Photo courtesy Apache Corp.
HOUSTON– The impact of possible new regulations governing oil and gas operation in the Gulf of Mexico that shut-out independent operators would mean a loss of more than 200,000 jobs and more than $10 billion in federal, state, and local revenues and royalty payments to 2020 in the Gulf region from Texas to Alabama, according to a study released today by IHS Global Insight and commissioned by Cobalt International Energy.
“Policy that has the effect of excluding independents from the Gulf of Mexico would significantly shrink offshore activity, threaten hundreds of thousands of jobs, and result in billions of dollars in lost economic activity,” said Joseph H. Bryant, chairman and CEO of Cobalt.
“It is Cobalt’s hope that this study will provide an independent and objective factual basis for the consideration of policy changes, which will allow all responsible companies – independents and majors – to remain active in the exploration and development of the vital domestic energy resources in the Gulf of Mexico.”
In looking at the details, IHS Global Insight notes that while new policies aim to prevent accidents such as the BP blowout and to see that mitigation responses are in place should it happen again, the details should consider the economic impacts of excluding certain categories of companies currently active in the market. There exists integration among majors and independents when it comes to GoM exploration and development that benefits not only the participants, but the Gulf region and the nation, and dissolving that would adversely impact overall GoM economic standards.
The study found that independent operators are the largest shareholders in 66% of all GoM leases and 81% of the producing leases. Of the total leases, independents hold 52% of the deepwater tracts and 46% of the deepwater production.