An oil lease sale scheduled March 20 will offer a glimpse at whether the Houma-Thibodaux area will see an economic uptick after a four-and-a-half-year oil bust.
The Trump administration says it will again open about 78 million acres in the Gulf of Mexico to bids from companies interested in drilling for oil and gas. It remains uncertain whether the lease sale, to be held in New Orleans, will attract any more interest than the previous few, which saw bids on one percent or less of the tracts offered.
The sale comes as Houma-Thibodaux’s offshore-oil-based economy struggles after losing more than 16,000 jobs – one in every six – amid a global crude glut that caused prices to plummet to less than half their mid-2014 high of about $115 a barrel.
The US industry has rebounded, but job growth has been limited mostly to inland shale fields, where drillers have been able to break even at about half the $60-a-barrel prices most deep-water operations have required.
A few things have changed since the last lease sale in August:
Oil companies continue to reduce the break-even cost to as low as $30 or $40 a barrel in the deep-water Gulf through innovation and efficiency. But some of that, including producers’ increasing use of tiebacks that pipe oil from several subsea wells to existing platforms, have come at a cost to local companies that build and service those structures.
An annual forecast by Louisiana economist Loren Scott says the area’s economy has hit bottom and begun a slow recovery. Scott projects the metro area, comprised of Terrebonne and Lafourche parishes, will gain 700 jobs, 0.8 percent, this year. It will add another 2,100 jobs, 2.4 percent, in 2020, driven largely by gains in oil and gas.
The local economy continues to shed jobs, according to state data, but oil-and-gas and related maritime employment numbers have remained relatively stable since April.
Global energy consulting firm Wood MacKenzie issued a forecast last month that predicts an uptick this year in the Gulf that could see companies invest as much as $10 billion in oil projects.
The Gulf’s federal waters, covering about 160 million acres, are estimated to contain about 48 billion barrels of undiscovered, recoverable oil and 141 trillion cubic feet of gas, officials said.
“Developing our nation’s offshore energy resources is vital to our economy and energy security,” Walter Cruickshank, acting director of the federal Bureau of Ocean Energy Management, told local news outlet Houma Today. “Our staff is committed to ensuring offshore development is done in an environmentally responsible manner.”