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."