Slower gulf permitting pace costs jobs, API-funded study finds

A slower permitting pace in the Gulf of Mexico following the 2010 Macondo deepwater well incident and spill and subsequent moratorium is reducing investment in new projects and costing jobs, a new study commissioned by the American Petroleum Institute concluded.

Capital and operating expenditures in the gulf have plunged by $18.3 billion in 2010 and 2011 relative to pre-moratorium plans, according to the study, “The State of the Offshore US Oil & Gas Industry,” by Quest Offshore Resources, a Sugar Land, Tex., consulting firm.

Eleven deepwater rigs have left the gulf since Apr. 10, 2010, to work off Brazil, Egypt, Angola, and elsewhere, it noted. “Through 2015, the investment in other regions instead of the US associated with these rigs is estimated to be over $21.4 billion including drilling spending and associated project equipment orders, even accounting for the portion of equipment that will likely be manufactured in the United States,” it said.

The resulting decreased domestic investment due to the moratorium reduced total US employment by an estimated 72,000 jobs in 2010 and 90,000 jobs in 2011, it added.

“The economic impacts of the moratorium are still being felt,” API Pres. Jack N. Gerard said on Jan. 10 as the trade association released the Dec. 29, 2011, study. “We're not doing what we should be doing to help meet our nation's energy needs, deliver revenue to our government, and create jobs. This is not just hurting people in the gulf, it's hurting people across the country.”

The study said if the US Bureau of Safety and Environmental Enforcement returned to issuing permits at pre-moratorium rates, the number of delayed permits for shallow water projects could be reduced from 85 under the current path to 37 in the 2012-15 period, and from 48 to 9 in the gulf’s deepwater.

This would increase investment in the gulf’s offshore oil and gas industry by more than $15.6 billion during that time, and add 17,000-49,000 jobs/year, it indicated. US offshore oil production would climb over the next decade, rising some 13% by 2017 relative to its current projected path, it said.

Contact Nick Snow at nicks@pennwell.com.

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