American energy security, oil and gas production in jeopardy following Gulf of Mexico court ruling, API warns

(WO) – The American Petroleum Institute is raising concerns over the recent decision by the U.S. District Court for the District of Maryland to vacate the National Marine Fisheries Services’ (NMFS) Biological Opinion in the Gulf of Mexico.

In a letter from President and CEO Mike Sommers to Secretary of Commerce Gina Raimondo, Sommers highlighted how the lack of a resolution by December could lead to significant consequences for American energy security, including a potential halt to all new and existing oil and gas production in the Gulf of Mexico.

“Without a solution in place, this court decision has the potential to halt or seriously slow all operations in the U.S. Gulf of Mexico, leaving a critical source of energy supply and economic security in jeopardy,” API President and CEO Mike Sommers wrote in the letter.

“Constrained production in this region could be replaced by higher carbon-intensity barrels from elsewhere in the world. This region is also an important driver of economic growth, contributing over $34.3 billion to the U.S. GDP, supporting more than 412,000 jobs across the United States, and generating $6.1 billion in federal government revenue.”

“It is in the best interest of U.S. consumers, the federal government, and oil and gas producers to partner to resolve this issue,” Sommers wrote. “We look forward to working with the department and its agencies to minimize any disruptions and find a solution.”

Under the ruling, the Biological Opinion for the U.S. Gulf of Mexico will lapse effective December 20, threatening to disrupt new and existing oil and natural gas production and activity in the region.

By vacating the biological opinion without allowing enough time for NMFS to issue a revised opinion, this court decision threatens to significantly slow down or halt all permits for routine, daily operations.

According to the U.S. EIA, U.S. Gulf of Mexico production accounts for 15% of total U.S. crude oil production, or nearly 2 MMbopd. If the Gulf of Mexico were a country, it would be one of the top twelve producing nations in the world.

The U.S. Gulf of Mexico produces some of the lowest carbon-intensity barrels in the world. Constrained production in this region could be replaced by higher carbon-intensity barrels from elsewhere in the world.

A recently completed study confirms the economic importance of the oil and gas operations on the outer continental shelf in the Gulf of Mexico. In 2023 alone, the Gulf of Mexico oil and natural gas industry is estimated to have supported over 412,000 jobs, contributed over $34.3 billion to the U.S. gross domestic product and generated $6.1 billion in federal government revenue.

Revenue from offshore energy production, especially in the Gulf of Mexico, goes toward funding the Land and Water Conservation Fund and other initiatives focused on protecting green spaces, public parks and recreation areas, wildlife, and other community programs across all 50 states. From 1965 to 2019, the industry contributed nearly $41 billion to the program and provided more than 42,000 state grants for park restoration.