Increased economic activity, more jobs and a 70% rise in spending are predicted for the Gulf of Mexico offshore oil & gas industry by 2013 – provided permitting returns to pre-moratorium levels. Katie Jernigan looks at the region’s latest economic impact analysis.
Conducted by Quest Offshore Resources on behalf of the American Petroleum Institute (API) and the National Ocean Industries Association, the 2011 US Gulf of Mexico Oil & Natural Gas Industry Economic Impact Analysis (EIA) report estimates that regional capex has declined 15% since 2008 through a combination of falling energy prices, economic recession, the post- Macondo deepwater drilling moratorium and lower levels of shallow water activity.
Industry lobby groups have accused the US Bureau of Ocean Energy Management, Regulation & Enforcement (BOEMRE) of unnecessarily delaying the release of new deepwater drilling permits following the BP Macondo incident (OE May 2010). ‘The slow pace of Gulf development since the accident has cost jobs, revenue and energy production,’ says API president and CEO Jack Gerard, adding that recent disappointing unemployment figures from the US government made action in this area ‘more important than ever’.
According to Quest, accelerated permitting could boost the total Gulf offshore spend to over $41.4 billion by 2013 – 71% up on 2010. Capex is projected to rise from $6.5 billion in 2010 to $15.7 billion in 2013 and opex from $17.7 billion to $25.7 billion over the same period, with simultaneously higher employment numbers as operators make progress on projects stalled by the moratorium backlog.
The report adds that employment associated with the Gulf of Mexico’s oil & gas industry fell to its lowest level in years in 2010, bottoming out at about 242,000 jobs – 60,000 of them directly related within the industry and 180,000 indirectly.
If permit levels increase, Quest’s projection is that the industry’s employment numbers could rise 28% to 310,000 in 2011, and to 430,000 by 2013 if the trend continues. But the ‘bad news’, according to NOIA president Randall Luthi, is that ‘the current pace of permit reviews and approvals will just not get us there’. Quest stipulated its estimated impacts are likely conservative because they do not take into account the benefits of increased government revenue from bonus bids, royalties, and corporate income taxes.OE
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