Independent oil and gas companies currently account for about half of the 400,000 oil and gas jobs in the Gulf of Mexico, $70 billion in economic values and $20 billion in federal, state and local revenues generated by the industry in 2009, according to an analysis by IHS Global Insight of the economic contribution to Gulf states from offshore oil and gas development in the region.

The study, The Economic Impact of the Gulf of Mexico Offshore Oil and Natural Gas Industry and the Role of the Independents, indicates that independents represent a significant and growing portion of the economic value of the oil and gas offshore industry in the Gulf of Mexico, and a large and growing portion of the deepwater segment of the industry.

Cobalt International Energy, Inc., which has oil and gas assets in the Gulf of Mexico and offshore West Africa, commissioned the report to show the value companies smaller than the majors bring to the GOM and deepwater in response to voiced views that only majors should drill in the deepwater and also to legislation that would set liability thresholds so high in the wake of the Deepwater Horizon accident that only “majors” could meet the threshold.

The study forecasts that by 2020 an exclusion of the independents from the GOM would eliminate 300,000 jobs and result in a loss, over 10 years, of $147 billion in federal state and local taxes from the Gulf region. If the independents are excluded just from the deepwater, the job loss would be 265,000 jobs by 2020 and $106 billion in tax revenues over the 10-year period.

According to the release, the actual federal tax losses would be larger because the economic analysis only includes the Gulf region—Louisiana, Texas, Mississippi, and Alabama—and not the revenue impact on income earned elsewhere in the United States from manufacturing and investment activities related to the Gulf.

“The resulting vacuum would be filled only marginally by the major oil companies,” the IHS Global Insight report says. “The loss of independents could actually precipitate an overall decline in activities because of the integration between majors and independents.”

The report continued, “Because of the scale of the independents’ involvement in the Gulf, including the deepwater, their exclusion would likely lead to ‘a significant shrinkage in offshore oil and gas activity…and a dilution of the U.S. technological and industry leadership.’ This would mean a significant decline in oil output from what otherwise would be the ‘growth engine’ of domestic U.S. oil production.”

James Diffley, group managing director of U.S. Regional Economics for IHS Global Insight and lead author of the report, said, “The study demonstrates the significant contribution and important role of independents in the Gulf of Mexico offshore oil and gas industry, both today and in the future when measured in jobs, economic value and government revenue.”

Diffley continued, “The offshore Gulf of Mexico also plays a huge part in the nation’s energy security and is a leading contributor to the economic vitality of the four-state Gulf region.”

The offshore is a growing component of domestic oil production both for the United States and the world. The U.S. offshore—primarily the Gulf of Mexico—produces 30 percent of U.S. oil and 10 percent of U.S. natural gas. The U.S. recorded an increase in domestic oil production in 2009 for the first time since 1991, an increase attributable to developments in deepwater production, and was a factor in the decline in oil imports.

Independents currently hold majority interests in 81 percent of all producing GOM leases and 46 percent of the Gulf’s producing deepwater leases. Independents have drilled 1,298 wells in the deepwater and currently account for over 900,000 bpd of oil equivalent.

According to the study, in 2009, independents accounted for more than 200,000 jobs, $38 billion in economic benefit and $10 billion in state and federal tax revenues and royalty payments.

The IHS Global Insight study forecasts that by 2020 for the industry as a whole—with independents as well as majors—industry jobs will climb to nearly 520,000, that annual economic benefit will total more than $113 billion, and tax and royalty revenue will total nearly $30 billion, or approximately $267 billion over the 10-year period.