David Jacobs / The Center Square
The worst is likely over for Louisiana’s struggling oil-and-gas sector, though employment is unlikely to rebound to levels seen before the 2015 crash or even to pre-COVID-19 levels, according to a new report.
The LSU Center for Energy Studies projects Louisiana will regain about 2,600 jobs in the upstream oil and gas extraction and services sectors by the end of next year relative to the low point in September. Louisiana refining and chemical manufacturing employment is expected to increase by about 300 jobs by the end of 2021, or about a 0.8% increase.
The authors of the center’s 2021 Gulf Coast Energy Outlook, LSU CES director and professor David Dismukes and associate professor Greg Upton, assume that presumptive President-elect Joe Biden’s campaign proposal to ban new oil and gas permitting on public lands and waters is not implemented anytime soon. They also assume that trade talks with China will not deteriorate, leading to new tariffs, and that the COVID-19 pandemic is brought under control.
“Embedded in this outlook is the assumption that COVID-19 will gradually subside, and that a second wave of shutdowns will be avoided,” the authors say. “Yet, within days of sending this [report] off to print, the likelihood of a second wave of infections and associated reduced economic activity has increased substantially.”
Other factors to watch include a potential re-engagement with Iran, which could add to the global oil supply, and industry efforts to reduce carbon emissions. Ironically, regulatory changes that make it harder to develop oil-and-gas resources could benefit certain sectors of the industry by increasing prices for fossil fuels.
Oil production, both nationally and in the Gulf Coast region, is expected to decline over the next three years.
The authors project $105 billion in energy manufacturing investment in the Gulf Coast region by 2029. They expect investments to consist of $58 billion in liquified natural gas investments (55%) and $47 billion (45%) in non-LNG energy manufacturing investments. Most of the total investment will be in Louisiana ($63.5 billion or 60%) followed by Texas ($41.5 billion or 40%).