Economic downsides of Atlantic oil and gas drilling detailed in new report

A new report disputes industry estimates of jobs that would be created by offshore oil and gas drilling in the Southeastern Atlantic while detailing the existing coastal economy that drilling puts at risk. (Photo of fishing boats in Swan Quarter, North Carolina by dmitri_66 via Flickr.)

Proponents of oil and gas drilling along the Atlantic Coast often point to the economic claims in a 2013 report prepared by Quest Offshore Resources, a Texas-based firm whose mission is "to provide market expertise, strategic analysis, marketing communication and consultancy services to the deepwater oil and gas markets globally."

The Quest report — which found significant local, state and regional benefits to drilling — was paid for by the American Petroleum Institute and the National Ocean Industries Association, groups that represent the oil and gas industry. API and NOIA have cited the Quest study in pro-drilling ads that have aired in Virginia and the Carolinas.

But a new analysis takes a critical look at the Quest claims and calls them "exaggerated." It also details the existing coastal economy that would be at risk if the Obama administration signs off on a proposal to drill for oil and gas off the coasts of Virginia, North Carolina, South Carolina and Georgia.

"The Economic Effects of Outer Continental Shelf Oil and Gas Exploration and Development in the South Atlantic Region: Issues and Assessment" was written by the Center for the Blue Economy (CBE) at the Middlebury Institute of International Studies at Monterey, a California-based research center that provides ocean and coastal economic data and analysis. The study was sponsored by the Southern Environmental Law Center, a nonprofit that opposes Atlantic drilling.

The Quest report "was based on an incomplete and misleading economic picture, which resulted in overstating the likely regional economic effects of offshore oil and gas exploration and development," the CBE study says.

The CBE criticizes the industry-sponsored Quest report for:

* Assuming drilling in all federal waters in the Atlantic when what's under consideration is limited to an area off Virginia, the Carolinas and Georgia beyond a 50-mile coastal buffer.

* Projecting that oil and gas revenue sharing would bring states nearly $19 billion between 2017 and 2035 when federal law does not allow revenue sharing and legislative efforts to change this appear unlikely to succeed.

* Assuming annual lease sales beginning in 2018 when the Obama administration's proposal includes only one sale in 2021.

* Overstating drilling's economic benefit to the Atlantic region given that the nearby Gulf region already has the infrastructure and skilled workforce the industry needs.

At the same time, CBE says, the Quest report failed to consider the existing economic assets that would be put at risk by the coastal industrialization and oil spills that are an inevitable consequence of offshore drilling.

Consider that in 2009, the year before the high-profile BP oil disaster in the Gulf of Mexico, Louisiana experienced a total of 3,600 oil spills of a magnitude great enough that they were reported to the National Response Center. Many of these spills were not from offshore drilling operations per se but from the associated industrial infrastructure such as refineries and pipelines, the construction of which also damages coastal ecosystems.

Meanwhile, CBE points out that the existing ocean economy, which includes everything from resorts to commercial fishing to restaurants, provided nearly 250,000 jobs in Virginia, the Carolinas and Georgia in 2012 alone — more than Quest's optimistic estimates for oil and gas industry jobs in the region in 2035. It also paid more than $7.5 billion in wages and contributed $14.6 billion to the regional economy that year and accounts for as much as 25 percent of total employment in some counties in the proposed Atlantic drilling zone.

The CBE report concludes that while drilling may bring new economic activity to the Southeast, it risks harming other important elements of the region's ocean-based economy. Indeed, concerns about the economic damage caused by offshore oil and gas development have been driving the burgeoning grassroots movement opposed to Atlantic drilling, with a growing number of local governments, elected leaders, tourism boards, restaurant associations and other business groups taking formal stances against the Obama administration's proposal.

"Our coast is built around a thriving tourism industry that attracts visitors from around the world to the pristine beaches, unique coastal communities, and natural wetlands," said Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce, which passed a resolution against offshore drilling earlier this year. "This report proves that these industries are invaluable to the prosperity of our coastal communities and the entire Southeast region. Offshore drilling is incompatible with our thriving small business coastal tourism economy, and we simply can't afford that."