Study Finds GOM Offshore Industry at Risk

Potential leasing and drilling bans threaten the Gulf of Mexico (GOM) oil and natural gas industry’s contribution to U.S. energy production, employment, gross domestic product (GDP) and government revenues, according to a new National Ocean Industries Association (NOIA) study.

Citing calls for no offshore drilling by former Vice President and presumptive Democratic presidential candidate Joe Biden and others, NOIA contends political efforts to curb offshore production would harm the Gulf Coast and national economies.

“Gulf of Mexico oil and natural gas production is a powerful driver of economic, energy and national security,” NOIC President Erik G. Milito remarked in a written statement emailed to Rigzone. “Every barrel of oil produced in the Gulf is a barrel produced under one of the toughest safety and environmental regulatory regimes in the world, and is a barrel that Americans do not have to import from countries like Russia and Iran. 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.”

Prepared for NOIA by Energy & Industrial Advisory Partners (EIAP), the study models the effects of various policies and regulations. It presents three scenarios of what the GOM oil and gas industry could look like by 2040, NOIA stated. The scenarios include:

• A “baseline” case that keeps existing policies and regulations in place: It would lead to $30 billion in annual spending, sustain 1.9 million barrels of oil equivalent per day (boepd) of production, support 367,000 jobs, contribute $31.1 billion to GDP annually and generate $6.7 billion in government revenues.
• A scenario with no new offshore leasing: It would result in $12.1 billion in annual spending, sustain 900,000 boepd of production, support 173,000 jobs, add $16.4 billion in annual GDP and yield $3 billion in annual government revenues.
• A scenario with no new offshore permitting: It would justify $4.8 billion in annual spending, result in 332,000 boepd of production, sustain 80,000 jobs, contribute $8.3 billion to GDP annually and provide $1.1 billion in government revenues.

“A strong Gulf of Mexico oil and gas industry means a strong America,” stated Milito. “From buoy specialists in Maine to composite material engineers in Oregon to software companies in Florida, every state has jobs and economic investments linked to the Gulf Coast. 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.”

The full study is available on NOIA’s website.

To contact the author, email mveazey@rigzone.com.