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While Pennsylvania, northwestern Louisiana and gas-rich areas around the Gulf of Mexico are losing jobs and revenue as the fracking industry shrinks after a price collapse, oil-rich North Dakota and Texas are in the midst of a boom.

Other winners in the fracking lottery include central and southern Louisiana, Mississippi, Ohio and Wyoming, where the economy is expanding and revenues are climbing.

As oil prices are expected to stay around $100 a barrel for at least a couple of years, the success of these states may last longer. But the high volatility of energy prices may give local economies a headache.

With natural gas prices touching 10-year lows three weeks ago, there could be more pain ahead for gas-rich communities and states where fracking was until recently a growth industry.

The forerunners in fracking natural gas are a case in point.

Parts of northwestern Louisiana, where the Haynesville shale is located, already have been hit as gas rigs left. In Bossier City-Parish, one of the communities in the Haynesville area, the rural district tax revenue fell 25 percent to $2.5 million from January to April, according to tax administrator Ken Kirspel.

Economists warn that this type of reduction in local revenues could spread throughout Lousiana as natural gas output falls, cutting more jobs and revenue.

In the last two years, the oil and gas extraction industry added 36,000 jobs around the nation. Most of those jobs were in natural gas fracking, according to Dean Baker, an economist with the Center for Economic and Policy Research, in Washington, D.C.

Those jobs could move elsewhere, other experts said.

Fracking is a drilling technique that extracts oil and gas from shale by blasting it with water, sand and chemicals. Environmentalists have raised concerns about possible air and water pollution. Due to these concerns, Vermont is set to ban fracking, and New York has placed a moratorium on it.

How many jobs will be lost in gas production and gained in oil drilling is difficult to estimate, economists say, but local communities in gas-rich areas will feel the pain.

The estimated number of jobs lost could reach 72,000 – or double the jobs added during the fracking boom, said Baker of the Center for Economic and Policy Research. This assumes that each fracking job created one more job in related areas, such as trucking and steel manufacturing, and in other sectors, from hotels to shops, where oil and gas workers spend their wages.

GOODBYE GAS, HELLO OIL

The decline in gas rigs happened swiftly in Louisiana’s gas-rich Haynesville shale. The number of rigs has dropped to about 40 from over 140 over the past 18 months, said Don Briggs, president of the Louisiana Oil and Gas Association.

“These rigs are moving to Texas or other places to drill wells … for oil instead of natural gas,” he said.

Caddo Parish, which enjoyed the fracking boom, is getting squeezed now. Sales tax revenue fell 18 percent in 2011, and has kept slipping this year, said Erica Bryant, director of finance. “We will have to monitor the situation to determine its effect on our operations.”

Some of the economic damage comes from the lost payments that landowners hoped to get from drilling companies.

Suzanne Stinson, the court administrator for Bossier Parish, said a company that leased property from her family for three years has not renewed the contract.

“It didn’t come as a surprise to us,” she said, noting other landowners had the same experience.

The metropolitan area around Shreveport, a Haynesville drilling hub, had 6,800 mining and logging workers in March 2012, down from a year-ago peak of 7,200, according to the Louisiana Workforce Commission.

The state’s severance tax, its natural resource levy, has yet to recover from the Great Recession. It only produced $764 million in 2011 versus a 2008 peak of $1.047 billion. The state’s budget last year was about $25 billion.

Natural gas drilling could remain depressed for a couple of years, economists say, because that is how long it could take to work off the oversupply created by fracking.

The price of natural gas has fallen to about $2.50 per million British thermal units from around $13.70 in July 2008. Output fell in February, and the decline was the bigger of two monthly drops in 12 months..

Drillers have reacted. The number of gas rigs fell last week to 598, the lowest in a decade. Yet the total number of oil rigs rose to 1,372, a 25-year high..

Pennsylvania, which opened its doors to fracking, has started to see gas rigs leave the state. The number last week fell to 95 from 108 a year ago.

“I think Pennsylvania will see some moderation and there probably will be some short-term adverse effects on jobs,” said Eric Smith, a professor at the Tulane Energy Institute, in New Orleans.

The state, whose oil and gas revenue leaped to $419 million in 2011 from $176 million in 2006, could see that windfall shrink as more rigs leave, economists said To put that figure in perspective, the state’s budget last year totaled $27 billion, with gambling alone producing $1.4 billion in 2011 tax revenues.

NORTH DAKOTA’S OIL RUSH

Many rigs have moved to North Dakota because of its oil-rich Bakken shale formation.

Its mining and logging sector rose to 21,000 workers in March 2012 from 15,500 in December 2007, and its oil output topped California’s in January. Economists expect more gains.

North Dakota’s oil production in January averaged 546,284 barrels a day and “I think it’s very realistic to assume this becomes a million barrels-a-day production,” said John Harju, associate director for research at the University of North Dakota’s Energy & Environmental Research Center in Grand Forks.

The state’s 3 percent jobless rate could fall further, and might even be lower in a few drilling hotbeds, like Williston.

“There’s no unemployment here, everybody’s home values have gone up, but at the same time, there is a lot more traffic,” said Tom Rolfstad, the town’s economic development director.

North Dakota’s oil tax revenue – which totaled $1.027 billion from July 1, 2011 to March 3, 2012 – is expected to keep rising. Its budget is about $4.2 billion.

The state is aiding its booming localities, planning to send them about $1.2 billion by the time its two-year budget ends on June 30.

“They certainly have been our Big Brother through this whole thing … but it is kind of hard to keep up,” Rolfstad said.

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New technology is a game changer for Louisiana’s energy future, but foreign rivalries and domestic legal issues are still stacking against the energy industry, according to Louisiana Oil and Gas Association President Don Briggs.

Addressing the association’s local members Tuesday, Briggs spoke of the challenges facing the industry.

“We are today truly in a new era for our industry,” Briggs said. “Technology is changing everything, and we’re going to be part of it in a big way, especially in northwest Louisiana.”

Those technologies have allowed drilling firms to reach unprecedented levels of production, which has driven a boom in investments across Louisiana, Briggs said. The Louisiana chemical industry has been a major benefactor, he said.

But even with natural gas prices falling rapidly, Briggs said concerns about the future of drilling on the Haynesville Shale will eventually fade. Only 42 percent of rigs in the United States are drilling primarily for natural gas, Briggs said, down from 82 percent in 2008.

“Natural gas prices are going in the tank. We had a good run, but that’s the nature of the beast,” Briggs said. “Even though the rigs are moving out, and they need to be, eventually that glut will be swallowed.”

But the challenge of natural gas prices is based on successful production and partly a mild winter. Briggs said the largest problems facing the industry are both foreign and domestic.

Increasing tension between the United States, Israel and Iran have raised the specter of skyrocketing oil prices, already trading around $100 per barrel. Briggs said military or political action could limit oil flow through the Strait of Hormuz, through which 35 percent of the world’s sea-born oil flows and which Iran has threatened to shut down.

“If that happens, we’ll see the price of oil go absolutely through the roof,” Briggs said.

But U.S. Environmental Protection Agency push-back against hydraulic fracturing — the process of breaking apart shale sediment with water, sand and chemicals to release natural gas — was the area Briggs said concerned him most.

The EPA has raised concern that fracking could contaminate groundwater and harm people and the environment. Briggs said those concerns are “scare tactics,” that 85 percent of wells today are fracked and there has never been proof it is harmful.

“I’m not sure we’re winning that battle,” Briggs said. “This administration doesn’t like the domestic oil and gas industry.”

Briggs also raised concerns about the effects of “legacy lawsuits” — claims against firms for environmental damage caused in years past — on the oil and gas industry.

“It’s a huge problem, and our industry has been on the back side of it,” Briggs said.

Briggs said 56 percent of the top 50 oil and gas producers have legacy suits filed against them. Good companies, he said, are being sued for environmental damage as much as 70 years old caused sometimes by drilling techniques legal at the time.

A founder of LOGA, Briggs also serves on governor-appointed committees such as the Ground Water Management Advisory Task Force, Governor’s Environmental Task Force and the Oilfield Site Restoration Committee.

“Don is always the guy leading the charge against bad legislation and challenges to our industry,” LOGA’s Chairman of the Board Raymond Lasseigne said.

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Drivers could be paying more than $4 for a gallon of unleaded gasoline by the late spring and summer months as demand increases, tensions rise in the Middle East, companies switch to new formulas and maintenance work takes place at refineries across the country.

In Lafayette on Monday, the average for a gallon of gas was $3.42, according to the gas-price tracking website gasbuddy.com. That’s up from an average of $3.01 in February 2011 and

$2.46 in February 2010.

Gregg Laskoski, senior petroleum analyst with gasbuddy.com, said the national average on Dec. 31 was $3.25 per

gallon.

“We expect that gas prices are going to go up significantly because we are starting at the highest price point we have ever seen in the United States,” Laskoski said. “If we start 2012 at such a high price point, and we know that every spring gas prices go higher, it’s not outlandish to see them hit $4 a gallon.”

Over the last seven years, gas prices have increased an average of 93 cents from Dec. 31 to the peak price point in the following year. That means if the nationwide average is $3.25 per gallon, the national average by the summer could be around $4.18 per gallon.

“The dominant issue right now is the potential threat and conflict that could occur in the Middle East,” Laskoski said. Federal intelligent officials believe there is a chance that Israel could attack Iran sometime this spring.

“That creates a lot of nervousness in the financial market and builds a premium into the price of crude oil,” Laskoski continued. “Even if that were not to occur, we could see prices going higher because they do the same thing every spring. The refineries are in a difficult spot because they have to produce a ’summer blend’ gasoline, and at the same time they also have some scheduled maintenance issues. You also have aging infrastructure, so the refineries have unscheduled maintenance before they can ramp up and produce a ’summer blend.’”

Don Briggs, president of the Louisiana Oil and Gas Association, said a large company like Exxon can make more than 20 different kinds of “boutique” fuels, and different fuels are made for different cities, depending on emission requirements and specific local needs. But that kind of specialization is more costly for companies and refineries, and that cost is passed on to consumers at the pump.

“The refineries have to change what they are doing and make these different fuels,” Briggs said.

Laskoski said that because of federal regulations, refineries must produce a summer blend from May 1 to Sept. 30 that burns cleaner to reduce smog and pollution as more drivers hit the road for the summer travel season. The special additives needed to make this blend are pricey, another factor that leads to increased costs. On Monday, unleaded gas at most Lafayette stations ranged from $3.31 to $3.41 per gallon. The highest was at three Chevron locations, where gas was $3.51 a gallon, while the lowest was at Cigarettes and Checks on Kaliste Saloom Road, where it was $3.25 per gallon.

The variations among gas stations are usually because of the timing of when gasoline arrives at a station and wholesale prices, Laskoski said. Distribution and transportation costs also can play a role in the variations, while some companies are able to sell gas at lower prices because the refineries they use are able to produce it at a lower cost than others. While south Louisiana residents will more than likely see higher gas prices, they may not be as high as in other parts of the country. In general, Louisiana prices are running about average in the country. The highest gas prices are in California, where cities along the coast such as Eureka and Oxnard are selling gas from $3.60 to $3.99 per gallon. The lowest prices are in western states such as Wyoming, Montana, Colorado and Utah.

For example, in Billings, Mont., a gallon of gas is $2.94 to $3.16 a gallon, while in Salt Lake City, Utah, the price is $2.90 to $3.09 per gallon.

Louisiana’s proximity to refineries and oil-producing rigs is a main reason why the state’s prices usually don’t go as high as some other parts of the country.

“It can cost less because we refine it right here. It costs money to transport the oil to other parts of the country, so it may cost less here because it doesn’t cost very much to transport it,” Briggs said. “Those transportation costs and taxes do make a difference. There’s a lot of different ingredients that go into it.”

Laskoski said taxes in Louisiana average about 38.4 cents per gallon, as do most Gulf Coast states. But in Florida, the tax amounts to about 53.4 cents, and other states can see taxes as high at 67 cents per

gallon.

“The states like New York, Illinois and California, which all have extremely high taxes, are most likely to see the extremely high end of the price range when we talk about peak prices,” he said.

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Elsewhere in this issue, we’ve told you about the stories we think will make news in Acadiana in the year that begins with great promise today. We’re a local newspaper, so those stories focus on events that happen here at home. Now and again, it’s also good to think about the way that news from beyond the borders of Louisiana and the even beyond the United States could come home:

» Oil prices. While Louisiana’s economy has diversified over the 30 years since the 1980s oil glut, many of our jobs and a substantial piece of state revenue continue to rely on how much a barrel of petroleum brings. We’ve seen how horizontal drilling and hydraulic fracturing have greatly increased domestic natural gas production, and how the price has been pushed down to levels near $3. Now that Gulf deepwater exploration is recovering and the new techniques are opening new inland areas to crude production, could the same thing happen to the price of oil? Don Briggs of the Louisiana Oil & Gas Association doesn’t think so. Briggs makes the point that while domestic natural gas goes largely for domestic consumption, the price of oil is set by a world market. And that means U.S. energy companies can increase their production substantially without cutting their own throats.

» The presidential election. Today’s story mention’s the probability that Louisiana will go against President Barack Obama. Nationally, things aren’t as clear. Despite continuing high unemployment and sub-50 approval ratings for Obama, the Republicans have yet to settle on a presidential candidate or a clear message. The leading contenders, Mitt Romney and Newt Gingrich, have each been spurned by their party in the past. The outcome of the election seems destined to make a big impact on health care, energy regulation, tax policy and more.

» China’s economy. Officials in the Chinese government are warning of a slowdown in economic growth that has been like a wildfire for 30 years. The weakness has been linked to shifts in demographics and shifts in labor supply. That could be bad news for Louisiana, which ranks seventh among U.S. states in exports ($27.4 billion), and for which China has been the leading export market this year ($4 billion through the third quarter, up 45 percent over 2010). It would be worse if China’s economy drags down regional partners and competitors such as Japan ($2.8 billion from Louisiana through three quarters), Singapore ($1.7 billion) and Korea ($1.6 billion).

» European debt. There is still fear that massive debt problems in Greece, Italy and other members of the European market could dampen growth in the rest of the industrialized world, perhaps even pushing the United States back into recession.

» The Arab spring. For the first time since the rise of Nasser after World War II, there is at least a chance of widespread reform in the Middle East. Solutions to longstanding problems there could make it less likely that thousands of Louisiana troops could again be called to action in wars in western or central Asia.

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By Aaron Clark

Nov. 21 (Bloomberg) — The premiums for Light Louisiana Sweet and Heavy Louisiana Sweet oils weakened as the West Texas Intermediate-Brent spread widened.

The January WTI-Brent spread widened 7 cents to $9.96 a barrel at 1:17 p.m. in New York. The gap for the contracts has narrowed by 64 percent since reaching a record of $27.88 a barrel Oct. 14.

Light Louisiana Sweet’s premium to WTI decreased 40 cents to $11.90 a barrel at 12:21 p.m. in New York, according to data compiled by Bloomberg. Heavy Louisiana Sweet’s premium narrowed 40 cents to $12.25.

Thunder Horse’s premium to WTI widened 25 cents to $12. The premium for Mars Blend added 60 cents to $10 a barrel. Poseidon strengthened $1.10 to $10.25 a barrel over WTI.

Southern Green Canyon’s premium increased $1 to $9.75 a barrel and West Texas Sour’s discount widened 5 cents to 90 cents.

The discount for Western Canada Select was unchanged at $12.75 a barrel.

Syncrude’s premium was unchanged at $5 a barrel. Syncrude is a light, low-sulfur synthetic oil derived from the tar sands in Alberta.

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By Aaron Clark

Nov. 17 (Bloomberg) — The premiums for Light Louisiana Sweet and Heavy Louisiana Sweet oils weakened as West Texas Intermediate crude’s discount to Brent remained near an eight- month low.

The January WTI-Brent spread widened 1 cent to settle at $9.29 a barrel. The gap for the contracts nearest to expiration has narrowed by more than half since reaching a record of $27.88 a barrel Oct. 14.

When Brent decreases versus WTI, it weakens the value of low-sulfur U.S. grades that compete with West African oil priced against the European benchmark.

Light Louisiana Sweet’s premium above WTI fell 50 cents to $11.50 a barrel at 4:16 p.m. in New York, according to data compiled by Bloomberg. Heavy Louisiana Sweet’s premium decreased 75 cents to $12 above WTI.

Thunder Horse’s premium widened $2.30 to $11.30 above WTI. The premium for Mars Blend added 75 cents to $7.75 a barrel. Poseidon strengthened $1.10 to $8.20 a barrel over WTI.

Southern Green Canyon’s premium increased $1.40 to $7.65 a barrel and West Texas Sour’s discount was unchanged at 80 cents.

The discount for Western Canada Select widened 70 cents to $12.35 a barrel.

Syncrude’s premium slipped 25 cents to $5.25 a barrel. Syncrude is a light, low-sulfur synthetic oil derived from the tar sands in Alberta.

–Editors: David Marino, Bill Banker

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By Arron Clark

Heavy Louisiana Sweet oil has risen to a premium over Light Louisiana Sweet since Exxon Mobil Corp. (XOM) shut a portion of its Southwest Pipeline System from South Bend to Sunset, Louisiana.

The line was shut “indefinitely” Oct. 31, according to an Oct. 21 bulletin sent to shippers obtained by Bloomberg News. The pipeline helps carry Heavy Louisiana Sweet oil, according to the company’s website.

The 12-inch pipeline carries oil from South Bend to Krotz Springs, Patricia Errico, an Exxon spokeswoman, said in an e- mail. Exxon made alternative arrangements available for customers before the closure, she said.

Exxon shut the pipeline after a special permit application seeking to “modify repair criteria” on the segment was rejected, according to the spokeswoman.

Alon USA Energy Inc. (ALJ) shut its 83,000-barrel-a-day Krotz Springs refinery for upgrades that will improve the capacity of the plant’s fluid catalytic cracking unit and its ability to handle different grades of crude, the company said in a Nov. 3. statement.

Alon said it expects to finish work during the first half of this month and that throughput will exceed 62,000 barrels a day in the fourth quarter.

Heavy Louisiana Sweet has climbed to a premium of $1.65 a barrel over Light Louisiana Sweet from a discount of 70 cents on Oct. 31, according to data compiled by Bloomberg.

Original Article