New Study Finds Return to Pre-Moratorium Permitting Rate in Gulf Would Create 430,000 Jobs by 2013

by Marlo Lewis on July 12, 2011

in Blog, Features

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A new study by Quest Offshore, prepared for the American Petroleum Institute (API) and the National Ocean Industries Association (NOIA), finds that a return to the pre-moratorium permitting rate for offshore drilling in the Gulf of Mexico would create 430,000 jobs by 2013.

In the wake of the April 2010 BP Macondo offshore oil rig blowout disaster, the Department of Interior (DOI) imposed a six-month moratorium on permits for new deepwater oil and gas drilling in the Gulf of Mexico. Although the moratorium officially targeted only deep water rigs, permitting for shallow water (less than 500 feet deep) drilling projects also slowed down. After the moratorium expired in November, an informal regime of bureaucratic foot-dragging, nickednamed the “permitorium,” delayed new projects through February 2011 or later. 

The Quest Offshore study, United States Gulf of Mexico Oil and Natural Gas Industry Economic Impact Analysis, estimates the job, GDP, and tax revenue gains of a full return to pre-Macondo permitting rates, taking into account “capital investment and purchases of intermediate goods undertaken by the oil and natural gas industry,” “linkages to supplying industries,” and estimated “job creation and contribution to GDP associated with oil and natural gas development.” A unique feature of the study is its use of capital investment and spending data drawn from a “proprietary database of suppliers of capital equipment and intermediate goods to the Gulf of Mexico oil and natural gas operations.”

Some key findings:

  • Volatile energy prices, the recession, the deepwater drilling moratorium, and the permitorium reduced total oil and gas-related spending in the Gulf by 15% — from $28.5 billion to $24.2 billion — over the 2008 to 2010 time period.
  • Largely due to the moratorium, total spending declined 10% and capital spending declined 33% from 2009 to 2010.
  • If permitting returns to the pre-Macondo rate, total oil and gas domestic spending in the Gulf is projected to increase from $24.2 billion in 2010 to $41.4 billion in 2013, a 71% increase. Capital expenditures are projected to reach $15.7 billion in 2013, a 141% increase from 2010 levels.
  • The GDP contribution of Gulf offshore oil and gas expenditures declined by 15% from 2008 to 2010. If permitting returns to the pre-Macondo rate, the Gulf offshore oil and gas GDP contribution would increase from $26.1 billion in 2010 to $44.5 billion in 2013, a 70% increase.
  • In 2010, the Gulf offshore oil and gas industry supported more than 60,000 direct jobs plus 180,000 indirect (equipment and service provider) and induced jobs.  Total employment in 2010 — 242,000 jobs — was 15% lower than in 2009, which was 7% lower than in 2008.
  • If Gulf offshore permitting returns to the pre-Macondo rate, employment is projected to increase to 310,000 jobs in 2011, 350,000 jobs in 2012, and 430,000 jobs in 2013 — a 77% increase over the 2010 level.

Two charts from the study in particular convey the big picture:

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