Louisiana's energy future doesn't look good at the moment, and Southwest Louisiana will feel the impact. David Dismukes of the LSU Center for Energy Studies said a lull in industrial construction could stretch out several years.

Dismukes told business owners during a call hosted by the Baton Rouge Area Chamber that some proposed projects would likely be postponed or even cancelled because of the global economic slowdown.

The Advocate reported that Dismukes estimates that only about $131 billion may come to fruition out of $195 billion of energy manufacturing and export capital investments that were expected to occur between 2019 and 2029 along the Gulf Coast. He said of the $88 billion in LNG investments anticipated, only about $55 billion in LNG projects might actually happen.

The newspaper mentioned that Shell pulled out of a multi-billion-dollar deal to renovate a liquefied natural gas terminal in Calcasieu Parish amid uncertain market conditions. However, the company's Dallas-based partner, Energy Transfer, expects to continue the project at a reduced size.

An Australian parent company behind the Magnolia LNG project near Lake Charles canceled a $2.25 million deal to sell the operation, but a Delaware-based entity stepped up and bought Magnolia LNG for $2 million. The deal includes the permits, land, engineering plans and a contract for development, in addition to the underlying technology related to the proposed LNG project.

Many petrochemical companies, which are a major part of the local economy, have promised investors to reduce capital expenditures by double-digits this year. Dismukes said things are improving, but oil prices are well below the $55 or $65 per barrel price needed by U.S. producers.

Crude oil prices are still down 50 percent compared to the beginning of the year and oil storage capacity remains high. The Advocate said about 64 percent of capacity is full along the Gulf Coast district, which includes Louisiana.

Dismukes said, "They (drillers) are just sitting out there, waiting for a drop in supply in the market." He added that so far petrochemical and refinery jobs have had some losses, but they were not as significant a drop as oil and gas.

Jobs in Louisiana tied to oil and gas extraction have been dropping substantially since 2014 after oil prices started falling from more than $100 per barrel. There were about 52,000 jobs then, compared with about 33,000 oil and gas jobs at the end of 2019.

Although experts are predicting a long-time energy slump, a quicker-than-expected economic recovery from the coronavirus pandemic could improve the outlook.

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