How Many US GOM Jobs Could Go Under Biden?

If U.S. President Joe Biden’s pause on new oil and natural gas leases in offshore waters becomes permanent, the effect on the U.S. Gulf of Mexico workforce would be considerable.

That’s what’s shown by the National Ocean Industries Association’s (NOIA) latest projections, which were prepared by Energy & Industrial Advisory Partners. According to these figures, which assume that no new lease sales would be held from 2022, Gulf of Mexico offshore oil and natural gas supported employment would decline by almost 200,000 jobs over the next two decades, compared to a base case figure. A more detailed breakdown of the job reduction figures, as outlined in the projections, can be seen below:

• 2022: -821
• 2023: -4,970
• 2024: -9,150
• 2025: -33,532
• 2026: -69,536
• 2027: -108,463
• 2028: -128,652
• 2029: -134,051
• 2030: -133,841
• 2031: -136,951
• 2032: -144,560
• 2033: -153,250
• 2034: -153,524
• 2035: -145,135
• 2036: -154,581
• 2037: -135,820
• 2038: -144,153
• 2039: -164,620
• 2040: -194,524

Projected base case Gulf of Mexico offshore oil and natural gas supported employment figures, as outlined in the projections, are as follows:

• 2022: 378,617
• 2023: 390,751
• 2024: 390,063
• 2025: 401,868
• 2026: 404,966
• 2027: 410,406
• 2028: 409,287
• 2029: 408,118
• 2030: 399,584
• 2031: 390,262
• 2032: 382,091
• 2033: 376,305
• 2034: 365,146
• 2035: 348,302
• 2036: 327,324
• 2037: 328,927
• 2038: 331,811
• 2039: 347,769
• 2040: 367,568

In a statement sent to Rigzone, NOIA President Erik Milito said the benefits of the Gulf of Mexico oil and natural gas industry are “immense” and noted that jobs would be jeopardized by a leasing ban.

“The impacts of a leasing ban would take slightly longer to hit because companies have existing leases that they are not yet in production that they can still invest in and develop,” Milito told Rigzone.

“Within three or four years, job losses would top 33,000 and only continue to grow. By 2040, you are looking at more than 190,000 jobs lost,” he added.

Milito warned that these estimates were conservative and said uncertainty alone could depress investment and adversely impact employment.

First to Take the Hit

Under a no new leasing regime, the first industry segments to take a hit are the geological and geophysical industry and drilling companies, Milito said.

“There are fewer reasons to explore and fewer lease blocks to drill,” he told Rigzone.

“As leases mature and production declines, other industry segments will quickly follow suit with massive reductions in investment and employment, until there is not much left in any industry segment,” he added.

“Without any new projects on the horizon, spending on capital expenditures, risers, subsea hardware, production platforms, umbilicals and more dissipates,” Milito continued.

When asked what advice he would give to anyone losing their job, Milito said, “it is tough to give advice to anyone who loses their job, much less someone who is part of an industry that plays such a fundamental role in lifting society and powering a higher standard of living”.

“The men and women of the U.S. offshore oil and gas industry produce vast quantities of energy with a small environmental footprint and a low emissions, a carbon intensity one half of other producing regions and deepwater production that has the lowest greenhouse gas emissions of any source of oil production,” he added.

“The ingenuity, innovation and dedication of the men and women of our industry make them an incredible success story,” Milito continued.

TXOGA, LOGA Reaction

Following Biden’s leasing pause, Texas Oil and Gas Association (TXOGA) President, Todd Staples, told Rigzone that banning energy development on federal lands and in offshore waters will threaten thousands of the best-paying jobs in Texas and will needlessly erase revenue that helps pay for schools and other essential services.

“Even in a challenging year like 2020, the Texas oil and natural gas industry paid $13.9 billion in state and local taxes and state royalties and continued to produce the safe, clean and abundant energy that powers modern life,” Staples said.

“Instead of negatively impacting consumers with misguided policies that only stifle our nation’s energy and environmental progress, we must encourage policies with an inclusive approach that accomplish shared environmental goals,” he added.

The Louisiana Oil and Gas Association told Rigzone that restricting offshore development will jeopardize hundreds of thousands of jobs and billions in revenue.

Just a week after his inauguration, Biden issued an executive order pausing new oil and natural gas leases on public lands and offshore waters pending the completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices in light of the Secretary of the Interior’s broad stewardship responsibilities over public lands and offshore waters.

According to the executive order, the Secretary of the Interior will complete the review in consultation with the Secretary of Agriculture, the Secretary of Commerce, through the National Oceanic and Atmospheric Administration, and the Secretary of Energy. In conducting the analysis, the Secretary of the Interior will consider whether to adjust royalties associated with coal, oil, and gas resources extracted from public lands and offshore waters, or take other appropriate action, to account for corresponding climate costs, the executive order notes.

To contact the author, email andreas.exarheas@rigzone.com