Industry in flux: Troubled industry tries to weather rough waters

Terrebonne remembered for leading true Cajun lifestyle
September 28, 2016
Chabert given top oilfield post
September 28, 2016
Terrebonne remembered for leading true Cajun lifestyle
September 28, 2016
Chabert given top oilfield post
September 28, 2016

Continued low crude oil prices, non-stop overseas production and related loss of contracts, clients and jobs within the oil and gas service industry are the clearest indicators that an industry once king over the Bayou Region will be facing continued tough times.

Interviews with industry leaders, however, indicate that its core components – while understanding that big change is not likely to come soon – are digging in for the long haul, and hopeful that perseverance will pay off.

Stephen Waguespack, president of the Louisiana Association for Business and Industry, says he would love to have a positive answer to questions about an industry comeback, but that a realistic assessment is necessary.

“I am hearing of a lot of the challenges facing the industry, with the oil price being what it is, the loss of a lot of energy jobs and indirect jobs among the companies that service the industry. There is not a great story to tell, to layer on top of that. The state level of taxing for those folks and the big lawsuits public entities are filing, the federal regulations we are seeing coming out of agencies left and right, that headwind is providing a really stiff resistance to these companies recovering.”

Government leadership – in Louisiana specifically – is not helping, in Waguespack’s assessment.

“I am not hearing any of our leaders say we have to turn the tide, lower the taxes or ease the lawsuits and the regulations. All of this causes companies to hold on to their capital because they are not sure when hope is coming, when help is on the way.”

Nonetheless, key players in the local energy economy are trying to keep business operating as usual.

Local port operations – the Port of Terrebonne as well as Port Fourchon – while realizing they are not in a climate conducive to growth, are prepared for their facilities to accommodate tenants and provide continued services to the best of their abilities.

At the Port of Terrebonne, executive director David Rabalais says plans are on track for maintenance dredging of the Houma Navigational Canal, despite federal appropriations problems that have made new funding sources necessary.

The Terrebonne Parish Consolidated Government is kicking in to the cost of dredging, at a time when Parish President Gordon Dove says incoming sales taxes are taking a dive.

A glimmer of hope appeared this month, when the Gulf of Mexico rig count increased from 18 to 20, according to the Baker Hughes Weekly Rig Count.

Industry sources said that’s nine less than the same period last year, however.

A saving grace locally has been the continued interest in deep-water drilling, but that’s not been enough to salvage the local economy.

The story is in the numbers, which most recently show that Terrebonne and Lafourche lost 3,400 jobs overall from August of 2015 through Aug. 31 of this year.

The chunk of jobs reported lost in August of this year stood at around 400.

Tiny percentage movements in the demand for oil – which can over time translate to economic recovery for the local area – are seen as small bright spots.

Most recently the total number of petroleum deliveries in August moved up by a mere 1.6 percent from last year, according to the American Petroleum Institute, with the average at 20.1 million barrels per day.

API said that was the highest August delivery number since 20017.

“When petroleum demand grows, it’s a sign the economy is on the right track,” said Erica Bowman, API chief economist. “The overall economy showed gains for the seventh time in the year, adding 151,000 jobs in August, which is good news for everyone.”

That number, however, takes into account the entire domestic industry, and is not necessarily reflective of jobs in the Bayou Region.

Gasoline deliveries in August were the highest August level on record, up from the prior month, the prior year, and the prior year-to-date. Total motor gasoline deliveries, a measure of consumer gasoline demand, moved up 2.2 percent from August 2015, to average nearly 9.7 million barrels per day. Compared with July, total motor gasoline deliveries increased 0.1 percent. For year-to-date, total motor gasoline deliveries increased 2.4 percent compared with year-to-date 2015 to a record level near 9.4 million barrels per day.

Crude oil production increased 0.3 percent from July, but was down 9.2 percent from August 2015 to average 8.5 million barrels per day in August. However, this was the first month since this past March where production increased month over month. This was the third-highest August level in 31 years, since 1985. For year-to-date, crude production was also down 6.1 percent compared with year-to-date 2015, but was the second highest year-to-date level in 31 years.

Such numbers are of little comfort to those who have lost jobs and have been unable to regain their footing during the slump, which economic forecasters say isn’t likely to end soon.

The good news, according to some local economic sectors, is that the steady plunge local businesses have experienced is no longer strictly vertical.

At the Frank’s Supermarket chain, whose business includes stocking the galleys of rigs and tugs with groceries, business has been about half what it was in 2014.

But the chain’s owner, David LeBoeuf, recently told The Times that the free-fall seems to have stalled.

“It seems to have leveled off a little, but it definitely hasn’t rebounded lately,” LeBeouf said.

Diversification has also aided some businesses – especially those in the marine sector – that once entirely relied on the oilfield.

“There is work out there,” Rabalais said. “Some people have it and some people don’t. It’s a matter of where you are positioned in the industry … Some of my tenants have laid off people but they are still there.”

Contracts for work not related to the oilfield have been a boon to some local firms, and local business leaders say that money earmarked for coastal restoration will play a bigger role in economic comebacks. Company by company, executives have said that it is the quality of work and dedication from their employees that is allowing them to continue forward.

Bollinger Shipyards is among local firms that have benefitted from the ability to diversify – something that is not new for the iconic firm.

In May the company announced a contract to build more than two dozen cutters for the Coast Guard; the role employees play in that success story was not ignored by its officials.

“We are pleased with this award to build 26 FRC Coast Guard cutters,” CEO Ben Bordelon said at the time. “Our relationship with the Coast Guard began over 30 years ago and we are proud to continue building on that legacy. This is a testament to the skilled Louisiana-based team of Bollinger employees.” •

State of oil and gas