API: Gulf of Mexico restrictions negatively impact U.S. oil, gas production, analysis shows

WASHINGTON, October 6, 2023 – The American Petroleum Institute (API) released new analysis that outlines the potential consequences of new vessel restrictions on American oil and gas workers in the U.S. Gulf of Mexico. The study, conducted by EIAP, finds that recently proposed restrictions on oil and natural gas vessels operating in the Gulf of Mexico would have a major impact on jobs, industry investment, government revenue and oil and natural gas production in the region, to a nearly one-quarter decline – which is more than 500,000 boed – in energy production in the Gulf of Mexico by 2040, even as demand continues to rise.

The analysis was submitted to the National Marine Fisheries Service (NMFS) alongside joint comments from API, EnerGeo Alliance, Independent Petroleum Association of America (IPAA) and the National Ocean Industries Association (NOIA) in response to the agency’s proposal to designate Rice’s whale critical habitat in the Gulf of Mexico. In the comments, the associations highlight the industry’s commitment to environmental stewardship and habitat conservation in the areas in which they operate but argued that the proposal is not supported by the best available science, lacks a comprehensive evaluation of known economic costs and fails to comply with the Endangered Species Act.

“Energy production in the U.S. Gulf of Mexico is critical for not only meeting current and future energy demand, but also for supporting conservation programs, driving state and local economies and helping the U.S. meet our emissions reduction goals. At a time when offshore production in nations around the world is needed, this proposal could increase reliance on foreign regimes for our energy and may compromise U.S. energy security,” said API Vice President of Upstream Policy Holly Hopkins.

Oil and gas production in the U.S. Gulf of Mexico generates nearly 15% of crude oil production and supplies among the lowest carbon-intensive barrels in the world. The industry also supports thousands of American jobs along the Gulf coast, generates billions in federal and state revenue and contributes significant funding for conservation efforts.

As argued in API’s successful motion for preliminary injunction on unjustified restrictions to Lease Sale 261, there is insufficient information to warrant a far-reaching ban on vessel operations after extensive data collections. The analysis found that the recommended restrictions would severely impact the industry’s ability to supply the necessary materials to conduct oil and natural gas development in the Gulf.

According to the new analysis, if the vessel restrictions are implemented:

• Average oil and natural gas production is projected to decline to just under 2 MMbpd, a 24% reduction from projected levels, between 2023-2040.
• Average oil and natural gas industry employment supported by Gulf of Mexico activities is projected to fall by 13 percent to just under 310,000 jobs nationally.
• Industry investment in the U.S. Gulf of Mexico is expected to decline by 14% from 2023-2040. In 2024 alone, industry investment in the region declines by approximately $ 6.8 billion, a 19% reduction.
• Government revenue from oil and natural gas production is projected to fall by 22% to $5.7 billion annually.