Oil prices got a brief boost following the decision by OPEC and other oil producers over the weekend to cut production by nearly 10 million barrels a day, or a tenth of global supply, beginning May 1.
Analysts said the cuts were not enough to make up for the void in demand due to business and travel shutdowns resulting from the coronavirus pandemic. The deal at least helped resolve a price war that took U.S. crude to near $20 per barrel, pummeling U.S. oil and gas producers.
“The OPEC+ deal may eventually help move the needle in the right direction, but the cuts announced Sunday fall far short of the meaningful measures that Louisiana’s independent oil and gas producers need to survive,” said Gifford Briggs, president of the Louisiana Oil and Gas Association.
LOGA released the results of a membership survey last week, that found more than 23,000 jobs in the industry are at immediate risk of being lost in the next three months. As many as 16,800 of the 33,650 oil and gas wells operating in Louisiana could be shut in.
“Our industry is on the verge of collapsing. This is a time for bold, decisive action, not small steps in the right direction. 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 said.
To boost the oil industry, LOGA put forth several measures, which include things it has long supported: suspending severance tax collections for one year, ending government-led coastal restoration lawsuits, easing regulations at the Office of Conservation and identifying ways to expedite oil storage capacity.
Another industry group, the Louisiana Mid-Continent Oil & Gas Association sent a letter to President Donald Trump earlier this month urging him to protect the offshore drilling industry by suspending or reducing royalty payments.
Tyler Gray, LMOGA President, said the industry is "in a circumstance where there is a need for urgent and bold action.”
Reuters reported one unnamed oil company had asked the U.S. Department of the Interior for royalty payment relief. U.S. Sen. Bill Cassidy, R-Baton Rouge, said he met with Interior Secretary David Bernhardt to discuss the issue. “He promised to quickly process targeted royalty relief on the outer continental shelf using existing law,” Cassidy said in a statement.
Along with the cut in payments, LMOGA is asking for a 3-year extension of the primary term of non-producing federal oil and gas leases in the Gulf of Mexico to allow companies to better map out their spending and work plans for the years ahead and preserve cash to maintain liquidity in the short term. Extending decommissioning obligations associated with current and expired leases was also recommended, along with protecting infrastructure that is inactive because of storage capacity limits.
OPEC has historically had a difficult time reining in members and enforcing those cuts. Bank of America says that means the actual cut may be closer to 7 million barrels per day. Energy analysts with the bank believe because the world is so flush with oil, it could mean an extended period of lower prices, particularly in the U.S.
U.S. benchmark crude initially jumped more than $1 but then lost ground. It fell 35 cents to settle at $22.41 a barrel. It declined $2.33, or 9.3%, to $22.76 a barrel on Thursday, before the Good Friday holiday.
Crude prices, already in decline as the global economy slowed, have been in free fall since the outbreak began, tumbling 62% since the beginning of the year.
Acadiana Business Today: Can small retailers survive COVID-19? Some Acadiana business owners hoping online sales enough to make it; Acadiana business goups host Tuesday webinar for renters and landlords
Regional business organizations have scheduled a webinar Tuesday on the effects of COVID-19 on landlords and tenants.
Athena Greek & Lebanese Food is giving away gyro sandwiches, french fries and face masks to remind people they're not alone during the cor…
Like at most other non-grocery retail outlets in Acadiana and elsewhere, business is slow at Big Boy Toys & Hobbies.
Oil prices got a brief boost following the decision by OPEC and other oil producers over the weekend to cut production by nearly 10 million ba…
Motivated in part by the closures of grocery stores on Lafayette’s north side, farmer Kevin Ardoin is going to work.