The American Petroleum Institute (API) and the National Ocean Industries Association today released new analysis outlining the potential economic consequences of delaying the Department of the Interior’s (DOI) 5-year program for leasing in the Gulf of Mexico. The next 5-year offshore leasing program must be in place by July 1, 2022, but is well behind schedule, and no offshore lease sales can be held unless DOI implements a new program. The report, which was prepared by Energy and Industrial Advisory Partners (EIAP), warns how a delay in the program could jeopardize American energy security and cost 14,000 Louisiana jobs and millions in contributions to the Louisiana economy.
“Now more than ever, U.S. oil and natural gas development is critical for Louisiana’s economy and our nation’s long-term energy security, and offshore production plays a key role,” API Gulf Coast Regional Director Gifford Briggs said. “Policymakers should be doing everything they can to encourage the development of Louisiana’s vast energy resources and acting on the 5-year program is a commonsense step the administration could take right now to support global energy security now and in the future.”
“The Gulf of Mexico is a proven strategic energy asset that benefits every American. Workers across Louisiana and the Gulf Coast and throughout the nation need a new leasing plan so they can do their jobs and help fortify our national security, alleviate inflationary energy prices, and reduce our dependence on foreign sources of energy. The longer we go without being able to explore and develop new leases offshore, the longer we weaken the Gulf of Mexico,” NOIA President Erik Milito said.
“The results of this study reinforce what we already know here in Louisiana, offshore energy development and lease sales provide economic stability and energy security, providing jobs and wages to thousands of citizens, and helping to fund critical coastal restoration and hurricane protection projects that help make our communities safer and stronger,” said LMOGA President Tommy Faucheux. “The administration needs to recognize that promoting increased dependence on foreign oil threatens American jobs and deprives our state and local communities of much-needed revenue, all while likely increasing the risks of climate change and creating economic uncertainty when we need it most.”
“Offshore energy is the primary economic generator for the Lafourche Parish community, supporting not just jobs, but also substantially funding the government services provided by the Parish, like after school programs, economic development assistance, public works and emergency preparedness. Offshore activity serves as an economic base for our levee and water districts as well. In our daily lives, where we live, work, raise families, go to school, recreate – offshore energy production is vital to all of it, and that is the case in any community across the country that supports energy activity,” Greater Lafourche Port Commission Executive Director Chett Chiasson said.
“Danos has supported the energy industry in South Louisiana for over 75 years where we employ nearly 2,500 people. Ending or reducing lease sales in the Gulf of Mexico will increase carbon emissions, send jobs overseas, increase the cost of energy for Americans, and take away the largest source of funding to restore and protect our Louisiana coast,” Danos Owner and CEO Paul Danos said.
Since 1980, DOI has been required to prepare a 5-year offshore leasing program to best meet national energy needs for the 5-year period, including a schedule of oil and gas lease sales and details on the size, timing and location of proposed leasing activity. Despite their legal obligation to maintain an offshore leasing program, DOI is well-behind schedule in this multi-year regulatory process and has yet to initiate the third comment period required for completion.
A lapse in a 5-Year Program would impact Louisiana more than any other state, costing thousands of jobs and millions in lost economic activity in Louisiana.
106,000 Louisiana jobs are supported by Gulf of Mexico offshore production. Nearly 14,000 of those could be lost without a 5-year offshore leasing program. Direct jobs supporting the offshore oil and gas industry pay on average $69,650. That’s 29% higher than the national average salary.
With a 5-year offshore leasing program in place, Louisiana could receive $165 million in state revenue, compared with around $55 million in Mississippi revenue and around $53 million in Alabama revenue. That’s revenue that is used for infrastructure, conservation projects, coastal restoration and hurricane protection programs but could be reduced without a 5-year program in place.
A delayed 5-year offshore leasing program could result in a loss of around $1.3 billion in contributions to Louisiana’s economy.
With a 5-year offshore leasing program, the Gulf of Mexico is projected to produce an average of 2.6 million barrels per day of oil and natural gas from 2022 – 2040. A delay in the program could mean nearly 500,000 barrels per day less, about a 20% reduction, over that time period.
In 2036, the lost Gulf of Mexico production could reach a peak of 885,000 barrels of oil and natural gas per day – a 33% decrease.