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Expanded OCS Access Is Important to the American Economy
The Outer Continental Shelf (OCS) plays a key role in helping meet US energy needs, particularly the growing demand for clean natural gas. But current restrictions limit access to a small area in the Central and Western Gulf. Technology has greatly expanded the resource potential of this area, but without expanded access to new OCS areas, the recent supply growth from this valuable resource is expected to be short lived. Failure to provide this access will adversely impact the nation's economy. With growing demand and continued constraints on supply, already high natural gas costs could continue to increase. The National Association of Manufacturers estimates that the US has lost more than 2.8 million manufacturing jobs since summer 2000, and has only recently begun to regain those losses. US manufacturers are ready to add more high-wage jobs but high natural gas prices threaten to derail current economic growth and job gains.
- Energy is the lifeblood of our nation's economy. Even with aggressive conservation efforts, the Department of Energy estimates that maintaining US economic growth through 2025 will require a 36% increase in energy supply, including a 40% increase in natural gas and a 39% increase in oil.
- The OCS: A Record of Solid Achievement. The OCS has played a growing role in US natural gas and oil supply for more than 50 years. The OCS contributed 30% of domestic oil production and 21% of domestic gas production in 2004, supplying more energy to the nation than any individual state or country. The OCS directly employs more than 45,000 people, with about 4,000 production facilities and 33,000 miles of pipeline. The Gulf of Mexico OCS played a key role in expanding the use of clean natural gas and stabilizing US oil supply in the 90's.
- OCS resources could extend its role in the future. The National Petroleum Council (NPC) estimates that there are 300 trillion cubic feet of natural gas yet to be discovered on the OCS off the lower 48 states, enough to sustain current levels of OCS gas production for 75 years. Or, put another way, enough natural gas to meet all US natural gas needs at current rates for over 13 years. Much of this expanded potential is possible because of new exploration and production technologies that have opened new frontiers in the deep water Gulf of Mexico.
- Much of this potential OCS resource is off limits. A significant portion of this resource is off-limits to development. The NPC estimates these unavailable OCS areas contain 79 trillion cubic feet of gas, representing more than a quarter of the natural gas remaining to be discovered off the lower 48 states, enough to heat almost 40 million homes for 30 years. However, this estimate is based on older data-if new seismic work was done and new technology applied, this estimate could increase, perhaps substantially.
- Without new access, the dominant OCS role in supply will be short-lived. The importance of the OCS has been widely recognized but the fragility of sustaining its role has not. Recent MMS and DOE forecasts estimate that without expanded access beyond the Central and Western Gulf, the growth in deepwater production will be unable to offset declines in shallow water production much longer. Without expanding OCS leasing activity beyond its current boundaries, OCS oil and gas supply is expected to begin to decline in 5 and 10 years, respectively.
- Failure to provide needed access comes at a high cost. Since 2000, natural gas prices have increased 150%. In the past two years, higher energy prices have cut the annual rate of US economic growth by an estimated 0.5% - 1.0%, seriously impacting US industry. Since 2002, chemical manufacturers have lost $50 billion worth of business and 90,000 direct jobs; 36% of the natural gas dependent nitrogen fertilizer industry in the US has been shut down or mothballed since 2000. Worldwide, virtually every other country with offshore resource potential is actively promoting investment in new development. If we continue to reject opportunities to develop the country's rich OCS resources, the US economy will continue to bear an unnecessary cost burden and jobs will be lost.