Great Expectations

Don Briggs, President of the Louisiana Oil and Gas Association 

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 benefitted from this optimism and opportunity. Looking solely at the Liquefied Natural Gas (LNG) sector, the headlines are riddled with new multimillion-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 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 oil 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 is 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 1 active rig. Just this week, the state is down to 24 permits in just four parishes:  17 permits in DeSoto parish, 3 in Bossier, 1 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 oil and gas 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.

 




Crude Oil and Petroleum Product Exports Reach Record Levels in the First Half of 2017

Crude oil exports in the first half of 2017 increased by more than 300,000 barrels per day (b/d) from the first half of 2016 to 784,000 b/d, a 57% increase. Petroleum product exports also grew over the same period. Crude oil and propane exports each reached record highs of 0.9 million b/d, and distillate exports reached a record high of 1.3 million b/d.

Following the removal of restrictions on exporting U.S. crude oil in December 2015, total volumes of crude oil exports and the number of destinations for those exports both increased. The United States exported crude oil to 26 countries in the first half of 2017 compared with 17 countries in the first half of 2016.

Canada remained the largest recipient of U.S. crude oil exports at 248,000 b/d in the first half of 2017 but imported an average of 46,000 b/d fewer than in the first half of 2016. China increased its crude oil imports from the United States by 154,000 b/d and became the second-largest importer of U.S. crude oil, averaging 163,000 b/d in the first half of the year…

 

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U.S. looking to Japan for help in boosting LNG exports to Asia

The U.S. is keen to work with Japan in expanding exports of U.S. liquefied natural gas in Asia, a move that bodes well for export terminals being developed along the Louisiana and Texas coasts.

Many of the fastest growing markets in the Asian-Pacific region lack terminals and other infrastructure needed to increase their LNG imports.

Federally approved facilities under construction in Louisiana are Cheniere Energy’s Sabine Pass, which already has some units operating and exporting LNG, and Sempra-Cameron LNG. Approved but not under construction are Southern Union-Lake Charles LNG and Magnolia LNG. Proposed projects with pending applications are Venture Global Calcasieu Pass, Venture Gobal LNG in Plaquemines Parish and Driftwood LNG in Calcasieu Parish. In prefiling are Fourchon LNG LLC and G2 LNG…

 

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New Orleans Mayor Mitch Landrieu slammed as ‘unprofessional’ by U.S. Sen. John Kennedy in D.C. hearing

U.S. Sen. John Kennedy of Louisiana took repeated shots at New Orleans Mayor Mitch Landrieu during a high-profile Senate hearing Wednesday — while also offering to broker a solution to an ongoing spat between Landrieu and U.S. Attorney General Jeff Sessions.

The Landrieu administration and the federal Justice Department have been at loggerheads over the New Orleans Police Department’s degree of cooperation with federal immigration agents.

Kennedy, publicly questioning Sessions in front of a packed hearing room, scolded Landrieu for the mayor’s latest letter to the Justice Department — a missive Kennedy called “very unprofessional” — and suggested the city is refusing to obey federal law…

 

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State revenue, Alaska workers stand to gain by Liberty oil project

Hilcorp’s Liberty oil field is home to the largest undeveloped light oil reserve on the North Slope and presents an exciting opportunity for economic growth at a time when Alaska’s economy is struggling. With Alaska’s economic woes on our minds, Alaskans are ready for good news. And with the opportunity for boosting oil production, Hilcorp’s Liberty project is our good news, bringing jobs and increased state revenue.

Hilcorp estimates that the Liberty oil field contains around 150 million barrels of recoverable, high-quality crude oil. The oil field is located 19 feet deep in federal offshore waters. The project will require a 9-acre island, generating construction jobs for Alaskans. Once built, the Liberty project could boost oil production by 50,000-70,000 barrels per day. This will help offset the decline in oil flowing through the trans-Alaska pipeline, which is now running at three-quarters empty. The pipeline has been Alaska’s economic engine for decades, and filling the pipeline will recharge Alaska’s economy.

Not only will the Liberty project help fill the pipeline — building and operating the Liberty project means jobs for Alaskans. During the construction phase, the number of jobs is expected to peak at around 200 positions to perform ice road construction, pipeline construction and drilling unit installation. Drilling activity will take place around the clock for two years, requiring an estimated 60 to 80 full-time positions…

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Politics are putting the oil market in a risky place

It’s been a long time since geopolitical developments caused major movements in the oil price, but the escalating tension between the U.S. and Iran, combined with the sudden military clashes in Iraq, has pushed geopolitical risk back on to the agenda for the oil market.

“Geopolitical risks to the oil market have continued to intensify,” Goldman Sachs wrote in an October 17 research note. In addition to Iraq and Iran, the decline in Venezuela’s oil production “appears to be accelerating,” while the resurgence in output from Libya and Nigeria continues to be fragile. “There remains high uncertainty on the potential impact of these new tensions on the oil market.”

But it’s Iraq and Iran that have really raised fears of outages. As of October 17, preliminary reports suggest that about 350,000 bpd of oil production from the Kirkuk oil fields were disrupted, with conflicting reports about whether or not that output has come back online. Iraqi officials said that the interruptions would be temporary and short-lived, and the Kurdish government insisted that it wouldn’t block exports through its pipeline system…

 

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U.S. Is Well On Its Way To Being An ‘Energy Superpower,’ Former Senior Obama Staffer Says

U.S. liquefied natural gas (LNG) exports may surge in the next decade, establishing America as an “energy superpower,” former Obama special assistant Jason Bordoff told The New York Times Tuesday.

The American LNG market has several unique advantages that make it attractive to other countries’ needing a reliable and affordable source of gas.

“U.S. gas is linked to a hub price and has no destination restrictions,” Bordoff told TheNYT in an email. “That means more competition, liquidity and supply diversity, and that will make global gas markets more flexible, efficient and secure”…

 

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As Gas Use Surges, China Sees ‘Harsh’ Winter Without More Supply

Chinese regulators warned that the nation may face a “harsh” supply situation this winter if natural gas supplies can’t keep up with its booming demand.

Surging use of the fuel — powered by President Xi Jinping’s pro-gas policies — combined with inadequate infrastructure such as pipeline connections and storage, may create a severe supply shortfall as weather turns colder, the National Development & Reform Commission said in a statement Thursday. The nation’s top regulator called on state-run producers to ensure sufficient supply.

State owned oil and gas companies China National Petroleum Corp., China Petrochemical Corp. and China National Offshore Oil Corp. should raise production year-on-year this winter to meet the increased demand, the NDRC said. Output from unconventional sources, including coal-bed methane, shale gas and coal-to-gas projects, should also rise, it said…

 

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LOUISIANA POLITICS: CHATTER PERSISTS ABOUT SPECIAL SESSION

Lawmakers, administration officials, lobbyists and other government relations professionals are working under the assumption that the next special session of the Legislature will be called some time after Feb. 14.

Louisiana residents up to speed on on next year’s cultural calendar already know that date as Ash Wednesday, or the official end to Mardi Gras. That’s the timeframe — sometime in late February, after the carnival season quiets down — that Gov. John Bel Edwards has mentioned as a possibility in several meetings.

But like all things that radiate from the tall, pointy, Alabama limestone building located in downtown Baton Rouge, there are caveats. Edwards is said to be looking for a true consensus on something — anything — that the House can get behind, his administration can live with and that the Senate can stomach…

 

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The Rundown: Updates on treasurer’s race, early ed, Amazon, criminal justice and everything else you need to know in Louisiana politics today

Today in The Rundown: Updates on the Louisiana treasurer’s race, early ed, Amazon, criminal justice, sanctuary cities and everything else you need to know in Louisiana politics today.

Programming note: We will be taking a brief hiatus next week. The Rundown will resume its outside-Louisiana Legislature twice weekly schedule after that.

Countdown…

Days until the runoff election for state treasurer: 30

Days until the 2018 regular legislative session begins: 145…

 

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