North Carolina has geological potential for oil and gas resources, but commercial development is currently non-existent. The state’s geological structure suggests the presence of oil and natural gas, but these resources remain untapped due to historical exploration failures and significant legal restrictions. This analysis explores the history of land-based drilling, the potential lying offshore in the Atlantic Ocean, and the current federal and state policies that prohibit their development. While the resources exist, they are not accessible to the energy market today.
Onshore Exploration History
Exploration for oil and gas within North Carolina dates back to the 19th century, focusing primarily on ancient geological formations. Most efforts concentrated on the Triassic basins, elongated rift valleys formed when the supercontinent Pangea split apart. These basins, including the Deep River and Dan River areas, contain sedimentary rocks recognized as potential source rocks for conventional hydrocarbons.
Despite this geological promise, historical exploration has never led to commercially successful production. Numerous exploratory wells were drilled throughout the 20th century, including activity in the 1970s when companies like Chevron drilled wells in the Sanford sub-basin. Although small amounts of oil and natural gas were detected, they did not discover economically viable reservoirs. Consequently, North Carolina has no history of commercial oil or gas extraction from its land. Modern interest has shifted toward unconventional natural gas resources within the basin’s shale layers.
Offshore Reserves and Potential
The most significant potential for oil and gas lies in the federal waters of the Outer Continental Shelf (OCS), far beyond North Carolina’s three-mile limit. Geologically, this potential is concentrated in major offshore depocenters formed as the Atlantic Ocean opened, specifically the Carolina Trough and the Blake Plateau Basin. These basins contain deep layers of marine sediments assessed by the Bureau of Ocean Energy Management (BOEM).
BOEM’s 2014 assessment of the entire Atlantic OCS estimated a mean of 4.72 billion barrels of undiscovered, technically recoverable oil. The potential for natural gas is estimated at 37.51 trillion cubic feet of undiscovered, technically recoverable gas across the same region. These figures represent the total volume that could be produced using current technology, without considering economic feasibility.
The Atlantic OCS is considered a frontier area, meaning there are currently no established reserves or ongoing production. The resource potential is theoretical, based on seismic data and geological modeling, rather than proven drilling results. The significant volumes of hydrocarbons remain speculative until successfully drilled and appraised.
Federal and State Regulatory Status
Despite the significant offshore potential, development is currently prohibited by a combination of federal and state regulatory actions. The legal framework for offshore activity is governed by the federal Outer Continental Shelf Lands Act, which authorizes the U.S. government to manage leasing in these waters. Currently, the federal government has placed a moratorium on new leasing in the Atlantic OCS.
This federal ban, established by executive memorandum, withdrew the waters off North Carolina from consideration for oil and gas leasing for a ten-year period. The moratorium began on July 1, 2022, and is set to continue through June 30, 2032. This action prevents the Bureau of Ocean Energy Management from issuing new leases for exploration or production during this time frame.
State-level opposition further reinforces the prohibition against drilling near the coast. North Carolina’s Coastal Area Management Act (CAMA) requires that any federal activity affecting the coast must be consistent with the state’s coastal management program. Additionally, the state prohibits drilling within its sovereign waters, which extend three nautical miles from the shoreline. These parallel regulatory barriers are the dominant factors preventing any current oil and gas development.