Study touts oil and gas industry

07 16, 2014 by Houma Courier

Louisiana is the second largest producer in the country.

If you’ve not been living under a rock the past 60 or 70 years, you may have noticed Houma-Thibodaux’s income and tax collections rely primarily on offshore oil and gas exploration, production and service.

The industry’s contribution to the state’s economy was the subject of a new study paid for by oil and gas interests and discussed at the South Central Industrial Association’s monthly luncheon Tuesday at the Courtyard Marriot in Houma.

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 which further fire Houma’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 economist Loren Scott, who created the study paid for by the Louisiana Mid-Continent Oil and Gas Association. The trade organization boasts giants such as Shell Oil, Phillips66, Chevron, Haliburton and BP in its membership ranks.

The study is similar to others completed by Scott in the past. It comes at a time when many feel industry is 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 for onshore formations such as the Haynesville Shale play.

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

Scott’s study found the industry directly contributes some 64,669 jobs to the state, paying out some $5.9 billion in wages each year.

Overall 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.

Scott claims the industry generates more than the gross domestic product of 86 of the 193 countries sorted by the United Nations.

“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. Again this doesn’t consider ancillary services performed by some of Terrebonne and Lafourche’s largest employers, like Edison Chouest and such. Lafourche has some 1,511 jobs directly tied to the industry.

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

Local governments benefit as well Scott said, estimating the industry directly paid about $410 million in 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 which wouldn’t exist in Terrebonne without the local oil field 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.