The recently proposed restrictions on oil and natural gas vessels operating in the U.S. Gulf of Mexico (GOM) would lead to a nearly one-quarter decline in U.S. energy production, or more than 500,000 barrels of oil equivalent per day (boepd).
That’s what a new study commissioned by the American Petroleum Institute (API) found, according to a statement from the organization Friday. The study, conducted by advisory services firm Energy & Industrial Advisory Partners (EIAP), was submitted to the National Marine Fisheries Service (NMFS) alongside joint comments from API, EnerGeo Alliance, Independent Petroleum Association of America, and the National Ocean Industries Association in response to the agency’s proposal to designate Rice’s whale critical habitat in the Gulf of Mexico.
In the comments, the associations argued that the proposal is not supported by the best available science, lacks a comprehensive evaluation of known economic costs, and fails to comply with the Endangered Species Act, the API said.
According to the study, if the proposed restrictions are implemented, average oil and natural gas production would decline to just under 2 million boepd, a 24 percent reduction from projected levels, between 2023 and 2040. Industry investment in the GOM would decline by 14 percent from 2023-2040, with investment in the region dropping by approximately $6.8 billion, or 19 percent, in 2024 alone. Government revenue from oil and natural gas production would fall by 22 percent to $5.7 billion annually, and the average oil and natural gas industry employment supported by the GOM would decline by 13 percent to just under 310,000 jobs nationally.
In July, the NMFS published a proposed rule in the Federal Register designating critical habitat for the Rice’s Whale, designating waters from the 100-meter isobath to the 400-meter isobath in the GOM as critical habitat for the whale and restricting the transit of oil and gas vessels in the designated area.
“If implemented, these restrictions would greatly reduce the ability of oil and gas vessels to transit through this area, which would include all vessels transiting to deepwater, drilling and production platforms”, the EIAP study said, adding that transit through the area would essentially be halted during certain sea state conditions as well as at night.
“These transit restrictions would essentially reduce the capacity of the existing offshore oil and gas supply fleet, as the journey between shore and platforms would be extended. This reduction in transport capacity would reduce the ability to support exploration, drilling, development, and production operations, reducing the industry’s ability to explore for, develop, and produce oil and natural gas”, the study continued.
“Given the Jones Act requirement that vessels transporting equipment from US ports to offshore be Jones Act compliant (U.S. built, flagged, and crewed), overcoming these restrictions would take a significant amount of time, as well as putting strain on Gulf Coast ports, and the limited pool of U.S. mariners”, the study noted.
“Energy production in the U.S. Gulf of Mexico is critical for not only meeting current and future energy demand, but also for supporting conservation programs, driving state and local economies and helping the U.S. meet our emissions reduction goals”, API Vice President of Upstream Policy Holly Hopkins said in the statement. “At a time when offshore production in nations around the world is needed, this proposal could increase reliance on foreign regimes for our energy and may compromise U.S. energy security”.
