David E. Dismukes Center for Energy Studies
GOM Offshore Oil and Gas Economic Overview In 2008, over 420 MMBbls of oil and 2.4 Tcf of natural gas were produced in the Gulf of Mexico OCS. Employs over 200,000 workers in the Gulf Coast region. Over 100,000 workers associated with offshore activities. Contributes almost $100 billion to Gulf Coast states GDP. GOM accounts for 30 percent of total U.S. crude oil production. Deepwater areas produced 76 percent of all GOM crude oil production in 2007. Note: Gulf Coast states include Louisiana, Texas, Mississippi and Alabama Source: Bureau of Economic Analysis, US Department of Commerce; Energy Information Administration, U.S. Department of Energy; and Baker Hughes. 2
Number of Wells Center for Energy Studies GOM OCS Deepwater Wells Active deepwater wells are down relative to the earlier part of the decade, but still make considerable contributions to OCS production levels. 250 200 150 > 7,500 ft 5,000-7,499 ft 1,500-4,999 ft 1,000-1,499 ft 100 50 0 1992 1994 1996 1998 2000 2002 2004 2006 2008 Source: Minerals Management Service, U.S. Department of the Interior. 3
Oil Production (MMBbl) Center for Energy Studies GOM OCS Deepwater Crude Oil Production The significant increase in deepwater crude oil production has been a major new source of domestic crude oil supply. 600 500 400 Deepwater Oil Shallow-water Oil 300 200 100 0 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 Source: Minerals Management Service, U.S. Department of the Interior. 4
Gas Production (Bcf) Center for Energy Studies GOM OCS Deepwater Natural Gas Production Deepwater natural gas production has remained relative constant in recent years, despite the overall GOM gas production plummet in 2002. 6,000 5,000 Deepwater Gas Shallow-water Gas 4,000 3,000 2,000 1,000 0 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 Source: Minerals Management Service, U.S. Department of the Interior. 5
$ million Crude Oil Price ($ per barrel) Center for Energy Studies U.S. Offshore Capital Expenditures The federal OCS, and its deepwater regions, account for a large share of the increasing capital investments for major oil companies. $100 $20,000 $90 $15,000 $80 $70 $60 $10,000 $5,000 $50 $40 $30 $20 $10 $0 $0 Exploration Development Production WTI Crude Oil Price Source: Energy Information Administration, U.S. Department of Energy. 6
Crude Oil Production (MMBbls per day Center for Energy Studies U.S. Crude Oil Production Forecast Deepwater production is forecast to increase by almost 20 percent between 2010 and 2030. 5.0 4.5 Projection 4.0 3.5 3.0 2.5 2.0 Potential moratorium-created production risk 1.5 1.0 0.5 0.0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Onshore Lower 48 GOM - Deep Water GOM - Shallow Water Offshore Pacific & Atlantic Alaska 7
Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Number of Total Active GOM Drilling Rigs Price of WTI per Barrel Center for Energy Studies Gulf of Mexico Offshore Rig Forecast Moratorium Impact 80 70 Forecasted activity $160 $140 60 50 Apr-20: Accident $120 $100 40 $80 30 $60 20 10 Moratorium-created reductions in activity $40 $20 0 $- Historical Rigs Baseline Forecast Attrition Forecast Price of WTI Sources: Dept. of Interior, Energy Information Administration, Baker Hughes, CME Group (NYMEX)
Moratorium Impacted Rigs Impacted rigs anticipated to operate in very close proximity to Louisiana ports and support services. 9
Gulf Coast Oil and Gas Employment All Activities 10
Gulf Coast Oil and Gas Employment - Production 11
Gulf Coast Oil and Gas Employment - Drilling 12
Gulf Coast Oil and Gas Employment Support 13
Potential Moratorium Impacts Louisiana Only Louisiana-Specific Impacts Employment (cumulative) Output Wages Impact Period: Immediate Impacts Near Term (to 3 months) To Moratorium (3-6 months) Monthly post 6 months Impact Period: Low High Low High Low High 0 6,786 $ - $ 1,076 $ - $ 430 6,786 8,265 $ 1,076 $ 1,090 $ 430 $ 526 8,265 9,462 $ 1,090 $ 1,533 $ 526 $ 656 328 399 $ 146 $ 148 $ 35 $ 43 Moratorium plus permitting (120 day)- Louisiana Only Peak to New Start (10 Months) Peak to New Start (14 Months) 9,575 11,058 $ 1,673 $ 2,123 $ 668 $ 830 10,886 12,655 $ 2,255 $ 2,713 $ 810 $ 1,004 Impact Period: Moratorium plus permitting (120 day)- Louisiana Only- Higher Prices Peak to New Start (10 Months) Peak to New Start (14 Months) 10,012 11,591 $ 1,867 $ 2,320 $ 715 $ 888 11,760 13,719 $ 2,644 $ 3,107 $ 905 $ 1,119 14
Potential Moratorium Impacts Louisiana Only 15
Potential Moratorium Impacts Louisiana Only While allocation of total impacts across parishes may not appear large, the total employment impacts, on a share of total oil and gas employment basis, could be very large for many individual parishes. Share of Share of Total Oil & Gas Parish Impact Emloyment Ascension 0.38% 12% East Baton Rouge 0.34% 22% Iberville 0.39% 40% Livingston 0.03% 28% Tangipahoa 0.15% 30% West Baton Rouge 0.62% 24% Beauregard 0.04% 13% Calcasieu 2.72% 30% Cameron 0.34% 18% Jefferson Davis 0.39% 31% Vernon 0.01% 28% Acadia 3.20% 30% Evangeline 0.07% 22% Iberia 5.27% 35% Lafayette 38.44% 30% St. Landry 0.56% 25% St. Martin 2.27% 37% Vermilion 1.82% 26% Assumption 0.03% 8% Lafourche 5.57% 30% St. Mary 8.16% 24% Terrebonne 14.34% 29% Jefferson 5.90% 21% Orleans 1.90% 5% Plaquemines 3.74% 21% St. Bernard 0.09% 10% St. Charles 0.20% 23% St. John the Baptist 1.06% 28% St. Tammany 1.00% 29% Washington 0.96% 30% Total 100.00% 16
Questions, Comments, & Discussion dismukes@lsu.edu Center for Energy Studies www.enrg.lsu.edu 17