Overview of U.S. Legislation and Regulations Affecting Offshore Natural Gas and Oil Activity
August 1, 2005
This article presents a summary of the legislative and regulatory regime that affects natural gas and oil exploration and production in offshore regions of the United States. It discusses the role and importance of these areas as well as the competing interests surrounding ownership, production, exploration and conservation. Questions or comments should be directed to Erin Mastrangelo at erin.mastrangelo@eia.doe.gov or (202) 586-6201.
Legislation and regulations regarding natural gas and oil exploration, development, and production from U.S. offshore lands developed over many decades in response to a variety of concerns and disputes that were most often engendered by competing priorities. This article discusses the evolution of offshore developments and the major legislation and regulations that have affected the natural gas and oil industry in the past 50 years. The most common early disputes revolved around ownership of coastal waters. Eventually, as offshore activities became more abundant, more complicated issues arose over the need to ensure that operations are accompanied by safety, equity, and the protection of marine and coastal environments.
The Federal government did not largely regulate natural gas and oil exploration and development activities in the offshore regions of the United States from the 1880s, when offshore oil production first began, through the mid-1900s. During this time technological advances and increasing demand for natural gas and oil provided incentives for offshore exploration and the development of offshore natural gas and oil production infrastructure. By 1949 eleven offshore fields had been found and 49 production wells were operating in the Gulf of Mexico. By the 1950s the U.S. government began responding to increased concerns regarding offshore jurisdiction, environmental impacts of offshore activities, economic factors, and safety. Key legislative and regulatory initiatives were thereafter enacted that sought to balance the need for a reliable, safe energy supply with minimization of environmental impacts, at a fair price to all parties.
Offshore natural gas and oil exploration, drilling, production, and transportation have all been affected. Legislative action has ranged from imposition of a wide range of requirements on operations in the offshore to complete removal of access to offshore resources. Today natural gas and oil drilling is prohibited in all offshore regions along the North Atlantic coast, most of the Pacific coast, parts of the Alaska coast, and most of the eastern Gulf of Mexico. The central and western portions of the Gulf of Mexico therefore account for almost all current domestic offshore natural gas and oil production.