49–010 

Calendar No. 402 

109TH CONGRESS REPORT " ! SENATE 2d Session 109–240 

OIL AND GAS LEASING IN THE 181 AREA OF THE GULF 

OF MEXICO 

APRIL 20, 2006.—Ordered to be printed 

Filed, under authority of the order of the Senate of April 7, 2006 

Mr. DOMENICI, from the Committee on Energy and Natural 

Resources, submitted the following 

R E P O R T 

[To accompany S. 2253] 

The Committee on Energy and Natural Resources, to which was 

referred the bill (S. 2253) to require the Secretary of the Interior 

to offer the 181 Area of the Gulf of Mexico for oil and gas leasing, 

having considered the same, reports favorably thereon without 

amendment and recommends that the bill do pass. 

PURPOSE OF THE MEASURE

The purpose of the measure is to direct the Secretary of the Interior to offer for oil and gas leasing an area within the 181 Area as 

soon as practicable but not later than one year after the date of enactment of this Act. 

BACKGROUND AND NEED

S. 2253 directs the Secretary of the Interior to offer for oil and 

gas leasing certain parts within the 181 Area as soon as practicable 

but not later than one year after the date of enactment of this Act. 

The area to be offered for sale under S. 2253 is at least 100 miles 

from any point on the Florida coastline. The area is not under congressional moratorium or Presidential withdrawal. Also excluded 

from oil and gas leasing under S. 2253 is any portion of the 181 

Area that is east of 86 degrees 41 minutes longitude (the ‘‘Military 

Mission Line’’) unless the Secretary of Defense agrees in writing 

before the area is offered for lease that the area can be developed 

in a manner that will not interfere with military activities. This 


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provision seeks to address issues raised in a November 30, 2005, 

letter from Secretary of Defense Donald Rumsfeld to Senator John 

Warner, raising concerns that drilling structures and associated development east of the Military Mission Line would be incompatible 

with military activities. The Minerals Management Service 

(‘‘MMS’’) has in the past attempted to address such concerns 

through a memorandum of understanding with the Department of 

Defense. 

On November 14, 1996, MMS announced that Secretary Bruce 

Babbitt had approved the 5-Year Program for oil and gas leasing 

on the Outer Continental Shelf (‘‘OCS’’) for 1997–2002. The plan included an intention to offer the entire 5.9 million acre area (geographically shaped like the state of Idaho) commonly referred to as 

the ‘‘Original Lease Sale 181 Area’’ or oil and gas leasing. This area 

is outlined in the MMS map below and labeled as ‘‘Original Sale 

181 Area Boundary.’’


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The decision to include the Original Sale 181 Area in the 5-Year 

Program was the culmination of an extensive consultation process 

by the federal government with coastal states and the public at 

large. This decision by the Clinton Administration to offer these 

lands for oil and gas leasing was made after negotiations with 

then-Florida Governor Lawton Chiles. This area included submerged lands within 15 miles directly off of Alabama’s coastline in 

the area commonly referred to as the ‘‘stove-pipe.’’ This stove-pipe 

area is excluded from oil and gas leasing under S. 2253. 

In preparation for oil and gas leasing in the entire Original Sale 

181 Area, a Final Environmental Impact Statement was completed 

in June 2001 for the full area. On July 2, 2001, Secretary of the 

Interior Gale Norton proposed a Notice of Sale for oil and natural 

gas production in a modified 181 area (labeled on the map as ‘‘Proposed Sale Area’’). Secretary Norton stated, ‘‘Our modified 181 area 

has been adjusted from 5.9 million acres to 1.5 million. The adjusted area is at least 100 miles from any portion of the Florida 

coast. For example, its northern border is more than 100 miles 

from Pensacola, Florida and its eastern edge is 285 miles from the 

shores of Tampa Bay.’’ At the time of the Notice of Sale in 2001, 

the Department of the Interior projected that the adjusted area 

contained 1.25 trillion cubic feet of natural gas and 185 million barrels of oil. The 2001 estimates for the entire Original Sale 181 Area 

(5.9 million acres) were 11.69 trillion cubic feet of natural gas and 

1.87 billion barrels of oil. 

In its most recent resource assessment on the OCS, MMS noted, ‘‘The OCS remains a significant potential domestic source of new 

natural gas resources from fields yet to be discovered.’’ The MMS 

estimate for undiscovered technically recoverable gas resources on 

the OCS increased 16 percent when comparing the 2006 assessment with the 2001 assessment, and the volume of undiscovered oil 

resources increased 15 percent over that same time period. 

According to recent mean estimates from MMS, there are 930 

million barrels of undiscovered recoverable oil and 6.03 trillion 

cubic feet of undiscovered recoverable natural gas in the entire 3.6 

million acre area covered by S. 2253. In the approximately 725,000 

acres east of the Military Mission Line (available for leasing under 

S. 2253 only with the approval of the Secretary of Defense), MMS 

estimates that there are 1.17 trillion cubic feet of undiscovered, recoverable natural gas and 130 million barrels of undiscovered, recoverable oil. 

According to the Energy Information Agency, the United States 

consumed 22.2 trillion cubic feet of natural gas in 2005, making the 

estimated resources covered in S. 2253 greater than 25% of the 

total natural gas consumed in the United States last year. Furthermore, the American Gas Association estimates that MMS assessments for the area covered in S. 2253 equals the amount of natural 

gas used to heat and cool approximately 6 million homes for 15 

years. 

On February 8, 2006, MMS released for comment a draft proposed 5-Year Plan for 2007–2012 Oil and Gas Leasing on the OCS. 

The Department of the Interior described this as the second step 

of a four-step process to developing a final OCS leasing plan. 

The Department of the Interior published Federal OCS offshore 

administrative boundaries in the Federal Register on January 3, 


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2006 (Federal Register Vol. 71, No.1). According to the MMS, the 

agency developed these administrative boundaries beyond State 

submerged lands for the purpose of agency planning, coordination 

and administrative purposes. As stated in the Federal Register notice, applying the principle of equidistance, MMS specifically designated these areas to better carry out its responsibilities and mandates under the Coastal Zone Management Act, the Outer Continental Shelf Lands Act and the Energy Policy Act of 2005. 

MMS stated its intention to realign the boundaries of the Central 

Gulf of Mexico Planning Area to correspond with the new offshore 

administrative boundaries. Under this revision, part of the Original 

Sale 181 Area, and the deepwater area to the south of that would 

be considered part of the Central Planning Area and could be considered for future oil and gas development. According to MMS, the 

re-designated Sale 181 Area included as part of the Central Planning Area is approximately 2 million acres, in contrast to approximately 3.6 million acres under S. 2253. 

The Outer Continental Shelf Lands Act (OCSLA) specifically authorized the Secretary of the Interior to manage oil and natural gas 

and other marine minerals activity seaward of state submerged 

lands. Today, submerged lands within three nautical miles off the 

coastline fall within the jurisdiction of the individual states. Texas 

and the Gulf Coast of Florida (and unincorporated U.S. territory of 

Puerto Rico) are the exceptions, with state (or territorial) waters 

extending out to three marine leagues (nine nautical miles). 

There are over 8,200 producing and non-producing existing 

leases on the OCS, and about 4,000 offshore facilities. MMS estimates that there are 42,000 OCS personnel and 125 companies operating on the OCS. There are 46 million acres leased in the approximately 1.76 billion acre OCS (2.6%) and 33,000 miles of oil 

and gas pipeline. About twenty percent of this lease acreage is currently in production. 

Oil and gas production on the OCS provides approximately 1.6 

million barrels of oil per day, and 11 billion cubic feet of natural 

gas per day to the domestic market. Annually, this production 

amounts to over 600 million barrels of oil per year (30% of United 

States domestic production) and 4.7 trillion cubic feet of natural 

gas per year (23% of United States domestic production). According 

to MMS, the OCS contains more than 60% of the remaining undiscovered oil in the United States and as much as half of our nation’s 

undiscovered, recoverable natural gas. MMS estimates that over 

the next five years, OCS production could account for more than 

40% of domestic oil production and 23% of domestic natural gas 

production, mostly due to new discoveries in deepwater and at 

greater depths beneath the ocean floor. 

In addition to providing significant energy resources, activities on 

the OCS provide substantial revenues to the Federal Treasury, in 

the form of bonuses, rents and royalties. Activities on the OCS provide an average of over $6 billion per year in revenues to the 

Treasury. 

LEGISLATIVE HISTORY

S. 2253 was introduced by Senator Domenici for himself and Senators Bingaman, Talent and Dorgan on February 7, 2006. S. 2253 

was read twice and referred to the Committee on Energy and NatVerDate Aug 31 2005 22:18 Apr 21, 2006 Jkt 049010 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\SR240.XXX SR240

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ural Resources. On February 16, 2006, the Senate Committee on 

Energy and Natural Resources met in a full committee hearing to 

receive testimony regarding S. 2253. To date, twenty-four members 

of the Senate have cosponsored S. 2253. At the business meeting 

on March 8, 2006, the Committee on Energy and Natural Resources ordered S. 2253 favorably reported. 

COMMITTEE RECOMMENDATION AND TABULATION OF VOTES

The Senate Committee on Energy and Natural Resources, in 

open business section on March 8, 2006, by a majority vote of a 

quorum present recommends that the Senate pass S. 2253. 

The roll call vote on reporting the measure was 16 yeas, 5 nays, 

1 present as follows: 

Yeas Nays Present 

Mr. Domenici Mr. Martinez Ms. Landrieu 

Mr. Craig Mr. Akaka 

Mr. Thomas Mr. Wyden * 

Mr. Alexander * Mrs. Feinstein * 

Ms. Murkowski Mr. Menendez 

Mr. Burr * 

Mr. Talent 

Mr. Burns* 

Mr. Allen 

Mr. Smith 

Mr. Bunning 

Mr. Bingaman 

Mr. Dorgan 

Mr. Johnson* 

Ms. Cantwell 

Mr. Salazar 

* Indicates vote by proxy. 

SECTION-BY-SECTION ANALYSIS

Section 1. Offshore Oil and Gas Leasing in 181 Area of the Gulf of 

Mexico 

Section 1(a) provides definitions for the terms ‘‘181 Area,’’ ‘‘Military Mission Line,’’ and ‘‘Secretary.’’

Section 1(b) directs that, except as otherwise provided in this section, the Secretary of the Interior shall offer the 181 Area for oil 

and gas leasing pursuant to the Outer Continental Shelf Lands Act 

(43 U.S.C. 1331 et seq.) as soon as practicable, but not later than 

one year, after the date of enactment of this Act. 

Section 1(c) excludes certain areas from the lease sale directed 

under section 1(b). These areas are only excluded, by this section, 

from the oil and gas leasing authorized under this Act. 

Section 1(d) provides that the 181 Area shall be offered for lease 

notwithstanding the omission from the 181 Area from any prior 

outer Continental Shelf leasing program under the Outer Continental Shelf Lands Act. 

COST AND BUDGETARY CONSIDERATIONS

The Congressional Budget Office estimate of the costs of this 

measure has been requested but was not received at the time the 

report was filed. When the report is available, the Chairman will 

request it to be printed in the Congressional Record for the advice 

of the Senate. 


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REGULATORY IMPACT EVALUATION

In compliance with paragraph 11(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee makes the following evaluation 

of the regulatory impact which would be incurred in carrying out 

S. 2253. The bill is not a regulatory measure in the sense of imposing Government-established standards or significant economic responsibilities on private individuals and businesses. 

No personal information would be collected in administering the 

program. Therefore, there would be no impact on personal privacy. 

Little, if any, additional paperwork would result from the enactment of S. 2253, as ordered reported. 

EXECUTIVE COMMUNICATIONS

At a hearing before the Committee on Energy and Natural Resources on February 16, 2006, the Department of the Interior provided the following testimony with respect to S. 2253: 

STATEMENT OF R.M. ‘‘JOHNNIE’’ BURTON, DIRECTOR, MINERALS MANAGEMENT SERVICE, DEPARTMENT OF THE INTERIOR

Mr. Chairman and Members of the Committee, I appreciate the opportunity to appear here today to discuss the 

area of the Federal Outer Continental Shelf (OCS) in the 

Gulf of Mexico commonly referred to as the ‘‘Sale 181 

area’’. We appreciate the Committee’s efforts to address 

our nation’s domestic energy needs. S. 2253, calling for the 

expansion of leasing within the Gulf of Mexico of non moratoria areas closely resembles the draft 5-year proposed 

program released by the Department on February 8, 2006. 

The OCS Lands Act directs the Secretary of the Interior 

to make resources available to meet the nation’s energy 

needs. The accompanying congressional declaration of policy states, ‘‘The OCS is a vital national resource reserve 

held by the Federal Government for the public, which 

should be made available for expeditious and orderly development.’’ The Administration has directed the Minerals 

Management Service (MMS) to meet this charge through 

specific policy initiatives provided in the President’s National Energy Policy. This direction is all the more critical 

in the face of higher oil and natural gas prices and their 

impacts to our economy. 

As the Nation’s offshore energy and mineral resource 

management agency, the MMS has a focused and well established ocean mandate—to balance the benefits derived 

from exploration and development of oil, gas, marine minerals and renewable energy resources with environmental 

protection and safety. 

The environmental record of the OCS program is outstanding. There has not been a significant platform spill in 

the last 35 years. The Sale 181 area is a gas prone area 

and natural gas production offshore represents one of the 

most environmentally sound energy developments this 

country could propose. 


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The oil and gas produced from the OCS plays a major 

role in supplying our daily energy needs, accounting for 

30% of domestic oil production and 21% of domestic natural gas production. The Gulf of Mexico is the most prolific 

producing offshore region, providing 27% of the oil and 

20% of the natural gas produced domestically. The share 

of Gulf of Mexico production is expected to rise within the 

next several years to about 23% of natural gas and 40% of 

oil domestic production. 

Sale 181 area 

In 1999, MMS put out a call for information and notice 

of intent to prepare an environmental impact statement 

for a proposed Federal oil and gas lease sale in the area 

now referred to as the original Sale 181 area. This area, 

original Sale 181, included an area offshore of Alabama beginning 15 miles south of the Alabama coast and an area 

offshore of Florida more than 100 miles from the Florida 

coast. It included 1,033 lease tracts covering 5.9 million 

acres. 

In 2001, the Secretary of the Interior spent a great 

amount of time speaking with officials and citizens of the 

affected states around the original Sale 181 area. Based on 

those discussions, a decision was made to modify the 181 

area that would be offered in the December 2001, lease 

sale and that would become available for leasing during 

the 5-Year Oil and Gas Leasing Program for 2002–2007. 

This modification reduced the acreage available for leasing 

in the Sale 181 area from 5.9 million acres to 1.5 million 

acres. At the time, the Department projected the adjusted 

area contained an estimated 1.25 trillion cubic feet of natural gas and 185 million barrels of oil. 

There have been three sales held in the modified Sale 

181 area. The first, Sale 181, held in December 2001; Sale 

189 in December 2003; and Sale 197 in March 2005. The 

results of Sales were as follows: 

Sale 181: 95 leases were awarded, with total high bids 

of $340,474,113. 

Sale 189: 14 leases were awarded, with total high bids 

of $8,376,765. 

Sale 197: 10 1eases were awarded, with total high bids 

of $6,595,753. 

There have been a total of 26 exploration wells drilled 

on the leases in this area. The first discovery on leases 

issued in these recent sales was announced in 2003 with 

seven additional discoveries subsequently announced. 

These discoveries are predominately natural gas. 

Five independent exploration and production companies 

and a mid-stream energy company have come together to 

facilitate the development of multiple ultra-deepwater natural gas discoveries located in the Central and Eastern 

Gulf of Mexico, including all of the 7 discoveries mentioned 

above. The fields’ water depths range from 7,800 to 9,000 

feet. The production from these discoveries will be tiedback to a central platform, Independence Hub, which will 


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be located on unleased Mississippi Canyon Block 920 in 

the Central Gulf. First production is expected in 2007. 

5-Year Program for 2007–2012 

In August 2005, the Department began the process of 

developing the next 5-Year Oil and Gas Leasing Program 

2007–2012 by requesting comments on all OCS areas, including the Sale 181 area. On February 8, 2006, the Department announced its draft proposed program for the 5- 

year OCS Oil and Gas Leasing Program 2007–2012. This 

was the second step in a 5-step process which affords substantial opportunity for public comment. Under the draft 

proposal, the MMS would plan on conducting a lease sale 

in a larger part of the original Sale 181 area in the fall of 

2007. 

On January 3, 2006, the Department published in the 

Federal Register revised administrative lines that differentiate Federal waters of the Eastern, Central and Western 

Gulf of Mexico. These lines were drawn on the principle of 

equidistance. It is now clear which area of Federal waters 

is off the coast of each state. These lines are purely administrative with no legal effect on civil or criminal jurisdiction. We published the lines because the OCS is more and 

more subject to multiple-use activities, and it became timely to delineate zones of interest of coastal states in Federal 

waters. 

The draft proposal includes consideration of leasing in 

an expanded area within the original Sale 181 area. The 

expanded area is approximately 2 million acres now located within the Central Gulf Planning Area under the 

new administrative lines. This area is in addition to the 

1.5 million acres within the original Sale 181 area already 

offered for leasing under the current 2002–2007 5-year 

program. 

MMS estimates that most of the prospective tracts in 

this area would be leased out within 5 years, under annual 

sales, and that the first production would occur within 5 

years of the first sale. 

The Sale 181 area, which we believe has a huge potential for natural gas and oil resources, is not under Congressional moratorium or Presidential withdrawal. Nevertheless, in accordance with the Secretary’s commitment, 

the draft does not propose any leasing within 100 miles of 

the coast of Florida, including that portion of the Sale 181 

area which is now in the Central Gulf Planning Area. No 

lease sale is proposed in the Eastern Gulf Planning Area. 

This respects the commitment made by the Secretary, 

which was reiterated in the August 2005 Request for Information, that the Secretary ‘‘had no intention of offering for 

leasing areas in the Eastern Gulf of Mexico Planning Area 

within 100 miles of the coast of the State of Florida.’’

In addition, the area proposed for leasing is west of the 

Military Mission Line (86 degrees, 41 minutes West longitude) and would not interfere with military readiness or 

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fense on all oil and gas leasing on the OCS and envision 

this relationship to continue with future leasing decisions. 

The draft proposed program would continue to schedule 

annual area-wide lease sales in the Central and Western 

Gulf Planning Areas, as has been the customary practice. 

The area south of the original Sale 181 area that is west 

of the new administrative line has been included for analysis. This area is currently under both Presidential withdrawal and Congressional moratorium; both of these would 

need to be removed before this area could be offered for 

lease. It is estimated that there could be 700 million barrels of oil and 3.68 trillion cubic feet of natural gas in this 

area. This area warrants further analysis and consideration in order to inform future decisions as to whether or 

not to include the area in the final program. Therefore, the 

draft proposed program notes that subsequent annual Central Gulf sales may consider the area to the south. No sale 

will be held unless the moratorium is discontinued by Congress and the Presidential withdrawal is modified. In addition, pursuant to Section 18 of the OCS Lands Act, no sale 

will be proposed until all affected states have the opportunity to comment. 

2006 Resource assessment 

Concurrent with the draft proposed program, MMS released two documents: (1) Assessment of Undiscovered 

Technically Recoverable Oil and Gas Resources of the Nation’s Outer Continental Shelf, 2006; and (2) the Report to 

Congress: Comprehensive Inventory of U.S. OCS Oil and 

Natural Gas Resources, which was sent to Congress. These 

documents report MMS’s new estimates for the total endowment of technically recoverable oil and gas resources 

for the entire OCS, including areas under Congressional 

moratoria or Presidential withdrawal. In the draft proposed program for 2007–2012, numbers were predicated on 

the 2003 estimates. These numbers will be updated in the 

proposed program that will be released in the summer of 

2006. MMS periodically updates its resource assessments 

to include any new data and information, incorporate advances in exploration and development technologies, and 

use new assessment methods. MMS did not directly acquire or contract for the acquisition of new seismic data or 

the drilling of wells. All of the data used was commercial 

data or published scientific research. 

The Department has completed eight comprehensive resource assessments since 1976. During this timeframe, the 

magnitude of resources believed to be technically recoverable continued to grow with each assessment in those 

areas with leasing activity. 

Estimates for the sale 181 area 

MMS has examined the resource potential of the Sale 

181 area under the 2003 interim update. Based on those 

assessments, we have estimated that the portion of the 

Sale 181 area east of the area currently available for lease 


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has a potential of 930 million barrels of oil and 6.03 trillion cubic feet of gas. This is the area proposed in S. 2253. 

By contrast, the new area included in the Draft Proposed 

Program for 2007–2012 is estimated to contain 530 million 

barrels of oil and 3.42 trillion cubic feet of gas. 

S. 2253 

Mr. Chairman, I will now turn to S. 2253, the legislation 

that you, along with Senators Bingaman, Talent and Dorgan, introduced last week. The legislation would require 

the Secretary of the Interior to offer a large portion of the 

Sale 181 area for oil and gas leasing within one year of enactment. We support the goals of the legislation and we 

appreciate your efforts to make additional energy resources available for our nation. This proposal would make 

3.6 million acres available for lease while maintaining a 

100 mile buffer zone along the Florida coast. Leasing in 

the area east of the Military Mission Line, an area of approximately 725,000 acres, would be subject to the agreement and approval of the Secretary of Defense. 

The work MMS must conduct to comply with the National Environmental Policy Act, Marine Mammal Protection Act, Endangered Species Act, and Coastal Zone Management Act is very similar for the sale included in its 

draft proposed oil and gas leasing program as for the lease 

sale called for in S. 2253. Mr. Chairman, we look forward 

to working with you and your staff on this legislation. 

Conclusion 

This Administration and the Department of the Interior 

remain committed to ensuring that the OCS remains a 

solid contributor to the nation’s energy needs. The relative 

contribution from federal offshore areas will increase in 

the upcoming years due to activity in the deep water areas 

of the Western and Central Gulf of Mexico. 

Mr. Chairman, this concludes my statement. Please 

allow me to express my sincere appreciation for the continued support and interest of this committee for MMS’s programs. It would be my pleasure to answer any questions 

you or other members of the Committee may have at this 

time. 

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, the Committee notes that no changes in existing law are made by the bill S. 2253, as ordered reported. 

Æ 


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