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Insights across the energy value chain

Over the past two decades, the landscape for oil and gas development has experienced a fundamental shift due to technological advancements made along the U.S. Gulf Coast Region. As the combining of horizontal drilling and sequential hydraulic fracturing has become economical in “tight” shale oil plays, the historic trend of declining oil and gas production has reversed itself and created historical increases in production that has fundamentally changed the trajectory of both the energy industry, and the economy more generally, both here in the U.S. and across the world.

Thus, this new era of oil and gas production has fundamentally transformed the Gulf Coast Region’s role in global energy markets. These changes have been the catalyst for an inaugural annual Gulf Coast Energy Outlook (GCEO) (full report here), which focuses specifically on the Gulf Coast Region and its interaction with U.S. and global energy markets. The GCEO is a collaborative project between the Louisiana State University E. J. Ourso College of Business and Center for Energy Studies.

The collaborative research initiative focuses on upstream oil and gas production and downstream refining and petrochemicals, as well as the contribution of the energy sector to the broader Gulf Coast economy. The report also includes forecasts of future employment in relevant energy sectors.

For the report, GCEO researchers used the Drilling Info ProdCast Tool to create oil and gas production forecasts. Because ProdCast allows for reservoir level production to be aggregated into larger regions, our researchers were able to examine not only the forecasted oil and natural gas production in their region, but also the relative share of regional production. Other dynamics, such as the relative share of shale, conventional onshore, and offshore production were also considered.

As shown in Figures 8 and 9 of the report, ProdCast estimates increases in both U.S. oil and gas production over the next decade, with oil production peaking at 12 million barrels per day in 2024 and natural gas production experiencing year-over-year growth until 2030, when production is expected to exceed 100 Bcf per day. While for the Gulf Coast Region both oil and natural gas production are expected to increase, the relative importance of the region for oil is expected to increase from its current approximately 11 percent of U.S. production, to more than 12 percent in 2030. But for natural gas, a very different story emerges. Specifically, Gulf Coast natural gas production accounted for more than 50 percent of total U.S. production just a decade ago, but this relative share has attenuated to less than 40 percent and is expected to remain relatively flat as a share until 2030. Thus, while the Gulf Coast Region still serves a larger absolute share of natural gas production relative to crude oil, the relative importance has attenuated.

In addition to new oil and gas production, the Gulf Coast Region is experiencing historical investments in refining, petrochemicals, and LNG exports. Figures 11 and 12 show the completed, currently underway, and announced projects associated with this shale-boom-induced investment, much of which is driven by LNG export facilities located in Calcasieu and Cameron Parishes in southwest Louisiana. In addition, significant investments in petrochemical facilities have been heavily concentrated along the Mississippi River parishes in southeast Louisiana.

The report concludes with employment forecasts for both Texas and Louisiana in the upstream oil and gas extraction sectors and refining and chemical manufacturing. Figures 16 and 17 show upstream oil and gas employment forecasts in both Louisiana and Texas. These forecasts were developed using outputs from the DI Prodcast tool alongside historical labor market data. During the recent oil price drop, Louisiana has lost about 16,000 upstream jobs, and is expected to gain about half of these jobs back over the next three years. Texas lost more than 100,000 jobs and is similarly expected to see about half of these jobs return in upcoming years.

This past decade and a half has been an exciting one for the energy industry. Technological advancements in the upstream oil and gas extraction sectors have fundamentally changed the outlook of energy, not only here on the Gulf Coast, and not just here in the United States, but around the world, as the global energy outlook has changed for decades to come. Drilling Info has been a great partner in allowing for researchers to study regional implications of oil and gas activity.

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Greg Upton is Assistant Professor at the Center for Energy Studies, Louisiana State University. His research interests are related to the analysis of economic and public policy issues on energy and the environment.

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