Oil and gas industry dominates region, state

09 26, 2014 by Houma Courier

Houma-Thibodaux's income and tax collections rely primarily on offshore oil and gas exploration, production and service.

Terrebonne Parish derives some $558 million in annual earnings directly from the oil and gas industry. This doesn't account for all the ancillary shipbuilding, mud mixing and construction operations that also pump up Houma-Thibodaux's economy.

"There is no other place in the state of Louisiana, very few in the United States of America that has a closer contact with the oil and gas industry than this one," said LSU economist Loren Scott, who this year released a study titled "The Energy Sector: A Giant Economic Engine for the Louisiana Economy."

Scott analyzed the crude oil, natural gas and petroleum refining industries and found that in 2011 they yielded more than 11.6 percent of total state earnings.

The industry in Louisiana generates more than the gross domestic product of 86 of the 193 countries that are part of the United Nations, Scott claims.

The study, paid for by the Louisiana Mid-Continent Oil and Gas Association whose members include Shell Oil, Phillips66, Chevron, Haliburton and BP, is similar to others Scott has done. It comes at a time when many critics are putting the industry under more scrutiny than ever for its contribution to the state's coastal erosion problem decades ago.

Counting production in federal waters off the coast, Louisiana is the second-largest producer of oil and natural gas in the country.

The oil industry got its start in Louisiana early in the last century as Texas oilmen explored local marshes for oil deposits on the edge of subterranean salt domes. Through the years, the state's role was as a staging base for development and supply of offshore fields. More recently, the so-called shale revolution fired economic activity by extracting resources from onshore formations such as the Haynesville Shale play.

Scott said more than 112,000 miles of oil and gas pipelines run through the state.

His study found the industry directly contributes some 64,669 jobs to the state, paying out some $5.9 billion in annual wages.

The study found that 287,000 jobs are generated by the energy sector and its support, spurring some $20.5 billion in earnings and almost $74 billion in sales last year.

The industry's average wage is also very high.

"It's about 77 percent higher than the average wage in manufacturing and about two and a half times higher than the average job in the Louisiana economy in general," Scott said.

In Terrebonne, about 6,070 jobs are directly attributable to the oil and gas industry — the second highest in the state. This doesn't consider ancillary services performed by some of the largest employers. Lafourche has some 1,511 jobs directly tied to the industry.

Last year the industry paid about $1.5 billion or about 14.6 percent of total state taxes, licenses and fees collected.

Scott estimated the industry directly paid about $410 million in local government property taxes last year. That's a 37.5 percent increase over 2009 due largely to the Haynesville Shale play.

Terrebonne received about 13 percent of its property tax collections from the industry, or about $11.5 million. Lafourche received some $16 million, for about 14 percent of its total. The state average for municipalities is a 6.4 percent contribution directly from the oil and gas industry.

This number can be slightly misleading in Terrebonne and Lafourche, where industries that service the oilfield are the largest taxpayers. For example, a helicopter company that wouldn't exist in Terrebonne without the local oilfield carries the parish's largest property tax bill. As well, some 30 percent of Lafourche's property tax collections come from the boats servicing Gulf of Mexico oil and gas fields.

Scott attributes the state's economic health to the oil and gas industry.

"For Louisiana, the presence of the extraction, refining and pipeline industries have indeed made all the difference. The energy industry, and its accompanying multiplier effects, has been a powerful engine for economic growth in Louisiana," Scott said.