New study says ocean drilling would reap huge economic benefits

The nonpartisan Thomas Jefferson Institute for Public Policy says a new study on drilling for oil and natural gas off the Atlantic coast would reap huge economic benefits in Virginia.

“The economic benefits … far exceed the cost of possible environmental impacts, “ Michael W. Thompson, the institute’s chairman and president said in a statement.

Assuming that medium to high estimates for gas and oil production can be achieved, in 20 years Virginia could see between 16,500 and 32,100 jobs created, the report says.

Drilling also would produce between $270 million and $526 million a year in royalty payments and between $61 million and $119 million in new state and local taxes.

“These monies can go a long way in improving the Hampton Roads transportation network, its schools and to help it prepare for the growing threat of rising ocean waters,” Thompson says.

The study, done by Timothy J. Considine, distinguished professor of energy economics at the University of Wyoming's School of Energy Resources, looked at the financial impact of off-shore oil and gas production along the Atlantic seaborard.  A companion paper, written Thompson, used Considine's data to focus on Virginia's potential. The Thomas Jefferson Institute is based in Charlottesville.

The estimates for gas and oil reserves in the new study come from the Bureau of Ocean Energy Management (BOEM) and are reportedly current as of a couple of months ago.

If all goes as planned, new seismic mapping of the ocean floor will begin sometime next year. If the decision to drill is given in 2017, the earliest date expected, it would take another eight years to begin producing gas and oil. The study only estimates the economic and environmental impacts to 2035.  Some of its findings:

1.    “Oil and gas investment and operating outlays in Virginia during 2025 … can reach between $82 and $455 million from the low to high production scenarios. By 2035, we are looking at investments and operating outlays of between $404 million and as much as $ 2.25 billion.

2.    Cumulative real investment spending and operating expenditures to support oil and gas operations offshore Virginia by 2035 are $3.3, $9.4, and $18.3 billion across the low, medium, and high production scenarios. 

3.    Crude oil production approaches between 11,300 barrels per day to 63,000 barrels per day and natural gas production reaches between 88 million cubic feet to 491 million cubic feet per day in 2035.

4.    Virginia has the deepest port on the East coast and the largest dry docks in the U.S. at Newport News Shipbuilding. Given existing infrastructure, offshore oil and gas drilling could attract additional investment in refineries and other energy facilities making Virginia's port an energy center for the East Coast, similar to the role Houston plays in Gulf of Mexico oil and gas development.”