Last Tuesday, as the federal government’s fiscal year 2008 came to a close, Democrats in Congress conceded on what had become an increasingly untenable position. The decades-long ban on offshore oil and gas drilling in the Atlantic, Pacific and Eastern Gulf planning areas of the federal Outer Continental Shelf (OCS) was allowed to expire.

While politically significant, the move has left a great deal of uncertainty regarding the future of oil and gas production from the OCS. For starters, no clear action was taken by Congress to signal a commitment to future offshore production. The continuing resolution that extends federal government operations until March simply omitted language barring the Department of Interior from expending appropriated dollars on leasing and preleasing activities certain areas of the OCS. And although the Mineral Management Service (MMS) is already composing a new Five-Year Plan, lawmakers’ “addition by subtraction” is probably not a clear enough directive for oil and gas producers to confidently make billion dollar long-term investments.

Second, it can safely be assumed that the next administration and Congress will take the opportunity to set a national energy policy on their own terms. How this affects offshore domestic production depends on a variety of factors. At one end of the spectrum, some observers believe that a new Congress will simply reinstitute the moratoria. At the other end of the spectrum, Congress could pass new legislation explicitly outlining a plan for OCS development, including a new revenue structure that apportions OCS lease royalty payments to the relevant states, conservation funds, and the federal government.

Many current legislative proposals include language that would open areas of the OCS, but prohibit drilling within a certain number of miles (usually 50 miles, but some proposals have suggested 25 miles) of the shoreline. The MMS recently released a series of maps illustrating undiscovered technically recoverable reserves of oil and gas according to water depth. The maps add reference mile-markers for 25, 50, 75, and 100 miles. Though MMS is careful to point out that the mile-markers do not correlate to any specific estimates for oil and gas reserves, the maps highlight the potentially significant impact of production boundaries, which will vary widely by geographic region.

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