Study: GOM drilling could create 190,000 jobs by 2013

If the federal government can find a way to get permitting activity in the US Gulf of Mexico (GOM) to return to levels that existed before the 2010 moratorium, approximately 190,000 jobs could be created by 2013 for a total of nearly 430,000 jobs. This and other economic findings were released in a joint study this month by the National Ocean Industries Association (NOIA) and the American Petroleum Institute (API) looking at the impact of the offshore oil and gas industry on the American economy.

The study, “United States Gulf of Mexico Oil and Natural Gas Industry Economic Impact Analysis,” concluded that getting the offshore oil and natural gas industry back to full speed would be a boon to job creation and economic growth across the country. In addition to creating 190,000 jobs by 2013, it was estimated that capital expenditures could increase by 140%, reaching $15.7 billion, while spending by the offshore oil and gas industry would increase by 70%, reaching $25.7 billion of investment. Total contributions to the US Gross Domestic Product (GDP) could be nearly $45 billion, the study stated.

From 2008 to 2010, total spending in the GOM declined 15% from $28.5 billion to $24.2 billion per year. Operational expenditures increased slightly during that period while capital expenditures plummeted by 46%, the study found. The principal reasons were declining energy prices, the economic recession and the deepwater drilling moratorium and subsequent reduced offshore permitting. The 10% year-to-year decline in capital spending from 2009 to 2010 was due in large part to the drilling moratorium, according to the study.

Further, it found that although the shallow-water segment was not directly subjected to the moratorium, approximately a third of the 2010 decline in capital investment was due to reductions in GOM shallow-water capital investment.

The NOIA/API study also found that although spending from the GOM oil and gas industry is focused along the Gulf Coast, many states see the benefits. Non-Gulf Coast states are expected to average $9.9 billion in spending from 2011 to 2013, compared with an average of $7.2 billion spending per year from 2008 to 2010. According to the report, if potential spending levels are reached, total employment supported by the GOM oil and gas industry in 2013 could exceed 430,000 jobs, or a 77% increase from 2010.

Provided that the rate of permitting returns to and eventually surpasses the early 2010 rate, employment associated with the GOM oil and gas industry this year is expected to grow to 310,000 jobs, a 28% increase from 2010 due to increased investments associated with long-delayed projects. Employment levels in 2012 are expected to increase by 15% compared with this year to 350,000 jobs. In 2013, employment is projected to reach its highest level in the study period, at 430,000 jobs, which is a 20% increase on the 2012 level.

Looking at impacts on the Gulf Coast, the majority of the spending/capital investments and the associated economic impacts are projected to occur in the four main producing states of Texas, Louisiana, Mississippi and Alabama. In 2010, 72% of spending and investment, or approximately $17.5 billion, is estimated to have occurred in the four states. Total employment in the four states supported by the offshore GOM oil and gas industry is estimated to have been 175,000 jobs in 2010, a decrease of 60,000 from 2008.

The states’ direct oil and gas industry employment is estimated to have dropped by 25,000 jobs over the same time period. The study projects that supported employment levels could exceed 320,000 in the four states by 2013 if projected spending and investment levels are met. This would represent an 80% increase over 2010 employment levels and would constitute approximately 85,000 direct industry jobs and 235,000 indirect and induced jobs.

The study, prepared by Quest Offshore Resources, can be found here.