A new study commissioned by the National Ocean Industries Association (NOIA) forecasts daily oil and gas production from the US Gulf of Mexico could be slashed by over 85% by 2040 if new drilling permits are banned on the US Outer Continental Shelf
The study, The Economic Impacts of the Gulf of Mexico Oil & Natural Gas Industry, prepared by Energy & Industrial Advisory Partners (EIAP), examines the economic impact of the effects of potential leasing and drilling bans on the offshore oil and gas industry and employment.
NOIA had the 116-page study prepared to counter a statement made by Democratic presidential candidate Vice President Joe Biden calling for a ban on offshore oil drilling to combat climate change. Senator Biden is the presumptive Democratic nominee to run against President Trump in the US Presidential elections in November.
At the heart of the study is an analysis conducted by EIAP that forecasts offshore oil and gas activity in the Gulf of Mexico by 2040 under three scenarios: continuing current policies and regulations, banning new offshore leases, and banning new drilling permits.
Offshore oil and natural gas exploration, development and operations require spending across a large variety of activities that are supported by offshore support vessels, survey vessels, offshore construction vessels, drilling rigs and other specialised equipment. Among those activities are geological and geophysical surveys, drilling, surface and subsea production equipment, engineering, operational expenditure and decommissioning.
“Gulf of Mexico oil and natural gas production is a powerful driver of economic, energy and national security,” said NOIA president Erik G Milito. “While some elected officials and political candidates have promised to stop American energy production, including oil and gas production in the Gulf of Mexico, the reality is that these pledges would do untold harm to America.”
Mr Milito emphasised that the offshore oil and gas industry generates employment across the entire US, adding, “The lessons and warnings from the report are especially important now, as our industry fights to recover from the existential threat from Covid-19 and the Saudi Arabia-Russia oil price war.”
NOIA’s snapshot of the Gulf of Mexico as of 2019 shows production at 2.3M barrels of oil equivalents (boe) per day, supporting 345,000 offshore and onshore jobs, with a GDP contribution of US$28.6Bn, while generating US$5.4Bn in government revenue. Employment in the offshore oil and gas industry in the US Gulf Coast states of Texas, Louisiana, Mississippi and Alabama accounts for about 289,000 jobs.
Under a base case secenario, with current policies intact, the study forecasts oil and gas production at 1.9M boe/day, supporting 367,000 jobs, with annual spending of US$30Bn, US$31.1Bn in annual GDP contributions and US$6.7Bn in government revenues generated.
If a ban on new leases was implemented, by 2040 production from the Gulf of Mexico would be slashed by over 60% to 0.9M boe/d, with employment dropping to 173,000, annual spending to US$12.1Bn, GDP contributions of US$16.4Bn and government revenues of US$3Bn.
With no new permitting, the US offshore oil and gas industry would be devastated, with production dropping over 85% to 332,000 boe/d, jobs shrinking to 80,000, spending at US$4.8Bn, GDP contributions at US$8.3Bn and government revenues at US$1.1Bn.
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