Oil, gas industry the lifeblood of Tri-parishes

Despite best efforts not to be a banana republic, the Tri-parishes’ dependency on the oil and gas industry is unavoidable.

The region’s geographic locale has the industry lapping at its shore.

And when gas and oil is hurting, it is immediately felt, taking jobs and much-needed taxes with it.

“The oilfield industry has been the driver of our economy,” Terrebonne Parish President Michel Claudet said. “No matter how we try to diversify other industries, they dwarf in comparison to the oilfield industry.”

When dwindling resources and cheaper foreign products tanked the U.S. oil industry in the 1970s, the area fell with it. Even industries outside of oil and gas suffered because of declining revenues.

It took years for the Tri-parish economy to rebound, parish officials agree.

Gas prices continue to fluctuate, averaging $70 per barrel and rising. Today, the local oil and gas market is holding its own.

The short-term improvement just since the summer, when the industry’s roller coaster-like volatility left many worried where prices would stop – high or low – still has parish officials scratching their heads.

Nowhere was the instability more than in the Tri-parishes.

St. Mary Parish President Paul Naquin said the summer’s downturn cost the area several oilfield-related jobs, leaving a number of residents without work – again.

The past year’s market is a bit of deja vu, although, it is far short of the magnitude experienced in the 1970s and ’80s, Naquin said.

In the lean years, contracted services and boat companies were hardest hit, he explained. Because work simply disappeared overnight, jobs were few.

Naquin said the area found itself in a similar situation following last year’s back-to-back hurricanes, as oilfield companies were forced to decrease productivity while they repaired platforms and damaged equipment. And the economic impact, again, has been immediate to his parish’s economy.

With most operating rigs back online, locals are now just hoping gas prices will continue to climb.

“If gasoline prices can get between $70 and $90 per barrel, the economy will start to improve here in St. Mary again,” he said.

With gas at $70 per barrel, the outlook is encouraging.

The job market is more promising in Terrebonne Parish, according to Claudet.

“We have been the beneficiary of the oilfield industry,” he said, “making us one of the largest regions in the area.”

“If there is a decrease in the oilfield (industry), it is felt throughout all the other aspects in our economy, including retail, construction, shipbuilding and all other facets,” he explained.

Fluctuating gasoline prices are impacting Terrebonne Parish Government’s bottom line. Claudet said the parish council recently had to reduce the parish’s operating budget by $2.5 million because of lower royalties.

“What happens is there are royalties that go to the state and royalties that go to Terrebonne,” he explained. “Terrebonne had to adjust its budget downward substantially to accommodate for the low mineral royalties.”

Lafourche Parish, much like Terrebonne and St. Mary, depends on the oil and gas industry for its livelihood. “It’s the economic engine of Lafourche,” Parish President Charlotte Randolph said.

Despite plenty of jobs and projects under way across the parish, Randolph said the parish is awaiting signs of an economic recovery.

“A good year in the industry is a direct representation of increased car sales, home building and other signs of a good economic growth,” she said. “However, a downturn in the economy has the same, but a more adverse effect because the rest of the industries in the parish feel the tightening of money spent, as we are experiencing now.”

Because of the industry’s cyclical economic nature, Randolph and her constituents are forced to budget conservatively.

“In 2008, we experienced an extraordinary amount of royalties from the industry and we were able to budget many projects in 2009,” she said. “The 2010 budget now reflects the drastically reduced royalty funds and thus few projects.”

Together, the three agree that as parish presidents, they have to address as many national associations as possible to educate members about the detrimental effect the proposed tax hikes on the industry will have on this country.

Randolph said proposed cap and trade legislation, which removes some of the tax incentives that have motivated the oil and gas industry to continue exploring, is a concern.

“In July, we were two votes shy of gaining the support of the National Association of Counties,” she said. “I believe if the vote were held today, we would succeed.”