According to Rep. David Obey, the U.S. House of Representatives will allow the 27 year old moratorium prohibiting the exploration and production of oil and natural gas reserves in the area known as the OCS (Outer Continental Shelf) to expire on September 30. A spokesman for Senate Majority Leader Harry Reid concurred, saying the Congress could not afford to risk shutting down the federal government over this controversial issue at this time.
This is a victory for the 80% of Americans who pollsters report favoring the expansion of U.S. offshore oil and gas exploration, which is now limited to the waters off the states bordering the Gulf of Mexico. In theory, at least, this will allow exploration anywhere in federal waters beyond the three mile limit controlled by the states, except for an area off Florida dedicated to naval training exercises.
The U.S. Department of the Interior estimates there are some 18 billion barrels of recoverable oil in the OCS, about half of which may lie off California. Exactly how much oil and gas the area could contain is unknown, however, as oil companies have been prohibited from even performing seismic studies there since 1981.
What the actual prospects are for the resumption of energy exploration and production in the OCS remains unknown. These areas must be tested for their potential and competitively leased by the Minerals Management Service before such activities could commence. There is also the possibility that the next Congress or President could reinstitute another moratorium or otherwise limit exploration, although such measures would likely be unpopular with the American public.
Stock position: None.
