Slowed Oil Production Not Likely To Lead To More Drilling In Louisiana
OPEC members have made the decision to slow crude oil production by 1.2 million barrels a day starting next year. The announcement led to an 8% increase in oil prices as they were trading at around $50 a barrel. Executive Director for LSU’s Center for Energy Studies, David Dismukes, says it’s a nice sign for Louisiana’s oil industry, which has been lagging because of low oil prices.
“For Louisiana this will be positive in terms of market prices increasing for production that we’re getting right now, but we’re not going to see any substantial drilling activity as a result of that,” Dismukes said.
This is OPEC’s first cut in 8 years, and it will reduce production by over 32 million barrels a day globally. The state’s budget also counts on high oil prices to help boost state revenues. He says the rise in oil prices as a result of OPEC’s decision will only help a little.
“This hedging that we’ve seen in mineral revenues from a state budget perspective, well hopefully that will start to unwind a little bit, not by much but at least a little bit,” Dismukes said.
Based on latest numbers from the Louisiana Workforce Commission, seven thousand jobs have been lost in the Lafayette area over the last year and much of that is the result of the downturn in the oil industry. Dismukes says this announcement from OPEC is not enough to jump start drilling in this state.
“We’re not drilling any new wells here, and we’re not going to drill any new wells even if pries get up to $60 to $80 a barrel for oil,” Dismukes said.