About half the members of the Louisiana Oil and Gas Association expect to file for bankruptcy as the energy industry's struggles accelerate faster than anticipated since the price of oil has plummeted and storage tanks are increasingly full.
Nearly a quarter of oil and gas employees have already been laid off, members said in a recent survey. There are about 33,900 oil and gas industry workers across the state, where more than 33,600 wells operate. About four in five exploration and production businesses have already started shutting in oil wells, the association said.
A significant drop in demand for oil spurred by stay-at-home orders due to the coronavirus pandemic, coupled with increased oil production in Saudi Arabia and Russia, crippled U.S. oil and gas extraction businesses when prices collapsed.
The trade organization has about 460 exploration and production members, but also oilfield services businesses across the state.
A price collapse that sunk May oil prices well below the $0 mark on Monday was a rude awakening to a glut that's straining storage capacity an…
"We feared these outcomes would take place by mid- to late-May, but the crushing weight of the crisis is taking hold much quicker than expected," said Gifford Briggs, president of the Louisiana Oil and Gas Association.
About 77% of operators have begun to shut in wells, despite some being approved for federal help, such as through the Paycheck Protection Program and Economic Injury Disaster Loan program, both administered by the U.S. Small Business Administration through lenders.
Only about 25% of members received economic injury disaster loan amounts they expected. Of those who received funds, about 72% said it was not enough money to avoid layoffs and about 46% said it wasn't enough to keep the business alive either.
A survey of Louisiana oil and gas business found more than 23,000 jobs in the industry are at immediate risk because of the back-to-back blows…
The trade group has been pushing for the state to drop its severance tax rate for at least one year, which stands at 12.5%, more than three times higher than competitors such as Texas. It also is pushing for the state and federal government to offer more storage capacity.
The Louisiana Department of Natural Resources State Mineral and Energy board of directors voted in late April to enact a temporary moratorium on lease maintenance obligations for all state leases between March 11 and July 13 as one way to help oil and gas drillers.
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