Offshore drilling refers to oil and gas exploration and production companies harvesting oil and gas reserves from beneath the ocean. It differs from onshore drilling, which involves drilling wells to extract oil and gas from underneath the Earth.
Statistics show that approximately 28 percent of the world’s oil will be produced offshore by 2025. Meanwhile, onshore drilling will still account for 72 percent of global oil production.
The primary reason behind offshore drilling trailing onshore drilling is that it’s expensive, time-consuming, and challenging. It requires creating complex and rigid structures that can withstand the ocean’s environment. Transporting extracted oil from the ocean to land is also incredibly complicated because gas and oil exploration and production companies must ensure oil spills don’t occur.
The Benefits of Offshore Oil Drilling
Offshore oil drilling has several benefits, including the following:
Creates Job and Stimulates the Economy
Oil drilling is important for any nation. After all, the modern world runs on oil. Offshore drilling can help countries extract more oil because onshore resources are gradually being exhausted. According to the Bureau of Ocean Energy Management, offshore oil and gas drilling helped create over 175,000 jobs in the United States in 2020. These offshore drilling activities resulted in $11.9 billion in labor income. Additionally, they contributed $20.6 billion to the GDP and provided an output of $38.1 billion.
It’s worth noting that offshore drilling also positively affects the local area. For instance, workers must leave for offshore rigs through a port, meaning they must transit through a small town. These areas benefit because the worker influx props up small businesses and often creates a tourism economy since the workers’ families visit them. It also has a knock-on effect that causes real estate prices to rise.
Enhanced Oil Production
According to the US Energy Information Administration’s International Energy Outlook Report, the global supply of crude oil and other liquid hydrocarbons will sustain the world demand level until 2050. However, the issue is that world demand for liquid fuels continues rising, meaning these finite resources will eventually run out. Most of the world’s oil supply comes from onshore drilling activities because these are easier to extract.
However, we’ll eventually witness a shift to offshore drilling to facilitate the increased demand for liquid fuels, and offshore drilling will play a pivotal role in ensuring sufficient oil is extracted to meet demand.
Statistics show global oil demand has steadily increased over the past two decades. Oil demand momentarily declined for a brief spell in 2020, when COVID-19 resulted in a pandemic. However, it has since resumed its natural upwards trajectory.
Helps Developing Countries
Offshore oil drilling also helps developing countries. Most developing countries don’t have the resources to extract their oil resources. As a result, they rely on importing oil from other nations. However, as these countries develop and oil exploration technologies advance, extracting oil from offshore drilling activities will become cheaper and easier, helping these countries access untapped oil reserves.
Helps Create New Habitats for Marine Life
While it’s true that offshore drilling activities affect marine life, it’s also important to note that offshore rigs can create unique habitats for different animals, including birds, fishes, and other aquatic life.
For instance, a World Economic Forum study found that abandoned oil rigs off California’s coast could be used as artificial reefs to develop new habitats for marine life.
Reduces Tax Liabilities and Supports Investment Accounts
Governments can also use the money obtained from offshore oil rigs to lower tax liabilities for locals or bigger population groups.
Similarly, oil is an excellent way to get people to invest in commodities. While oil prices are often volatile, oil commodities help people diversify portfolios and generate sizable returns.
The Consequences of Offshore Oil Drilling
It’s no secret that offshore oil drilling has numerous consequences similar to onshore drilling. They include:
Environmental Hazard
Routine offshore oil and gas activities impact the environment during each phase. Exploration, production, and decommission leave a significant effect on the environment. According to the Chesapeake Bay Foundation, oil spills frequently occur, releasing 157,000 oil barrels into the ocean annually. Offshore activities also result in toxic pollution of the air and water.
Affects Marine Life
As previously stated, oil spills and toxic pollution affect the air and oceans, affecting marine life. Additionally, creating large drilling rigs in the middle of the ocean also affects existing habitats, displacing marine life.
Requires Significant Capital Expenditure
Offshore drilling is extremely capital-intensive. Oil and gas exploration and production companies must invest in building a new platform to drill offshore. These platforms can range between $20 million and $1 billion. The average price of a new offshore rig hovers around $650 million.
Offshore Oil Rigs are Dangerous for Workers
Offshore rigs and platforms are dangerous environments. As a result, workers on these rigs are adequately compensated. However, that doesn’t negate the fact that these conditions are challenging and can cause injuries and fatalities.
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