The U.S.is set to pay a very stiff price for Department of the Interior efforts to enhance offshore drilling safety in the aftermath of the Deepwater Horizon disaster. The resulting delays in Gulf of Mexico drilling 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.
A new analysis by energy consultancy Wood Mackenzie, prepared for API, warns that deepwater development could be seriously jeopardized if permitting timelines are extended, according to a new analysis
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."
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).
Read the study HERE