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In his Louisiana Economic Outlook for 2019-2020, the acclaimed Louisiana economist and professor emeritus at LSU predicts oil prices to rise to $80 a barrel by 2020, spurring a serious revival in Gulf energy activity and job growth along our energy coast. We are already seeing encouraging indicators that this economic bounce is beginning.
As the second-largest producer of crude oil in the U.S., Louisiana is especially sensitive to the ups and downs of global oil prices, and no communities in our state feel the impact more than our energy hubs of Lafayette and Houma. After reaching $105.71 a barrel in 2014, crude oil prices hit a low of $27.76 in 2016, before recovering to around $50 a barrel in 2017. The sudden price drop ushered in a 28-month recession in Louisiana and a net loss of 23,300 jobs, according to Dr. Scott, and the impacts in Acadiana and the Bayou Region have been much more severe.
Baton Rouge, La [November 20, 2018] - Louisiana Mid-Continent Oil and Gas Association (LMOGA) President Chris John today announced that at the end of the year he will be leaving the organization he has led for the past eleven years.
“The oil and gas industry is very exciting, challenging and critical to America’s energy security. For the past 11 years I’ve had the privilege to work alongside some wonderful people through both good and bad times. I’m incredibly proud of all we have accomplished. Louisiana’s oil and gas industry has a bright future and is well on the road to recovery. I believe it’s the perfect time for my wife Payton and I to move on to our next adventure,” John said.
Pricing is everything. In retail and in real estate, we all know that price can either attract prospective buyers or drive them away. The same can be said about the federal government’s approach to royalty revenue for offshore oil and gas production.
The U.S. depends on offshore revenue, as it is the second-largest income source to the federal treasury behind income taxes, funding everything from school lunches to coastal restoration. Without a sensible royalty rate for producing American oil and gas on the Outer Continental Shelf (OCS), however, our nation may be permanently driving away this important revenue source and a unique opportunity to be energy dominant. To ensure long-term revenues and increase offshore investments, the federal government must take a hard look at royalty rate reduction.
For many of us, the month of August ushers in the promise of a new school year, anticipation for the upcoming football season and hope for an early fall. August also heralds the peak of the Atlantic hurricane season, with mid-August to mid-September historically experiencing the most active storm development, and a renewed call for all of us along the Gulf Coast to be vigilant and prepared.
Within our own homes and families, storm preparation includes making an evacuation plan, boarding our windows, having a radio to monitor weather alerts, and stocking up essentials like canned goods, bottled water, flashlights and batteries. Miles offshore, oil and gas operators are also vigilant during this height of hurricane season, ready to implement their comprehensive hurricane preparation and response plans if and when a storm threatens to enter the Gulf.
“The Gulf of Mexico continues to be the nation’s premier offshore oil and gas basin and today’s OCS lease sale is an indicator of the industry’s optimistic outlook for future offshore investment and for developing our nation’s oil and gas resources. Today’s sale resulted in $178 million in high bids from 29 companies with 97% in the deepwater Gulf. While this is an increase from the previous lease sale, offshore investments are globally competitive and reducing royalty rates on deepwater leases could go a long way to boosting future Gulf activity. Royalty rates onshore and shallow water are 12.5%; however, the deepwater remains at 18.75%. The cost of drilling, exploring and producing is much higher in the deepwater and we have a tremendous opportunity to provide a level playing field when it comes to royalty rates and the competitiveness of the Gulf. Ultimately, reduced royalty rates will lead to an even greater increase in activity in the Gulf of Mexico, an increase in production, and an increase in much needed oil and gas industry jobs and will fully support the Administration’s American energy dominance.”
- Chris John, LMOGA President