History of Louisiana Offshore Drilling

According to the Department of Natural Resources (DNR), Louisiana's Outer Continental Shelf (OCS) territory in the Gulf of Mexico forms the oldest and most extensively developed offshore oilfield in the United States. Louisiana's offshore drilling industry began with entrepreneurial ingenuity of the 1900s boosted by wartime attitudes and knowledge of the 1940s. Federal and state regulations and programs have shaped the modern offshore drilling history of Louisiana.

Early Years

• The first oil in open waters was discovered in 1938 off the coast of Louisiana.

  Louisiana's offshore drilling industry began on land. By the 1920s, oil prospectors began drilling in the bayous, lakes and marshes of Louisiana. In the 1930s, "large oil companies had locked up giant acreages at low costs" thanks to Depression-era land prices, according to the U.S. Minerals Management Service (MMS). The scarce onshore oil leases and promising seismic surveys revealing probable oil reserves in the Gulf of Mexico culminated in 1938 with Pure Oil and Superior Oil companies' joint discovery of the first oil in open waters.

Wartime Influences

• Navy divers made advancements in offshore drilling after returning from WWII.

  Trained soldiers and other military personnel returning from Europe at the end of World War II possessed the skills and expertise needed to advance the field of offshore drilling in Louisiana, including experience with logistics, at-sea communications and maneuvering underwater. Some of the first commercial divers came into the field because of their experience as Navy divers. The offshore oil industry cheaply converted wartime surplus vessels for use in the OCS region, thereby furthering the advancement of the industry in Louisiana, according to MMS. The milestone of the postwar offshore drilling era came in November of 1947 when the small oil company Kerr-McGee drilled the first productive oil well "out of sight of land" approximately 12 miles off Louisiana's coast.

Legislation

• The Louisiana Artificial Reef Program converts obsolete oilrigs into artificial reefs.

  State and federal governments have vehemently debated the issue of offshore leasing rights in the Gulf of Mexico since the 1940s. The Supreme Court prohibited state-approved oil prospecting without the permission of the federal government in its 1950 decision of "The United States vs. Louisiana." Millions of acres of OCS land off Louisiana's coast were set aside for oil speculation during the 1960s and 1970s. In 1986, the Louisiana Fishing Enhancement Act created the Louisiana Artificial Reef Program, which converts obsolete oilrigs into artificial reefs. In 1991, the Louisiana Legislature enacted a law establishing an oil-spill response program, according to the Louisiana Mid-Continental Oil and Gas Association. In 1994, Louisiana Legislature mandated tax incentives for oil drilling operations effectively increasing oil speculating activities off the state's coast.

Hurricanes

• Hurricanes pose an eminent risk to Louisiana's offshore drilling industry.

  Hurricanes pose one of the most eminent risks to Louisiana's offshore drilling industry. From the late 1940s until 1964, the oil industry in Louisiana avoided major storm damage. In 1964, Hurricane Hilda lashed offshore oil infrastructure, followed by Hurricane Betsy in 1965, which caused unparalleled damage to offshore and coastal oilrigs, according to MMS. In 2004, Hurricane Ivan caused extensive damage to underwater oil drilling infrastructure. In 2005, Hurricane Katrina resulted in the standstill of almost all oil and gas production activities in Louisiana for several months. Less than 30 days later, Hurricane Rita followed nearly the same path through a heavily developed area of the offshore oil industry causing further damage, according to the Louisiana Mid-Continental Oil and Gas Association. Hurricanes Gustav and Ike affect the offshore drilling industry in Louisiana in 2008.

Environmental Considerations

• Offshore drilling impacts Louisiana's fishing industry.

  Offshore drilling and related industries produce numerous economic rewards as well as numerous environmental challenges compounded by the oil industry's impact on Louisiana's equally important fishing economy. The storm surge from Hurricane Katrina flooded refineries and other oil-industry facilities along the coast resulting in numerous separate oil spills, almost 7 million U.S. gallons of spilled oil in all. In April 2010, a fire and explosion sunk an oilrig off the coast of Louisiana creating Spill of National Significance and negative environmental consequences. The massive oil spill threatens Louisiana's delicate coastal wetland habitats and its large fishing industry.