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Potential Job Creation, Economic Benefits and Revenue Sharing from Oil and Natural Gas Exploration and Production in th

Potential Job Creation, Economic Benefits and Revenue Sharing from Oil and Natural Gas Exploration and Production in the Mid-Atlantic Region. Virginia Governor’s Energy Conference Richmond, VA October 17, 2014. Five Year Plans and the Mid-Atlantic.

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Potential Job Creation, Economic Benefits and Revenue Sharing from Oil and Natural Gas Exploration and Production in th

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  1. Potential Job Creation, Economic Benefits and Revenue Sharing from Oil and Natural Gas Exploration and Production in the Mid-Atlantic Region Virginia Governor’s Energy Conference Richmond, VA October 17, 2014

  2. Five Year Plans and the Mid-Atlantic • The Department of the Interior (DOI) schedules all offshore oil and gas leases through the development of a Five Year OCS Oil and Gas Leasing Program • The Bush Administration included a Virginia lease sale in the 2007-2012 Five Year Plan • Lease Sale 220 was scheduled to take place in 2011 • The Obama Administration cancelled Lease Sale 220 following the Macando blowout in 2010 • The current Five Year Plan – from 2012-2017 – was finalized last August and does contain any Mid-Atlantic lease sales • DOI will begin developing the 2017-2022 Five Year Plan sometime in 2014

  3. The Mid-Atlantic Resource Base • The Department of the Interior conducted a resource assessment in 2011 that analyzed the oil and natural gas resource base for the entire OCS • Part of the assessment is of Undiscovered Technically Recoverable Resources (UTRR) • Mid-Atlantic Resource Base • Crude Oil • 95th Percentile 600,000 barrels • Mean 3.30 billion barrels • 5th Percentile 5.58 billion barrels • Natural Gas • 95th Percentile 1.01 trillion cubic feet • Mean 19.36 trillion cubic feet • 5th Percentile 38.94 trillion cubic feet

  4. Benefits of Mid-Atlantic OCS Leasing: Jobs, Economic Growth and Government Revenues • In deciding whether to support inclusion of Mid-Atlantic lease sales in the 2017-2022 program, state officials will need to consider the tremendous economic impacts and potential revenues that could be generated for the Mid-Atlantic states should offshore exploration and production take place. • A recent reportby ICF International estimates that the OCS exploration and development activity in the Mid-Atlantic could: • Create approximately 10,588 new jobs in Delaware, Maryland, Virginia and North Carolina; • Add $1.935 billion annually to the Gross Domestic Product; and • Generate almost $201.06 billion in government revenues at all levels of government (federal, state and local).

  5. Federal Revenue Sharing • Federal Government collected $10.5 billion from leasing activity on public lands in FY2011 • Revenues collected are from Lease Bids, Rents and Royalties • The federal government shares onshore leasing revenues with the states – 50% • Following passage of GOMESA in 1996, the federal government shares Gulf of Mexico offshore leasing revenues with TX, LA, MS and AL – 37.5% • In order to have revenue sharing in Mid-Atlantic, the GOMESA revenue sharing provisions will need to be extended legislatively

  6. Benefits of Mid-Atlantic OCS Leasing:Revenue Sharing • The revenue sharing program created for the Gulf of Mexico states in GOMESA 1996 creates a pool equal to 37.5% of the OCS leasing activities (Leasing Bids, Rents and Royalties) • The revenue pool is divided among the states based on a formula that accounts for the location of the well head • Valuing the Mid-Atlantic Resource Base • Average forecast prices for West Texas Intermediate (WTI) crude and Henry Hub natural gas from the Energy Information Administration’s 2013 Annual Energy Outlook • Oil $106.87 per barrel • Natural Gas $ 4.33 per thousand cubic feet.  

  7. Benefits of Mid-Atlantic OCS Leasing:Revenue Sharing • Under the OCS Lands Act, the federal government collects an 18.75% royalty rate on all oil and natural gas produced in the OCS • About 90% of the revenues that are collected by the federal government for OCS activities come from royalties • The remaining 10% come from Lease Bids and Rents • The value of the royalties is based on the value of the oil and natural gas that is developed – giving us the following potential in the Mid-Atlantic:

  8. Benefits of Mid-Atlantic OCS Leasing:Revenue Sharing • Under the GOMESA formula, 37.5% of the revenues collected for OCS Leasing Activities goes to the Gulf Coast States • If we apply that formula to the Mid-Atlantic resource base, we can project the following potential for revenue share to Delaware, Maryland, Virginia and North Carolina:

  9. Summary - Benefits of Mid-Atlantic OCS Leasing and Revenue Sharing • OCS Oil and Gas Leasing Activities and Revenue Sharing will bring significant benefits to the Mid-Atlantic Region, including: • Approximately 10,588 new jobs in Delaware, Maryland, Virginia and North Carolina • $1.935 billion annually to the Gross Domestic Product • Over $201 billion in government revenues at all levels of government (federal, state and local) • $36.84 billion in revenue sharing funds for the four states • Approximately $1.22 billion annually of 30 years

  10. Questions? Michael Whatley Consumer Energy Alliance 1666 K Street, NW, Suite 500 Washington, DC 2006 P: 202-674-1750 mwhatley@consumerenergyalliance.org www.consumerenergyalliance.org

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