Economic analysis for a national ultra-deepwater and unconventional oil and gas supply research fund

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2003

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This study provides an analysis of future incremental Federal lands and U.S. oil and gas production, and its associated economic benefits, that could be achieved through the establishment of a supply research fund. The supply research fund is based on H.R. 6, Subtitle E - Fossil Energy, Part 1, Sec. 21501(b) and Part 3 - Ultra-deepwater and Unconventional Natural Gas and Other Petroleum Resources, submitted to the 108th U.S. Congress. The legislation provides for the establishment of a supply research fund from a percentage of the amount of royalties, rents, and bonuses derived from Federal onshore and offshore oil and gas leases issued under the Outer Continental Shelf Lands Act and the Mineral Leasing Act for each of fiscal years 2003 through 2010. This report is an update to a previous report, "Benefit/cost analysis of GRI's gas supply research initiative" (Kim and others, 2000), which contains an analysis of the benefits and costs of a gas supply research fund.

The value of technology developed and advanced through the supply research fund was examined in terms of resulting incremental production. Incremental production was expected to be greatest among complex and new resource areas such as the deepwater offshore and unconventionals. Federal lands' incremental oil and gas production forecast by technological advancements achieved by the supply research fund during the period from 2003 through 2025 was calculated as 4,202 million bbl and 28.79 Tcf, respectively. The resulting incremental production and royalty revenue were $204,233 million and $28,749 million, respectively.

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