Oil rout has Louisiana’s bayou businesses singing the blues

Oil rout has Louisiana’s bayou businesses singing the blues

Louisiana has shed thousands of oil and gas sector jobs since crude prices collapsed in 2014, and as the slump continues, the effects are spreading across the state.

Louisiana is one of the most important oil-producing states in the nation, home to drillers that operate in shallow coastal waters, and to shipbuilders and support companies that contribute to oil operations in the deeper waters offshore.

One place the pain is now being felt acutely is the bayou. Louisiana’s low-lying marshlands have been buffeted from the north as drillers deactivate onshore rigs and from the south as surveying work in the Gulf of Mexico dries up.

“It’s a total disaster. There’s no other way to say it. We’re in deep trouble, all of us, and something’s got to happen.”-Marc Moncla, co-owner, Moncla Cos.

Louisiana’s mining and logging sector, an official statistical category that includes oil and gas extraction, shed about 12,100 employees in the 12 months through January. Employment in the manufacturing sector, which is highly exposed to the energy industry, was down by nearly 7,000 positions during the same period.

Local economies from Houma to Lafayette, in particular, are feeling the pinch. Derricks are stacked up all along the Intercoastal highway from Houma to Morgan City. Fisherman are seeing their share of the pie shrink as laid-off oil workers flood the industry. Business is down at restaurants.

A rebound in crude prices from 12-year lows earlier this year has not yet provided relief, and bayou businessmen say oil probably needs to head significantly higher before their balance sheets look healthier.

Oil’s magic number

Moncla Cos., a third-generation rig company, currently has only 2 of its 11 barge rigs operating on work sites. It weathered at least one stretch when its entire inventory sat idle for about a month.

Co-owner Matt Moncla said he was hoping demand would pick up when oil returned to about $45 a barrel, but now he thinks the magic number is closer to $60 or $65.

Even when rigs are running, day rates have collapsed from about $18,000 to $12,000, and the company has seen its revenue cut in half. Read More http://www.cnbc.com/2016/05/06/oil-rout-has-louisianas-bayou-businesses-singing-the-blues.html

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