Offshore Wind V. Offshore Drilling in the Atlantic: Economically, Which Wins?

On January 27, 2015, the Department of the Interior’s (DOI) Bureau of Ocean Energy Management’s (BOEM) released a draft of the five-year oil and gas leasing program for 2017 to 2022. DOI Secretary Sally Jewell and BOEM Director Abigail Hopper made the announcement that the Outer Continental Shelf (OCS) in the Atlantic from Virginia to Georgia would likely be opened up to offshore drilling for oil and natural gas. Some politicians from the Atlantic coastal states, including Senators Ben Cardin (D-MD), Robert Menendez (D-NJ), Cory Booker (D-NJ), and Ed Markey (D-MA), were quick to respond to DOI's proposal with dismay, citing risks to marine life and the fishing and tourism industries. The proposal answered previous calls made by the oil industry to expand leases off the Atlantic coast to offshore drilling. The industry says offshore drilling is in the US national interest because it drives billions of dollars in investment, tax revenue, and adds jobs. A report released earlier this month by Oceana titled, “Offshore Energy by the Numbers,” disputes this, saying the oil industry’s claims are exaggerated and investment in offshore wind energy has greater economic potential than oil drilling. 

Oceana found that when the oil and gas industry talks about the economic benefit of drilling off the Atlantic coast, it is using numbers from a December 2013 report by Quest Offshore, prepared for the American Petroleum Institute (API) and National Ocean Industries Association (NOIA). The Quest Offshore report found that offshore drilling of oil and gas in the OCS would generate, “1.3 million barrels of equivalent per day (MMboe/d), generate nearly 280,000 jobs, contribute up to $23.5 billion per year to the US economy, and generate $51 billion in cumulative government revenue,” by 2035. The oil and gas would be shipped inland, probably via pipeline, before being sent to refineries and then exported to foreign nations (providing little benefit to US energy security).

The Oceana report says these numbers are inflated. The report says the oil industry’s numbers are misleading because their report:

• Includes all oil and gas resources that are recoverable using today’s technology; not the oil and gas that is economically recoverable.
• Incorporates “inaccurate resource multipliers” - in other words, it takes the most abundant resource areas and applies those numbers to the entire OCS resource pool.
• Assumes a revenue split between federal and state governments, based on legislation which does not exist. Any oil and gas production in the OCS is administered solely by BOEM.

When these inaccuracies are corrected, the economic benefits of offshore drilling are much lower than reported. Using DOI numbers, Oceana states the OCS has 4.72 billion barrels of oil (Bbbl) and 37.51 trillion cubic feet (Tcf) of natural gas. These reserves are a small part of the total U.S. reserves, only 3.6 percent of all domestic oil and 2.4 percent of all domestic natural gas reserves. The Oceana report also finds that offshore drilling impacts, such as oil spills and the harm to marine life and fish populations, would threaten some of the 1.4 million fishing and tourism jobs and $95 billion in gross domestic product (GDP) in the Atlantic coastal states. In addition, offshore drilling would create 127,682 jobs and generate 6.11 Bbbl of oil equivalent (BOE(Bbbl)) combined from gas and oil – much less than equivalent figures Oceana projects for modest levels of offshore wind development.

^{Reproduced here with permission from Oceana.} 

Oceana’s projections for modest levels of offshore wind development over the next twenty years find that offshore wind could produce 218,640 jobs to oil’s 127,682 jobs, with 11.31 BOE (Bbbl) of wind energy potential to 6.11 BOE (Bbbl) from offshore drilling. Overall, Oceana’s figures suggest offshore wind could produce about twice the amount of energy along coastal Atlantic states as offshore drilling, and create more than 1.5 times the number of jobs. In addition, offshore wind would not threaten the local fishing and tourism industries along the Atlantic coast and would have minimal effects on marine life.

While offshore drilling would have some positive benefits to local jobs and economies, it also poses significant risks to other industries and the environment. Offshore wind could generate more electricity for coastal city centers and create more jobs, with the added benefit of curbing carbon emissions and improving US energy security.

 

Author: Samuel Beirne

 

For more information see:

Oceana, Quest Offshore, Clean Technica, BOEM, DelmarvaNow, DOI