New Orleans

Louisiana businesses face reality of no new federal offshore leases anytime soon | Business – New Orleans, Louisiana

New Orleans, Louisiana 2021-04-18 01:15:00 –

Companies that rely on oil and gas activity off the coast of Louisiana could have fossil fuels track the end of the coal industry, and would run out of work without enough renewable fuel jobs to replace them. I’m afraid there is a possibility.

President Joe Biden wants to replace fossil fuel production and consumption with policies that promote renewables such as wind and solar, which can be a problem if tackled too early.

“It will ruin our community,” Houma-based Danos CEO Paul Danos said in a recent industry panel discussion. “In the long run, we know that an energy transition will occur … but it must be done at a reasonable pace. We are not going to switch. It is that way. It won’t happen, “he said. ..

The Houma-based oilfield services business has a three-year contract to regularly supply 144 workers to the helicopter’s oil platform across the Royal Dutch Shell offshore fleet ferry crew.

Although state and federal officials acknowledge the need for a fair transition for Gulf Coast residents, there was little mention of Louisiana in a recent virtual public session hosted by the US Home Office. And no representative had a strong connection with Louisiana who was involved in the meeting. This says some industry supporters have failed.

The Home Office will draft a Biden administration report, but leasing new oil and gas on federal land and waters is temporarily banned. The federal lease auction in the Gulf will be canceled in March, and the auction scheduled for November may not take place.

Faced with no new offshore auctions for at least a year, companies have a stockpile of leases from previous auctions that haven’t been drilled yet and can be used, but which one is for future activity in the Gulf. Some people wonder how it affects them.

“It would be a tragic mistake for the federal government to rush to limit offshore development,” said Chet Chiasson, Secretary-General of Port Forchon.

Port Forcheon is a hub for more than 90% of deep-sea oil production activities in the Gulf of Mexico, and the Laforche Parish site between Houma and New Orleans has more than 250 tenant companies. Every day, hundreds of large supply vessels move along the harbor waterways. It is also the land hub of the Louisiana Offshore Oil Port, which has transitioned from import terminals to exports as production in the United States has increased in recent years.

Mr. Chiason joined the panel, arguing that industrial development was not necessarily at odds with the environment, and that local companies wanted a job, whether it was the manufacture of offshore wind turbines or oil rigs.

“I know the Bayou Laforche company in our area. If you need to make something and go abroad, I hope you can do it with any kind of energy service,” he said. Said. “We have the technology and expertise. We want to be part of it.”

Chiasson criticized the lack of new jobs created after the solar farm was built.

South Louisiana will become a larger hub for solar farms in the coming years as utilities are buying more renewable energy, but each solar project requires only a handful of jobs after construction Do not.

“There is no correlation between the number of jobs found in the oil and gas sector, especially the offshore oil and gas sector, and the number of jobs found in renewable energy. That’s true on the construction side, but no, on regular employment. Is a big concern. “

He also said that the production of renewable energy products such as wind turbines and solar panels still requires the petrochemical industry of components going into development. Offshore wind is another possibility on the Louisiana coast, which could be near the windy Texas border.

“It’s about a realistic transition,” he said.

Separately, Biden has set up 10 facilities to demonstrate modifications and installations to recover carbon from processes in the petrochemical and refining industries, to cap isolated oil and gas wells across the country. Proposed to work thousands of people. There are over 4,500 in Louisiana.

The CEO of Danos said his workers asked if there was a renewable energy job in the Louisiana community, and so far the answer is no.

Founded in the 1940s as a tugboat business, Danos has grown into offshore services, construction, manufacturing and logistics for many years. It spans nine offices and has more than 2,300 employees worldwide. The company has recently advanced into maintenance of renewable projects and hired a crew to engage in electrical repairs for solar farms in Arizona, but that’s not much of the company’s business.

Twice a day, we will send you the biggest headline of the day. Sign up today.

Onshore wells, on the other hand, require about the same number of people to run an offshore oil platform, even though more technology is being utilized in the field and fewer workers are needed. Shell’s Wood auger oil platform, which went into production in 1994, still requires 192 workers to operate, as these technology upgrades do not replace work.

The family-owned Galliano Food Store recognizes that the boom and cycle of the oil and gas sector is affecting its workforce. Grocery stores sell groceries to many boats near the Gulf, serving oil and gas service companies and workers. In recent years, the company has grown to more than 60 employees and has contracted to only 30 employees. So far this year we have 50 employees.

“It depends on what’s happening in the economy,” said Jedon Bregi, sales director of the Galiano Food Store, which his grandfather founded decades ago.

Bregi, who participated in a panel discussion on the Gulf ban and the future of the fossil fuel industry, was concerned about whether there would be sufficient food demand if supply vessels stopped going offshore.

In recent years, the industry has suffered from a large amount of oil produced using advanced drilling techniques and a diminishing demand for coronavirus during a pandemic. During the first oil price crash in 2015, Louisiana lost 18,000 oil and gas production jobs, dropping to a total of 28,700 jobs in September due to last year’s pandemic and declining fuel demand. .. Economists at LSU’s Energy Research Center project had regained 2,600 jobs by the end of this year, but fell to 27,700 jobs across the state in January.

Last week, the Louisiana Fossil Fuel Industry Group sent a letter to Federal Secretary of the Interior Deb Haaland on an upcoming interim report on federal oil and gas leasing program recommendations. The Louisiana Mid-Continent Oil and Gas Association promotes industry progress towards environmental management in offshore oil and gas mining processes, and how important offshore royalty funding is to the state’s coastal erosion master plan. Pointed out. This includes projected revenue of $ 389 million over the next three years.

The Gulf Economic Survival Team has called for the Home Office to “work with leaders in Gulf Coast states and local communities that are directly affected by the current offshore ban.”

The Laforche and Teleborn parishes alone have more than 5,400 workers in the energy industry, with an annual salary of $ 81,402, supporting a $ 24 million local property tax. Port Fourchon estimates that 15,000 people are flying by helicopter to a port-supported offshore oil platform.

Oil futures US benchmark oil was around $ 60 a barrel in January 2020, but fell to minus $ 36 in late April 2020. Since then, it has risen relatively steadily, driven by expected future demand as vaccination efforts are rolled out around the world. Demand for jet fuel and gasoline is increasing. The price reached $ 65 per barrel in March.

During that period, overall US oil production fell by an average of 11.3 million barrels per day in 2020, down 8% compared to 2019.

Federal offshore oil production in the Gulf of Mexico accounted for 17% of total US crude oil production and was set to set a new record in 2020, before the pandemic. instead of, It was the hardest hit as average production fell by 13%. By 2020, there will be 1.65 million barrels of oil per day.

According to the Energy Information Agency’s forecast released in mid-April, oil production is expected to increase until 2022 as the project goes online. Thirteen new projects are on track to increase production of 200,000 barrels of oil daily, or 12%. It is expected to reach 1.75 million barrels of oil daily by 2022.

New projects, such as Shell’s Vito field, scheduled for drilling in 2022, are estimated to be a break-even point even if oil prices are below $ 35 a barrel.

All of these oil platforms were closed during the busiest hurricane season on record, as hurricanes Marco and Laura urged them to stop working in August. During that time, the Gulf of Mexico’s crude oil production fell to its lowest level in seven years, producing a total of 1.2 million barrels of oil per day in August, compared to about 2 million barrels per day in 2019.

According to Baker Hughes data, there were 12 active oil and gas rigs off Louisiana during the week of April 1, down from 18 active rigs a year ago. In early April 2014, there were 42 active rigs off the coast of Louisiana.

Environmental activists questioned the strength of market demand for more federal oil and gas leasing offshore, as the majority do not produce oil. Industry representatives say that offshore development often takes years and millions of dollars, as only profitable wells are used for oil and gas, and market demand is fair. I argue that it is not a snapshot.

Despite headwinds due to corporate obligations to reduce carbon emissions, the suspension of new federal leases in the Gulf of Mexico …

The federal-controlled offshore waters cover 12 million acres, 77% of which are either non-producing or remain unused for now.

Louisiana businesses face reality of no new federal offshore leases anytime soon | Business Source link Louisiana businesses face reality of no new federal offshore leases anytime soon | Business

Back to top button