Offshore production vital to Gulf economy, US energy strategy

Stock SectorMay 1, 20189min12

WASHINGTON — Safe, reliable, and affordable energy is critical to U.S. economic growth and prosperity as well as to national security. As emphasized in the President’s all-of-the-above strategy for energy dominance, that energy comes from many different sources and locations throughout the country, both onshore and offshore. The Department of the Interior and its bureaus have the responsibility for managing the nation’s natural resources.

Specifically, the Bureau of Ocean Energy Management is charged with overseeing the exploration and development of oil and gas on the Outer Continental Shelf in an environmentally and economically responsible way. Offshore oil contributes 18 percent f the country’s oil production and 4 percent of its natural gas production.

The bureau’s responsibilities are significant, extending over the entire Outer Continental Shelf and the full life-cycle of development, from initial resource assessment and lease offerings through exploration, production, and decommissioning. Of the 1.76 billion acres the Bureau of Ocean Energy Management oversees on the Outer Continental Shelf, the most valuable area for offshore development is in the Gulf of Mexico, where 99 percent of US offshore oil and gas production takes place.

Considered a mature basin, there are 2,617 leases in the Gulf, 764 of which are producing oil and gas. Deep-water areas account for over 85 percent of the oil and two-thirds of the natural gas produced in the Gulf. As oil and gas companies reach into some of the region’s deepest waters and drill to greater depths, these areas will continue to play an important role in the future of the oil and gas industry. Technological advances in the extraction of oil and gas, along with proper oversight by the Bureau of Ocean Energy Management and other agencies, continue to reduce potential environmental impacts.

The bureau’s last two Gulf of Mexico lease sales generated nearly $246 million in high bids. Money received from those leasing tracts on the Outer Continental Shelf (including high bids, rental payments and royalty payments) is directed to the Treasury, Gulf Coast states, the Land and Water Conservation Fund and the Historic Preservation Fund. The Land and Water Conservation Fund was established by Congress in 1964 to fulfill a bipartisan commitment to safeguard our natural areas, water resources and cultural heritage, and to provide recreation opportunities to all Americans. Using zero taxpayer dollars, the fund invests earnings from offshore oil and gas leasing to help strengthen communities, preserve our history and protect our national endowment of lands and waters.

The oil and gas industry plays a significant role in the employment of Americans, especially those living along the Gulf Coast. The Outer Continental Shelf program supports over 315,000 jobs and contributes over $55 billion to the economy each year. We strive to ensure that this critical economic engine operates in a way that both protects the safety of offshore workers and protects the vibrant natural resources that are part of the Gulf of Mexico.

We recognize that the Gulf’s economy includes more than just oil and gas – fishing, tourism, boating, and many other important industries rely on a healthy natural environment. To protect these important assets, our environmental team and environmental studies program play a critical role in the work of our agency. The Bureau of Ocean Energy Management also works closely with a host of other Federal and state agencies to ensure a comprehensive approach to oil and gas oversight and regulation.

Looking forward, the bureau predicts that annual oil production from the Gulf of Mexico will set a record high in 2018, continuing the trend of increased annual production. Total oil production from the Gulf in 2018 is forecast to be more than 605 million barrels, an increase of almost 4 million barrels from 2017 volumes. BOEM’s ongoing process to develop a new National Outer Continental Shelf program to establish a lease sale schedule for 2019 to 2024 will provide a basis for future production as well.

A strong offshore energy program provides the affordable and reliable energy we need to heat our homes, fuel our cars, and power our economy. The Gulf of Mexico has been and will remain a prolific hydrocarbon basin into the foreseeable future — retaining its position as the crown jewel of the Outer Continental Shelf and a critical part of the country’s long-term energy portfolio.

Walter Cruickshank is acting director of the Bureau of Ocean Energy Management.

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