Hundreds of feet above the sea floor, dozens of oil and natural gas platforms sit atop the ocean off the coast of Galveston, Texas. While the Lone Star State’s landscape has traditionally been associated with rich terrestrial oil resources, companies in Texas and other Gulf states have looked to the sea in recent years for the future of oil and natural gas development.
The oil and gas energy industry is vital to the economy of the Gulf of Mexico and the nation. The Gulf is responsible for approximately 17 percent of total U.S. domestic oil production and approximately five percent of total natural gas production. Deepwater drilling accounts for approximately half of the oil production in the Gulf.
Throughout Texas and the Gulf, the offshore energy industry employs thousands of surveyors, engineers, geologists, technicians, and scientists and indirectly supports thousands of contractors and support service employees. Oil and gas production are the dominant ocean industries in the region, and accounted for 55 percent of ocean-based jobs along the Texas coast in 2013.
At the same time, the oil and gas industry’s dominance puts the Gulf’s regional economy at risk of market fluctuations in the price of these commodities. A drop in oil prices from more than $100 a barrel in 2014 to $26 a barrel in early 2016 caused nearly 100,000 Texans to lose their jobs. Despite record-breaking production years, two years of low oil prices forced 46 oil companies to file for bankruptcy in Texas alone. Oil companies that avoided bankruptcy have scaled back plans for future spending, which will further tamper the region’s economic outlook.
Environmental factors also affect the stability of a regional economy dependent on oil and gas. In 2005, destructive winds and waves from Hurricanes Katrina and Rita led to the temporary closure of 88 percent of offshore wells in the Gulf of Mexico and caused lasting damage to offshore oil and gas infrastructure. In addition to its impact on the regional economy, damage to drilling infrastructure poses environmental risks in the form of oil spills.
Despite a number of challenges, offshore oil and gas remain crucial to the future of the Gulf region. A prosperous offshore energy industry will bolster economic activity and enable communities from Texas to Alabama to thrive. Resources from the industry, allocated through the RESTORE Act to monitor and restore ecosystems in the Gulf of Mexico, offer an opportunity for environmental conservation in the region, as well. A sustainably managed and diversified oil and gas industry provides significant opportunities for the region going forward.
Published in March, 2017, by the Joint Ocean Commission Initiative.