BRIGGS: Oil And Gas Is Tightening Its Belt

An oil and gas analyst has no problem finding a job today. Similar to the weatherman, the energy sector is difficult to predict, yet everyone still wants to know the forecast for tomorrow. While different opinions can be found on any television channel, it is important to look at reality, especially right here in Louisiana. What is the lay of the land for today’s oil and gas industry in Louisiana?

Layoffs are indeed occurring at the highest of levels. Operators, service companies and land companies are each taking a hard look at the 2015 budget and some have cut jobs. Why? The simple answer can be found by looking at a supply and demand chart. The United States is producing more resources domestically than it has in the past several decades. And still, OPEC member countries like Saudi Arabia are flooding the market with crude oil and have no plans of scaling back. When the massive global supply of crude oil dwarfs the demand, a downturn occurs.

What are some of the positive outcomes that occur through a negative downturn in the market? For starters, the industry is working together as a team to continue production. Some service companies are even offering discounted rates to operators so that drilling can continue in the necessary areas. Additionally, companies are trimming any excess to ensure a tighter “oiled” machine.

The term “tightening belts” is usually used when the state or federal budget is facing a budget short fall. However, belts can also be tightened at the corporate level as well. This current downturn in the energy market will cause financial loss at the company level and trickle down to the individual workforce. However, companies are positioning themselves to come out of this period even stronger than before the drop in oil prices.

Tough times often cause us to reflect on our personal decisions, our business ventures, the excess in our budgets, and yes, our employee charts. Through this reflection, this noted excess can be seen more clearly. While no one would wish for a slowdown of the economy or a specific industry, often, these are the times that companies become leaner and stronger for the future.

Again, the state of the oil and gas industry in Louisiana can be summed up by glancing at one specific data point: fewer rig permits were issued in the month of January than in the history of record keeping for such information. However, as the crude oil market slowly corrects itself over time, or if we see additional dips in the price, the task at hand remains the same. The oil and gas industry is no infant to slowdowns and boomtowns. Companies will cut where necessary; yet they will continue offering quality services and drilling U.S.-produced resources to help power this great nation. No downturn has lasted forever, and neither will this one. The oil and gas industry is made up of a group of resilient men and women who are eager to keep to task. While belts are being tightened, the industry will only grow stronger.



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