ACCESS NUMBER: 30829 

STUDY TITLE: The Social and Economic Consequences of Onshore – OCS-Related 

Activities in Coastal Alabama 

REPORT TITLE: Economic Effects of Coastal Alabama and Destin Dome Offshore 

Natural Gas Exploration, Development, and Production 

CONTRACT NUMBER: 1435-01-96-CT-30829 

SPONSORING OCS REGION: Gulf of Mexico OCS Region 

APPLICABLE PLANNING AREAS: Central and Eastern Gulf of Mexico 

FISCAL YEARS OF PROJECT FUNDING: FY 1995-1996, FY 1997-1998, FY 1998-

1999 

COMPLETION DATE OF REPORT: June 2000 

COSTS: FY 95-96: $125,000; FY 97-98: $23,639; FY 97-98: $59,954; FY 98-99: 

$18,426 

CUMULATIVE PROJECT COST: $227,019 

PROGRAM MANAGER: William W. Wade 

AFFILIATION: Foster Associates, Inc. 

ADDRESS: 120 Montgomery Street, Suite 1776, San Francisco, CA, 94104 

PRINCIPAL INVESTIGATORS: Jason R. Plater, Jacqueline Q. Kelley, William W. 

Wade, Robert T. Mott 

KEY WORDS: natural gas, Alabama, Destin Dome, Mobile, Louisiana, Texas, 

economic effects, offshore gas industry, economic input-output model, employment, 

expenditures.

BACKGROUND: Following the 1979 discovery of Norphlet gas in Mobile Bay during 

the early 1980s, the Coastal Alabama region experienced the emergence of a large 

offshore gas industry. Development and subsequent discoveries of natural gas in 

coastal Alabama and Mobile OCS waters introduced a specialized, capital-intensive 

industry into Mobile County. Little or no infrastructure existed to support the 

development activities during the early years of development. Much of the specialized 

materials and labor required to explore and develop offshore resources came from 

Louisiana and Texas where the offshore industry has long been established. Mobile 

County, the rest of Alabama, and Louisiana/Texas has been affected in different ways. 

This study is the second in a series of investigations analyzing the social and economic 

impact of the Coastal Alabama offshore gas industry on Gulf Coast states. 
ACCESS NUMBER: 30829 

OBJECTIVES: This study analyzes the industry’s impacts on employment, population, 

and personal income for Mobile County, the State of Alabama, and the combined 

economies of Louisiana and Texas. The study documents historical economic effects of 

the industry’s impacts through 2020. The economic effects of upcoming production in 

the Destin Dome Area of the Eastern Gulf of Mexico Planning Area are included. 

DESCRIPTION: Forecasting economic effects of the offshore gas industry on the 

Coastal Alabama region involved three major steps: 

1) developing regional economic input-output models to determine how local, state, 

and regional economies are affected per unit amount of spending by offshore gas 

producers; 

2) determining how many dollars offshore operators spend by year and major 

expenditure category to explore, develop, and produce offshore natural gas 

resources; and 

3) combining results of (1) and (2) to estimate the total economic effects of offshore 

gas exploration and development activity by year. 

SIGNIFICANT CONCLUSIONS: The study found that total industry spending on 

exploration, development, and infrastructure to fully develop existing Coastal Alabama 

fields will total close to $4 billion. Expenditures for ongoing operations and maintenance 

will add over $3 billion more through 2020. The State of Alabama received close to a 

billion dollars in lease bonus payments from offshore operators in State waters during 

the 1980’s. Coupled with ongoing production taxes and royalties, and a share of federal 

8(g) royalties for fields in the Mobile OCS, the State of Alabama and coastal counties 

are expected to spend close to $6 billion through 2020 from trust fund earnings. 

Because the principal of the trust fund is never drawn down, spending of trust fund 

earnings will provide a significant economic stimulus to Alabama long after gas reserves 

have been exhausted. 

Coastal Alabama and Destin Dome OCS gas development are expected to support at 

least 7,000 jobs in the Gulf region over a 35 year period and could peak to 10,000 jobs 

in some years. Most of the employment in Louisiana and Texas occurred in the early 

years of development. Mobile County and Alabama employment grew as local gasrelated businesses grew. Employment is not expected to peak beyond 2001 unless 

significant new fields are discovered and produced. 

STUDY RESULTS: The research found that the majority of expenditures, and thus jobs 

and income, from exploration and infrastructure (platforms and pipelines) phases of 

development accrue to Louisiana and Texas. Mobile County received a large share of 

spending from construction of onshore treatment plants and receives the majority of 

economic effects from ongoing operations and maintenance. Employment due to 

Alabama State production—dominated in later years by government spending of 

interest from trust funds, which grows to over $200 million annually—becomes most 

significant in later years. 
ACCESS NUMBER: 30829 

STUDY PRODUCTS: Kelley, J.Q. and WW. Wade. 1999. Social and Economic 

Consequences of Onshore OCS-Related Activities in Coastal Alabama: Final Baseline 

Report. OCS Study Minerals Management Service 98-0046. A final report by Foster 

and Associates, Inc., for the U.S. Department of the Interior, Minerals Management 

Service Gulf of Mexico Region, New Orleans, LA. Contract No. 1435-01-97-CT-30829. 

102pp. 

Plater, J.R. Coastal Alabama Offshore Natural Gas Economic Projection Model. OCS 

Study Minerals Management Service 2000-065. U.S. Dept. of the Interior, Minerals 

Management Service, Gulf of Mexico OCS Region, New Orleans, La. 46 pp. 

Plater, J.R., J.Q. Kelley, W.W. Wade, and R.T. Mott. 2000. Economic Effects of Coastal 

Alabama and Destin Dome Offshore Natural Gas Exploration, Development, and 

Production. OCS Study Minerals Management Service 2000-044. U.S. Department of 

the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, 

LA. 218 pp. 

Wade, W.W., J.R. Plater, and J.Q. Kelley. 1999. History of Coastal Alabama Natural 

Gas Exploration and Development, Final Report. OCS Study Minerals Management 

Service 99-0031. A final report by Foster Associates, Inc., for the U.S. Department of 

the Interior, Minerals Management Service Gulf of Mexico OCS Region, New Orleans, 

LA. Contract No. 1435-01-CT-96-30829. 189 pp.