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    Natural gas exports, investments expected to swell after a historically challenging year, economists say


    November 18, 2021 - Caroline Savoie, The Advocate, Baton Rouge, La.

     

      Nov. 18—A year of shutdowns and hurricanes threatened oil and gas production on the Gulf Coast, but economists with LSU's Center for Energy Studies predict an upswing in natural gas investments and refinement over the next several years. Oil investments, however, have a less-than-desirable outlook.

      LSU professors David Dismukes and Greg Upton authored the fifth Gulf Coast Energy Outlook report and presented their findings Wednesday morning.

      While crude oil production is below pre-pandemic levels, natural gas supplies surpassed pre-pandemic levels, and demand for oil and gas rebounded, causing prices to jump. But after post-pandemic pressures settle, Dismukes and Upton predict the price for a barrel of oil will fall from $80 to $58 in coming years.

      The economists project a $155 billion capital development potential in the next eight years, with more than 40% of that coming from liquified natural gas exports, an enterprise that depends heavily on trade negotiations with foreign importers like China.

      "What may come as a surprise to some is that Biden has decided to continue Trump-era tariffs while participating in trade talks," Upton said. "There hasn't been a notable change in policy here since Biden took office, so we'll assume that these talks don't deteriorate and new tariffs aren't implemented."

      Upton said the situation is fluid, and any change in foreign trade policy can have a heavy impact on the Gulf Coast's export-oriented business.

      Hurricane Ida shut down nine refineries when it made landfall in Port Fouchon on Aug. 29, halting 14% of U.S. refining capacity. But Dismukes and Upton said the impact was short lived and has not affected companies' decisions to make investments in the region.

      The report said oil investments will decrease over the next 10 years, but natural gas investments will increase as reliance on offshore drilling goes down. Alternative forms of energy, such as wind and solar are set to increase.

      Dismukes noted the shift away from reliance on coal and gas, predicting generation in both industries will plateau by 2025.

      The economists predict Louisiana will bounce back from the low point for energy sector employment set during the pandemic, gaining back 4,300 jobs in the oil and gas sector by the end of 2022.

      "Although the trough is behind us, (exploration) employment is unlikely to reach pre-COVID levels in coming years," the report said.

      But as automation ramps up and rigs shut down in the Gulf of Mexico, drilling companies don't need as many employees as they once did.

      Because the Gulf Coast houses more than half of the nation's refinery capacity, the refining and manufacturing sector has a more positive outlook. The report noted growing investments in both Louisiana and Texas, and found that investments in Louisiana will grow from $16 billion to $33 billion by 2023. Employment in this sector is expected to reach pre-pandemic levels by the end of 2023 and hit an all-time high by the end of 2024.

      Upton said 2022 will be an important year for energy discussions in the political sector. As pressure mounts to decrease carbon emissions and produce "cleaner" forms of energy, he emphasized the need for "resilience during the energy transition."

      ___

      (c)2021 The Advocate, Baton Rouge, La.

      Visit The Advocate, Baton Rouge, La. at www.theadvocate.com

      Distributed by Tribune Content Agency, LLC.

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