Gulf Oil Spill Ready or Not

This Sunday, April 10, 2011 picture shows a rig and supply vessel in the Gulf of Mexico, off the coast of Louisiana.  (AP Photo/Gerald Herbert) ORG XMIT: LAGH102

Despite hard times in Louisiana’s oil patch that have caused thousands of layoffs, the state’s energy industry continues to be a significant source of high-paying jobs for tens of thousands of people in almost every corner of the state, according to an economic study paid for by an industry trade association.

Last year, oil and gas production in Louisiana — including extraction, mining, pipeline operations and refining — employed 44,580 people, paying them $4.3 billion annually, the report says. That’s an annual average wage of more than $96,500, nearly double the state average, the report says.

The economic impact study, which is scheduled to be released this week, relied in large part on data collected by the Louisiana Workforce Commission. It was conducted by retired LSU economist Loren Scott, who has tracked the region’s economic outlook for decades.

The report was paid for by the Grow Louisiana Coalition, a nonprofit group whose mission is to promote the positive effects it says the oil and gas industry has had on Louisiana and its residents.

“Our review of the direct wage and employment impacts of these industries reveals something important about the energy sector,” the report says. “This economic engine is far from small. It has been a powerful factor for creating thousands of high-wage jobs in Louisiana.”

The industry’s wide reach was felt statewide: Energy jobs and income were reported in all but one of Louisiana's 64 parishes in 2017, including 13 parishes where more than 1,000 people worked in the energy sector, the report says. Not surprisingly, the largest tally was in Lafayette Parish, where 9,086 people worked directly in the energy sector.

Crude oil prices climbed to about $67 a barrel last week, up nearly $14 a barrel over the past year, and federal forecasters expect domestic production will hit a record 10.7 million barrels a day this year.

However, rather than jump-starting significant drilling in the Gulf of Mexico, many experts predict that, at least for now, any marginal gains in prices will simply spur more activity in lower-cost shale production elsewhere, which could ultimately saturate the market and cause prices to slide again.

Employment in oil and gas extraction and mining in Louisiana fell 39 percent since the group’s last study in 2014. That left 30,731 people working in the two sectors, a figure that the report said was on par with Louisiana’s chemical and shipbuilding industries — which employed a combined 32,125 people.

As drilling technology has improved, Louisiana lost its standing as the nation’s top oil producer, thanks to highly productive, cheap-to-drill shale formations like the Permian Basin in western Texas. At No. 2, Louisiana produced almost 1.6 million barrels a day in October, accounting for about 16.1 percent of the nation’s crude production.

“Louisiana has its large shale play — the Tuscaloosa Marine Shale — but exploration companies have struggled to break the code on how to efficiently harvest this ‘mushy’ shale at a competitive break-even price,” the report says.

More recently, companies have started leasing acreage in the Austin Chalk formation that runs above the Tuscaloosa Shale through the midsection of Louisiana and is in the early stages of awaiting test wells.