Texas and Louisiana. Underwater offshore reservoirs yielded large amounts of oil. These results spurred the conduct of geophysical surveys further out in the Gulf.
In 1938, Pure Oil and Superior Oil built the first freestanding drilling platform near Creole, Louisiana. That platform was more than a mile offshore and stood 15 feet above the waterline; its drill bit went through 14 feet of water. The Creole field yielded almost four million barrels of oil. During the next few years, many other companies drilled productive wells in the Gulf; some were located up to 10 miles offshore. The coming of World War II, and more specifically the threat of German U-boats prowling along the Gulf Coast, brought most of this activity to a halt.
In mid-1944, the absence of the U-boat menace spurred oil companies to resume their offshore drilling activities. The rapid return to extensive automobile driving after V. J. Day in August 1945 caused an unexpected shortage of gasoline, making the development of new sources of oil an important post-war initiative. Companies returning to the Gulf used wartime technologies such as sonar and seismic sounding; they hired experienced Navy divers for underwater operations; and they converted war-surplus landing crafts to drilling tenders, supply boats and pipe-laying ships.
The price of crude oil rose from its wartime frozen level of $ 0.92 per barrel to $ 1.27 in mid-1946 and $ 2.32 by the end of 1947, thus encouraging even relatively small companies to explore the deeper waters of the Gulf. In 1946, Magnolia Petroleum Company explored a parcel about 10 miles out to sea, positioning a drilling derrick about 12 feet over the water line. After spending more than $ 1 million on the first of its three planned wells, the company found natural gas pockets at 900 feet and 1,500 feet, but no oil.
In 1947, Kerr-McGee, in partnership with Philips Petroleum and the Stanolind unit of Standard Oil of Indiana, located attractive salt domes more than 10 miles offshore. It paid Louisiana $ 317,000 for the right to drill two 20,000-acre tracts that appeared promising in seismic surveys. An engineer modified Magnolia’ s derrick design and hired Brown and Root to build a new type of freestanding platform. Kerr-McGee made history by using a platform it labeled Kermac No. 16 to drill wells in“ only” 18 feet of water but more than 10 miles offshore, i. e.,“ beyond the sight of land.”
Southern Methodist University, Central University Libraries, DeGolyer Library
Continental Oil Co. offshore oil well drilling platform in the Gulf of Mexico, March 23, 1955.
The successes of the companies noted above encouraged others to increase their activities in the gradually sloping waters extending from 50 to 140 miles from the shoreline. In the last few years of the 1940s, almost three dozen companies spent more than $ 200 million to discover 11 separate oil fields with a total output of 16,500 barrels a day. But that early opening to a new era of offshore oil exploration was cut short by a ruling from America’ s highest court.
The Dispute Over Federal vs. State Control
The coastal states had long believed they controlled the submerged lands reaching at least three miles from their shores. Based on that understanding, they had a history of regulating fishing rights, constructing appropriate infrastructure facilities and leasing offshore tracts to companies exploring for oil and gas. As far back as 1937, the federal government had asserted its own right to control leasing rights to the tideland waters off the country’ s coastline. Acting upon the suggestion of Secretary of the Interior Harold L. Ickes, Congressman Gerald P. Nye( R-ND) encouraged Congress to proclaim national dominance over those waters. Doing so seemed to be a natural extension of the Roosevelt administration’ s program to establish more control over American industry, especially the energy sector. It was also a reflection of federal efforts to conserve the nation’ s petroleum resources. But the government took no action to confirm or enforce its offshore ownership rights at that time.
In October 1945, President Harry Truman signed Executive Order 9633, which proclaimed that the resources under the subsoil and seabed of the continental shelf were subject to the control and jurisdiction of the federal government. California argued that its 1849 constitution included in its boundaries the waters extending three miles from its shore. Attorney General Tom Clark sued the state to challenge that claim. In June 1947, the Supreme Court ruled in the landmark United States v. California case that the federal government, not the states, owned the submerged lands off the coasts. Therefore, it had“ full dominion over the resources of the soil under that water area, including oil.”
The government pursued similar lawsuits against Texas and Louisiana— states that also claimed their original constitutions gave them the right to control their offshore waters. All three states immediately ceased further leasing activities while those two cases made their way through the federal court system. In June 1950, the Supreme Court validated the federal government’ s right to control the waters off those states’ coasts. The ruling allowed existing drilling projects to continue on the five million acres Louisiana and Texas had already auctioned to the oil industry, but it prohibited those states from issuing new permits for exploration.
During the next two years, oil companies and states’ rights advocates twice persuaded Congress to pass a law returning to the states at least partial rights to control their submerged coastal lands. President Truman vetoed both bills, asserting that it was not right to give certain states the“ free gift” of valuable land and mineral rights that belonged to all the states in the Union. His veto message acknowledged that companies had already extracted 235 million barrels of oil from the coasts of California, Louisiana and Texas, and that they had identified another 278 million barrels of proven reserves. It even suggested that more than 2.5 billion barrels might still exist in those territories.
In May 1953, President Dwight D. Eisenhower delivered on his campaign promise to break the deadlock over what was called the Tidelands Oil controversy by signing the Submerged Lands Act( SLA). That law recognized the states’ rights to control the use of the lands
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