Gulf ’s working coast: An American treasure worth fighting for
The COVID-19 pandemic has taken an incredible toll on America, and nowhere has the impact hit harder than right here on the Gulf Coast’s oil and gas industry.
There is no doubt that Gulf of Mexico energy production is critical to national security, our national economy and conservation of wildlife and public lands from sea to shining sea, literally. If left unattended during the ongoing global crises, many of these benefits may be lost.
At least 17 percent of our nation’s energy is produced in the Gulf of Mexico and most of that comes onshore into Louisiana and Texas. Offshore energy production supports approximately 500,000 jobs and generates over $5 billion in annual federal revenue.
These benefits expand far past the region and are more than just economic. Our exports of LNG and crude oil strengthens our national security and levels our trade deficits.
The Gulf of Mexico Energy Security Act allows Gulf states to share in offshore revenue generated from oil production. To date, the act has allowed over $300 million to flow to states primarily for coastal restoration and hurricane protection. In fact, Louisiana is statutorily required to spend this revenue to combat its coastal land loss and 34 percent of the state’s coastal protection office is funded through mineral revenues.
Offshore energy production also funds the Land and Water Conservation Fund. This program has funneled more than $4.4 billion to conservation and outdoor recreation activities across our country to public lands in the Mountain West, to playgrounds in New York, the everglades in Florida and grants to states to help protect some of our most vulnerable wildlife species.
These activities alone have contributed $51 billion to the economy and 880,000 jobs. Offshore energy production even funds National Historic Landmarks such as battlefields in Virginia and the tribal preservation grant program like on the Hualapai Reservation in Arizona.
Action needed
While President Donald Trump’s announcement of the April OPEC Plus deal is significant, analysts predict that demand will drop 20-30 million barrels per day less than before the coronavirus pandemic, likely lingering even after our businesses open their doors again. With storage reaching capacity within a few short weeks and little relief in sight, producers are already shutting in regardless of any OPEC deal.
This means that recovery from this demand reduction will be long and painful for many, especially those along the Gulf Coast. These cuts are devastating to our workers and will have very long-term impacts, drastically reducing funding for states and conservation efforts.
Trump can take actions now. The administration has discretionary authority to reduce federal royalty rates. This action will infuse direct capital in an industry where upfront expenses are 10 to 20 times higher than onshore production.
Temporary relief now will lessen the impact of production cuts and layoffs — keeping our industry resilient for years to come and continuing to fund conservation efforts throughout our country.
Some Gulf producers are also nearing the end of their lease terms. The administration can provide targeted lease extensions to operations that have been well maintained and provide relief in other ways like reducing decommissioning requirements temporarily and protecting storage capacity.
Our workers urge Trump to stand up for them by considering the importance of Gulf of Mexico energy production. He can support them by maximizing his resources to protect this industry for years to come. If nothing is done now, the Gulf of Mexico and Louisiana’s working coast could look very different in a few short months.