NewsCovering Louisiana


LOGA: State’s Oil Producers Shuttering at Alarming Rate

Posted at 3:22 PM, May 04, 2020

The Louisiana Oil and Gas Association states that the economic consequences of the global COVID-19 pandemic, the oil glut generated by the Saudis and Russians, and the lack of storage are being felt at a much quicker pace than previously projected and are gravely threatening Louisiana’s energy sector.

According to a release from LOGA, the second in a series of “point-in-time” surveys shows that nearly a quarter of the state’s oil related workforce has potentially already been laid off, and four in every five Exploration and Production (E&P) companies has already begun shutting in wells.

“Our members have indicated they’ve already been forced to lay off 23% of their workforce and the large majority are now taking steps to shut-in production,” Louisiana Oil & Gas Association President Gifford Briggs said in the release. “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. Without a doubt, we need federal and state policymakers to take immediate action to help mitigate further losses from these extreme market conditions.”

LOGA states that Louisiana’s severance tax rate is the highest in the country at 12.5%, which is nearly four times the neighboring Texas 4.6% rate.

Oil prices closed most recently on the West Texas Intermediate at $18.84, which LOGA describes as a menacingly low amount. Louisiana’s independent producers require an average of $37 a barrel to break even, the release states, and more than half of company leaders indicated that bankruptcy or closures are likely.

According to the Louisiana Workforce Commission and the Department of Natural Resources, the oil and gas industry employs approximately 33,900 workers operating around 33,650 oil and gas wells around the state. Those tens of thousands of jobs bring Louisiana families $3.2 billion in wages, states LOGA.

According to the LOGA survey results, 23% have already reportedly been laid off.

State tax revenue will also suffer drastically from the sharp decline in oil prices and staggering job losses across the state, states LOGA.

This survey from LOGA’s members includes 450 exploration and production and service companies across Louisiana.

The LOGA survey results include:

  • Members have been forced to reduce 23% of their Louisiana workforce already
  • 77.5% of operators have already begun taking steps to shut-in production
  • 97% are moderately or extremely concerned about the future of the industry
  • 51.35% said bankruptcy likely
  • 34% applied for EIDL funds, of those only 25% received the funds they expected
  • Of those who received funds, 46.67 indicted they were not enough to help them stay in business
  • Of those who received funds, 72% indicated they were not enough to avoid layoffs

“We’re one of the largest employers in Louisiana with the highest average wages,” Briggs added. "Just imagine what shut-ins and company closures mean for individuals and communities. These are real dollars and their lack is going to be felt all across the state. “We are looking forward to working with the legislature and the administration to figure out how to keep wells flowing and keep people employed as long as possible.”

LOGA offered several emergency measures to help the state's oil and gas industry to survive:

  • Reduce state severance taxes for a period of one year while protecting resources for local governments via passing HB 506
  • Support the passage of SB 359 and take appropriate steps to address the government-led coastal lawsuits
  • Identify any opportunities at the federal and state level to expedite additional storage capacity

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