf. Hedberg sought greater opportunity for US petroleum exploration and his position was supported by the American Association of Petroleum Geologists (AAPG).

In the intervening years, however, the use of islands has become a fixed practice, and treaty ratification is being supported by the American Petroleum Institute, Independent Petroleum Association of America, and other industry groups. Letters in support of ratification have been sent to Senate Foreign Relations Committee Chairman Jesse Helms (R-NC) by those groups as well as by Senate Energy and Natural Resources Committee Chairman Frank Murkowski (R-AK) and a group of senators from Gulf Coast states led by Majority Leader Trent Lott (R-MS) and Sen. Kay Bailey Hutchison (R-TX). The Foreign Relations Committee was recently briefed on the issue by the State Department, which supports ratification as does the Department of the Interior. AAPG has taken a position in favor of negotiated boundaries between countries, which the treaty represents.

A more extensive discussion of this issue can be found in the August 1997 issue of AAPG Explorer.


Sources: Library of Congress, Minerals Management Service

Please send any comments or requests for information to the AGI Government Affairs Program.

Contributed by Kasey Shewey and David Applegate, AGI Government Affairs.

Last updated November 8, 1997 (previous update 7-7-97)

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