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Study Sees Strong Gulf Employment If Permitting Picks Up

More than 60,000 jobs have been lost in the Gulf of Mexico region since 2008 due the deepwater oil and natural gas moratorium and sluggish pace of new drilling permits in the area, but 190,000 jobs could be created by 2013 for a total of nearly 430,000 industry-supported jobs nationwide if permitting returns to historic levels and backlogged projects are processed, said a new study by two producer groups

Employment -- direct, indirect and induced -- associated with the Gulf region's oil and natural gas industry reached its lowest level in 2010: 242,317 jobs, according to the study released by the National Ocean Industries Association (NOIA) and the American Petroleum Institute Monday. The two groups commissioned Sugar Land, TX-based Quest Offshore Inc., a consultant in the deepwater oil and gas market, to do the study.

Direct employment is defined as jobs within the oil and gas industry, while indirect jobs are the equipment and service providers for oil and gas producers. Induced employment includes the jobs (i.e., restaurants, grocery stores ) supported by household spending of income earned either directly or indirectly from oil and gas industry activity.

Of the 242,317 jobs related to the oil and gas industry in the Gulf region in 2010, the study estimated that more than 60,000 were within the oil and gas industry, and 180,000 were either indirect or induced jobs. It said the industry contributed more than $26 billion to the nation's gross domestic product (GDP) in that year.

The 2010 industry-related employment level was 15% below the 285,042 level in 2009 and 7% below the 306,970 level in 2008, the study said. It projects that the Gulf employment level will climb to 311,023 this year, to 356,174 in 2012 and to 429,208 in 2013.

The projected 28% increase in the Gulf-related employment rate this year is "due to increased investments associated with long-delayed projects," the study said. However, it cautioned, "this estimate may be optimistic given the current rate of permitting."

Along with the rise in employment the study projects that spending by the oil and gas industry would increase by 70%, reaching $25.7 billion in 2013, while capital expenditures would increase by a projected 140% to $15.7 billion in 2013. It estimates that the industry's total contributions to the nation's GDP will be around $45 billion in 2013.

While the study offers a potential for good news, NOIA President Randall Luthi acknowledged that there was bad news as well. "The bad news is that the current pace of permit reviews and approvals will just not get us there."

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