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Monsters & Critics: Some oil firms leave New Orleans – but others stay

By Bruce Nichols

NEW ORLEANS – The boom in Gulf of Mexico oil exploration since the 1970s made New Orleans a hub of the U.S. energy industry, but the devastation caused by Hurricane Katrina in 2005 has led some oil companies to move out, a mini-exodus that could grow.

A recent survey by New Orleans CityBusiness magazine found that 12 of 23 publicly traded companies headquartered in New Orleans had left since Katrina, including four energy-related firms.

Tidewater Inc., the world’s largest operator of oil industry service vessels, recently became the latest to say it is considering moving its headquarters to Houston, the U.S. capital of oil and gas.

Others are moving but staying closer. Chevron Corp. is leaving its downtown tower for offices in Covington, 26 miles north, across Lake Pontchartrain. Louisiana Offshore Oil Port also plans to relocate its offices to the north shore.

An important player, Shell Oil Co., is still downtown and insists it will stay. ‘We extended our lease … for another 10 years, until 2017,’ spokesman Fred Palmer said.

Others departing are leaving some operations. Deepwater U.S. Gulf activity near New Orleans is, after all, increasing. ‘They keep whatever minimal stuff they need to keep here,’ said Eric Smith, an energy industry expert at Tulane University.

The exodus is not entirely a post-Katrina trend.

Mining employment, the relevant U.S. federally defined category, fell from 16,000 to 8,000 between 1990 and August 2005, before Katrina struck, said Janet Speyrer, associate dean of business research at the University of New Orleans.

It has held close to 8,000 since operations resumed after Katrina, she said. And oil refining in greater New Orleans, a different U.S. federal employment category, is expected to remain strong.

Still, ‘it’s not a good thing for New Orleans’ that top executives are leaving, Speyrer said. ‘They have a very big secondary impact because of who they are.’

More non-energy firms than energy firms appear to be leaving, according to the CityBusiness survey. Energy companies are more accustomed to difficult environments and less dependent on local markets than restaurant chains or banks.

But among energy companies, Newpark Resources, a small exploration and production company, and McDermott International, an energy-oriented engineering and construction firm, also relocated, both to the Houston area.

Sandra Gunner, CEO of the New Orleans Chamber of Commerce, said she tries to keep companies but is realistic.

‘If you look at the aftermath of any storm, it’s just a practical reality,’ she said. ‘That’s not something you can fix overnight.’

Tidewater, which has 8,000 employees worldwide and a total of 75 in New Orleans, has made no final decision, spokesman Joe Bennett said.

‘We are still assessing the possibility of moving maybe five to eight people to Houston,’ he said.

Chevron spokeswoman Qiana Wilson said ‘some safety issues related to the next storm’ drove that company’s move to higher ground after Katrina, but Chevron had reasons to stay close.

‘We just couldn’t leave south Louisiana because of those great opportunities we have in deepwater operations,’ Wilson said.

Jun 28, 2007, 21:20 GMT
(c) Reuters 2007. All rights reserved.

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