Global Production Could Mean Local Boom

Quick Questions for the People in Charge | Ernie Griffin
October 17, 2018
A New Way for TGMC
October 17, 2018
Quick Questions for the People in Charge | Ernie Griffin
October 17, 2018
A New Way for TGMC
October 17, 2018

SHAKEY INDUSTRY IN IRAN, OTHER GLOBAL COMPETITORS MIGHT BRING WORK TO THE GULF

The price of oil dominates our local economy.

By now, we all know this. We detail the happenings of the industry literally every, single month within the context of this piece of our magazine.

But right now, that price is on the rise with oil going for close to $75/barrel and beyond at press-time — some of the highest figures that we’ve seen in quite some time.


The reason? Global supply and demand.

Our rivals in the oil and gas industry are struggling mightily right now and that might mean that added work will come to the Gulf of Mexico to help fill the void.

Some of the largest oil and gas producing nations in the world are struggling at press-time, lowering their oil and gas production, which is limiting the supply of crude on the market, thus raising the price.


Industry experts say that the reasons for the struggles are multi-dimensional and vary from nation-to-nation. Most are driven by sanctions levied by President Donald Trump on Iran and their energy industry.

But the struggles are not expected to go away anytime soon, which has experts thinking the prices will continually rise and Louisiana will be leaned upon heavily to help fill the void.

“The higher price will only be blamed on the Trump administration,” Fereidun Fesharaki, the founder and chairman of consultancy FACTS Global Energy, told national reporters earlier this month. “There’s not much anybody can do if the sanctions come in and are enforced properly.”


Fesharaki was speaking about gas prices nationally, which are on the rise and are an annoyance to some around the country.

But here, locals often don’t mind paying at the pump because it means that their friends and family are busy working and making money.

One of the biggest factors in the price hike is Iran and the dip in their global oil and gas production.


Iran’s crude oil exports dropped to just 1.1 million barrels per day in the first week of October — down from the 1.6 million barrels per day average it carried throughout September. At one time, the country was producing nearly 3 million barrels per day.

The reason for the dip is because of sanctions levied on the Middle Eastern nation by Trump, pertaining to the country’s nuclear weapons program — sanctions which are likely to return in the coming weeks and which have hamstring the country’s economy.

The Trump Administration has also set an early-November deadline for all Iranian oil buyers to stop their purchases of oil from the nation. Failure to do so will subject them to American sanctions, as well, which is a driving force behind the cut in supply.


Experts say that such a dip in Iranian production is a recipe for oil prices to test $100/barrel like they once did.

Fesharaki said there is “no way” major oil producers can ramp up global oil and gas production enough to fill the Iranian void, which will cause there to be less oil on the market and thus, higher prices.

In addition to the Iranian dilemma is political unrest is both Libya and Venezuela — two nations which are capable of producing millions of barrels per day, but are seeing numbers decline because of political unrest in their countries.


“It’s coming, said energy expert John Kilduff, who has predicted $4/gallon gasoline averages and $110/barrel oil prices. “I think it’s going to get higher than people realize.”

But as the supply drops globally, someone has to pick up the void.

With struggles in Iran, Libya and Venezuela and storage capability issues in Russia, that means the void will likely, in part, fall on the Gulf of Mexico.


Rig counts currently sit at 22 in the Gulf of Mexico at press-time — up from 18 active rigs in the first week of October.

Those numbers still pale in comparison to rig count figures when oil and gas was at its peak, but any increase is a good increase — especially when it means work for local companies that serve the industry.

Port Fourchon Executive Director Chett Chiasson has said many times throughout the summer that the industry is showing signs of a comeback after a prolonged slump.


“We think things are working their way back,” he said. “And that’s good. Because our tenants have been waiting for such a long time.”

BY CASEY GISCLAIR