New study says Virginia among top three states to benefit from offshore gas and oil drilling
Virginia, home to one of the largest dry docks in the U.S. and a network of equipment suppliers, is poised to reap big benefits from offshore oil and natural gas development if the federal government allows drilling in the Atlantic Outer Continental Shelf (OCS).
In fact, it is among three mid-Atlantic states that would benefit the most, according to a new study released Thursday by the American Petroleum Institute (API) and the National Ocean Industries Association (NOIA).
The state would gain about 5,000 jobs by 2025 and nearly 25,000 jobs a decade later. The report also says the state’s economy could grow by about $2.2 billion per year by 2035, and state government could collect $1.9 billion in revenue.
Only North Carolina and South Carolina – states with ample coastlines on the Atlantic – would fare better.
Nationally, the study estimates that oil and natural gas development would have these benefits:
Nearly 280,000 new jobs along the East Coast,
An additional $195 billion in private investment,
A contribution of up to $23.5 billion per year to the U.S. economy,
$51 billion in new revenue for the government,
1.3 million barrels of oil equivalent per day to domestic energy production — about 70 percent of current output from the Gulf of Mexico.
Such estimates, while welcome by money-hungry Atlantic states, are based on decades-old seismic data provided by the U.S. government.
“It’s our best guess based on old data of what’s out there. That’s why we need new information and the opportunity to go look,” Randall Luthi, president of the NOIA, said during a press conference. More recent discoveries of oil and gas plays off the West coast of Africa and Nova Scotia, similar in geology to parts of the East Coast, also were taken into consideration, he said.
The report’s release comes as the federal government gears up for the country’s next five-year lease sale (2017-22). The Obama administration has been considering whether to allow seismic surveying in the Atlantic for the last five years. Such surveys are essential to exploring for oil and natural gas offshore, and they are used to site locations for offshore wind facilities.
The last surveys of the Atlantic OCS took place about 30 years ago.
A final decision on new surveys is expected next spring. If the first lease sales were held in 2018, the report says exploratory drilling could begin the following year, with the first production of oil and natural gas expected in 2026.
Erik Milito, API’s director of upstream and industry operations, said oil and natural gas production off the Atlantic coast, “is a potential gold mine” that is drawing public support.
Governors in North Carolina, South Carolina, Virginia and other states have encouraged the president and Congress to open the Atlantic for offshore development, he said, and public polling has found strong support for offshore drilling both at the national level and in states along the East Coast.
In response to the study, Virginia Gov. Bob McDonnell issued a statement Thursday, showing his support. “Today’s study is just further proof of what such a comprehensive approach to our energy issues could produce: thousands of new jobs, billions in new revenue, a stronger economy. It is time that we moved forward to responsibly develop Virginia’s offshore energy resources: wind, oil, and natural gas.”
The federal government awarded Virginia an OCS oil and gas lease sale in March of 2010 but later cancelled the sale and refused to include Virginia in the current 5-year OCS plan.
How much states could get from new development would depend on a revenue sharing agreement. Based on what’s already in place in the Gulf of Mexico, the study estimates that states would get 37.5 percent of all revenue from oil and natural gas produced off their shores with the rest going to the U.S. government. Bipartisan legislation introduced in both chambers of Congress supports revenue sharing.
“Major capital investments, job creation, and revenue to the government would all begin years before the first barrel goes to market,” said Milito. “Expanding offshore energy production would also send a strong signal to the energy markets that America is leading the world in developing energy resources, which could help put downward pressure on prices.”
The new study was conducted by Sugar Land, Texas-based Quest Offshore Resources Inc. at the request of API and the NOIA.