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Oil prices are continuing to collapse and U.S. stocks dropped to their worst loss in weeks as worries sweep markets about the economic damage caused by COVID-19. Analysts are pessimistic about government aid actually helping. (April 21)

AP Domestic

Nearly a quarter of Louisiana’s oil and gas workforce has been laid off as the industry battles an unprecedented crisis, according to the Louisiana Oil and Gas Association.

A survey conducted by the organization also found that about 80% of the state’s exploration and production companies have begun shutting in wells.

“Our members have indicated they’ve already been forced to lay off 23% of their workforce and the large majority are now taking steps to shut-in production,” Louisiana Oil and Gas Association President Gifford Briggs said. “We feared these outcomes would take place by mid-to-late May, but the crushing weight of the crisis is taking hold much quicker than expected. Without a doubt, we need federal and state policymakers to take immediate action to help mitigate further losses from these extreme market conditions.”

MORE: Louisiana’s oil and gas industry needs ‘life-support’ relief after COVID-19 crisis

The crisis — spurred on by a trading war between Saudi Arabia and Russia that dumped excess product on the market and the global drop in demand caused by COVID-19 — has resulted in a historic glut of oil.

Oil prices hovered around $20 per barrel Monday, but the prices have been far from stable. In recent weeks, the price hit the lowest mark in history, around -$37. Louisiana’s producers need the price to reach $37 per barrel to break even, according to LOGA.

The LOGA survey showed 97% of the 450 exploration and production and service companies across Louisiana are moderately or extremely concerned about the future of the industry. More than half said bankruptcy was likely, LOGA said.

MORE: Coronavirus: Oil and gas leader wants Edwards to do more to address crisis

More than a third applied for federal Economic Injury Disaster Loans, though only 25% have received the funding they expected, LOGA said. About 47% of the companies that received the federal relief said it would not be enough to keep them in business, and 72% said it would not help them avoid layoffs.

To help the state’s oil and gas industry stay afloat, LOGA has pushed for the state Legislature to pass House Bill 506 to reduce state severance taxes. LOGA has long been critical of the tax, but Briggs said oil producers need a reduction to avoid layoffs or closures.

He has said they are looking at ways of reducing the tax without harming parish governments, which receive a portion of the tax revenue. Gov. John Bel Edwards announced in April he would be delaying collection of the tax, but he said it took legislative action to fully suspend or reduce the tax.

MORE: Coronavirus: Edwards delays collection of severance tax to help oil and gas

LOGA has also taken aim at the coastal lawsuits, though the group has been fighting unsuccessfully against the actions since long before the coronavirus spread to the U.S. Briggs said the group is supporting Senate Bill 359, which would limit lawsuits to state authorities regarding state concerns.

Briggs and LOGA have also been pushing for the federal government to buy up excess oil to fill the strategic petroleum reserve.

“We’re one of the largest employers in Louisiana with the highest average wages,” Briggs said. “Just imagine what shut-ins and company closures mean for individuals and communities. These are real dollars and their lack is going to be felt all across the state.

“Of the things we can control, we must take bold action to enact immediate changes. We are looking forward to working with the legislature and the administration to figure out how to keep wells flowing and keep people employed as long as possible.”

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