Environmental Compliance and Offshore Oil and Gas Exploration and Production

by Di Jin, Woods Hole Oceanographic Institution, Woods Hole, United States,
Thomas A. Grigalunas, Woods Hole Oceanographic Institution, Woods Hole, United States,

Document Type: Proceeding Paper

Part of: Coastal Zone '93


The economic impacts of multiple environmental regulations of offshore oil and gas exploration and production are examined using an integrated, investment-production-regulatory model developed by the authors. Simulation results indicate that at the firm level, strict environmental regulations can significantly (1) reduce firms' after-tax-net present value and payments to government and (2) increase minimum field size. At the aggregate regional level, compliance with strict regulations can reduce the supply of oil and gas from marginal fields. The paper examines the cost of compliance only; consideration of benefits from regulations is outside the scope of the paper.

Subject Headings: Offshore platforms | Laws and regulations | Offshore drilling | Wells (oil and gas) | Oil pipelines | Gas pipelines | Benefit cost ratios | Non-renewable energy

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