Expanded offshore production is good for America

10 13, 2014 by Lori LeBlanc | BIC Magazine

If Gulf energy producers had only one word to suggest federal officials include in the next offshore oil and gas development plan that word would be “expand!” In fact, in recent comments submitted to the U.S. Bureau of Ocean Energy Management (BOEM), the Louisiana Mid-Continent Oil and Gas Association (LMOGA) presented compelling reasons why expansion of federal waters for energy production is the right thing for America.

Currently, 87 percent of America’s offshore waters are off limits to drilling. This leaves only 13 percent of federal waters open for developing energy to heat our homes and fuel our cars — namely the Western and Central Gulf of Mexico and Alaskan waters. LMOGA urges the BOEM to maintain these areas of existing exploration and development activities in the 2017-2022 Leasing Plan and to expand leasing into new areas where there has been little to no activity such as the Mid- and Southern Atlantic Ocean, the Eastern Gulf of Mexico and the Pacific Ocean.

Such expansion would help meet America’s ever-growing energy needs with our own domestic energy while the rest of the world clamors to meet energy demands of their own. It is important to consider all areas of the outer continental shelf (OCS) to strengthen our country’s energy security and grow our economy.

Energy demand

Global population is on the rise and as such worldwide energy demand is projected to grow substantially. Some forecasts suggest an increase of 56 percent in global energy demands by 2040. Here at home, the U.S. is currently meeting 84 percent of its energy needs with domestic production, with the Gulf having supplied 90 percent of all OCS domestic crude oil since the beginning of time. Activity off of Louisiana’s coast alone generates $5 billion-$8 billion in offshore revenues for the federal treasury each year. Projections indicate by 2016 up to 1.8 million barrels of oil per day could be produced in the Gulf.

A 2011 study by Wood Mackenzie suggests developing all of the current “off-limits” areas in the OCS would add an additional $127 billion in new government revenue by 2020. Additionally, expansion of territories in the lease program would make significant inroads on meeting projected energy demands while providing the additional benefits of increased dollars to the federal treasury, reduction in our net oil and gas imports, and a reduced bill for imports.

Economic impact

Louisiana is a perfect example of how a robust offshore oil and gas industry can provide significant benefits to our local, state and national economies. While the recession of 2010 severely impacted many local and state economies, Louisiana’s economy maintained its resiliency due to a strong oil and gas industry. The offshore industry has a $44 billion economic impact on the state of Louisiana. Combining the offshore sector with related pipeline and refining activities, the oil and gas industry has a $70 billion total annual impact on the state. And while high unemployment levels devastated other states, parishes in Louisiana’s energy centers boast some of the lowest unemployment rates in the nation at around 3 percent.

According to the Department of the Interior, over $1 trillion in net economic value is associated with development of the Gulf of Mexico over the past 20 years, and the federal government has collected over $150 billion in revenues. A Wood Mackenzie report indicates there will be $10 billion-$20 billon in capital expenditures for Gulf exploration each year through 2020.

An expansion of federal waters eligible for energy exploration and production would exponentially increase capital expenditures by energy companies, providing a much needed boost to local and state economies throughout the country with thousands of good-paying jobs and increased sales by local businesses supporting the oil and gas industry.

The vibrant offshore oil and gas industry in the Gulf of Mexico has proven to provide long-lasting and undisputable economic and energy security benefits not only to Louisiana but to the entire nation as well. These are direct benefits states across our country — from the Atlantic to the Pacific — could experience with the opening of additional offshore federal waters for energy development.