If there was a single, largest surprise for economist Loren Scott in preparing his 2020 economic outlook for Louisiana, it resided in Gulf of Mexico waters.
His expectation that the offshore oil and gas industry will begin to recover this year was based at least in part on the break-even mark for drilling in the Gulf: In 2014, in order for oil to break even for its steep investments in drilling offshore, oil had to sell at $80 a barrel. Nowadays, he noted, some companies can break even at $30 a barrel.
“If our forecast is correct, that oil will average around $60 a barrel, that will help companies,” he said, adding that the offshore industry includes “some of the cleverest, smartest people you will ever find.”
Scott’s remarks followed Wednesday’s 2020 Economic Outlook presentation in Lafayette, hosted by One Acadiana, presented by IberiaBank and supported by Cox Business.
The Acadiana economy appears to have hit a turning point in its recovery from years of record-low oil prices that sets the stage for growth ov…
Confidence in offshore improvement was based on the industry efficiencies developed since oil prices fell at mid-decade, especially since a glut of oil on the market dropped global prices to a low of about $26.
Among changes, he said, were technological innovations that allowed drillers to succeed in deeper waters and cutbacks in prices from service providers. If recovery occurs as expected, Scott said, service industry providers will begin to recovery some of the losses.
In his morning presentation for One Acadiana, Scott said oil prices in the coming year will fall in the $30 to $90 a barrel range, a wide swarth but one he’s used in previous presentations. Prices fluctuated widely in the previous decade, especially in the past five years and hovered around $58 Wednesday morning. He said he expect oil supply will continue to rise.
In the Gulf, he said, rig counts will rise from about 20 last year to about 35 this year. That follows lease sales in the Gulf that rose by 52 percent with a rise of about 33 percent in the value of the bids.
One key investment, he said, may be Chevron’s in the Anchor field in the Gulf, an ultrahigh pressure project which may advance by the end of the year.
Gary Wagner, professor of economics at the University of Louisiana at Lafayette, said part of the efficiencies in offshore include being able to drill with fewer employees. He said that successful projects don’t necessarily mean more jobs; thus, he said, he doesn’t necessarily share Scott’s rosier outlook for Gulf drilling in the coming year.
He also said deepwater drilling continues to demand huge investments, including big rigs that deteriorate because of salt air.
Even in creation of large liquefied natural gas projects in southwestern Louisiana, Wagner said, the jobs come up front in the construction phase, not in permanent employment.
Scott also cited Lafayette Metropolitan Statistical Area growth generated by its diverse economy, touting employment growth, real and projected, at numerous area companies. He touted growth at the Port of Iberia and the Acadiana Regional Airport, and continued improvements at Lafayette Regional Airport, which is building a new terminal.
Scott said some factors may mitigate optimism locally, among them President Trump’s use of tariffs against trade partners like China and Mexico. If those are threatened or used for negotiation, he said, they will be less likely to harm the economy: Both countries have more at stake in exporting here. But, he suggested, if tariffs help spark a trade war or eventually recession, optimism for 2020 will lessen.
Steven Hebert, president and CEO of the Billeaud Cos., said he was heartened by the presentation, especially Scott’s projections for oil and gas industry recovery in the Gulf.
“Employment is turning around,” he said.
Acadiana Business Today: Baton Rouge-based LIT Pizza to open Youngsville location in Metairie Centre; Weatherford International lays off about 20 employees from its Broussard location, according to KATC report
Baton Rouge-based LIT Pizza will expand into the Lafayette market with a Youngsville location, the company announced this morning.
Weatherford International laid off about 20 employees from its Broussard location, KATC is reporting this morning.
The merger would create the largest health system in the Gulf South.
If there was a single, largest surprise for economist Loren Scott in preparing his 2020 economic outlook for Louisiana, it resided in Gulf of …
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