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Frequently 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.  The Bureau evaluates the high bid(s) to ensure the Bureau-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 the Bureau 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.

The Region 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 Bureau regulations.  In 2005, MMS performed over 20,000 inspections. Information of the BOEMRE 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 Bureau 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 Bureau 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 Bureau regulations and safeguards are in place.