MDA Offshore Leasing Program - Open Access is the Right Policy

• Mississippi should develop its energy resources to create jobs. Mississippi is blessed with tremendous energy

resources. Oil and natural gas resources are an enormous catalyst for investment and jobs in Mississippi, but in

order to reap the economic benefits of these natural resources, exploration and production must be permitted.

o Nearly 15,000 Mississippians are employed directly in oil and natural gas extraction, refining, or pipeline

transportation. Additionally, thousands more are indirectly employed as a result of oil and natural gas

production in distribution, retail, wholesale, and other service related jobs to support this industry.

o Oil and natural gas production directly makes up 5.7% of Mississippi’s Gross State Product (GSP). The

only industries with a larger share of GSP are real estate and healthcare, so growth in this industry

means noticeable growth in GSP.

o Production and extraction related jobs in energy typically have higher job multipliers than other sectors.

Every new oil and natural gas job in the Gulf is estimated to create 7 additional jobs.

• With the energy industry being a huge part of Mississippi’s economy, state policy should encourage

investment. More investment and more production in oil and natural gas translate into more revenue for

Mississippi. Investment, jobs, and revenue would be spread over the entire production period.

o MDA estimates as much as 350 billion cubic feet of natural gas to be available.

o Wellhead value @ $3.50/mcf = $1.225 Billion

o Severance tax = $49 Million state; $24.5 Million local

o Royalty income (to Education Trust Fund) = $241 Million to $523 Million

o Cumulative Impact to Gross State Product = +$1.874 Billion

• America will need the energy. As a state that embraces energy production, Mississippi should do its part and

more towards contributing to the Country’s energy needs. In fact, Mississippi has much to gain in jobs and

revenue by doing more than its fair share. Existing Mississippi industry and future industrial prospects will have

energy availability and reliability at the top of their list when looking for places to expand and invest. Projects

that increase Mississippi’s energy production potential will only enhance the state’s reputation as a reliable, pro-

energy state.

Currently, the price of natural gas is low, and offshore drilling is typically more expensive than onshore. Hence,

it may take some time for the price of gas to increase enough to make Mississippi offshore attractive for firms.

Having an offshore drilling program keeps the state prepared and allows the market to dictate when exploration

and production will commence.

• Risks are far outweighed by the rewards. As with any industry, there are risks associated with production, but

the benefits of activity in Mississippi waters far outweigh potential hazards.