Craig Marston is feeling confident about the state of the oil industry.
On Friday, a week after the White House announced plans to expand oil drilling in federal waters around the United States, Marston, general manager of Gulf Copper, an oil rig repair and refurbishment facility in the Galveston Ship Channel, said he was planning to hire more employees in 2018.
“What I’d say is that we’re cautiously optimistic,” Marston said.
Gulf Copper, like other businesses in the oil and gas sector, has gone through hard times in a downturn during recent years. The company employed 400 people in Galveston in 2015, Marston said. Today, about 100 people work there.
There are ifs in Marston’s optimism, however. A local boon depends on whether energy companies want to spend capital exploring areas away from prosperous places where drilling already is allowed, on whether state governments fail in fighting the proposals and on whether onshore drilling ceases to be as successful and cheaper than offshore drilling, one industry watcher argues.
If all that happens, there might be more work for businesses like Marston’s.
“They’re going to have to take these rigs into facilities like ours and perform a reactivation,” he said.
More potential reactivations mean more potential business, but experts said it will still be some time before the true effect of the ocean drilling expansion will be known.
Last week, the Trump administration announced a plan to expand the areas of offshore oil and natural gas drilling around the United States.
U.S. Interior Secretary Ryan Zinke said the changes would open nearly all offshore areas off United States coasts to drilling, from Maine to Florida to Alaska to California.
The government plans to auction offshore drilling rights to certain areas between 2019 and 2024, including sites in the Gulf of Mexico.
The proposal could expand the number of active offshore oil rigs operating in the United States. As of this week, there were 19 active offshore rigs, all of them in the Gulf of Mexico, according to industry analyst Baker Hughes.
The proposal drew condemnation from environmental groups, and leaders of some coastal states. On Tuesday, Zinke announced that Florida would be exempt from the new policy after complaints from Florida Gov. Rick Scott.
Zinke said that “Florida is unique and its coasts are heavily reliant on tourism as an economic driver,” and would therefore be exempt from consideration of getting new oil platforms.
Amid the entire discussion about new platforms in the country, there’s been little discussion about the western Gulf of Mexico and Texas.
That’s because Texas and the western Gulf of Mexico already are open to drilling and exploration, said Ramanan Krishnamoorti, chief energy officer at the University of Houston Energy Institute. It’s likely that even with the potential areas where drilling is expanded, most United States offshore drilling activity will stay in that area, he said.
“This is great news for the business of offshore drilling and production that happens in Texas, if it comes to fruition ever,” he said. “I just don’t see that happening.”
Exploring new areas for oil is very expensive, Krishnamoorti said, and unless there’s a guarantee of sustained success in new sites, oil companies probably won’t abandon the west gulf to look for it. That’s particularly true with onshore oil and natural gas production remains booming, he said.
Officially, the Port of Galveston isn’t banking on much change in its oil and gas sector either, said Peter Simons, the port’s interim director.
Only about 4 percent of the Galveston port’s revenues came from oil and gas related activity in 2016, Simons said. He expected it to stay that way and didn’t expect businesses to leave for other areas of the country.
“I don’t see it changing much, in part due to the uncertainty,” Simons said. “Exploration and production projects offshore are very time intensive projects. Projects that are going on there today will continue.”