Offshore analysts and leaders say business is approaching mid-1980 levels, when the bottom fell out of the domestic industry in the Gulf of Mexico.
South Louisiana has long been known as the jumping off spot for the domestic offshore oil and gas industry. As other states turned away the industry’s advances, Louisiana embraced it with open arms.
The industry touches nearly every aspect of the economy in south Louisiana, as the land-side infrastructure and expertise needed to operate the offshore sector is a cornerstone of all coastal parishes and communities. From catering to training and from supply boat firms to drilling fluid companies - all play a vital role in keeping America’s energy industry humming.
That’s why when industry leaders hear political promises of energy independence from foreign sources, then hear little but cap-and-trade talk and green job pledges following it up, they get nervous – real nervous.
And the entire economy around domestic offshore oil and gas production should be nervous, too. Consider this: one president of a family-owned OSV company compared today’s market in the Gulf of Mexico to that of the mid-to-late 1980s – a depression for most along the coast. The oil crunch of that time period saw offshore rig counts dip from the mid-70s to a low-point of the mid-30s in 1992. This week, the rig count for the same area is 27 – after an average of 53 in 2008.
OSVs are beginning to be stacked up and Tidewater Inc., the world’s largest operator of OSVs, has only 10 boats operating in the Gulf region. Industry analysts have always seen the Gulf of Mexico as a “spot market,” one that can fall quickly and rebound quickly – depending on market factors.
Most operators point to the White House as the harbinger of things to come – waiting for a positive signal or pledge of support to domestic producers. Instead, the grumbling of higher taxes has investment on the sideline. In relation to potential higher taxes on the industry – one operator stated – “No one has to drill in the Gulf – they got a whole world to drill in.” Many say lessons were learned from past downturns, record profits were invested or stashed away for a rainy day. However, as the storm clouds roll in, cash reserves will only keep companies afloat for so long.
In the late 1980s – bumper stickers in and around the south Louisiana oil patch proclaimed “Last one out turn out the light.” While the economy is not as wholly tied to the industry as it once was – the affects can run deep. Let’s hope political promises of energy independence can strike a sound balance with help for the domestic oil and gas sector.