If you’re wondering where the slide in the price of a barrel of oil will stop, keep wondering. No one knows.
As The Advertiser reports, Louisiana Oil & Gas Association Vice President Gifford Briggs told those who gathered in Lafayette on Wednesday for LOGA’s annual state of the industry luncheon that there are many possible reasons for the six-month slump that has taken per-barrel prices from more than $100 to less than $45 by mid-afternoon Wednesday. Among them are a surfeit of supply from producers around the globe—the U.S. included—and diminished demand from oil-importing countries. No matter the reason, though, times are tough and not getting less so.
“There is no real definitive point in time when it will change,” Briggs said.
Briggs said the dramatic decline in oil prices doesn’t necessarily spell doom for the region and state, but it does present challenges. Among them will be keeping service industries across south Louisiana working, Briggs said. He foresees some companies turning offshore for work, while others may look to shale plays for natural gas, such as the Haynesville in northwestern Louisiana, and shun the downward slide in oil prices.
“Because the industry is here, and because of our innovation, Louisiana can still be the beneficiary of any energy renaissance,” Briggs said, adding that the oil and gas industry has work to do—much of it political in nature—to ensure Louisiana offers the type of business environment that will entice oil and gas companies to invest here.
Briggs said the oil and gas industry has flipped its investment in Louisiana since he joined LOGA about seven years ago. It has gone from 82% investment in natural gas in 2008 to 82% of investment in oil in 2015. U.S. oil production has soared from 5 million barrels a day in 2008 to almost 10 million barrels in 2015—a 95% increase. The consequence of that shift, he said, has been a decrease in the price per barrel.
Decreasing prices have meant oil producers have become hesitant to drill. Since November, he said, the U.S. rig count has declined by about 200. In Louisiana, the rig count has slid to 114 from more than 400 in the 1980s. Offshore, there are still 55 rigs. In south Louisiana, the land rig count has fallen from 44 in 2001 to 17 in 2015. At points last year, the south Louisiana land rig count slipped to a dozen. Read the full story.
The post No end in sight for oil price decline, LOGA official says appeared first on Baton Rouge Business Report.