Pacific Offshore Oil and Gas Boom to Boost Economy Energy Supply

After decades of inactivity, the Pacific Outer Continental Shelf (OCS) may be on the verge of a transformative energy revolution. A comprehensive analysis commissioned by the American Petroleum Institute (API) and conducted by Calash reveals that lifting restrictions on oil and gas exploration and development in the Pacific OCS could significantly boost the U.S. economy and enhance national energy security. The report outlines a bold vision: starting in 2020, with the launch of a new leasing program, the Pacific coast could emerge as a major energy hub.

Currently, U.S. oil and gas exploration is concentrated in the central and western Gulf of Mexico, along with select areas in California and Alaska. However, a staggering 94% of federal OCS waters remain untapped due to leasing bans or lack of development. The Pacific OCS is a prime example, with virtually no new activity since its last lease in 1984. The proposed 2019–2024 draft plan would open leasing in Southern, Central, and Northern California, as well as Washington and Oregon, marking a pivotal shift in the region’s energy potential.

The report forecasts substantial capital and operational investments if the Pacific OCS is developed. Over a 20-year period, cumulative domestic spending could reach approximately $160 billion, with $155 billion allocated to capital expenditures (CAPEX) and nearly $33 billion to operational expenditures (OPEX). Notably, 85% of this spending would remain within the U.S., with nearly 70% concentrated in Pacific coastal states. California alone would account for about 49% of the investment, while Washington and Oregon would capture 14% and 8%, respectively.

This economic activity would translate into significant job creation. By the end of the forecast period, Pacific OCS development could generate nearly 300,000 new jobs nationwide, with over 240,000 of those in Pacific coastal states. California alone could see more than 165,000 new jobs, spanning exploration, drilling, project development, and operations—a major boon for regional economies.

In terms of GDP contribution, the report estimates that Pacific OCS development could add nearly $26 billion annually by the end of the forecast period, with over $21 billion of that impact concentrated in Pacific coastal states. This growth would ripple across the broader economy through direct, indirect, and induced effects.

Beyond economic benefits, Pacific OCS development would generate substantial government revenue. Over 20 years, leasing, rental fees, and production royalties could yield more than $57 billion in cumulative income. Royalties alone are projected to account for $47 billion, with lease bids contributing $8.1 billion and rental income adding $2.3 billion.

Under the report’s assumptions, 37.5% of this revenue would be allocated to affected coastal states, while the federal government would retain 62.5%. This could translate to over $21 billion for Pacific coastal states, providing critical funding for public services and infrastructure.

Current oil and gas production in the Pacific OCS has been in steady decline, averaging just 19,000 barrels of oil equivalent per day (BOED) in 2016. However, the report predicts that production could surpass this level within six years of new leasing activity. By the tenth year, output could climb to over 225,000 BOED, and by the end of the 20-year period, it could exceed 1.5 million BOED—79% of which would be oil, with 21% natural gas.

This surge in domestic production would significantly reduce U.S. reliance on energy imports, bolstering national energy security. The report emphasizes that unlocking the Pacific OCS’s resources would help the country move closer to energy self-sufficiency.

The report provides detailed projections across leasing, drilling, project development, production, spending, employment, and revenue. For instance, annual drilling activity could rise from an initial 2–6 wells to about 80 by the later stages. Over 20 years, more than 30 major projects could come online, including 20 deepwater ventures.

While these projections are based on current resource estimates and assume favorable regulatory conditions, real-world outcomes may vary due to market fluctuations, technological advancements, and policy shifts. Nevertheless, the report underscores that responsibly developing the Pacific OCS could deliver profound economic and strategic benefits for the United States.