The Industrial sector is the biggest energy consumer in the Gulf States region, with transportation coming in a close second.
Four out of five states in the region produce a surplus of electricity.
The Gulf Coast Hub contains some of America’s most substantial energy sources and most reliable energy infrastructure. The discovery of oil and gas deposits in Texas and Louisiana a century ago ushered in an era of rapid regional industrialization, including the construction of a pipeline network linking inland oil wells to coastal refineries, growing municipalities and neighboring states. This infrastructure has expanded as production, investment and demand increased. Texas, for instance, now has more intrastate natural gas pipeline miles (more than 43,000) than any other state.
Offshore drilling did not begin until 1938, but oil rig operations and onshore linkages expanded rapidly in the following decades. Today, approximately 4,000 drilling rigs and production platforms are located in coastal and offshore Gulf waters. These structures are connected to onshore processing facilities through a network of underwater pipelines totaling 33,000 miles. Federal and state offshore production in the Gulf now accounts for 17% of total U.S. crude oil production and 6% of total U.S. dry natural gas production.
Together, these four states—plus Arkansas and New Mexico further inland—comprise PADD 3 (Gulf Coast), one of the five Petroleum Administration for Defense Districts within the United States. Half of the U.S. oil refining capacity is contained within this district. Texas alone contains 27 petroleum refineries, or about 29% of the total U.S. refining capacity. Product from PADD 3 is shipped into East Coast and Midwest markets and exported to Latin America and European countries.
The recent downturn in crude oil prices is expected to have only a minimal impact on Gulf of Mexico production, according to forecasting from the U.S. Energy Information Administration. The government agency projects that crude oil production will reach 1.52 million barrels per day in 2015 and grow to 1.61 million barrels per day in 2016.
The Gulf Coast's trading hubs and distribution infrastructure are split between a Louisiana corridor and a Texas corridor. The Louisiana corridor hubs are connected to the Midwest region and the Midcontinent region for oil export and import, while the Texas Corridor hubs are connected to the Midcontinent region.