There could be as much as 10 billion barrels of oil and gas off of America's Atlantic coast. But according to former Interior Secretary Ken Salazar, "We really don't know a lot about what's down there." In fact, he admits, "It may be nothing, it may be a lot."
Therein lies America's dilemma: Should or shouldn't we search for oil off our Atlantic coast?
According to a new report on the Atlantic Outer Continental Shelf, if there is as much oil as we think then the economic activity required to develop it would be quite substantial. The report, prepared for the American Petroleum Institute and the National Ocean Industries Association, projects that from 2017 to 2035 oil and gas activity off the Atlantic coast could contribute $23.5 billion per year to the U.S. economy. Further, it would create nearly 280,000 jobs as well as add a cumulative total of $51 billion to the government's coffers from royalties and leases.
Not only that but by 2035 the Atlantic coast could produce an incremental 1.3 million barrels of oil equivalent per day. For some perspective, that's more oil and gas than the Bakken Shale currently produces. That would represent important production to the country as most of the major tight oil plays like the Bakken and Eagle Ford are expected to be in major decline well before that time.
While there isn't currently any oil and gas activity off America's East Coast, there have been some major developments further north. The past few years has seen several major oil fields discovered off the shore of Newfoundland and Labrador in Canada. Because of this, ExxonMobil (NYSE:XOM) and partners like Chevron (NYSE:CVX) recently announced that the companies are investing more than $14 billion to develop the Hebron oil field. That field is estimated to hold more than 700 million barrels of oil and should start producing by 2017 and eventually produce 150,000 barrels of oil per day.
That's just one of several major projects either producing or in development off the eastern coast of Canada. There's even more oil on the way as Norway's Statoil (NYSE:STO), which is also a partner at Heron, announced two major oil discoveries in Canada this year. The second find, an estimated 300-600 million barrels of oil, is one of the top 12 oil discoveries over the last three years.
It's quite possible that similar potential does exist off America's East Coast. The greatest beneficiaries, other than oil companies, would be the states along the coast. It's estimated that 75% of the $23.5 billion annual spending would directly impact the Carolinas, Virginia, Massachusetts, Maine, and New York. North Carolina would see the greatest impact with more than 55,000 jobs created by 2035, followed by South Carolina (where I live) at 35,000 jobs, and Virginia at 24,000 jobs.
If America is serious about becoming energy independent and creating jobs, then we do need to explore the possibility of drilling off the Atlantic coast. Even if the process started now, the first barrel of oil wouldn't be produced until 2026 because of the long lead time required to get offshore production flowing. That gives the nation plenty of time to take the proper precautions to ensure the safety of the environment and the communities along the coast. If we want to end OPEC's stranglehold on our economy, we need to access all of our oil and gas reserves, including those off our East Coast.
Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Chevron and Statoil (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.