While oil and gas activity has picked up across the Gulf Coast, drilling permits and rig activity in south Louisiana are at or near record lows, with more permits issued to inland parishes than coastal parishes, bucking historical trends.
Coastal parishes have traditionally exceeded non-coastal areas in drilling permits, but beginning in 2014 the script was flipped, says Louis Gilbert, a petroleum geologist and president of Louis Gilbert & Associates in Metairie.
Gilbert was one of several speakers this morning at the 2019 Oil & Gas Symposium, hosted by the Louisiana Geological Survey and LSU Center for Energy Studies, which brings together experts from a range of disciplines to assess the state of the energy sector. Gilbert gave an update on the south Louisiana oil and gas sector in his address.
The main reason drilling has slowed is because the area has a “mature basin,” Gilbert says, which means production is at or near its peak. In other words, the low-hanging fruit has already been picked, but there’s still fruit left on the tree.
Permitting delays in Louisiana’s coastal areas have also contributed to the lull in oil and gas activity, Gilbert says, adding the permitting process can take about six months.
He’s also heard from some operators who are concerned about coastal lawsuits in Louisiana. And with the combination of these factors, operators may look elsewhere to invest their money.
“The takeaway is that we’ve got competition,” Gilbert says. “There are other places where operators can spend their money. What I hear is it’s difficult to do business in Louisiana because of some of the issues taking place.”
He also noted in his address new operators are responsible for much of the current coastal parish permit and drilling activity.
“From my perspective,” Gilbert says, “there’s a wave of new operators moving into the state.”
Employment trends in Louisiana’s oil and gas sector have also shifted, which Center for Energy Studies assistant research professor Gregory Upton noted at the symposium. The refining and chemical manufacturing industries now employ more workers in Louisiana than the upstream oil and gas industry, breaking with historical trends, according to the center’s 2019 Gulf Coast Energy Outlook.