Economist: Oil support firms stand to gain




    The Associated Press
    Published: 4:02 p.m. Wednesday, March 31, 2010

    NEW ORLEANS — Louisiana-based industries supporting the petroleum industry stand to gain under President Barack Obama’s plan to expand offshore drilling.

    Shipbuilders, offshore structure fabrication companies and offshore transport companies eventually could see increased demand for their supplies and products, said Louisiana State University economist Loren Scott.

    “There are certain industries that will be poised to gain,” Scott said.

    Reversing a ban on oil drilling off most U.S. shores, Obama on Wednesday announced an expansive new policy that could put oil and natural gas platforms in waters along the southern Atlantic coastline, the eastern Gulf of Mexico and part of Alaska.

    Scott said Louisiana shipbuilding companies such as Bollinger Shipyards and Edison Chouest Offshore are well placed if increased drilling pushes up demand for vessels that cart personnel and supplies from the shore to the platforms.

    “They have all the infrastructure to do this,” Scott said. “I doubt anyone is going to build a new shipyard in Virginia when these companies are already here.”

    Louisiana also is the home of several large yards that build the huge structures used in offshore drilling, owned by Global Industries Ltd. and Gulf Island Fabrication Inc. and Houston-based McDermott International Inc.

    Two major offshore transportation companies, Tidewater Inc. and Hornbeck Offshore Services Inc., also are based in Louisiana.

    “We hope that it does come to pass,” said Tidewater spokesman Joe Bennett. “We’ll be well-positioned to participate if it does.”

    The head of Louisiana Mid-Continent Oil and Gas Association, a major trade organization, called Obama’s announcement “a very positive first step in securing American’s energy future.”

    Association president Chris John said he was optimistic, even though Obama’s proposal has to go through Congress and regulators before being added to the federal Minerals Management Service’s long-term offshore lease plan.

    John called the proposal to open up the eastern Gulf “the crown jewel” for Louisiana because of its proximity to the region.

    Still, John said there was a potential “two-edged sword” — while Obama is proposing more offshore drilling, his latest federal budget proposal calls for elimination of about $36 billion in drilling incentives and other breaks for the petroleum industry.

    “Still, this is a bold first step,” John said.

    In Wednesday trading, Gulf Island Fabrication shares jumped $2, or 10.1 percent, to close at $21.75. Those shares traded as high as $22.80 during the session.

    McDermott International rose 21 cents to $26.92, Global Industries added 7 cents and closed at $6.42, Tidewater lost 10 cents to close at $47.27 and Hornbeck Offshore gained 13 cents to close at $18.57.


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