BRIGGS: Great Expectations, Significant Threats In The Energy Industry

Energy producers across the United States are benefitting greatly from the policies of our President and his cabinet appointments. New lands are being opened up for drilling and exploration purposes. Overly burdensome rules and regulatory hurdles that stifled the growth of our industry are systematically being removed. Red tape that once stalled pipeline infrastructure projects in their tracks is no longer.  The expectation for our oil and gas industry is brighter than it has been in years.

Louisiana, in particular, has benefited from this optimism and opportunity. Looking solely at the Liquefied Natural Gas (LNG) sector, the headlines are riddled with new multi-million dollar expansions and projects to come. For example, Venture Global LNG has raised approximately $470 million in total for a planned export facility. Cheniere Energy’s Sabine Pass LNG facility has exported its 100th cargo in April. These are just two of multiple projects and growth in store for Louisiana.

It also seems like a sleeping giant is starting to awaken, the Haynesville Shale. This boost in activity is partly due to the increase in petrochemical plants, LNG, and the infrastructure in place to move shale gas. Haynesville was once thought to be left for dead because of more low-cost shale plays, but that is no longer the case. Shale formations such as the Utica and Marcellus are more cost-efficient to produce, but the shut-in production – an inability to move the oil and gas from those wells due to a lack of adequate pipelines – creates another hurdle and expense for producers. The vast pipeline infrastructure coupled with the ability to move material to the export facilities along the Gulf has led to a resurgence of activity in the Haynesville.

While all the chips seem to be falling in our favor, there are still issues holding back the complete success of the oil and gas industry. For one, the lack of stability in oil pricing. It seems as if we, the United States energy industry, are sitting on the edge of our seats waiting to see whether or not OPEC decides to decrease production. The ongoing threat of North Korea, along with a slew of geopolitical issues, is also affecting the amount of demand for oil. Unfortunately, this geopolitical problem does not show signs of subsiding.

There are hurdles in Louisiana that are severely crippling our industry, especially in South Louisiana. The most significant and harmful issue is the Coastal and Legacy Lawsuits against the oil and gas industry. Many in the industry fear that this will lead to the death of South Louisiana’s oil and gas exploration and production. The indicators of this coming to fruition are becoming more difficult for the naysayers to refute.

The most obvious example is the lack of activity. Right now, there is an average of 43 rigs active in North Louisiana.  In South Louisiana, there are only 3 rigs, and our inland water is down to just one active rig. Just this week, the state is down to 24 permits in just four parishes:  17 permits in DeSoto parish, 3 in Bossier, one in Caddo, and 3 in Red River parish. All of these parishes are located in the northwest portion, and not one permit was issued in South Louisiana.  Another example of how our legal environment is affecting our oil and gas industry is the fact that at the October 11th State Mineral and Energy Board Meeting, there was no nomination for the October 11, 2017 lease sale. Since I have been a part of this organization, I cannot remember a time when there was no nomination for access to state leases for mineral production.

As we look to the future of Louisiana and its energy industry, it is important to realize that they go both hand in hand. When the oil and gas industry is active across the state, creating valuable jobs and vital tax revenue, Louisiana succeeds. We must put an end to our self-inflicted wounds and get Louisiana back on track. The opportunity for Louisiana to ends its financial woes is there for the taking.

Don Briggs is President of the Louisiana Oil and Gas Association.

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