1998 Year of the Ocean Ocean Energy and Minerals 



INTRODUCTION 



The United States has sovereign rights over the exploration and development of non- 

 living resources, including oil and gas, found in the seabed and subsoil of the continental shelf, 

 which is defined to extend to 200 nautical miles from its coast or, where the continental margin 

 extends beyond that limit, to the outer edge of the geological continental margin. This claim, 

 made under the Truman Declaration of 1945, is confirmed in the 1982 Convention on the Law of 

 the Sea. Currently, about 27 percent of the natural gas and 18 percent of the oil produced in the 

 United States is from the federally managed Outer Continental Shelf (OCS). 



The development of the OCS is projected to increase substantially over the next few 

 years. Oil production in the Gulf of Mexico is expected to reach a level of 1.9 million barrels per 

 day by the year 2000, with natural gas production at between 12 and 1 7.2 billion cubic feet of 

 gas per day. Meanwhile, the federal government collects an average of $3 to 4 billion annually 

 in bonuses, rents, and royalties from oil and gas-producing companies for OCS oil and gas 

 leases. These funds are distributed to the general treasury, the Land and Water Conservation 

 Fund and the National Heritage Fund. These conventional hydrocarbon resources will continue 

 to be an important source of energy, revenue, and employment for the United States well into the 

 next century. 



The offshore oil and gas industry, in operation since 1 947, has made significant progress 

 in establishing a strong human and environmental safety record. Approximately 85,000 

 Americans are employed directly in the offshore oil and gas industry, with an equal number 

 employed in supporting jobs. Technological advancements have substantially reduced hazardous 

 working conditions and environmental impacts over what they were a few decades ago. 

 Additionally, new technologies have enabled industry to identify and develop new reserves, both 

 in shallow and deep water. In 1995, Congress passed the Deepwater Royalty Relief Act, which 

 provided new economic incentives to industry to develop deep water areas in the Gulf of Mexico. 

 The Act has contributed to a significant increase in the number of tracts leased and aggregate 

 bonuses received, and it has spurred a surge in employment in the OCS oil and gas industry and 

 supporting services. 



The U.S. offshore energy resources are now being produced in water as deep as 5.376 feet 

 using subsea systems. By the turn of the century, this production capability will extend to even 

 greater water depths. However, development of these deep water resources presents new 

 challenges, both technologically and environmentally. These include working under harsh 

 conditions, geohazards, and dealing with irregular ocean bottom relief features. Moreover, deep 

 water resource development places increased demands on coastal ports and communities for 

 facilities and services. 



In terms of potential alternative energy resources from the ocean, the vast deposits of 

 methane hydrates found in deeper oceanic areas offer the greatest hope for future economical 

 recovery and production. While technology exists for harnessing renewable and non-hydrocarbon 

 energy sources such as tidal and wave power or thermal stratification, these energy sources are 



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