Sue Sturgis at Facing South notes evidence that some industry job projections for their projects are exaggerated, in part due to old data based upon vastly different market conditions:
Sue Sturgis, November 5, 2015
The South Carolina ad claims offshore drilling would create up to 35,000 jobs in the state and bring in $4 billion in state revenue, while the Virginia ad claims the creation of up to 25,000 jobs and almost $2 billion in revenue. The ads disclose that the figures come from a 2013 report that was prepared by Quest Offshore Resources, a Texas-based company that provides research for the deepwater oil and gas industry; the report was paid for by API [American Petroleum Institute] and the National Ocean Industries Association (NOIA), which represents the U.S. offshore drilling industry.
But an analysis of the API report by Douglas Wakeman, an economics professor at Meredith College in Raleigh, North Carolina, suggests its claims are unrealistic.
For one thing, Wakeman’s analysis notes, production is dependent on oil prices. When oil is selling at high prices, like the $120 a barrel it was fetching a few years ago, economically marginal deposits become profitable to pursue. But when the price of oil falls below $50 a barrel, production in high-cost areas drops off. The API report doesn’t specify what future price estimates it used. A barrel of oil was selling for over $90 at the time the report was released; it’s now selling for $47.90 amid a worldwide glut.
“All economic estimates in the API report may be regarded as likely overestimates,” Wakeman’s analysis states.
Emphasis added – Ed.
And it’s not just economists who are questioning API’s claims. Stanley Riggs, a coastal and marine geologist at East Carolina University, was at Carteret Community College in North Carolina last week to deliver a lecture about offshore drilling sponsored by the anti-drilling Sierra Club. Riggs noted that N.C. Gov. Pat McCrory (R) — who’s leading the political push for Atlantic drilling as chair of the Outer Continental Shelf Governors Coalition, which includes Virginia’s Terry McAuliffe (D) and South Carolina’s Nikki Haley (R) — is relying on the same questionable API report. Riggs pointed out that these very numbers were being circulated by the industry 30 years ago.
“It is the same data we had in 1988 that was used to put the moratorium on the Atlantic margin,” he said. “It’s the same data that we have today in the public domain. There’s been no work out there since.”
Read the full article by Sue Sturgis here.