1998 Year of the Ocean Ocean Energy and Minerals 



was broken in the Gulf of Mexico in 1976; recently, an exploration well in the Gulf has been 

 drilled in 7,600 feet of water. 



Since the enactment of the OCS Lands Act in 1953, outer continental shelf oil and gas 

 production has increased greatly and contributes significantly to the total U.S. domestic 

 production. In 1996, this production reached 18 percent of total domestic oil production and 27 

 percent of gas production. Between 1953 and 1995, the outer continental shelf has generated 

 more than $110 billion in federal revenues. These contributions may be expected to continue to 

 increase since the OCS is estimated to contain about 19 percent of the nation's proven gas 

 reserves, 15 percent of the proven oil reserves, and more than 50 percent of the nation's 

 remaining undiscovered oil and gas resources. 



Value to the Nation 



The federal OCS oil and gas program has provided significant benefits to the United 

 States by helping to address its energy needs, contributing to its economic well-being, and by 

 providing an important source of revenues for the U.S. Treasury. It is estimated that more than 

 half of the nation's undiscovered oil and gas lies on the outer continental shelf; thus, offshore 

 energy resources may play an even more important role in meeting U.S. energy needs in the 

 future. Currently, the United States imports about one-half of the petroleum necessary to meet its 

 energy needs, and the Department of Energy projects this level will reach 61 percent by 2015. 



The success of deep water exploration and development in the Gulf of Mexico, largely 

 due to advances in 3 -dimensional seismic and production technology, is reversing the long-term 

 decline in domestic oil production. By the end of 1996, there were 26 rigs drilling in water 

 depths greater than 1,000 feet, which compares with 9 such rigs in 1990. Oil production from the 

 Gulf of Mexico increased by 10 percent in 1995, and most of the U.S. oil and gas reserve 

 additions from new field discoveries (79 percent and 70 percent, respectively), and from new 

 reservoir discoveries in old fields (91 percent and 68 percent), were in the Gulf. 



The oil and gas industry employs tens of thousands of American workers. The average 

 salary and benefits for workers of producing companies employed as a direct result of activity in 

 the Gulf of Mexico was estimated to be $52,580 in 1992. Since then, a shortage of skilled labor 

 due to the recent boom in industry activity has pushed earnings even higher. In addition to 

 payroll expenditures, producers pay several billion dollars each year to vendors and contractors 

 who support OCS activities. Expenditures by producing companies on employees, equipment, 

 and support services in turn result in additional spending in communities near outer continental 

 activities and throughout the nation. To cite some specific examples. Shell's Auger project 

 involved contractors in 30 states, and work on the Rowan No. 4 jack-up drilling rig involved 

 contractors in 43 states. 



Bonus bids, rents, royalties, and other revenues paid to the federal government for the 

 rights to explore for and produce OCS energy resources average between $3-4 billion annually. 

 Total revenues (unadjusted for inflafion) are well above $110 billion since passage of the OCS 



D-7 



