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Energy Policy at a Crossroads: An Assessment of theImpacts of Increased Access versus Higher Taxes onU.S. Oil and Natural Gas Production, GovernmentRevenue, and Employment
Released –January 4, 2011Revised –June 24, 2011
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©Wood Mackenzie 2 ©Wood Mackenzie 2
Project Background
API has requested Wood Mackenzie to undertake a studywhich examines the implications of increasing exploration anddevelopment access in 5 key US regions currently closed todevelopment. The 5 key regions are the Eastern Gulf ofMexico, portions of the Rocky Mountains, ANWR, and theAtlantic and Pacific Outer Continental Shelf (OCS).Additionally, Wood Mackenzie has contrasted this ‘Access’study with an analysis of the potential threat to production and jobs associated with increasing taxation on the oil and gasindustry at a rate of $5 billion per year, which was less thanthe amount that was considered by the US Congress andAdministration in 2010. The taxes were applied on both anincome and production basis so as to capture the impacts ofthe slate of proposed taxes put forward by the Administrationin 2010.
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©Wood Mackenzie 3
Key Results
Total Potential Production Impact:
Gain of 1.4 mmboed* by 2020, and 4 mmboedby2025**
Total Potential Government Revenue:
$20 billion by 2020 and $150 billion by 2025 assumingcurrent regional fiscal regimes. In addition, weestimate leasing activity will raise a further $44 billionby 2020
Total Potential Production Impact:
Estimated loss of 0.7 mmboedby 2020 with anadditional 1.7 mmboedput at increased risk***; and anestimated loss of 0.4 mmboedby 2025 with anadditional 1.2 mmboedput at increased risk
Total Potential Government Revenue:
Averages a positive $3 billion per year the first fiveyears, 2011-2015. An estimated $6 billion lessin 2020with an additional $8 billion put at increased risk; andan estimated $10 billion less in 2025 with an additional$8 billion put at increased risk
ACCESS –Compared to Base CaseTAXES –Compared to Base CaseWood Mackenzie’s analysis found that increasing access leads to a direct increase in domesticproduction, jobs, and government revenue. Whereas increasing taxes reduces production and jobs. It isalso detrimental to government revenues five years into the future.
*** Risk of not being developed due to unprofitable project economics
•
mmboed= million barrels of oil equivalent per day ** 2010 total US production is18.8 mmboed(8 mmb/dliquids and 61 billion cubic feet per day (bcfd) natural gas)
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Scope of Study –Access Scenario for An Assessment of the Impacts of Increased Access versus Higher Taxes on U.S. Oil and Natural Gas Production, Government Revenue and Employment
API has commissioned Wood Mackenzie to undertake a study which examines the implications of increasing exploration and development access in five key US regions currently closed to development. The five key regions are the Eastern Gulf…
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