Louisiana Pitches Woo to Industry

It's Been Awhile Since They've Gone Courting

As crude oil prices continue to soar and natural gas tags along, there’s increased rhetoric about making the country "energy independent."

The multitude of proposed solutions to accomplish this feat include pouring money into new technology and alternative fuels, bringing more hybrid vehicles to market, etc.

Notably absent from the discourse, for the most part, is the call for a concerted effort to increase exploration and production activity in the United States to help feed the country’s voracious appetite for energy. Apparently the price and supply situation must become a heckuva lot more dire to impact the mindset of the NIMBY (Not-In-My-Backyard) crowd.

The powers-that-be in Louisiana have a different take on this issue.

Recognizing that oil and gas drilling provides not only much-needed hydrocarbons but also creates jobs and provides revenue to fund services and benefits for the citizenry, Gov. Kathleen Blanco is making an all-out effort to encourage increased industry activity in the state. It’s part of her administration’s emphasis on encouraging greater economic development in the state.

Blanco received sizeable press coverage recently for being the first Louisiana governor in many years to attend the Offshore Technology Conference in Houston, where she interacted with numerous oil and gas execs and hosted a luncheon for dozens of industry representatives.

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As crude oil prices continue to soar and natural gas tags along, there’s increased rhetoric about making the country "energy independent."

The multitude of proposed solutions to accomplish this feat include pouring money into new technology and alternative fuels, bringing more hybrid vehicles to market, etc.

Notably absent from the discourse, for the most part, is the call for a concerted effort to increase exploration and production activity in the United States to help feed the country’s voracious appetite for energy. Apparently the price and supply situation must become a heckuva lot more dire to impact the mindset of the NIMBY (Not-In-My-Backyard) crowd.

The powers-that-be in Louisiana have a different take on this issue.

Recognizing that oil and gas drilling provides not only much-needed hydrocarbons but also creates jobs and provides revenue to fund services and benefits for the citizenry, Gov. Kathleen Blanco is making an all-out effort to encourage increased industry activity in the state. It’s part of her administration’s emphasis on encouraging greater economic development in the state.

Blanco received sizeable press coverage recently for being the first Louisiana governor in many years to attend the Offshore Technology Conference in Houston, where she interacted with numerous oil and gas execs and hosted a luncheon for dozens of industry representatives.

In courting the energy folks, the state is working diligently to dispel the image it has acquired as a tough place to do business because of the onerous regulatory climate and other issues.

After just seven months in office, the governor is getting high marks from energy industry participants.

"She’s already done several things," said Larry Wall, public relations coordinator at Louisiana Mid-Continent Oil & Gas Association. "She spearheaded legislation to phase out the corporate franchise tax on debt and the tax on manufacturing equipment, and she instructed the heads at departments of natural resources (DNR), environmental quality (DEQ) and wildlife and fisheries (DWL&F) to work together to expedite permits."

Working With Industry

It is noteworthy that an array of the state’s conservation office folks attended the recent LIOGA-sponsored Gulf Coast Prospect Expo in Lafayette, where the leaders of DEQ, DNR and DWL&F were included on the speaker roster at an invitation-only executive night.

Wall noted that Scott Angelle, the new DNR secretary appointed by Blanco, has an energy background that includes a degree in petroleum land management.

The permitting process overhaul is focused on the coastal zone, which encompasses most all of the state south of Interstate 10, according to Jim Welsh, commissioner, Office of Conservation. Coastal use permits are required for any oil and gas activity in the coastal zone.

"It takes so long to go through the process and get comments back and forth to get a coastal use permit," Welsh said. "The governor told them to streamline the process and speed it up."

Statewide, drilling already is making major new strides, with permits up 29 percent over this time last year, according to Welsh. He emphasized this has much to do with the price of oil and gas.

"The governor also has worked with industry to put a law into place that sets up a process to unitize zones to promote development of coal seam natural gas," Welsh said. "There’s lignite all across north Louisiana," he said, "and unitizing will put separately-owned areas together to make an economic project."

The coal seam natural gas bill was one of several energy friendly bills that passed muster during this year’s legislative session, according to Don Briggs, LIOGA president.

Significant Benefits

Besides encouraging E&P activity, Blanco also is a staunch supporter of liquefied natural gas projects, which are being spurned by most other states.

With its vast array of pipelines and other infrastructure, the Louisiana coastal zone is ideally suited for LNG terminals, which would go far to help meet the energy needs in other parts of the United States as well as those of the state’s numerous chemical and utility plants.

The LNG push du jour centers on Cheniere Energy’s Sabine Pass LNG receiving terminal in Cameron Parish. With support from local communities near the site, Blanco is encouraging state agencies and the federal government to expedite the project. If given the green light, the terminal reportedly will be the country’s largest receiving terminal with a plan to import LNG volumes exceeding 2.5 billion cubic feet per day.

The Trunkline LNG facility at Lake Charles currently is the only LNG terminal in the state and is the largest of the four existing terminals in the United States. Sempra Energy has received approval for a terminal south of Lake Charles.

According to David Dismukes, associate professor at the Louisiana State University for Energy Studies (CES), the development of an LNG infrastructure in Louisiana has the potential to provide significant benefits, including:

  • Increasing gas export volumes through the existing pipeline system by more than 237 percent over the annual average.
  • Providing $398 million in annual gas expenditure savings by 2005 under a high LNG development scenario.
  • Creating 13,800 jobs.
  • Injecting more than $2.2 billion into the state economy.

The overall LNG impact is detailed in a recent CES report "Economic Opportunities for LNG Development in Louisiana," which was co-authored by Dismukes.

"We’re excited about the LNG projects," Welsh said. "We’re also excited about the new deep plays offshore south Louisiana — that’s what will carry us into the future."

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