The New Year is right around the corner and speculators are earning their paychecks as they attempt to predict how 2015 will look for the oil and gas industry. Oil prices have tanked by $50 since the summer leaving companies in quite a predicament. The smaller independents are facing large budget cuts, while some of the larger operators will have the ability to weather the storm.
However, it is important to take a step back to survey what impacts the year 2014 had on the oil and gas industry. Some very good pieces of legislation were passed in the Louisiana legislative session, new lawsuits were filed against the industry, and finally, the price of oil dropped to five-year lows. Needless to say, 2014 was an eventful year for the oil and gas industry.
On a positive note for the industry, the Louisiana House and the Senate passed three helpful pieces of legislation. SB 667 brought about by Sen. Robert Adley was the Legacy Lawsuit compromise bill agreed to by landowners and industry. The Governor signed this legislation into law as Act 400. While this bill does not solve the Legacy problem, it is a step in the right direction.
Sen. Brett Allain brought SB 469 to directly attack the lawsuit filed by the South Louisiana Flood Protection Authority-East (SLFPAE) against 97 oil and gas companies. The Governor signed this legislation into law as Act 544. While the intention of the bill was to kill the lawsuit, the lawsuit unfortunately is still tied up in the courts and will be for a long period of time.
Finally, Rep. Stuart Bishop introduced HB 799 to limit the use of contingency fee contracts by the Louisiana Attorney General. The bill seeks to add transparency and oversight to this process. The Governor signed this legislation into law as Act 796.
2014 also brought about some new lawsuits against the oil and gas industry. As Helis Oil is attempting to drill one well in St. Tammany Parish, the green environmentalists have made their presence known through protest, hearings and now lawsuits. While the environmental front claims that hydraulic fracturing is their chief reason for protest, when facts have been presented to support the fracturing process, the opposition simply dismisses the facts and screams louder.
If over 360 legacy lawsuits, a flood board suit against 97 oil and gas companies, seven lawsuits brought against industry by Jefferson Parish and 21 suits filed by Plaquemines Parish was not enough to hinder oil and gas activity in Louisiana, oil prices have now dropped by over $50 in just a few short months.
However, despite each of these blows to oil and gas production in Louisiana over the past two years, the industry will remain resilient for many years to come. The oil and gas industry must keep to task by producing consumer-ready resources, creating thousands of jobs for our workforce, and remaining committed to the safety of our communities and the preservation of our environment to which we have been entrusted.