Low oil prices have begun to put some Louisianans out of work. Fox 8 News reports that although most businesses tied to the oil and gas industry in the Energy Corridor aren’t affected yet, a slowdown has begun. A few rigs have already shut down operations, leaving a few hundred people laid off.
Just last week, Halliburton announced layoffs in Lafayette, though the exact number was not disclosed. The company supports about 1,027 employees in Acadiana, according to The Advertiser, primarily through the tools manufacturing facility the company opened in 2012 in Lafayette. The 200,000 square foot plant carried a $65 million price tag for Halliburton but was a big contribution to the region’s industry.
Louisiana’s economy, particularly in the southern portion of the state, is entwined with the energy sector. According to Chris Breaux, president of the Harvey Canal Shipping Association, as many as 7,000 jobs are supported by energy-related businesses in Harvey Canal. Breaux noted that the area has already lost much of its volume and production from the 2010 Deepwater Horizon disaster. Many are unsure of how long Louisiana’s still-recovering economy can withstand the low prices.
According to Gifford Briggs, vice president of the Louisiana Oil and Gas Association, “There’s not really any clear indication of how low and how long it will go… Nobody has any idea.” Briggs contributed to LOGA’s first State of the Industry presentation in Lafayette, according the The Advocate. The series kicked off on January 14th at the Lafayette Petroleum Club with a luncheon meeting. The next event is set for the Windsor Court Hotel in Downtown New Orleans on January 26th, and has already sold out. Four more events scheduled for February and March will take place in Baton Rouge, Houma, Houston and Shreveport. Registration is $27.50 per seat.
Low oil prices have already hindered growth in the Tuscaloosa Marine Shale, a formation shared by Louisiana and Mississippi that is still being explored. While companies such as Halcón Resources and Comstock Resources believe there are vast oil reserves to be found in the region, the cost of drilling has forced them to shelve projects until oil prices rise.
Thankfully, the long-term projects in the Gulf of Mexico are insulated from the effect of low oil prices. “Because those are long, multi-million dollar projects and 10-year long-term projects – and they won’t necessarily be impacted by low prices – but we’ll see the South Louisiana land rig count and maybe a few rigs in north Louisiana and some of the coastal rigs slowdown some,” Don Briggs, president of the LOGA, said in an interview with Fox 8 News. That sentiment was reaffirmed by Briggs’ son, Gifford Briggs, at the State of the Industry meeting in Lafayette.
Industry professionals have been eyeing global production and the oil glut with particular concern for Saudi involvement in OPEC. Don Briggs believes that Saudi Arabia has deliberately made the decision to flood the market in the hopes of damaging the shale industry in the United States.
Still, there may be a positive side, according to Breaux. “Many of the major manufacturing plants have left the United States because of rising labor costs, you know, 15, 20 years ago, we see some of those companies exploring a return back to the U.S., because of low energy costs and low transportation costs to distribute their goods and services,” Breaux noted.
There has also been increased speculation about renewed growth in the Haynesville shale. Although natural gas prices have also been low in the last several years, there are a number of liquefied natural gas (LNG) facilities cropping up in Louisiana and Alaska. The new LNG plants and global demand could once again make Haynesville a boon to the nation’s energy industry.
For more information about LOGA’s State of the Industry series and how to register, click here.