Offshore Drilling 101
A look into how drilling for oil and gas in the oceans works—and why it’s time to make it history.
Jump to section:
- What Is Offshore Drilling?
- How Is Offshore Drilling Regulated?
- Where Is Offshore Drilling Performed in the United States?
- What Are the Environmental Impacts of Offshore Drilling?
- What Are the Economic Impacts of Offshore Drilling?
- Why Are New Oil and Gas Leases a Bad Idea?
- How Do We Stop Offshore Drilling?
Offshore drilling is risky business. It can have devastating consequences for oceans and coastal communities. It’s also expensive. But fossil fuel companies are willing to pay the price to access the potentially large reserves under the seafloor—and though the United States is moving toward a clean energy future, large swaths of our federal waters remain for sale to them.
Until we stop sacrificing public waters to fossil fuels, we’ll continue to see oil spills that devastate ecosystems and coastal communities, exploratory activity that harms wildlife, and the acceleration of our climate crisis.
Here’s what you need to know about offshore drilling—and why new oil and gas leases are the last thing we need.
What Is Offshore Drilling?
Simply put, offshore drilling is the process of drilling into the ocean floor to access pockets of oil and gas that lie underneath. About 15 percent of crude oil and 2 percent of gas in the United States were produced from offshore drilling in 2021. There are several stages to the whole process, and because of the uniquely challenging environment in the ocean—one site can take several years to build and hundreds of millions of dollars to complete.
In the United States, coastal waters technically belong to the public. As a result, before any other action occurs, fossil fuel companies must lease parcels of the ocean from the government. After making a purchase at a lease sale, the company (or lessee) then has the ability to explore the deposits under the ocean floor. Some companies will hold onto their lease for years before exploring or developing the area, waiting for the most lucrative time to drill or working on gaining access to the infrastructure they need in the meantime.
The Biden administration is planning to host major lease sales in Alaska and the Gulf of Mexico by September 2023. More on those sales—and their many issues—below.
The next step is finding the oil and gas pockets, or reserves, within the leased area. Seismic testing, one of the most common ways companies hunt for these reserves, involves blasting an array of airguns, which are towed behind ships across large swaths of the ocean. The airguns blast loud booms into the water every 10 seconds, and the returning echoes provide an outline of what lies underneath the seafloor. Think of how a bat uses echolocation to find its prey, except imagine the bat is using an air horn.
Drilling and extraction
Once oil or gas is found, fossil fuel companies use mobile offshore drilling units (MODUs) to dig a well. There are different types of MODUs, often referred to as oil rigs or oil platforms, depending on the depth of the site, typical weather conditions, and other factors. Some are fixed to the seafloor with cables, concrete, and anchors while others float at the surface. These platforms can store equipment above the water, and some even provide dorms for the rig workers, who arrive at the site by helicopter. The first offshore oil well was built in 1897, and early developments took place in waters less than 300 feet deep, while wells today are built as far as 2 miles down.
Once a viable well is built, the oil or gas is pulled from the wells to production platforms (either part of the same MODU or a separate one) to be stored and processed, and then transported to the coast via pipelines for distribution.
How Is Offshore Drilling Regulated?
The political borders of the United States actually extend 200 miles into the ocean in what’s referred to as the Exclusive Economic Zone. In most states, waters that are 3 nautical miles (1 nautical mile = 1.15 regular land miles) out from the shoreline are under state jurisdiction. This means state governments can largely do as they please with their bit of shoreline: expand ports, protect areas for conservation, and yes, even sell leases to fossil fuel companies just off the beach. Past that 3-nautical-mile marker is the outer continental shelf (OCS), which falls under federal jurisdiction.
Under the Outer Continental Shelf Lands Act (OCSLA), passed in 1953, the U.S. Department of the Interior regulates exploration and development on the OCS, which it manages through a subagency, the Bureau of Ocean Energy Management (BOEM). This includes developing plans for oil and gas leasing every five years and determining which areas of our ocean waters are for sale. Typically, plans have included ten sales—but BOEM has the ability to issue a plan with no required sales.
Before any lease sale, the BOEM must first publish a proposal and an environmental impact statement—taking into consideration the effect of leasing on the environment and communities—and then host a comment period for any member of the public to speak for or against the proposal (often a crucial opportunity for coastal communities to voice their opposition). After BOEM releases its final plan, it must be approved by Congress. The most recent five-year plan, which was finalized under President Barack Obama, expired in June 2022.
There have been many changes since the initial passage of the OCSLA, including significant environmental protections passed after the Santa Barbara oil spill in 1969, one of the worst oil spills in U.S. waters. The tragedy partly inspired the first Earth Day in 1970 and spurred legislative action to try to prevent future spills—like the National Environmental Policy Act, which requires federal agencies to develop detailed environmental reviews before any major projects or policies are undertaken. The Interior Department is also responsible for maintaining safety standards to protect both workers and the environment.
Even though devastating oil spills continue to happen, fossil fuel companies want to see more lease sales—and fewer safety regulations.
Where Is Offshore Drilling Performed in the United States?
In 2016, President Obama permanently withdrew portions of the Arctic and Atlantic oceans from new leasing. When President Donald Trump tried to reverse this ruling, NRDC and partners successfully challenged his administration in court. In 2021, a court affirmed that these sections, roughly 128 million acres, are permanently protected from drilling.
Unfortunately, certain areas in Alaska, like Cook Inlet, are still open to drilling and were included in the 2023–2028 proposed five-year program under the Biden administration. NRDC is continuing to fight for the cancellation of these plans and a permanent end to offshore drilling in the area.
Spurred by public advocacy, moratoriums on new federal leasing off the Pacific Coast stood from 1984 until 2008, when the order was rescinded by President George W. Bush. Even so, there haven’t been any new lease sales since.
Gulf of Mexico
The majority of federal oil and gas wells are in the Gulf of Mexico, producing nearly 15 percent of the country’s oil and 5 percent of its gas. The one area of exception is off the coast of Florida, where a moratorium on offshore drilling stands until at least the end of 2032. (This moratorium includes the coasts of Georgia and South Carolina as well.)
What Are the Environmental Impacts of Offshore Drilling?
Every stage of offshore drilling comes with harmful impacts. Let’s start with the seismic testing that fossil fuel companies use to find reserves. These blasts are the absolute loudest man-made sounds in the ocean—above 250 decibels—and can echo for miles in the water. (For reference, an ambulance siren is around 160 decibels.) A complaint filed by NRDC and partners details how dolphins, whales, and other marine animals that rely on sound—for communication, navigation, hunting, and finding mates—are impaired by the constant noise. The explosive sounds go off every few seconds and can even be lethal at a close range.
Oil spills and gas leaks
From the moment an oil or gas company starts drilling, there is a risk of leaks. And despite the frequency and scale of oil spills in the United States, drilling technology continues to develop much faster than safety technology, and the industry has not done nearly enough to lower the chance of future spills. These events wreak havoc on wildlife and coastal communities and a big enough spill can change the entire ecosystem. And while we can plug a leak, it is nearly impossible to collect all the escaped oil—tons of oil from previous spills remain in the depths of the ocean. And of course, it would be impossible to recapture the harmful gases that escape from wells and pipes.
There have been a number of news-making disasters in recent history (and many more under the radar):
- In 2021, a leaking gas pipeline sparked a swirling fire in the Gulf, which was dubbed the “eye of fire.” It took Pemex, which owned and operated the platform, five hours to extinguish.
- The same year, an underwater oil pipeline released at least 25,000 gallons of crude off the coast of Huntington Beach, California (aka “Surf City USA”)—prompting a two-month fishing ban that included 650 square miles of marine waters and 45 miles of shoreline. An anchor from one of the area’s many cargo ships is suspected to have ruptured the pipeline.
- In two instances in 2015 and 2018 at a Fieldwood Energy facility in Louisiana, two workers intentionally allowed oil to spill in order to avoid required shutdowns that would have hurt company profits. Workers on one of the company’s platforms are reported to have joked that their motto was “safe and sound until production’s down.”
- An explosion at the Deepwater Horizon drilling platform in 2010 (commonly known as the BP disaster) set off the biggest offshore spill in American history. The accident, which killed 11 people, is attributed to engineering failures and human error. The environmental impacts of 210 million gallons of oil spewing into the Gulf of Mexico were tremendous, including one million dead seabirds and 92,000 square miles of contaminated ocean water.
- In 2005, Hurricane Katrina, followed shortly by Hurricane Rita, set off a series of oil spills that largely went under-reported as recovery efforts focused on the devastation to communities on land. By some estimates, the back-to-back Category 5 hurricanes damaged more than 450 pipelines and 100 drilling platforms in the Gulf.
- Representing the longest-running oil spill in U.S. history, undersea wells owned by Taylor Energy have been leaking into the Gulf of Mexico ever since they were damaged by Hurricane Ivan in 2004.
- In 1989, the Exxon Valdez oil tanker collided with a reef, spilling 11 million gallons of oil into the waters off Alaska. Considered the worst spill in U.S. waters until the BP disaster occurred, it killed an estimated 250,000 seabirds, 2,800 otters, and 250 eagles.
Abandoned and orphaned wells
Once an operator shuts down a well—usually because it is no longer profitable—the company is required to remove its equipment and help restore the area that was damaged by its operations. But in reality, this doesn’t always happen. Many abandoned wells (idle wells with a known owner) and orphaned wells (wells with no responsible owner to be found) remain uncapped and leak oil, methane, and other pollutants into our oceans and atmosphere every day. Researchers estimate that properly plugging the 28,232 permanently abandoned wells in our federal waters, along with the ones currently in use, would cost around $47 billion. That doesn’t even take into account orphaned and abandoned wells in state waters.
Greenhouse gas emissions
The burning of fossil fuels—whether that fuel comes from beneath the ocean, a hillside, or your community—is driving the climate crisis. We know this. And we know that our continued reliance on oil and gas for electricity, transportation, plastic manufacturing and incineration, and other industrial processes means more greenhouse gases will be pumped into our atmosphere. Some studies have shown that methane emissions from offshore oil and gas operations are even greater than those on land.
What Are the Economic Impacts of Offshore Drilling?
Costs of oil spills and gas leaks
Oil spills and gas leaks hurt fishing operations, the tourism industry, and other coastal businesses. In the year after the BP disaster in the Gulf of Mexico, for instance, the region’s commercial fishing industry reported a $62 million loss in dockside sales and the tourism industry filed $1.5 billion in lost earning claims. In all, more than 174,000 claims were paid to individuals and businesses that suffered damages and costs related to the spill that year.
Costs of climate change
In 2021, the top five oil and gas companies reported $70 billion in profits, with some companies tripling shareholder returns in the first quarter of 2022, thanks in part to the violent war in Ukraine and global sanctions on Russian oil. Contrast those profits with data from the National Oceanic and Atmospheric Administration (NOAA) that show that extreme weather disasters cost the United States $145 billion that same year. This price tag—which includes damaged property, crops, and infrastructure but doesn’t account for health harms—is likely an underestimate. Extreme weather and other effects of climate change (which is driven by the burning of fossil fuels) are expected to intensify in the coming decades.
A report published by NRDC and partners found that U.S. residents collectively pay about $820 billion in physical and mental health damages from climate change–related events every single year. These include emergency conditions like heat stress, increased exposure to air pollution and wildfire smoke, and outbreaks of infectious diseases. In addition, we need to spend billions of dollars to build resilient infrastructure if we’re going to successfully adapt to the changing climate.
Why Are New Oil and Gas Leases a Bad Idea?
Even when energy prices are on the rise, drilling for more oil and gas on land or in our coastal waters will not lower gas prices. That’s because the production of U.S. oil does not set the price of gas; rather, it hinges on fluctuations in the global oil market.
When the federal government sets the five-year lease programs and includes new lease sales, it’s locking in fossil fuel infrastructure and climate pollution for years to come. Because of the long production process, oil and gas from new leases typically won’t hit the market for at least five years. Then, much of this fuel is exported to countries where companies can get a higher profit.
Lastly, why should we open more public waters to drilling when the fossil fuel industry is already sitting on 11 million acres previously leased to them—three-quarters of which remain unused? A brief commissioned by NRDC found that even without new leases, the country’s oil production rate will remain steady into 2035. Meanwhile, the clean energy and electric vehicle revolution is expected to drive down demand for fossil fuels in the coming years.
Transitioning away from offshore drilling is also an issue of environmental justice. Current pro-drilling ocean policies have left coastal communities—particularly poor communities and communities of color—exposed to the negative health effects of petrochemical development, as well as harmful port pollution and climate change impacts like sea level rise and intensifying storms. In 2022, the Ocean Justice Forum brought together grassroots and national nonprofit organizations from across the United States, including NRDC, to define what equity and social justice in ocean policy looks like. In its platform, the group concludes that ocean justice requires accountability, equitable representation in decision-making, and resourcing communities for conservation and climate adaptation. It urges policymakers to end taxpayer support for offshore oil and gas drilling, and instead promote an economy that sustains the ocean and the communities that rely on it—powered by justly sourced renewable energy.
How Do We Stop Offshore Drilling?
Currently, as required by the 2022 Inflation Reduction Act, the Biden administration is planning to host major lease sales in Alaska and the Gulf of Mexico by September 2023. But members of the public—including frontline and Indigenous communities—have delivered powerful testimonies against these sales and the BOEM’s draft five-year program. The plan to encourage new oil and gas operations off our coasts is in direct contradiction with President Joe Biden’s commitment to cut carbon emissions by at least 50 percent by 2030 and incompatible with the mission to keep global warming under 1.5 degrees Celsius. The fight to stop new leases continues.
Congress also has the power to end the destructive cycle of offshore leasing. Lawmakers have introduced legislation that would ban offshore drilling in every Congress since the BP disaster, but to no avail. That includes the West Coast Ocean Protection Act, which aims to permanently ban drilling off the coasts of California, Oregon, and Washington.
In addition to federal legislation, states can also ban drilling off state-controlled shorelines. In response to the Huntington Beach spill in 2021, a bill was introduced to end offshore oil production in California waters by 2024. Connecticut, Florida, Hawaii, Massachusetts, and South Carolina also introduced bills that year. While these bills have yet to become law, they show the growing bipartisan resistance to offshore drilling—a rare occasion where Republicans and Democrats are able to find common ground.
And there are success stories! New Jersey, Oregon, and Virginia have all enacted bans. As we continue the critical shift away from dirty fossil fuels, NRDC will push for investments in renewable energy, energy efficiency measures, and environmental justice. Our policy experts and lawyers are fighting for an end to new offshore drilling through state houses, public advocacy, and the courts.
Truly, one of the best ways to permanently protect ourselves from the volatility of the global oil market and fight climate change is to speed up the transition to clean energy sources with greater investments in our energy grid, advances in battery technology and electrification, and supportive state and federal policies. By 2035, solar energy could account for as much as 40 percent of electricity generation in the United States. And there are huge amounts of untapped potential for wind energy on land and offshore, which NRDC is working to ensure minimizes impact on the marine environment. We’re moving in the direction of a zero-emissions future—but we must stop new fossil fuel leases on our federal lands and in our oceans to get there.
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