By Don Briggs, Louisiana Oil and Gas Association The country is experiencing an oil and gas boom touching nearly every state in America. Shale plays that are producing dry natural gas and oil have become reachable thanks to the new technologies surrounding hydraulic fracturing and lateral drilling. However, there is much talk surrounding a “slow down” in new wells being drilled in Louisiana. Mainstream media fails to mention the cause of the decline and the chances for a market recovery. As of this time last year, Louisiana had 178 rigs drilling for resources. Today, Louisiana has around 119 rigs drilling. Keeping perspective, Louisiana now boasts of 48 rigs in the Gulf of Mexico, which is nearly back to the amount of rigs prior to the 2010 oil spill. The southern portion of the state has 28 rigs running, while the coastal inland area is seeing around 18 rigs. The newly reachable Tuscaloosa Marine shale (TMS), an oil play, has three rigs running at present time. While still in the exploratory phase, the TMS has great potential to add to Louisiana’s thriving oil and gas industry. However, the decline in rig count in Louisiana is due to the natural gas sector. As the demand for natural gas has not equaled the now available supply of natural gas, thanks to the many shale plays across the country, the price of natural gas has dropped to a 10-year low. Due to this downturn in natural gas prices, Louisiana’s Haynesville shale play has seen many of its operators scale back their “dry” natural gas operations. As recent as two years ago, the Haynesville shale had over 140 rigs running compared to today’s 26 rigs. Several keys factors play into how soon the natural gas demand will increase, thus causing the prices to return to a competitive rate. As the automotive industry makes strides to producing more vehicles that run off of compressed natural gas (CNG), with the possibility of the exportation of LNG and the increasing demand for natural gas as an electricity provider, the demand will only increase with each month. Again, as the demand for natural gas increases, the production will return, the rig count will climb and the economy will only grow stronger. While the talk continues of a rig decline in Louisiana, the need for employees is still large. Oil field service companies are at job fairs, frequently reporting that the need for quality employees is still high. What causes a need for employees when rig counts are declining? Possibly due to the newer wells being drilled to depths of 3,658 m (12,000 ft), and then stretching out another 1,219 m (4,000 ft) horizontally. With deeper and longer wells, comes the need more material and additional machinery, potentially producing a necessity for more manpower. The rig count has dropped, many parishes are experiencing a decline in tax revenues, and the price of natural gas is low. However, with the hope of a market recovery and the numerous wells being added thanks to Louisiana’s crude oil supply, the industry will only continue to thrive, thus helping to stabilize the Louisiana economy in uncertain times.
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