Offshore drilling in the Atlantic Ocean has been a major topic for debate since the mid-1980s. A study conducted for the American Petroleum Institute and the National Ocean Industries Association explored the oil and gas reserves evaluation off the east coast and highlights the benefits of moving forward with oil and gas exploration. Located on the ocean, the states on the Eastern Coast will benefit the most economically. The rest of the United States will also see measurable economic gain from this offshore drilling.
Statistics from the survey are estimates of the benefits between 2017 and 2035. The big push for this timing comes from the upcoming Five-Year Offshore Leasing Plan, which will renew in 2017. The oil and gas industry is hoping that the government lifts the embargo on the Atlantic Outer Continental Shelf (OCS) as it has been restricted since the 1980s.
While assessing exploration and production opportunities on the Atlantic OCS, the survey found that the U.S. economy could gain up to $23.5 billion per year from 2017 to 2035. In addition, the government could earn $51 billion in revenue. This revenue would come from selling leases to oil and gas companies, bonuses from companies bidding against each other and royalties from production activities. After 2017, investments are expected to grow and produce higher revenues for the U.S.
Seventy-five percent of this economic gain would be seen by the Mid-Atlantic states, particularly North Carolina, South Carolina and Virginia. Northern Atlantic states, including Massachusetts, Maine and New York, will also see significant economic benefits. Over time, revenues will reach other regions of the United States.
In addition to investments, Atlantic OCS activity requires a lot of resources, such as technology, equipment and labor. This project is expected to create up to 280,000 jobs between 2017 and 2035. More than 200,000 of those jobs will be located in the Eastern Coast states and an estimated 65,000 jobs in other U.S. regions by the year 2035. In North and South Carolina, jobs will open up in high-tech manufacturing industries. Virginia’s opportunities will expand because of its dry docks and equipment supply companies. Other industries that will benefit from offshore drilling are construction, scientific services, professional and oil and gas. Not only will Atlantic OCS activity address unemployment issues in the country, it will achieve the goal of higher revenues without raising taxes.
Estimating that seismic activity begins in 2017, the government would be able to sell leases in 2018, and production could begin as soon as 2026. The survey suggests that companies could drill approximately 30 wells per year between 2017 and 2030. This figure would increase to 66 wells per year between 2031 and 2035. The entire project has the potential to produce 1.3 million barrels of oil equivalent per day (boepd) by 2035. The production would be split into 40 percent oil and 60 percent natural gas. As a comparison, current offshore production in the Gulf of Mexico, Alaska and California is 1.87 million boepd. With results like these, the U.S. could become an exporter of oil and gas, bringing in more revenue.
What Needs to Happen?
To realize these benefits, the Federal Government needs to adopt new energy strategies that promote development by lifting the embargo on the Atlantic OCS. The oil and gas industry also needs to offer financial investments. Environmental supporters have concerns with the oil and gas risk assessment, but the survey shows that the economic benefits of offshore drilling significantly outweigh the costs associated with environmental effects. Other countries like West Africa and South America have already seen success from Atlantic exploration, so it is up to the United States to take advantage of their results and the estimated benefits.