Offshore drilling in the Gulf of Mexico has been a strategic component of the nation’s energy supply for over 75 years. Safe and responsible exploration, a hallmark for this industry in the Gulf, first began in 1938 when a predecessor to ExxonMobil developed the first offshore well off the Louisiana coast in a water depth of 14 feet.
Even back in the 1930s, this innovation would usher in a new era of energy for the U.S. and provide our country the opportunity to develop energy sources right here at home. Exploration continued in these very early stages and in 1947, the first offshore well out of sight from dry land was developed.
Population growth in the post-World War II era signaled to companies and the government alike that energy needs would increase, and therefore exploration pushed further and further offshore into depths of up to 1,000 feet by 1970.
According to the U.S. Government’s Energy Information Administration (EIA), there are currently over 1,000 active wells and nearly 100 structures in deep water depths, while in shallow and intermediate depths there are approximately 5,000 wells nearly 2,000 active structures.
Given this presence and output, it is no surprise that today the production in the Gulf of Mexico is of critical importance to the U.S. energy supply. As the EIA states, “Gulf of Mexico federal offshore oil production accounts for 17% of total U.S. crude oil production and federal offshore natural gas production in the Gulf accounts for 5% of total U.S. dry production.”
As a result of this enormous output in this region of the United States, EIA goes on to further note that “[o]ver 45% of total U.S. petroleum refining capacity is located along the Gulf coast, as well as 51% of total U.S. natural gas processing plant capacity.”
Economic Impact of the Gulf of Mexico Offshore Industry
Considering the production numbers alone from companies developing these resources in the Gulf of Mexico, as well as the combined presence of onshore companies facilitating refining and distribution of both crude oil and natural gas as well as a myriad of businesses benefitting from increased economic activity, the impact of production in the Gulf of Mexico is considerable.
A 2010 HIS Global Insight study analyzed the dollar impact of Gulf of Mexico offshore exploration. It concluded:
“The offshore GOM oil and gas industry generated almost $70 billion of economic value and nearly 400,000 jobs in 2009. The jobs generated from industry activity in the Gulf range from the mechanical engineer on the offshore platform, to the pipefitter at the equipment supplier, to the waitress at the neighborhood restaurant. In 2009, the industry also provided about $20 billion in revenues to federal, state, and local governments through royalties, bonuses, and tax collections. This analysis suggests that the Gulf of Mexico offshore oil and gas industry could generate almost $300 billion of revenues for federal, state, and local governments over the next 10 years.”
According to the National Ocean Industries Association (NOIA), total direct and indirect job impact numbers for the Gulf States as a result of offshore energy development:
(as of 2013)
- Texas: 140,213
- Louisiana: 129,108
- Mississippi: 3,359
- Alabama: 48,793
The survey done by NOIA also determined the effect of the entire offshire industry across non-Gulf states, given the fact that more than 2,400 companies from at least 47 states provide equipment and/or services to America’s offshore energy industry.
Some of the biggest states are highlighted below:
|California: 22,216||Illinois: 2,842|
|Oklahoma: 20,000||Kansas: 2,559|
|New Mexico: 12,842||Utah: 1,570|
|Ohio: 6,150||West Virginia: 1,555|
|Arkansas: $4,355||Kentucky: 1,522|
|Pennsylvania: 3,911||Florida: 1,340|
|Alaska: 3,116||Wisconsin: 1,272|
Lastly, production platforms in the Gulf of Mexico provide vertical reef systems – habitat where multitudes of fish grow and thrive. The economic output in fishing and diving is estimated at $324 million with employment estimated at 5,560 jobs.