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U.S. Gulf of Mexico Oil and Natural Gas Industry Economic Impact Analysis

U.S. Gulf of Mexico Oil and Natural Gas Industry Economic Impact Analysis

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Published by Energy Tomorrow
The offshore oil and natural gas industry is instrumental to the United States both from an energy supply perspective and due to its contribution to U.S. GDP and job creation. In 2010, over 30 percent of the oil and 11 percent of the natural gas produced in the United States was produced in the Gulf of Mexico (GoM). This production is crucial to U.S. energy security. In addition, capital investment and purchases of intermediate inputs of the oil and natural gas industry stimulate its entire value chain and ripple through many sectors of the economy, creating jobs, contributing to GDP and generating tax revenue at all levels of government. Oil and natural gas industry activity supports employment across a wide swath of industries in manufacturing and services, including oil and natural gas machinery, air and marine transport, legal and insurance services. This report builds out the entire value chain of oil and natural gas development and production in the Gulf of Mexico. It quantifies the capital investment and purchases of intermediate goods undertaken by the oil and natural gas industry, identifies linkages to supplying industries, and estimates both job creation and contribution to GDP associated with oil and natural gas development. A unique feature and strength of this study is the primary nature of the capital investment and spending data. Quest Offshore Resources, Inc. (Quest), drawing on its proprietary database of suppliers of capital equipment and intermediate goods to Gulf of Mexico oil and natural gas operations, is able to bring primary data to bear on the issues of importance to this study.
The offshore oil and natural gas industry is instrumental to the United States both from an energy supply perspective and due to its contribution to U.S. GDP and job creation. In 2010, over 30 percent of the oil and 11 percent of the natural gas produced in the United States was produced in the Gulf of Mexico (GoM). This production is crucial to U.S. energy security. In addition, capital investment and purchases of intermediate inputs of the oil and natural gas industry stimulate its entire value chain and ripple through many sectors of the economy, creating jobs, contributing to GDP and generating tax revenue at all levels of government. Oil and natural gas industry activity supports employment across a wide swath of industries in manufacturing and services, including oil and natural gas machinery, air and marine transport, legal and insurance services. This report builds out the entire value chain of oil and natural gas development and production in the Gulf of Mexico. It quantifies the capital investment and purchases of intermediate goods undertaken by the oil and natural gas industry, identifies linkages to supplying industries, and estimates both job creation and contribution to GDP associated with oil and natural gas development. A unique feature and strength of this study is the primary nature of the capital investment and spending data. Quest Offshore Resources, Inc. (Quest), drawing on its proprietary database of suppliers of capital equipment and intermediate goods to Gulf of Mexico oil and natural gas operations, is able to bring primary data to bear on the issues of importance to this study.

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Published by: Energy Tomorrow on Jul 11, 2011
Copyright:Attribution Non-commercial No-derivs

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Prepared by:Quest Offshore Resources, Inc. Prepared for:1600 Highway 6, Suite 300 American Petroleum Institute (API)Sugar Land, TX 77 National Ocean Industries Association (NOIA)June 2011
United States Gulf of Mexico Oil and Natural Gas Industry Economic ImpactAnalysis
The Economic Impacts of GOM Oil and Natural Gas Development on the U.S. Economy 
 
 
 
i
Key Findings
This report has documented the decline incapital expenditures and operationalspending of the GoM offshore oil andnatural gas industry that occurred over the2008 to 2010 period. The principal reasonsfor this decline include the economicrecession in 2008-09 and the establishmentof a moratorium on deepwater drilling andsubsequent slowdown of permit issuance inboth GoM deep and shallow waters in 2010and into 2011. We estimate that tens ofthousands of jobs have been lost inresponse to the decline in capitalexpenditures and operational spending ofthe offshore GoM oil and natural gasindustry over this period.We also demonstrate the near termpotential of the offshore GoM oil and naturalgas industry to create jobs, boost GDP andgenerate tax revenues at all levels ofgovernment – if the government pursuesa balanced regulatory approach thatallows for the timely development of thebacklog of GoM projects in anenvironmentally responsible manner.Under such government policy, weestimate total spending by the GoMoffshore oil and natural gas industry toincrease by over 70 percent by 2013from 2010 levels, and capitalexpenditures to increase by over 140percent. If potential spending levels arereached, total employment supported bythe Gulf of Mexico oil and natural gasindustry in 2013 could exceed 430thousand jobs or a 77 percent increasefrom 2010..
 Table 1
:
Estimated Historical and Projected Capital and Operational Spending, GDPImpacts, and Employment
1
Supported by the Offshore Gulf of Mexico Oil and Natural GasIndustry (2008-2013)*
*Projected spending, GDP, and employment contingent on returning to pre-Macondo permitting rates.
 
Source: Quest Offshore Resources, Inc.
 
1
Total employment includes direct, indirect, and income induced employment.
($billions)
200820092010201120122013
Operating Expenditures$16.7$17.2$17.7$21.6$25.0$25.7Capital Expenditures$11.9$9.7$6.5$8.9$10.4$15.7GDP Impacts$30.8$29.1$26.1$32.9$38.2$44.5Total Employment306,870285,042242,317311,023356,174429,208HistoricalProjected
 
 
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