Should Mississippi cash in on Trump’s relaxed offshore drilling strategy?

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Office of U.S. Rep. Clay Higgins

An oil rig off the Louisiana coast.

Energy and businesses leaders say Mississippi could get a boost from the federal government’s historic expansion of drilling in the Gulf of Mexico.

Meanwhile, conservationists say energy development would stifle Mississippi’s ecotourism, which would have detrimental long-term effects to the environment and economy.

Two weeks after the Trump Administration said it would sell leases for some 77 million acres in the Gulf of Mexico for oil and gas drilling — the largest lease sale ever — the 2017 Gulf Coast Energy Forum, hosted in Biloxi by Consumer Energy Alliance, an advocacy group that supports energy development, highlighted the potential for Mississippi.

According to the Houston Chronicle, the sale, scheduled for March 2018, could open an area the size of New Mexico to drilling, including all unleased areas on the Gulf’s outer continental shelf.

U.S. Bureau of Ocean Energy Management Strategic Resources Chief Renee Orr speaks during the 2017 Gulf Coast Energy Forum, hosted by Consumer Energy Alliance Thursday at the Biloxi Visitors Center.

Renee Orr, a strategic resources chief with the U.S. Bureau of Ocean Energy Management, said the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Program, which the Obama administration approved last year, blocks new offshore oil and gas leases from being offered in the Alaskan Arctic through 2022. That program also blocks expansion in the Atlantic and Pacific oceans, while allowing some new leasing in the Gulf of Mexico.

Orr said the White House wants to replace it with something in line with President Donald Trump’s America First Energy Plan, which would create jobs and spur economic growth, she said.

“The United States will encourage oil and gas exploration and development because we need to assure our global energy position as a leader, foster energy development, resilience and energy security,” Orr said.

The land in question is the Outer Continental Shelf, 1.7 billion acres of submerged federal lands, subsoil, and seabed starting some three nautical miles off the coastline for most states and extending for about 200 nautical miles in some cases. The acres are divided in four regions: the Atlantic Region, Gulf of Mexico Region, Pacific Region and Alaska Region.

Patrick Sullivan, president of the Mississippi Energy Institute, added that while the energy market goes up and down, investing in infrastructure now and using down periods to promoting a welcoming business environment to the energy sector would help when times are good, naming the Mississippi State Port Authority as an example.

Jonathan Daniels, Port authority executive director and CEO, said the Port of Gulfport has adapted to the changing trends of the industry in the past four years. Diversification with energy has become the cornerstone of the authority’s development, Daniels said.

“The energy sector has allowed the Port of Gulfport to move from a traditional international cargo port to a ‘conversion’ port, where we are bringing in raw materials and producing through private contractors a finished product,” he said.

He also said the sector brings in many indirect jobs to support the energy sector, further boosting South Mississippi’s economy.

Gulf Coast Business Council President and CEO Ashley Edwards speaks during the 2017 Gulf Coast Energy Forum, hosted by Consumer Energy Alliance Thursday at the Biloxi Visitors Center.

While panelists said the energy sector is an important tool for supporting prosperity in the region, whether fossil-fuel based energy will continue to be an economic driver for the nation and states like Mississippi remains in doubt.

At the state level alone, attempts in recent years to expand offshore energy production in Mississippi waters turned into a legal battle. In 2012, environmental groups The Sierra Club and the Gulf Restoration Network sued to block the state’s attempts to formulate rules for how the state would conduct offshore gas and oil leasing in its own waters.

The leasing program was halted when Hinds County Chancery Judge William H. Singletary ruled that the Mississippi Development Authority improperly developed rules for mineral testing, exploration and, ultimately, drilling off the coast in the Mississippi Sound, stating drilling leases did not contain a complete, adequate economic impact statement.

According to an Associated Press report, the National Park Service at the time opposed the offshore drilling rules proposed by the Mississippi Development Authority, saying allowing drilling within one mile of Horn and Petit Bois islands would spoil the islands’ wilderness character. Casino operators were also concerned with tourist areas overrun by industrial equipment, boats and workers.

Mississippi Sierra Club Director Louie Miller said the event on Thursday focused on an energy development agenda, and argues the unique ecotourism on the Mississippi Gulf Coast is worth more than the economic benefits of offshore drilling.

“All you have to do is go to Dauphin Island, Alabama and see what oil and gas drilling has done over there to that economy, Miller said. “There is no substantive tourism over there because of all of the impacts from oil and gas drilling that occurred in that area.”

He also said risks and consequences are far too great should things go wrong, such as the 2010 Deepwater Horizon oil spill. A March 2017 report from the Mississippi Development Authority shows that all tourism in the state has generated an average of $385.8 million per year over the last decade.

Another attempt at boosting Mississippi’s energy economy in other areas include Gov. Phil Bryant’s 2013 legislation that reduced the state’s tax rate for oil and natural gas companies that use horizontal drilling as part of his Energy Works: Mississippi’s Energy Roadmap plan aimed at strengthening the state’s pro-business environment.

A boom in natural gas drilling and the plummeting of oil and gas prices drove fossil fuel production in Mississippi and nationwide to considerably lower rates.

This affected oil and gas severance taxes, which produce revenues based on the value of oil, natural gas and other raw materials produced normally make up a little more than one percent of general fund revenue the Mississippi Department of Revenue collects year after year. A portion of oil and gas revenues also goes to Mississippi counties.

In October 2017, for example, the state collected $2.18 million from oil and gas severance taxes, information from the Legislative Budget Office shows.

Mississippi Energy Institute president Patrick Sullivan speaks during the 2017 Gulf Coast Energy Forum, hosted by Consumer Energy Alliance on Thursday at the Biloxi Visitors Center.

Ashley Edwards, the president and chief executive officer of the Gulf Coast Business Council, said the economic health of Mississippi’s Gulf Coast is closely tied to the Outer Continental Shelf oil and gas economy.

Despite Mississippi’s energy economy seeing a downturn after events like Hurricane Katrina, the Great Recession, the Deepwater Horizon oil spill and a dip in oil prices, Edwards said more diversification and investment in the energy industry could “insulate” South Mississippi’s energy economy.

“We’ve not yet fully found a way on the Mississippi Gulf Coast to capitalize on opportunities inherent in that area of the economy,” Edwards said. “If we look at today at what’s going on in the parishes of South Louisiana, there are nearly tens of billions of dollars in new industrial development and programming surrounding the energy industry. A lot of that has to do specifically with natural gas. … Those opportunities also exist here on the Mississippi Gulf Coast.”