Drilling Laws in the United States

RyanD
January 26, 2013

Petroleum and natural gas are the lifeblood of the United States and other industrialized nations. They provide the gasoline and other fuels that we use to run our cars, trucks and other vehicles, as well as the materials that we use for cooking and other forms of work. Countless products, including aspirins, toothpaste, milk cartons and detergents, are also made from “black gold,” as petroleum is often called.

In order to be obtained and processed for use, petroleum and gas must often be drilled for. The process of drilling may interfere with the activities—human or natural—in the surrounding area. A gas- or oil-producing area may extend onto somebody’s private property, a park or forest area, or a site set aside for use by the government, such as a military or naval base. It is quite necessary, therefore, that there be laws in force that regulate where and under what conditions drilling may be done. They regulate not only matters like land leasing and licensing, but also the testing of recovered oil and the safety standards for drilling equipment. This article will be confined to drilling laws in the United States, mainly on the federal law, although we will cover state laws as well, particularly in Alaska, New York and Texas, which are major oil- and/or gas-producing states. Both land and offshore drilling will be dealt with.

Federal drilling laws

Federal laws prohibit drilling in certain wilderness areas such as Arctic National Wildlife Refuge. The federal government also has jurisdiction over an area known as the Exclusive Economic Zone, which was created in 1983 and extends 200 nautical miles (230 statute miles) off the coast. The Bureau of Ocean Energy Management, Regulation & Enforcement (formerly the Mineral Management Service), part of the Department of the Interior and reorganized in 2010 into three agencies, manages mineral resources of all kinds on the outer continental shelf.

The Submerged Land Act

The Submerged Lands Act, passed in 1953, grants all states the right to any land that lies beneath navigable waters within their territory–about three nautical miles off the coast.

Title 43 of the Code of Federal Regulations

The Code of Federal regulations, Title 49, Subchapter C, Part 3100 spells out the laws relating to oil and gas drilling. They cover such topics as drainage and the compensation therefor, collection of compensatory royalties, options and their effects on acreage and the public availability of relevant information. The full texts of these laws may be viewed at the ECR’s website.

State Laws

Every state has its own laws on drilling, but only those of Alaska and Texas will be examined here in detail as they produce more gas and oil than all the other states.

I. Alaska

In Alaska, drilling is regulated by the state Oil & Gas Conservation Commission. Deposits of minerals on state land are open to “exploration, development and the extraction of minerals” (Article 7, Section 38.05.135). For more details, see the DNR’s website.

II. Texas

Texas’s Oil & Gas Division falls under the Railroad Commission, which grants drilling permits on the basis of “established spacing and density rules.” Each month, the commission also assigns oil and gas wells “production allowables,” receives production reports on leases and audits their “disposition path.” Title 16, Part 1, Chapter 3 of the Texas Administrative Code lays forth the regulations.

This article was written by RyanD and Robert Tritter, a writer of various law-related articles online. This was written on behalf of Allight Primax and their high quality mining pumps. Make sure to check out their website for more info regarding their products.