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Industry Overview The oil and gas industry is one of the leading industries in Louisiana in the terms of economic impact, taxes paid and people employed. The industry can trace its beginning back to the late 1800’s when gas was discovered in North Louisiana. The first oil well was discovered in 1901 in the Jennings Field and the first successful offshore well drilled out of sight of land was completed in 1947. The Louisiana oil and gas industry actually extends beyond the state boundary of Louisiana and includes much of the Gulf of Mexico. Also, the Louisiana oil and gas industry is really four industries in one. There is the familiar exploration and production segment, which is responsible for finding and producing oil and natural gas. Next there is the refining section, which takes crude oil and turns it into useful products like gasoline, diesel and chemical feed stock. Next comes the marketing section, which includes the gasoline stations. Finally, there is the transportation section, which includes pipelines carrying crude oil, natural gas and refined products. Louisiana is the third leading producer of natural gas and the fourth leading producer of crude oil in the country. When including the oil and gas production in the Gulf of Mexico, Louisiana becomes the second leading natural gas producer in the country and the third leading crude oil producer. There are 19 active refineries in the state of Louisiana, which accounts for 15 percent of the total refining capacity in the country. There are thousands of miles of pipelines in the state, safely carrying crude oil from the Gulf of Mexico to refineries in Louisiana and other states as well as carrying natural gas to all parts of the country. In addition there are pipelines carrying refined products such as gasoline from and through Louisiana to other states. Approximately 2 billion gallons of gasoline are consumed in Louisiana, with most of it being purchased at gasoline stations located in virtually every community of the state.
Economic Impact The direct taxes
and royalties paid by the industry to the state, along with fees and
other taxes account for approximately 13 percent of all the
general fund revenues collected by the state. At one time the industry
accounted for nearly 40 percent of all state general fund revenues. The
percentage has gone down because oil and gas production has declined over
the years and secondly, the state budget has grown as a result of new revenue
sources, such as increased sales taxes, increased income taxes and gaming
revenue. The offshore industry operating in the Gulf of Mexico, outside the state’s territorial boundaries has a tremendous impact on the state. A study conducted by Applied Technology Research Inc. shows that the offshore industry has a direct impact of $3 billion on the state. The offshore industry pays more than $500 million in salaries and wages to people working in the Gulf of Mexico. Another $2.5 billion is spent with companies operating in Louisiana and doing business with the offshore industry. It is important to remember that everything used on an offshore platform has to come from somewhere onshore. The refining segment of the industry has an $8 billion impact on the state. Approximately half of that amount is spent on the purchase of crude oil and the remainder is spent on salaries, wages, services and supplies used at the refineries. The Gulf of Mexico is important to the refining segment. Louisiana does not produce enough oil to meet the capacity of the Louisiana refineries. In fact, if the Louisiana refineries only used Louisiana oil, they could only operate for two months each year. Therefore, the refineries must use oil from the Gulf of Mexico, other states and foreign countries. The Louisiana Mid-Continent Oil and Gas Association represents the interests of the oil and gas industry before the Louisiana Legislature, state and federal agencies, members of Congress, the news media and general public. The Louisiana Mid-Continent Oil and Gas Association was founded in 1922. For more information visit the US Department of Energy's Louisiana Energy Profile |
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