Study: Atlantic drilling could give economy $23.5B boost

WASHINGTON — If companies were allowed to drill for oil and gas in Atlantic waters off the East Coast, the work would help create nearly 280,000 new jobs and contribute some $23.5 billion to the U.S. economy each year by 2035, according to a study unveiled Thursday by two industry trade groups.

The report by Sugar Land, Texas-based Quest Offshore Inc. also projects that the activity could yield 1.3 million barrels of oil equivalent per day, based on current estimates of the amount of crude and natural gas lurking along the East Coast.

Commissioned by the National Ocean Industries Association and the American Petroleum Institute, the study represents the oil industry’s latest bid to convince the Obama administration to make plans for auctioning offshore drilling leases in Atlantic waters beginning as soon as 2017.

The Interior Department’s Bureau of Ocean Energy Management soon will begin the long process of developing a schedule for selling outer continental shelf drilling leases from Aug. 27, 2017 through mid-2022 — and the oil industry wants to make sure the Atlantic acreage isn’t left out.

“The key is getting Atlantic lease sales included in the 2017-2022 offshore leasing plan,” said Randall Luthi, head of the National Ocean Industries Association. “None of the benefits shown in the study can be realized without actual sales.”

Luthi likened expanded offshore energy development to a “silver bullet that will decrease unemployment, increase federal revenue without raising taxes, and make America more energy secure.”

And Erik Milito, the API’s director of upstream and industry operations, called oil and natural gas production off the East Coast “a potential gold mine.”

“Developing oil and natural gas in the Atlantic could put hundreds of thousands of Americans to work, make us more energy secure, and bring in needed revenue for the government,” Milito said. “But none of these benefits will appear unless the federal government follows pro-development energy policies.”

Most U.S. offshore oil and gas development is concentrated in the Gulf of Mexico, though some activity continues off the southern California coast and in waters around Alaska.

Although the federal waters of the Atlantic Ocean are technically open for oil exploration, drilling leases must be sold in government auctions, and none of those sales are planned for the area under a schedule that runs through Aug. 26, 2017. In assembling that current sale schedule, Interior Department officials insisted private companies should first conduct geophysical research to get a sense of the area’s potential oil and gas resources before the government makes any leasing decisions or schedules sales.

Related story: Governors ask Obama administration to open Atlantic to drilling

The last geophysical studies of the area — which formed the basis for some of the resource estimates used in Quest’s report — were conducted decades ago, before advancements in seismic research that allow geologists to get a better look below underground salt layers.

The ocean energy bureau appears likely to broadly approve seismic research in the Atlantic as soon as next January, though industry representatives say that litigation and individual permit reviews mean the geological surveys might not begin for several years.

Although the Quest study predicts that economic benefits from Atlantic oil development would flow well beyond the East Coast, the report finds significant benefits there. For instance, North Carolina, South Carolina and Virginia would see the largest gain in jobs as a result of the activity, Quest predicted.

“Although some states such as the Carolinas, Virginia, Massachusetts, New York and Maine are expected to see larger benefits, the effects of offshore oil and natural gas activity are expected to be felt all along the Atlantic coast,” the report said. “The nation as a whole, but especially the Atlantic coast states would likely see large employment increases, increased economic activity and increased government revenue as well as increased domestic oil and natural gas production, increasing the nation’s energy security.”

The Quest analysis assumed oil and gas drilling leases would be sold along the mid- and south Atlantic beginning in 2018, with north Atlantic acreage auctioned no sooner than 2020. The analysts assumed industry interest in the Atlantic waters would parallel the activity during other outer continental auctions, with no more than 480 mid- and south Atlantic leases sold annually.

Working under those assumptions, Quest predicted that 69 offshore Atlantic projects would begin oil and natural gas production between 2017 and 2035, with most — 52 — in deep water. The analysts also forecast that oil companies would drill an average of 30 wells in Atlantic waters each year.

Also on FuelFix:

New waves of seismic technology yield big oil finds (video)