WASHINGTON, January 25, 2011 – Long-term Gulf of Mexico deepwater development could be seriously jeopardized if permitting timelines are extended, according to a new analysis by Wood Mackenzie. The study projects nearly one-third of U.S. deepwater production could be rendered uneconomic, which could significantly impact deepwater production, resulting in less energy production, less investment and less revenue to government.
“The potential harm is alarming,” said Kyle Isakower, API’s Vice President of Economic and Regulatory Policy. “We are talking about a transformation of the future relevance of deepwater Gulf development to U.S. domestic energy production – and a major threat to Gulf region jobs and to the nation’s energy security. Based on the development impacts outlined by Wood Mackenzie, we believe as many as 125,000 jobs could be lost in 2015.”
A slowdown in Gulf permitting has already cost jobs and will reduce Gulf oil and natural gas production and government revenue this year. Unless policymakers reverse course, 2011 could be the first year without a lease sale in the Gulf of Mexico since 1964.
As much as 680,000 barrels of oil equivalent Gulf production a day could be at risk in 2019, according to the study, which was sponsored by API. That’s approximately equal to total current Alaska oil production, 12 percent of total current U.S. oil production, or about 34 percent of total current Gulf deepwater oil production.
On top of the production impacts, the Wood Mackenzie study projects as much as $70 billion in investment and $18 billion in revenue to government could be at risk (cumulatively from 2011 to 2022).
API represents more than 450 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America’s energy, supports more than 9.2 million U.S. jobs and 7.5 percent of the U.S. economy, and, since 2000, has invested nearly $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.