In the oil patch, we’re used to the roller-coaster of boom and bust. And even in a time of boom, as 2013 was for the industry, the thoughts of bust can never be that far away.
In October, for the first month in nearly two decades, the industry extracted more oil from United States soils than our country imported from abroad.
At the same time, as huge shale oil plays around the country are part of this new boom, rapid depletion of shale wells is also being noted by U.S. and international analysts.
That should not be a surprise, as it is the nature of fracking-produced oil and gas to generate large returns early on but diminish quickly compared to the traditional pumping of easier-to-tap reservoirs.
It is hardly time to panic over the depletion trend, although it has been recently noted by the U.S. Energy Information Administration.
If there is an industry-wide consensus, it is that improved methods of extraction continue to be in a footrace with the rapid depletion of oil production in the shale plays. That’s why the roller-coaster is the common image for this industry.
New shale drilling is hardly going away, either, in Louisiana or in other states. The Tuscaloosa shale prospects in Louisiana near Baton Rouge remain exciting. Expanding industrial development along the Mississippi and Calcasieu rivers in Louisiana is based on the relatively cheap natural gas environment, partly driven by fracking.
And it should not be forgotten that the overall number on oil consumption, and thus oil imports, is definitely affected by the emphasis on conservation in this country.
A lifestyle shift is underway in many big cities, as younger people look to short-term rentals instead of auto purchases; public transit ridership is up, and cities like New Orleans rank high in the percentage of people riding bicycles to work.
More pedestrian-friendly urban design is fashionable and desired in the real estate marketplace.
While most of us will continue to own our personal vehicles, at the margins there is a little less consumption of energy as VMT — vehicle miles traveled — diminished in the aftermath of the 2008 Wall Street crash and resulting recession.
The White House is quick to claim credit for good news, noting that President Barack Obama has pushed fuel efficiency in new vehicles, among other conservation initiatives.
“Taken together, these factors not only reduce our dependence on foreign oil, but work to reduce overall carbon pollution in our communities,” said White House spokesman Jay Carney.
Be that as it may, the larger industry trends revealed in 2013 are based on exploration and development of new oil and gas sources.
In Louisiana, remembering the early 1980s, we know there is a potential for a bust, but don’t see a lot of reason for concern just now.
And there is no question that today’s energy environment is contributing to the nation’s economic recovery. Louisiana is proud to be a part of that recovery, and we look to 2014 with confidence in it.