Extending the Life of Wells in the Gulf of Mexico

Resources on the Gulf of Mexico (GOM) are critical to our nation’s ability to meet its energy demands:

  • Annually, operations in the GOM develop 17% of the U.S.’s total crude oil production, and 5% of the country’s natural gas production.
  • Most importantly, 45% of the nation’s refining capacity sits along the coastal areas of the GOM in Texas, Louisiana, Alabama, and Mississippi.
  • Since offshore production began in the GOM, the shelf has produced more than 12 billion barrels of oil & 160 TCF of natural gas.
  • Over the last ten years, operators in the GOM have paid over $66 billion in royalty payments to the U.S. taxpayer.

As the administration and Congress seek additional paths to increase production and grow revenues for the American taxpayer through royalties, extending the life of aging wells and infrastructure through royalty relief will result in additional contributions to the U.S. treasury, sustain and create offshore drilling jobs, and continue production of oil and gas critical to our nation’s energy security.

 

Royalty Relief Means New Capital Investment, New Jobs, and New Development

Extending the Life of GOM Shelf Infrastructure Enhances a Valuable Resource

  • Once infrastructure is removed, federal government revenue through royalties is left stranded, along with mineral reserves
  • If we allow areas to be abandoned, they will not see the benefit of new technology that will uncover new opportunities from existing wells and through existing production

More Total Barrels Produced Leads Increased Taxes & Royalties

  • Increased recovery of otherwise stranded resources will continue to quantifiably benefit the taxpayer
  • By extending the life of existing wells, the U.S. Treasury will realize increased royalties from new wells drilled off of existing structures
  • By extending the life of wells and additional wells to-be-discovered, the U.S. Treasury will experience additional, higher taxes from corporate and payroll sources from oil and oilfield service companies operating the platforms

Additional Activity By Extending Wells Results in Increased Employment

  • Field production personnel due to continued lease operations
  • Construction and drilling personnel stay on the job, finding and developing new wells

 

Extension of Infrastructure Life Raises the Value of the GOM Shelf to the Taxpayer and Local Jobs

The Bottom Line Benefits of Royalty Relief:

  • Operators – improved drilling economics to attract capital investment
  • Service Companies – significant increase in employment from platform life and drilling, with workers staying on the job and companies creating new jobs
  • Government – increased recovery of stranded royalties and preservation of infrastructure life for future technology and higher prices, in addition to continuance of corporate and payroll taxes that accrue to the U.S. government