Louisiana Layoffs, Shut-ins Happening Faster Than Expected

Louisiana Layoffs, Shut-ins Happening Faster Than Expected
Survey by Louisiana oil and gas industry group shows 23-percent layoff and 77.5-percent well shut-in figures.

A recent survey of Louisiana Oil and Gas Association (LOGA) members shows the nearly one-quarter of the Pelican State’s oil industry-related workforce has potentially already been laid off amid the severe market downturn.

“Our members have indicated they’ve already been forced to lay off 23 percent of their workforce, and the large majority are now taking steps to shut-in production,” LOGA President Gifford Briggs remarked in a written statement emailed to Rigzone.

LOGA’s latest online anonymous “point-in-time” survey of its member companies – conducted April 22 to 29 – also revealed that 77.5 percent of Louisiana’s operators have already begun taking steps to shut-in production. The organization counts 450 exploration and production and service companies among its ranks.

“We featured these outcomes would take place by mid-to-late May, but the crushing weight of the crisis is taking hold much quicker than expected,” continued Briggs. “Without a doubt, we need federal and state policymakers to take immediate action to help mitigate further losses from these extreme market conditions.”

In addition to the layoff and well shut-in figures, LOGA’s in-house survey of its members found:

  • 97 percent are moderately or extremely concerned about the industry’s future
  • 51.35 percent said bankruptcy is likely
  • 34 percent applied for Economic Injury Disaster Loan (EIDL) funds through the U.S. Small Business Administration in response to the COVID-19 pandemic
  • 25 percent of EIDL recipients stated they received the funds they expected
  • 46.67 percent of EIDL recipients indicated funds received were insufficient to help them stay in business
  • 72 percent of EIDL recipients stated funds were not enough to avoid laying off workers.

Citing figures from the Louisiana Workforce Commission and the state’s Department of Natural Resources, LOGA noted the oil and gas industry employs approximately 33,900 workers operating roughly 33,650 oil and gas wells statewide. Industry jobs account for approximately $3.2 billion in wages earned in Louisiana, the organization added.

“We’re one of the largest employers in Louisiana with the highest average wages,” Briggs stated. “Just imagine what shut-ins and company closures mean for individuals and communities. These are real dollars and their lack is going to be felt all across the state.”

In an effort to help limit additional adverse industry impacts within Louisiana, LOGA is urging state government officials to adopt the following “emergency measures”:

  • Cut the state’s severance taxes for one year by passing House Bill 506; LOGA noted that Louisiana’s 12.5-percent severance tax rate is the highest in the United States, adding the rate in neighboring Texas is a more modest 4.6 percent.
  • Support the passage of Senate Bill 359, which applies to government-led coastal lawsuits
  • Identify federal- and state-level opportunities to expedite additional storage capacity.

“Of the things we can control, we must take bold action to enact immediate changes,” Briggs remarked. “We are looking forward to working with the legislature and the administration to figure out how to keep wells flowing and keep people employed as long as possible.”

Rigzone also contacted LOGA’s counterpart in Texas to seek recent industry layoff figures there. A Texas Oil and Gas Association (TXOGA) spokesperson noted the Texas Workforce Commission counted 218,900 upstream oil and gas jobs in the Lone Star State in March 2020 – before recent significant workforce reductions. The TXOGA representative added the latest March figure was 20,600 (nine percent) lower year-on-year but still 26,500 jobs higher than the upstream employment low point from the previous downturn: 192,400 jobs in September 2016.

Previously, Texas upstream employment peaked at 308,900 jobs in December 2014, TXOGA added.

“The prior year saw some contraction prior to the pandemic and price war,” the TXOGA spokesperson said regarding the change in Texas upstream jobs from March 2019 to March 2020. “These numbers do not reflect the significant job losses as a result of the current dynamic. We need the U.S. and global economy to go back to full speed so our industry can put people back to work.”

To contact the author, email mveazey@rigzone.com.


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