Immediate Release: Contact: Nicolette Nye
Thursday, July 22, 2010 (202) 347-6900
New Study Confirms Importance of Independent Oil and Gas Companies
in the Gulf of Mexico
Predicts Dire Economic Impacts of Moratorium and Proposed Policies
WASHINGTON, DC – A new study shows the significant and growing role that independent oil and gas companies play in the Gulf of Mexico, and examines the devastating economic impacts that current and pending draconian policies on offshore drilling could have by forcing independents out of the Gulf. Such proposals include unreasonable financial requirements to operate offshore and overly prescriptive and onerous drilling standards, criteria that only a few major companies and national oil companies can meet and that may actually decrease safety.
“Many in the current administration and Congressional leadership have indicated that it is perfectly acceptable to reduce the number of oil and gas exploration companies to those judged to be big enough to pay,” said NOIA board member Dave Welch. “The move to drastically increase the amount of financial responsibility necessary to bid on leases and to make an unlimited liability cap will, without a doubt, result in many companies being no longer able to stay in business. The result is more and more jobs lost and less energy produced at home.”
The Economic Impact of the Gulf of Mexico Offshore Oil and Natural Gas lndustry and the Role of the Independents, shows that in 2009 about half of the nearly 400,000 oil and gas jobs in the Gulf of Mexico were generated by independents. In that same year, according to the study, independents generated $38 billion in economic value and $10 billion in federal, state and local revenue. The study was commissioned by NOIA member company Cobalt International Energy, Inc, and conducted by IHS Global Insight.
The study also indicates that independents represent a large and growing portion of the deepwater segment of the industry. The entire offshore energy industry in the Gulf of Mexico, including independents as well as majors, has been impacted by the deepwater drilling moratorium, and a de facto shallow water moratorium created by confusing, burdensome, and seemingly unnecessary new rules on shallow water drilling imposed by the Department of the Interior. These crippling measures along with proposed policies on liability caps and insurance, threaten to push independents from the Gulf of Mexico. This would be devastating to the Gulf economy.
In fact, the study forecasts that by 2020 an exclusion of the independents from the Gulf of Mexico would eliminate 300,000 jobs and result in a loss, over 10 years, of $147 billion in federal state and local taxes from the Gulf region. If the independents are excluded just from the deepwater, the job loss would be 265,000 jobs by 2020 and $106 billion in tax revenues over the 10-year period, the study shows.
Independents currently hold majority interests in 81 percent of all producing Gulf of Mexico leases and in 46 percent of the Gulf’s producing deepwater leases, according to the study, and independents have drilled 1,298 wells in the deepwater and currently account for the production of over 900,000 barrels a day of oil equivalent.
The study is available online at: http://www.ihsglobalinsight.com/gulfoileconomicimpact.
NOIA is the only national trade association representing all segments of the offshore industry with an interest in the exploration and production of both traditional and renewable energy resources on the nation’s outer continental shelf. The NOIA membership comprises more than 250 companies engaged in business activities ranging from producing to drilling, engineering to marine and air transport, offshore construction to equipment manufacture and supply, telecommunications to finance and insurance.