The mood of the industry today is what I would call "cautiously optimistic."
From the low forties this time last year, oil prices have steadily climbed to the low eighties, a 100 percent increase. Of course, the bottom of the low forties was a cliff dropper from $147 a barrel in 2008. Regardless, $80 oil prices help to build the coffers for exploration budgets.
Natural prices have climbed to around $4.30 per Mcf from a low of $2.90 this past summer, a 48 percent increase.
Another contributor to the optimism within the industry is that drilling activity has significantly increased following the climb of oil and natural gas prices.
Louisiana's current rig count as of mid-March is 209 rigs, compared to 132 rigs drilling this time last year. That's a 58 percent increase and a noteworthy sign of growth.
Louisiana's recovery in drilling activity has consistently outperformed all U.S. drilling activity. Of course, the Haynesville Shale activity in Northwest Louisiana is the shinning star responsible for this growth. Currently, there are 138 rigs drilling in Northwest Louisiana, up from 73 drilling this time last year. Projections for the next six months estimate that another 20 rigs could be added to the Northwest Louisiana fleet.
Another bright spot in Louisiana's rig activity is in the South Louisiana Inland Waters. Approximately a year ago, the inland water drilling activity hit an all-time historic low of five rigs, causing a near hysteria within our industry. Today, there are 15 rigs drilling in the inland waters of Louisiana. That increase has resulted in the creation of nearly 1,800 direct and indirect jobs.
As for Gulf of Mexico drilling activity, there are currently 42 rigs in operation, up from an all-time historic low of 25 rigs this past summer.
A further encouraging statistic comes from the recent MMS Lease Sale 213 that raised $949 million in revenues, up 34 percent from Lease Sale 208 in the Central Gulf of Mexico in March of 2009.
When you step back and look at the big picture, you cannot help but feel optimistic about the oil and gas industry in our state and country.But there is more to this picture.
Several game-changing issues that stand in the way are the potential regulation of hydraulic fracturing by the EPA, EPA regulating greenhouse gases, the President's budget stripping industry incentives, and cap and trade. Although the future of our industry seems bright, we all must remain cautious with these detrimental issues on the table.
Don Briggs lives in Lafayette and is president of the Louisiana Oil and Gas Association. He can be reached at don@loga.com.
Buck
