Economic rays of sunshine are beginning to break through the storm clouds formed after the price of oil dropped from $106 a barrel in August 2014 to a low of $27.80 in January of this year before bouncing back to about $50 per barrel at this writing. The Port of Iberia has recently scored several multimillion-dollar oil and gas projects, and while this latest activity has done little more than cauterize the wound left from the latest economic downturn, it bodes well for future job creation.
Among the most notable projects is the $14 million expansion of the Bayou Companies, which is constructing a 56,000-square-foot pipe coating facility. The facility’s first task will be a two-year project for Shell Oil’s Appomattox project, Shell’s largest floating platform in the Gulf of Mexico. Bayou Companies will add 40 workers to its workforce of 320.
Also in the works or planned, along with the jobs that will be created:
• Dynamic Energy Services International has begun delivery on the topside modules for the Sasol Ltd. ethane cracker project being built in Lake Charles - 400 jobs.
• Logan Industries is nearing completion of a 30,000-square-foot facility to store large components of offshore rigs. The $4.5 million facility will have cranes with lifting capabilities of more than 80 tons - 300 jobs.
• Ram Design is continuing construction of its 18-acre facility at the Port of Iberia. The Port has invested $3 million for land improvements and construction - 10-15 jobs.
• Louisiana Machinery Company is in final discussions of a major multi-million dollar facility expansion at their Port of Iberia headquarters - 50-60 jobs.
• Primoris is building a new facility to manufacture pipe - 400 jobs.
• And the port itself has recently secured $8.5 million from the State Bond Commission for deepening the Acadiana Gulf of Mexico Access Channel.“The shallow water drilling is pretty slow,” says Port of Iberia Executive Director Craig Romero. “They operate what they call posted drilling barges. And a lot of their fleet is parked.”
According to Romero, there are 13 floating jack-up barges used in shallow water drilling now docked at the Port of Iberia. If those rigs were working, it would take about 1,200 people to operate them. Now they’re down to about 180 people.
“The price of oil has everything to do with it,” he says. “That’s supply and demand. What the Saudis and those countries do has a large effect on if we have any activity at all.”
Romero says that slew of new projects is helping offset the numerous job losses in the local oil and gas industry.
According to Louisiana economist Dr. Loren Scott, the Lafayette MSA, which also takes in St. Martin, Vermilion, Acadia and Iberia parishes, derives 7.6 percent of its jobs directly from the exploration industry, the highest concentration among the state’s nine MSAs (the comparable number for Houma is 7.4 percent). Scott stresses that countless other jobs in the MSA are tied to the extraction industry through the multiplier effect.
Scott estimates the region will be down 16,500 jobs (7.4 percent) over 2015-16 as compared to 2014. Most of that loss (8,900 jobs) will occur by the end of this year, he says.
Unfortunately, the outlook for next year isn’t much better. In his annual forecast, Scott predicts the region will lose another 5,000 jobs next year. “By 2018 we expect the blood-letting to be over and the economy to stabilize,” he says.
That’s why every bit of good news coming out of the port is so welcome — to everyone in Acadiana.
“It would be much worse,” Romero says. “In fact, we have the potential to add some jobs. We’re not losing, so it’s not a constant downslide. At least we’re containing some jobs. At least they help us hold the line to a point,” he continues. “It’s not a total job loss in every segment of the oil and gas industry. But it would certainly be worse were it not for those projects.”