Louisiana News

Oil industry group leader says international oil deal not enough to help Louisiana producers

(The Center Square) – A historic deal reached Sunday by some of the world’s leading oil-producing nations may “help move the needle in the right direction” for the domestic oil industry but it won’t be enough to help Louisiana producers survive, an industry leader said Monday.
Members of the Organization of the Petroleum Exporting Countries and other major producers including Russia, known as OPEC+, pledged to reduce global oil production by almost 10 million barrels a day, or close to 10 percent of world output, beginning next month, according to published reports.
“Our industry is on the verge of collapsing,” said Gifford Briggs, president of the Louisiana Oil & Gas Association. “With tens of thousands of jobs and millions of dollars in tax revenue at risk, it is essential for policymakers at all levels of government to implement aggressive and immediate solutions to offset the expectation of prolonged shut-in wells, a massively oversupplied world oil market and the global shutdown of our economy.”
Briggs urged Congress to temporarily eliminate federal offshore royalties in the Gulf of Mexico “to prevent thousands of leases from being shut in.” LOGA also is asking Louisiana lawmakers to “provide immediate severance tax relief,” ease regulations, and find a way to address local government lawsuits against the industry alleging environmental damage to the state’s coastal region.
The domestic oil industry has been hit hard by low prices and the economic slowdown caused by the COVID-19 pandemic. The industry’s struggles in turn create uncertainty in states like Louisiana where energy tax revenue is an important component of government budgets.
The Louisiana Oil & Gas Association recently surveyed its members, which the organization says includes 450 companies across the state. The survey shows that without some kind of emergency relief, energy producers may be forced to shut-in more than half of the wells they currently operate in Louisiana and potentially reduce their workforce by as much as 70 percent over the next 90 days, LOGA says.
According to the Department of Natural Resources, there are 33,650 oil and gas wells currently operating in Louisiana. LOGA says as many as 16,800 of those could be shut in, according to survey respondents.
The operation of these wells directly employs about 33,900 workers according to the Louisiana Workforce Commission’s most recent quarterly report. Based on survey projections, more than 23,000 jobs, which generate $2.2 billion dollars in earnings annually, are at immediate risk, LOGA says.
Briggs says “it’s going to be devastating” if oil prices don’t exceed $40 a barrel by June 1. West Texas Intermediate crude oil on Monday afternoon was priced at $22.40.
“Our members are doing everything they can to keep their doors open and protect their workers, whose livelihoods are at risk,” he said. “We cannot do this alone.”
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