Office of Mineral Resources

State Mineral Leases Generate Close to a Billion Dollars a Year

New LSU Report Released on Economic Impact of Oil and Gas

Baton Rouge—According to a recently completed report by the LSU Center for Energy Studies, Louisiana realizes close to a billion dollars in economic activity associated with oil and gas drilling and production activities on state-owned leases. The report, entitled Analysis of the Economic Impact Associated with Oil and Gas Activities on State Leases, examines the economic, tax, and revenue impacts associated with companies that lease land and water bottoms from the state.

The state's Office of Mineral Resources (an office of the Louisiana Department of Natural Resources---DNR) commissioned the study to gauge the economic role the office and the Mineral Board's work has on state revenues including royalties and severance taxes collected, on impacts to parishes, and on jobs. DNR Assistant Secretary Gus Rodemacher, who heads the Office Mineral Resources, said that his office wanted at least a five-year review on a number of economic factors that contribute to the Louisiana economy. He said that in 1995, a voter's opinion survey showed that citizens of the state consider oil and gas to be the most important natural resource. "Here we are seven years later, and the economic impacts seem to be as viable as in past years and I think citizens would like to know that," he said.

"The Mineral Board will be given copies of the analysis in the form of a twelve-page report at its monthly meeting and lease sale to be held on Wednesday," Rodemacher said.

The study, which uses traditional economic impact approaches customized for both oil and gas drilling and production activities in Louisiana, found:

There are some $374 million in direct economic impacts associated with drilling activities on state leases in any given "typical" year. The indirect impacts (or total multiplier impacts) are approximately $172 million.
Drilling activities on state leases account for approximately 2,350 direct jobs and some 2,091 jobs associated with the multiplier effects of these activities.
Production activities, in a "typical" year have a direct economic impact of some $359 million. Indirect (or total multiplier) effects amount to some $76.8 million in economic activity.
There are some 1,117 jobs created by production activities on state leases, while an additional 1,027 indirect jobs are created.
The report also showed that for a typical year, state and local governments receive approximately $500 million in revenue from state lease operations. Some $274 million are from royalties, while $88 million comes from severance taxes. Some $70 million are from taxes associated with direct and indirect economic impacts associated with annual state lease operations. The report indicated, an additional $58 million from fees, bonuses, and rentals.

To read Analysis of the Economic Impact Associated with Oil and Gas Activities on State Leases funded by the DNR Office of Mineral Resources, go to http://www.dnr.state.la.us/min/ecoreport.pdf.

Editors: For more information, please contact Assistant Secretary Gus Rodemacher at 225-342-4607 or DNR Public Information Officer Phyllis F. Darensbourg at 225-342-8955.