By Don Briggs
The Cameron Parish lawsuits signal the same song with simply a different verse. Last week, Cameron Parish filed suit against 113 oil and gas companies with 195 named defendants. The industry has faced these types of lawsuits in Plaquemines and Jefferson parishes, with the South Louisiana Flood Protection Authority-East and with over 400 legacy lawsuits that span statewide. In addition to these mentioned, St. Bernard Parish is threatening to file suit, but still needs approval from their parish council to move forward.
The Louisiana oil and gas industry is unfortunately well versed in the defense of these egregious lawsuits. However, just because the industry knows the drill, does not make the suits any less frivolous. Millions upon millions of dollars have to be spent to defend these types of suits. At a time when oil is $29 and natural gas is below $2, the last thing the industry needs to do is spend working capital on lawsuits. As a reminder, the oil and gas industry is the economic driver for our nation, our state, but more specifically for our coastal parishes.
Over 30 percent of the nation’s natural resources come from or through the state of Louisiana. This means this 30 percent comes through our Mississippi River port system, through our immense pipeline infrastructure, from our over a dozen refineries or from beneath our feet. Whichever conduit is used, the nation benefits from our industry. Now with the ability to ship liquefied natural gas around the world, the globe is benefitting from our industry as well. What does all of this oil and gas activity have to do with a lawsuit? The oil and gas industry is facing the largest downturn in our industry’s history. We are facing record low permitting, historic low rig counts and production numbers that are sliding by the day.
Since November of 2014, the Louisiana oil and gas industry has lost over 10,000 jobs. The global job loss number in the oil and gas sector has superseded 250,000 jobs to date. So when lawsuits are filed in this already dismal economy, this simply means more loss for our state economy. The above downturn does not even include the budget deficit that the State of Louisiana is now facing.
Economic projections are now beyond $2 billion in deficits for fiscal year 2017. These lawsuits have a dramatic ripple effect for our state. When suits are filed, companies are less likely to continue drilling in that parish. When drilling slows, less oil is going to the refineries. Fewer jobs are needed to support the actual rigs. And the indirect jobs immediately take a hit. The operators support drilling companies. Drilling companies support service companies. Service companies support local businesses. Local businesses are the backbone of our state and nation.
Car dealers, hotels, restaurants, boutiques and mom and pop stores all begin to feel the decline when suits like this are filed. The ripple effect does not stop at the wellhead. The landowners are also being impacted through these suits. This reduces their ability to lease their mineral rights and takes their property out of commerce. But the bigger picture stretches beyond Cameron Parish and the immediate job loss.
The focus should be on the legal climate of our state. Louisiana has the natural resources and the workforce to thrive. However, the business community cannot be held back by a sue-happy legal climate.