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Economic Analysis of Future Offshore Oil and Gas Development
New Economic Study Highlights National Benefits of OCS Development in Alaska
A new study by Northern Economics and the Institute for Social and Economic Research (ISER) at the University of Alaska highlights the potential economic benefits to Alaska and the Nation if the oil and gas resources believed to be in the Alaska outer continental shelf are developed.
Based on current federal government estimates that Alaska’s offshore holds 27 billion barrels of oil and 132 trillion cubic feet of natural gas, the new report estimates that development of Alaska’s offshore resources could create an annual average of 54,700 new jobs through the year 2057, with 68,600 being created during production and over 91,000 jobs at peak employment. Based on those numbers, a total of $145 billion in new payroll would be paid to employees through the year 2057, including $63 billion to employees in Alaska and $82 billion to employees in the rest of the United States.
The new study uses the same Beaufort and Chukchi Sea development scenarios as a 2009 study also delivered by Northern Economics and ISER that finds new offshore oil would extend the life of the Trans-Alaska Pipeline for decades.
"It’s important to that Shell continues to make a business case to Alaska and the Nation when it comes to potential offshore development," said Shell Alaska Vice President, Pete Slaiby. "First and foremost is putting in place a safe, responsible exploration program. But if we realize the full potential of the oil and gas resources in the Alaska offshore, generations of Americans will have the opportunity to directly benefit from industries’ success.”
Other highlights of the 2011 Offshore Economic Report include:
- A total of $193 billion in government revenue would be generated through the year 2057, with $167 billion to the Federal government, $15 billion to the state of Alaska, $4 billion to local Alaska governments, and $6.5 billion to other state governments.
Implications for national policy raised in the study:
- The development scenarios assume “no major regulatory impediments or delays,” but ongoing regulatory impediments and delays have stalled exploration since 2007.
- Alaska OCS development maximizes the value of Alaska’s and the Nation’s oil and gas resources by enhancing both value and volume. Reduced transportation cost (from infrastructure operating at capacity) enhances value. Expanded infrastructure enables development of satellite fields.
- Alaska OCS development can help extend the operating life of the Trans-Alaska Pipeline System (TAPS).
- Alaska OCS development will enhance the probability of an Alaska gas pipeline due to increased certainty in the available gas resource base.
* The study was commissioned by Shell. Job estimates are measured by industry success as a whole, not just the success of a single company. Updated employment estimates include total jobs created both inside and outside the state of Alaska.