Next January, the International Maritime Organization’s global sulfur emission standards, commonly referred to as “IMO 2020,” will go into effect, strengthening America’s energy security and Louisiana’s position as an energy leader.
More than 10 years ago, the United States agreed to IMO 2020, which will reduce the maximum allowable sulfur content in marine fuels from 3.5 percent to 0.5 percent on January 1, 2020. These standards pose a hurdle for some foreign oil producers and refiners, as many do not have the necessary infrastructure to produce low-sulfur “sweet” crude oil.
Unlike our foreign competitors, the United States is well prepared to meet IMO 2020. The United States currently enforces sulfur emission guidelines that are five times more stringent than the IMO’s limit, and U.S. businesses have invested more than $100 billion in upgrading their refining infrastructure. By 2017, more than 60 percent of crude oil produced in the United States was IMO-2020-compliant. Now major American producers such as ExxonMobil, Marathon, and Chevron have all announced that they will be ready for the boom in “sweet” oil demand.
Louisiana is primed to meet the surging demand for low-sulfur fuels. Louisiana’s 1.6 million barrels per day accounted for nearly 16 percent of America’s total crude production in 2017. Moreover, Louisiana ranks second in the nation in petroleum refining capacity.
But the real beneficiaries of IMO 2020 are the people of Louisiana. The oil and gas industry contributes more than $2 billion in annual state taxes and is one of the Louisiana’s leading industries in economic impact and employment. According to the Grow Louisiana Coalition, Louisiana’s oil and gas industry has roughly a $72.8 billion impact on the state economy and employs more than 260,000 people at an average salary of $96,500. There are enough oil and gas workers in Louisiana to fill LSU’s Death Valley Tiger Stadium three times over.
Louisiana’s oil and gas industry also contributes to hundreds of cultural, educational, and social projects each year, from investing heavily in hurricane protection to engaging in coastal restoration projects. The increase in revenue resulting from a timely implementation of IMO 2020 will ensure that our local energy companies can provide the same, consistent, community support as they have done for years.
The IMO’s new sulfur standards are a clear win-win. Louisiana producers and refiners have anticipated the change for months and are fully equipped to meet the surge in demand. Timely and full implementation of IMO 2020 will improve air quality, fortify Louisiana’s energy industry and economy, and guarantee American energy security well into the future.
president, Louisiana Mid-continent Oil and Gas Association