requently
Asked Questions about the Atlantic OCS Leasing Program
What is the OCS?
On the Atlantic coast, the Outer Continental Shelf (OCS) is the submerged
lands beyond the State navigable waters; the OCS ranges from 3 to 200 miles seaward
of the coastline.
What is a Lease Sale? Do companies buy the land offshore?
An OCS Lease Sale is the process where the rights to explore for oil and gas
resources are conveyed to qualified bidders via a process
that begins with a public reading of sealed bids.
MMS evaluates the high bid(s) to ensure the
MMS-determined value of a tract or block (usually 5,760 acres) is met or
exceeded, thus ensuring fair compensation to the U. S. Treasury for the
resources in the blocks. A lease is conveyed to
the successful highest bidder for a specified period of time (which differs by
water depth).
What happens after a lease is awarded?
A company submits a plan to drill an exploratory well,
and MMS
then performs environmental and technical reviews
of that plan. If
no wells are drilled on the block within a specified period, the block reverts
to the U. S. Government and will be available at future lease sales.
If production occurs, the lessee retains the block until production
ceases and all equipment is removed from the seafloor. The
U. S. Treasury receives compensation through rent, royalties, and bonuses.
Can anyone comment and or participate in the Lease sale process?
There are numerous steps in the lease sale process where
Federal, state, and
local officials as well as public and private entities, are afforded the
opportunity to participate in the leasing process. Comment
opportunities are available in the Draft Proposed Program, the Five-Year EIS,
scoping meetings, public hearings, and the individual Lease Sale EIS’s.
What’s in it for us?
Domestic production of energy is a critical part of our national defense.
Energy extraction from the OCS has been a vital
part of the U. S. domestic energy efforts since the first well drilled in
Federal waters in 1946. The offshore Gulf of
Mexico alone has produced over 14.5 billion barrels of oil and over 163 trillion
cubic feet of natural gas since the inception of drilling in that region.
Reserves of hydrocarbons off the Atlantic coast
are thought to be significant.
Additionally, over $156 billion has been paid by offshore oil companies to
the U. S. Treasury in royalties on product extracted from beneath the seafloor,
as well as in rents and bonuses for the leases held and produced.
States have shared in this money through
revenue-sharing programs such as the Land and Water Conservation Fund and the
National Historic Preservation Fund.
How do we know the offshore operators are doing what they should do?
The GOM Region is responsible for administering more than 7,000 active
leases covering more than 39 million offshore acres, where some 35,400 personnel
work offshore on over 3,850 producing and 200 drilling facilities for some 160
qualified operators. The Region regards the
safety of personnel, of the environment, and of operations as top priorities.
MMS employs over 50 experienced inspectors who fly offshore daily to perform
inspections on all key components of offshore operations to ensure safety and
environmental compliance with MMS regulations. In
2005, MMS performed over 20,000 inspections. Information of the MMS Safety
Program may be found at
http://www.gomr.mms.gov/homepg/offshore/safety/safety.html.
Could OCS oil and gas activities conflict with other offshore activities?
The MMS routinely consults with other potentially affected parties to ensure
oil and gas activities are conducted in a safe and sound manner while all
parties are allowed to perform or conduct their activities.
What kinds of materials are produced and discharged overboard during OCS
offshore activities?
During drilling activities, non-toxic water-based drilling muds and cuttings
are discharged overboard. During production
activities, produced water is discharged. Materials
that cannot be discharged overboard include oily muds, produced sands,
trash, and debris.
Who regulates discharges?
The Environmental Protection Agency has a major role in regulating offshore
discharges. The MMS shares in this role and may
require lessees and operators to regulate effluent discharges by imposing
mitigating measures on certain operations.
Do produced water and drilling muds contain toxic chemicals?
The major components of most produced water and produced waste have not been
found to be toxic. To prevent toxic effects from
additives or unknown contaminants, all drilling muds and produced waters are
tested and EPA-certified for toxicity before discharge. The
materials cannot be discharged if found to be toxic.
Don't discharges kill fish and harm the marine environment?
Numerous environmental studies have examined the effects of oil and gas
discharges for regional-scale impacts; none of the studies detected harmful
effects to fishes or observed toxic effects. Drilling
muds and cuttings were found to settle very rapidly to the bottom and produced
water plumes rapidly disperse. Sublethal effects
to small organisms and some elevated non-toxic compounds were detected in the
sediments adjacent to some platforms.
How are offshore resources protected?
Federal law requires agencies to consider the potential effects of an
undertaking on human safety, biological communities, significant archaeological
resources, and all other offshore resources. Multiple
technical reviews of any proposed project are performed where detailed
evaluations are executed and stringent safeguards are put in place.
Inspectors visit the site during drilling and
production activities to ensure MMS regulations and safeguards are in place.