Industry sees upswing, but problems remain

Industry sees upswing, but problems remain

A welder works on the hull of the 55,000 BBL OPA’90 Tank barge for customer Bouchard Transportation at the Bollinger Morgan City facility.

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by Nikki Buskey / Houma Courier

wwltv.com

Posted on June 3, 2012 at 11:08 AM

Updated Sunday, Jun 3 at 4:23 PM

Local businesses say the recovery of deepwater offshore drilling has created an upswing in local shipbuilding and offshore service businesses.

But while business is recovering from the moratorium, there are still problems with new oil and gas industry regulations enacted after the Deepwater Horizon spill. The continuing regulatory issues have led to decreased federal revenue, fewer active rigs in the Gulf and lower forecasts of future production from the Gulf of Mexico, according to a report released last week by the Thibodaux-based Gulf Economic Survival Team.

Loren Scott, professor emeritus at LSU’s E.J. Ourso College of Business, laid out his forecast for the oil and gas industry in the state at a meeting of the South Central Industrial Association meeting in Houma last month.

Scott predicted the Gulf’s deepwater petroleum production should be completely recovered by the middle of next year.

Scott noted that 169 drill permits were approved in 2009, with 33 deep water rigs operational. Through the first quarter of this year, 44 permits had been approved. There are 24 rigs online with nine drill ship and semi-submersibles coming soon.

All that is good news for local offshore service businesses and shipbuilding companies, he said.

Robert Socha, a spokesman for Bollinger Shipyards, said the company has up to 10 years of work lined up for projects at one of its shipyards, and the company is hiring qualified workers.

The shipyard works in new construction, and has projects to build U.S. Coast Guard boats, tugboats and supply boats for the oil and gas industry. It also works in repair and conversion of vessels, which will “have the most opportunities” with business picking up, he said.

He said projects related to new deepwater drilling projects have already affected the market, and there’s a shortage of certain types of boats that are in demand for deepwater drilling.

“The industry is going to gain from that,” he said.

Chett Chaisson, director of Port Fourchon, said the port is experiencing an uptick in business because of recovering deepwater drilling business. It is nearing the level of business it saw before the ban on deepwater drilling, he said.

There’s been an increased interest in port property to service and support deepwater activity, and companies looking to develop new facilities and significantly invest in the port.

A lot of that activity is because of the culmination of a year and half worth of drilling permits beginning to be issued and work getting under way, Chaisson said.

But the process to issue drilling permits is still slow and onerous, he said.

Lori LeBlanc, executive director of the Gulf Economic Survival Team, which was formed after the offshore drilling ban to lobby for local industry, said that the industry outlook is optimistic compared to where it’s been at since the oil spill and drilling moratorium, but there are still problems.

The group’s new report was conducted by Southern Methodist University researchers examining the fallout of new regulations on the oil and gas industry.

“It’s important to break down these numbers” relating to rig counts and permits, LeBlanc said.

For example, prior to the deep­‐water moratorium, there was an average of 27 “active” rigs in the Gulf, rigs currently engaged in drilling-related activities as opposed to maintenance or other activities. But May 1, there were only 18 active rigs in the Gulf.

Offshore lease sale revenue has also dwindled. In 2008, $9.4 billion was generated in new offshore lease bids. That dropped to $979 million in 2010, and $36 million in 2011, with only one lease sale held the entire year.

In addition, the average number of days to have a drilling plan approved by federal officials has risen from 50 days to 207 days. And while the administration approved 94 permits for wells in March, only 32 of those covered new wells permitted to reach oil and gas.

In addition, many companies aren’t getting the permits they need to keep working and move from job to job.

“The industry needs predictability and stability,” LeBlanc said. “Things are happening, ... but it isn’t where it should be or it needs to be.”

Nikki Buskey can be reached at 857-2205 or nicole.buskey@houmatoday.com.

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