Gary David works for C&S Well Service—his family’s business in Grosse Tete that was established more than 30 years ago—and he’s having a rough year.
Apache Corp., the Houston oil and gas exploration and production company that has been C&S’s main customer for 27 years, sold all of its producing properties in Louisiana at the end of 2014.
“It’s kind of hard to look for new customers when nobody’s doing anything,” David tells Business Report in a feature from the current issue. “Nobody wants to invest any money because of the price of oil.”
C&S, which had more than 20 employees, is down to about 15. David says he has good workers and doesn’t want to let them go, but if circumstances don’t improve, the company may have to make some hard decisions.
Firms throughout Louisiana’s oil and gas sector have been facing similar choices. Mining and logging, which includes the oil sector, lost 800 jobs in August and 7,800 over the year, bringing the total to 46,000 jobs, the lowest level since December 2005, according to the Louisiana Workforce Commission.
“The longer the price of oil stays low, the more we would expect to see collateral impact on other sectors,” says Curt Eysink, executive director of the Workforce Commission.
Some of that collateral damage could include the state’s petrochemical expansion. That may seem counterintuitive, given that those projects largely will be fueled by natural gas. Gas also is cheap, and while that’s bad for producers it’s generally good for the chemical plants.
But many of the projects being planned are based on the premise that domestic plants that run mainly on natural gas will have a strong advantage over foreign competitors that rely on oil. If oil remains cheap, that advantage will be weakened or eliminated.
Economist Loren Scott says almost all of the $8.1 billion worth of projects planned for the greater Baton Rouge area already are under construction or complete. But for the tens of billions of dollars worth of LNG export projects around Lake Charles that are still in the planning stages, companies may be “moving their foot from the accelerator to the brake,” Scott says.
The Baton Rouge region, unlike Lafayette and Houma/Thibodaux, does not depend heavily on the oil and gas sector, although oil prices do affect state government, one of the Capital City’s leading employers.
But the Capital Region does host some companies that service the oil sector, ranging from small, family-owned firms like C&S to large ones like SGS Petroleum Service Corporation, which was founded in Baton Rouge in 1952 and now operates as part of Switzerland’s SGS Group.
Brian Haymon, CEO of SGS Petroleum Service Corporation, says his company’s crude-by-rail shipping operations are down about 50% compared to last year, and its business loading and unloading oil being shipped by barge is down as well.
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