Offshore drilling on the US Atlantic coast for oil and gas took place from 1947 to the early 1980s. Oil companies drilled 5 wells in Atlantic Florida state waters and 51 exploratory wells on federal leases on the outer continental shelf of the Atlantic coast. None of the wells were completed as producing wells. All the leases have now reverted to the government.
Although no oil or gas have been produced from beneath US Atlantic waters, there are active offshore fields to the south in offshore Cuba and to the north in offshore Canada.
Each coastal state along the Atlantic coast owns the territory extending three nautical miles (3.45 statute, or land miles) from the shore at mean low tide, and has jurisdiction to decide whether or not, and under what terms, to lease the territory for oil and gas. The federal government owns and controls the minerals between three and 200 nautical miles (370 km) from the shore.
In accordance with congressional restrictions and presidential orders, no federal leasing has taken place on the offshore US Atlantic coast since the early 1980s. The federal government had scheduled a lease sale offshore Virginia, to take place in 2011, and in March 2010, US President Barack Obama announced his intention to open the Mid-Atlantic and South Atlantic planning areas to oil and gas exploration.[1][2] However, lease sale plans were cancelled following the Deepwater Horizon oil spill in May 2010. In December 2010, Interior Secretary Ken Salazar announced a ban on drilling in federal waters off the Atlantic coast through 2017.[3]
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No oil or gas has been produced from the US Atlantic continental shelf.
A 1996 study by the US Minerals Management Service (MMS) estimated undiscovered conventionally recoverable resources in Atlantic federal waters to be 7,200,000,000 barrels (1.14×109 m3) of oil and 27.5 trillion cubic feet (TCF) gas.[4]
Five wells were drilled in state waters south of the Florida Keys from 1947 to 1962. Gulf Oil drilled three wells in federal waters south of the Florida Keys in 1960 and 1961. All the wells were dry holes.
The boundary between the Exclusive Economic Zones of the US and Cuba is halfway between Cuba and Florida, as determined by a 1977 treaty between the US and Cuba.[5]
Cuba has three producing offshore oil fields within 5 km of its north coast opposite Florida.[6] The US Geological Survey estimates that the North Cuba Basin contains 5,500,000,000 barrels (870,000,000 m3) of undiscovered petroleum liquids and 9.8 trillion cubic feet of natural gas, almost all in the offshore part of the basin.[7]
The issue of allowing oil and gas exploration offshore Florida became a hotly contested topic in the 2008 US elections. In a column published 5 June 2008, syndicated columnist George Will wrote that a Chinese oil company was then drilling in Cuban waters 60 miles (97 km) from the Florida coast, a claim that was repeated by candidates in favor of offshore drilling.[8] George Will later acknowledged that no drilling was then taking place in that part of Cuban waters.
In 2004 the Spanish oil company Repsol-YPF drilled in deep Cuban waters between Cuba and the Florida Keys, and found an oil deposit; the deposit was judged noncommercial, and the hole was plugged.[9] In October 2008, Cuba signed an agreement with the Brazilian state oil company Petrobras, which provides for Petrobras to drill for oil and gas in deep waters off the north shore of Cuba.[10][11] In July 2009, Cuba signed an agreement with the Russian government giving the Russian oil company Zarubezhneft oil exploration rights off the north shore of Cuba.[12]
In 2009 the Falkland Islands-registered company BPC Limited and Norwegian company Statoil announced a joint venture to drill for oil in Bahamian waters north of Cuba and southeast of Florida.[13][14] The government of the Bahamas has indicated that applications for offshore drilling are on hold pending negotiations with Cuba, the United States, and the Turks and Caicos Islands on the exact boundaries between their respective Exclusive Economic Zones.[15]
The first lease sale in the Southeast Georgia Embayment off the coast of Georgia and Florida was held in 1978.[16] Oil companies drilled seven wells, all dry holes.[17]
A number of oil companies bought federal leases offshore North Carolina, but in 1990 the US Secretary of Commerce denied Mobil Oil permission to drill after Congress passed the North Carolina Outer Banks Protection Act, prohibiting leasing and drilling on federal seabed offshore from North Carolina. Mobil and Marathon Oil sued the federal government to recover money paid for the leases. The US Supreme Court ruled for the oil companies in June 2000, and ordered the federal government to repay $158 million. The government paid, and the companies relinquished the leases.[18]
About 30 wells explored the Baltimore Canyon Trough, about 100 miles (160 km) off the coast of New Jersey, Maryland, and Virginia.[19] In one area, five wells tested significant flows of gas from Jurassic rocks, at rates as high as 18.9 million cubic feet per day. A 3-dimensional seismic survey was made over the area, but, in part due to falling gas prices in the 1980s, the lessee oil companies concluded that the tracts were uneconomic. The last leases were relinquished in 1984.[20]
From 1976 though 1982, oil companies drilled ten exploratory wells in the US portion of the Georges Bank Basin, about 120 miles (190 km) off the coast of Massachusetts. The deepest well had a total depth of 21,874 feet (6,667 m).[21] None was successful.[22]
Farther north, drilling has taken place in offshore Atlantic Canada since 1967. Gas was discovered on the Sable Offshore Energy Project (SOEP) offshore Nova Scotia in 1971, began producing natural gas in 2000, and is still producing. A second natural gas field offshore Nova Scotia is expected to start delivering gas in 2010.[23] Gas production required the construction of an undersea, offshore pipeline to link the production wells with gas markets. SOEP is owned by ExxonMobil Canada Limited (50.8%), Shell Canada Limited (31.3%), Imperial Oil Limited (9.0%), Pengrowth (8.4%) and Moshbacher Operating Limited (0.5%).[24] The Sable Project produces between 400 and 500 million cubic feet of natural gas and 20,000 barrels (3,200 m3) of natural gas liquids every day.[25]
Canada has imposed a moratorium until 2012 on drilling in the Canadian portion of the Georges Bank.[26]
The Obama adminsitration announced in March 2010 that it intended to open oil and gas leasing in the Mid-Atlantic and South Atlantic planning areas. However, in May 2010, following the Deepwater Horizon oil spill, the administration cancelled the only scheduled Atlantic lease sale, for an area offshore Virginia. On December 1, 2010, the Obama Administration closed Atlantic and eastern Gulf areas to drilling.[27]
Commercial oil and gas drilling has never occurred offshore Virginia. Unlike the offshore drilling in the Gulf of Mexico, which occurs in both state and federal waters, the proposed offshore Virginia drilling would be exclusively in Federal waters more than 50 miles (80 km) from the coast, and the state has not leased its state waters for drilling. A second difference is that although federal law has been amended to share royalties in federal waters in the Gulf between the federal government and the adjacent state, all royalty revenues from any offshore drilling in federal Atlantic waters is not shared with the states.[28][29][30]
Under the 5-year offshore leasing plan for 2007–2012, the MMS scheduled a lease sale for tracts 50 miles (80 km) or more off the coast of Virginia, to take place in 2011.[31][32] Five companies applied to the MMS to conduct seismic exploration surveys off the US Atlantic coast. The MMS requested funding for an Environmental Impact Statement to decide whether of not to allow the proposed seismic surveys.[33]
The possible offshore lease sale became an issue in the 2009 race for governor of Virginia.[34] The winner and current governor Bob McDonnell has urged that the sale take place.[35]
In May 2010, President Obama announced his decision to cancel the offshore Virginia lease sale, in response to the Deepwater Horizon oil spill in the Gulf of Mexico.[36] Obama had previously supported the lease sale.