Changing Headlines

Don Briggs, President of the Louisiana Oil and Association 

It is not uncommon to hear people all across Louisiana talking about the Permian Basin and for a good reason. The west Texas formation saw its first commercial oil well completed in 1921, and since then, the basin continues to be a predominant supplier of United States oil and gas. Some even say that an oil and gas recovery begins and ends in this portion of West Texas.

The Lone Star state has benefitted tremendously from the exploration, production, and transportation of oil and gas. Recently, Texas Tech University conducted a report looking at the current and future impacts of the oil and gas pipeline industry on Texas’ bottom line. The report found that between 2014 and 2024, the pipeline industry’s economic impact will generate around $374 billion in economic output, $212 billion in additional gross state product, and contribute $19.5 billion in state and local government revenues, as well as sustain an average of 171,000 jobs. Who wouldn’t be eager to talk about these numbers?

In Louisiana, when we see an increase in oil and gas activity, it’s the Haynesville shale formation.  For many years, people wrote off the Haynesville as a place that was just too expensive to produce. So the Haynesville was forgotten and companies headed northeast to the Marcellus and Utica formations in search of lower cost oil and gas production. But years of shut-in production due to a lack of pipeline infrastructure are causing companies and investors to return to what some have called a natural gas giant in North Louisiana. This turn of events is very welcomed news.

From the 30,000 foot view, it would look as though Louisiana is making a recovery, and the town of Lafayette, which relies heavily on the oil and gas industry, should be getting back on their feet. That is just not the case; the vast majority of oil and gas activity is above I-10. The truth is that many oil and gas companies in south Louisiana, especially oilfield service companies, are moving away from southern Louisiana and in many cases, walking across the border to Texas where there is opportunity and willingness to invest. According to those who do business in West Texas, it is not uncommon to see many Louisiana license plates at various Texas restaurants and gas stations.

So what is the issue with oil and gas activity in south Louisiana? It’s not that this part of Louisiana is void of oil and gas to be produced or has a lack of pipeline infrastructure…it’s not that we aren’t strategically located on the Gulf of Mexico with some of the busiest ports in the U.S. The reason that investors aren’t willing to invest in south Louisiana is due to the multiple lawsuits against oil and gas companies. What smart investor would spend hard earned capital in a place where he or she is almost all but promised to get sued decades later? The issue of a toxic legal environment was recognized by the United States Chamber for Legal Reform. The group ranked Louisiana as having the worst legal system in the nation.

It is time that the people of Louisiana see for themselves why south Louisiana isn’t thriving and why south of I-10 hasn’t kept up the influx of oil and gas activity in Louisiana. Trial lawyers and frivolous ligation are destroying our industry and hurting Louisiana’s financial footing. It is time we stop reading headlines about jobs leaving south Louisiana and start making headlines about bringing jobs back home.

The Fight Goes On

Don Briggs, President of the Louisiana Oil and Gas Association 

On the morning of October 30th, Louisiana’s oil and gas industry woke up to promising news amongst the headlines of low rig counts and low global commodity pricing. The United State Supreme Court denied hearing the Southeast Louisiana Flood Protection Authority-East’s (SLFPA-E) appeal of the lower courts ruling. This lawsuit, initially filed in 2013, has finally come to the end of its road. So who is the Southeast Louisiana Flood Protection Authority-East? On what grounds did SLFPA-E decide to sue oil and gas companies? How did this case get the all the way to United States Supreme Court? And what does this mean for the similar coastal lawsuits?

After Hurricane Katrina in 2005, the Louisiana State Legislature established the Southeast Louisiana Flood Protection Authorities to oversee flood protection in the Greater New Orleans area. This flood authority is separated into two groups:  the Southeast Louisiana Flood Protection Authority-East, who oversees the east bank of the Mississippi and the Southeast Louisiana Flood Protection Authority-West who monitors the west bank. The Eastern Authority is made up of nine members – all appointed by the Governor, and all appointees must be recommended by universities, national professional associations, and local civic groups.

In July of 2013, SLFPA-E filed a lawsuit against 97 oil and gas companies, alleging that their activities had damaged coastal lands and “increased the risk of flooding due to storm surges and necessitated costly flood protection measures.” One of the trial lawyers for the Board said that the damages equaled “Many billions of dollars. Many, many billions of dollars,” claiming that it was time for oil and gas companies to “pay their fair share.” If the courts would have sided in favor of the flood authority, that lawyer would have profited greatly and received a percentage of the “many, many billions of dollars” claimed.

This lawsuit was initially filed in New Orleans Civil District Court, but just weeks after, one of the 97 companies filed a motion to transfer the suit to federal court. The company asserted that the flood authority’s claim “required the interpretation of federal law, and the plaintiff’s right to relief under one or more causes of action asserted depends on resolution of a substantial question of federal law, and therefore federal question jurisdiction applies.” The motion was granted, and in 2015, the lawsuit was moved under United States District Court Judge, Nannette Jolivette Brown. She found that the board’s claims were not strong enough to justify a financial claim against the oil and gas companies and dismissed the lawsuit. The legal battle was just beginning.

After having their lawsuit dismissed in a federal district court, SLFPA-E took it to a three-judge panel at the 5th Circuit Court of Appeals, making the argument for the case to be returned to state court. In February of 2017, the group of federal judges upheld the decision of Judge Brown – which not only should the case remain in federal court – but that the claims of the board did not justify a financial claim against the oil and gas companies. The last leg of this lawsuit’s journey ended at the United States Supreme Court this week. The court denied hearing SLFPA-E’s appeal of the U.S. Court of Appeals’ ruling. The motion by the Supreme Court made the ruling by the Appellate Court the final decision.

The end of the SLFPA-E lawsuit is excellent news for Louisiana’s oil and gas sector, but the damage that has been done and is continuing by similar coastal suits are crippling our industry. As the 2017 LAGCOE Looey, I was able to talk face to face with companies from every aspect of the oil and gas industry. The frequent topic of discussion was the state of Louisiana’s legal environment. More than global pricing and geopolitical issues, coastal lawsuits pushed by trial lawyers and encouraged by our Governor is the greatest threat to our industry. The oil and gas sector has been an economic powerhouse and a significant contributor to environmental efforts, among other improvements. We must continue fighting to protect it.

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.


Everyone Has Skin in the Game

By: Don Briggs, President of the Louisiana Oil and Gas Association 


If you have turned on your TV in the last few months, you have likely seen political ads beginning to pop up here and there. Thankfully, with the invention of DVR, you are now able to record your shows and fast forward through the commercials. Well for those that enjoy the political ads, I have great news:  it’s campaign season. These political TV spots will dramatically increase in the coming weeks because on October 14th, the ballot box opens, and we have the opportunity to choose our next State Treasurer. There is another item on the ballot that deserves your attention, and that is Constitutional Amendment #1.

Unlike many Constitutional Amendments, Amendment #1 is not a tax increase. If passed, this constitutional amendment would protect homeowners and businesses from being assessed a property tax while they are building or under construction. Once the house, building, or facility has been constructed and is ready for its intended use, then the assessor can place the property on the tax rolls.

This process is certainly fair and has been the standard practice in Louisiana for over 60 years. So why the need for the Constitutional Amendment? According to the Louisiana Constitution, there is no language expressly prohibiting local governments from assessing property taxes on a project while it is under construction. This lack of specificity has created issues with some businesses in Louisiana and has left others leery to expand.

In 2016, local authorities began an audit, seeking to assess property taxes on an expansion of a large company undergoing construction. It is instances like this, not expressed in the constitution, that would affect not only companies looking to build or expand in Louisiana, but families looking to build a home here. This lack of distinction in the constitution poses a significant threat to all current and future property owners in our state.

The opposition against Constitutional Amendment #1 has been minimal. In its infancy, the measure was known as Senate Bill 140, authored by Senator Mike Walsworth. The bill received overwhelming support in the House of Representatives, the Senate, as well as the Governor’s office. We also we saw groups like the Louisiana Police Jury Association and the Louisiana Municipal Association voice their approval.

Business and industry across the state continue to show support for the constitutional amendment. A tax of this nature would have severe, negative impacts on commerce as companies look to expand and do business in Louisiana.

The passage of this amendment is vital to the people of Louisiana. A “YES” vote on Constitutional Amendment #1 will stop a tax increase on homeowners and businesses, provide certainty for new investments in the state, and allow Louisiana to remain competitive in attracting new businesses and jobs for the hardworking men and women of our great state.

The Oil and Gas Industry: It’s Who We Are, It’s What We Do

By: Don Briggs, President of the Louisiana Oil and Gas Association (LOGA)
On August 26th, Hurricane Harvey made its way as a Category 4 onto the shores of Southeast Texas, destroying communities and dropping 33 trillion gallons of water. The University of Wisconsin’s Space Science and Engineering Center compared the vast amount of water dropped by Harvey to a 1 in a 1,000-year flood. The flood waters displaced over a million people from their homes and tragically claimed the lives of over 60 individuals.
Just days after Harvey hit Texas, the United States’ refining capacity was only operating at 30%, and 379,000 bpd crude remained offline in the Gulf, equivalent to 22% of total production. The heavy and consistent rainfall caused many channels to fill with silt, thus closing them off from typical use. The Houston shipping channel was shut down, and both the Corpus Christi and Galveston ports were closed due to the hurricane.
The effects of this storm were not just felt in Texas or the United States; Hurricane Harvey was felt worldwide in the global oil and gas market.  This is an interesting time, where we have a significant amount of crude oil but a limited supply of refined products like gasoline and diesel. As a result, you and I will experience higher prices at the pumps for some time to come.
It is during times like these when the wind has been let out of the sails, and the road to recovery seems to nearly impossible that the oil and gas industry shows what they are all about. The oil and gas industry, especially in Louisiana, has a history of offering support when others are in need.
During the recovery of Katrina, oil and gas companies united their time and resources to aid in the recovery. The industry raised over $1 million, supplying generators and clothing in Bogalusa, housing for victims, providing fuel to the Bogalusa Medical Center, and schooling money for displaced children from New Orleans. Just over a year ago, 21 parishes were affected by a 500-year flood. The industry dispensed nearly $40,000 to families and individuals who were affected by last summer’s flooding.
The relief effort by the oil and gas sector for Harvey has been nothing short of astonishing. Some companies like Chesapeake Energy are holding company wide donation drives to assist with the Harvey recovery efforts. The following companies have donated to the relief efforts of Hurricane Harvey:
  • ExxonMobil committed $9.5 million
  • Citgo is giving $ 3 million
  • ConocoPhillips is donating $2.5 million
  • Anadarko donated $1 million
  • Cheniere Energy said it would donate $1 million
  • Chevron is making a $1 million donation
  • BP has donated $750,000
Time and time again, the industry steps forward to meet the needs of those in tough situations that are no fault of their own. I believe that we were put on this earth for two reasons: to love one another and to help those who are in need. This is who Jesus calls us to be in our personal and professional lives. The oil and gas industry will continue to play a vital role in the recovery efforts. It’s who we are, and it’s what we do.

Louisiana Leading the Way in LNG Renaissance

The state of Louisiana has become synonymous with the liquefied natural gas (LNG) industry. Headlines nationwide talk about the transformation that this industry is having in our local communities, and one could say that our state is in the midst of an LNG renaissance. In a short amount of time, Louisiana’s energy import facilities have been transformed into export facilities. This industry has become very comfortable in Louisiana and is only growing.  Recently, Venture Global announced an $8.5 billion LNG complex, G2 LNG is planning for an $11 billion natural gas facility, Magnolia LNG announced a planned $3.45 billion facility, and Cheniere shipped over 100 cargoes of domestic LNG starting back in February.

Along with exporting facilities, the exploration and production of natural gas has seen a bump in Louisiana. For years, the Haynesville Shale formation in Northwest Louisiana was thought to be too costly, but due to our plentiful pipeline infrastructure that allows the movement of LNG to our export facilities, investors are leaving their northern U.S. plays and heading down south. Here, LNG production is not limited by the amount existing infrastructure can handle, but it is constrained by production itself.

Our Commander and Chief has played a massive role in the exportation of American energy resources. His American First energy policy puts into motion a plan that stops America’s reliance on foreign goods and instead, allows for us to ship our product across the globe. According to President Trump, at the Unleashing American Energy Event, he proclaimed, “These energy exports will create countless jobs for our people and provide true energy security to our friends, partners, and allies all across the globe.” The appetite for our natural gas has only increased in the past years. In 2000, only ten countries were seeking American LNG; now, nearly 40 countries are waiting in line for our product.

Talk of even more increased exports and LNG permits have caused a little heartburn for some in the United States. Many are concerned as to whether or not we even have enough resources to accomplish the exporting goals.

The idea that the United States does not possess the resources necessary to achieve our goal of doing away with the need for foreign oil is nothing short of a farce.  In April of this year, the U.S. Geological Survey conducted an assessment of natural gas in the Haynesville and Bossier Formation and found that there were 304.4 trillion cubic feet of natural gas, over 4 times more natural gas than was found in a 2010 assessment. When OPEC agreed to cut production, the United States jumped in. We increased production so much so that it offset what OPEC had cut. The International Energy Agency (IEA) forecasted that we will generate almost 40% of the rise in global gas output between 2016- 2022. This will put us on par with top producers such as Russia and Norway.

Becoming the leader in natural gas exports is a home run for the oil and gas industry, as well as the multiple millions of mineral rights owners. It also makes the United States and our allies more secure. According to the Center for LNG Executive Director Charlie Riedl, “It advances our national security interests by providing allies access to diverse sources of energy, improves the global environment and contributes to correcting the U.S. trade deficit.” His words also came with a warning, “The U.S. has a limited window to take advantage of new demand.”

The opportunity to become a top supplier of LNG, to create countless jobs, and improve not only our national security but that of our allies is limited. As an industry, we urge our elected officials at every level to fight for Louisiana and America’s place as the world’s top gas exporter.

A Partnership Worth Keeping

From the oil platforms in the Gulf of Mexico to the drilling rigs in the Hayensville Shale, the oil and gas industry has played a vital role our culture, economy, and our community. It is well known in Louisiana that if you do business in our great state, you are somehow involved in the oil and gas sector.

The oil and gas industry is a key segment in Louisiana’s economy. One study suggests that our industry is responsible for 300,000 jobs and over $4 billion in contributions to state and local coffers. It is estimated that Louisiana’s oil and gas industry has an economic impact of nearly $74 billion in our great state.

The oil and gas industry has been a constant economic driver for Louisiana, providing not only jobs but valuable revenue that is used to protect and restore Louisiana coastal areas. Between January 2009 and January 2016, Louisiana collected more than $3 billion in severance taxes from wells in the coastal zone. These tax dollars are then sent to the legislature for lawmakers to decide how these fund will be appropriated for various coastal projects.

Louisiana also benefits from federal programs that rely on oil and gas revenues to fund coastal protection and restoration along the Gulf Coast. The Gulf of Mexico Energy Security Act or, GOMESA, which was signed into law by President George W. Bush in 2006, shares leasing revenues amongst the four oil and gas producing gulf-states of Alabama, Mississippi, Texas, and Louisiana. The share funds are to be used for coastal conservation, restoration, and hurricane protection. This act also stipulates that over 8 million acres be offered for oil and gas leasing. It has been estimated that Louisiana has generated nearly $140 million a year for costal projects since this legislation was enacted.

Another federal program that Louisiana has contributed to and has greatly benefitted from has been the Coastal Impact Assistance Program. This program allocates funds based on offshore oil and gas revenues. From 2007 to 2010, Louisiana has received $300 million and is set to receive another $36 million this year, all paid to coastal projects in Louisiana. These numbers are impressive, but they are just the dollars that Louisiana and the federal government has collected, not including any private investments that oil and gas companies have made here.

Over the past five years, ExxonMobil’s Baton Rouge sites have made approximately $1.4 billion in environmental investments. The Nature Conservancy, the Louisiana Coastal Protection and Restoration Authority, and Chevron have invested an estimated $1 million to build a brand new artificial oyster reef in St. Bernard Parish.  Chevron, Shell, and CITGO contributed to the   Foundation Gulf Intracoastal Waterway (GIWW) Shoreline Stabilization and Restoration Project that will create four miles of embankment along both sides of the Gulf Intracoastal Waterway in Lafourche Parish. The estimated investment of this project is $1.2 million. The list of projects that the oil and gas industry are investing in goes on and on.

While Louisiana finds itself in a continual financial tailspin from upticks in unemployment, we must provide an environment for the oil and gas industry to thrive. The state must provide a tax environment that will encourage future investment and a legal climate that doesn’t force banks and investors to look elsewhere when searching for new drilling projects. The partnership that Louisiana has with the oil and gas industry must continue, the success of us all depends on it.

Its More Than Just Rig Counts

At the start of the recent downturn in global oil prices, experts both inside and out of the industry relied on rig count data to be the grand indicator of how the industry was doing and when we might see signs of recovery from the tough financial times.

When the rig count dropped, industry experts lowered the lights, pulled up a seat right next to B.B. King, and joined in the chorus of “The Thrill is Gone.” As the rig count now increases, the lights shine a little brighter, and in the distance, you can hear Journey’s 1980s anthem, “Don’t Stop Believin’” gradually grow louder as we prepare for potential recovery.

The industry and investors would, and in many cases, still rely too heavily on rig count activity to be the leading indicator as to where the industry and the market is headed. What needs to be recognized is that an increase in rig activity gives us promising data, but it doesn’t necessarily mean that there are gains in reserves bases or profits made for completing a well for service companies.

It’s not to say that rig activity is somehow off-base or inaccurate, but looking solely to rig count activity gives you a limited view of what might or might not be happening. In order to the get full picture of our future, we need to look at a few different factors that are affecting oil and gas companies. The first is DUCS or drilled uncompleted wells.

DUCS are wells, particularly in shale formations, that have been drilled by producers but have not yet been made ready for production. During the recent oil downturn, new drilling and completion activity decreased and the number of DUCS increased. Right now there are 6,298 DUCS in the lower 48 states. While that might sound like a bad thing, the abundance of uncompleted wells allows the U.S. the ability to not only respond quickly to increases in domestic oil prices, but to respond with force.

The next item to look at when attempting to gauge the health of the oil and gas industry is the location. For instance, North Dakota recently issued allowance of an additional year to defer the completion of uncompleted wells. In some cases, companies will drill to uphold their obligations to secure acreage.  However, some companies will not immediately complete the well in hopes that prices will rise and then they can move the well into production.

Some formations are more profitable for the industry at different prices. Back when oil was near $90, the Bakken Formation, located in the North Dakota and Montana area, rig activity trailed that of the Permian and Eagleford Formation. The opposite was true when prices nose-dived. As a result, the reduction in drilling on the Bakken was more severe than that of both Permian and Eagleford formation.

The oil and gas sector has made steady advances in the way of exploration and production. The technology we now use allows companies to perform more thorough work in producing

hydrocarbons. According to the co-founder of, Mark Nibbelink, “Production flows are nearly double what they were in boom times, and we are now doing it with rig counts that are 40 percent below 2014 levels.” The oil and gas sector is resilient, and we will continue to advance our process and technology as we preserve energy security. As we prepare for the future of our industry, we must take into account all factors when preparing our next moves.

A Step to Reignite Louisiana’s Oil and Gas Industry

The 2017 Regular Legislative Session was 60 days of sloshing in waste deep tax policy in order to fix a budget deficit and prepare the state for the upcoming fiscal cliff. During this period, unusual alliances were made, and long-time partners found themselves disagreeing on various tax policies and how to go about fixing Louisiana’s budgetary woes. There were a couple of items that garnered consensus among both the House and Senate, in particular, House Bill 461.

The Chairman of the House Natural Resources and Environment Committee, Representative Stuart Bishop (R- Lafayette), filed House Bill 461 at the request of the Louisiana Oil and Gas Association (LOGA). This bill reinstates a tax incentive for inactive wells that was done away with in 2010. The incentive reduces the severance tax for 10 years by 50 percent on inactive wells and by 75 percent on wells that have been a part of the state’s Orphaned Well Program for five years or longer. All of this will go into effect on July 1, 2018.

So what qualifies as an inactive well, and what is an orphaned well?

For a well to qualify as inactive, the well must have seen less than 30 days of production in a 730 day, or two year, period. In short, these wells are producing little to nothing and thus, deemed inactive. The Orphaned Well Program was started in large part by LOGA President, Don Briggs, in 1993. The purpose of this program is to plug abandoned wells and restore the sites so they may be redeveloped. The term “orphaned” refers to a well site where the operator of record is no longer a viable, responsible party.  Since its establishment, the program has plugged over 2,000 wells at a cost of $64 million.

A common question from legislators when presented with the language of the bill was, “If we are cutting severance tax rates on inactive wells by 50 and 75 percent, won’t this hurt Louisiana’s bottom line?” In short, no. If the state is to tax an inactive well that is producing nothing, the state will collect nothing in tax revenue. Furthermore, the state is liable for properly restoring some of these well sites.

Legislators also asked, “How then does this help our state’s financial situation?” It is rather straightforward:  in order to save the state money on plugging orphaned wells, we must lower the tax rate to incentivize companies to begin producing out of these wells again. When companies start producing, tax revenue is generated, jobs are created, and royalties for the state are increased. HB 461 incentivizes operators to re-enter existing well-bores and implement new technologies to produce oil and gas that were not previously recoverable from the original reservoir.

LOGA worked around the clock to show legislators the great benefit that HB 461 could provide for Louisiana. The House first supported the measure unanimously, then the Senate, and eventually, Governor Edwards would let his support be known. A bill that offers an incentive to companies to create jobs and increase economic activity, all without impacting Louisiana’s bottom line, is hard not to support.

On July 26, HB 461 was signed into law, becoming Act 421. We would like to thank Representative Stuart Bishop (R-Lafayette) and all other co-authors of this legislation for their hard work in pushing this measure through the process and supporting Louisiana’s oil and gas sector. This is a step in the right direction towards reigniting Louisiana’s oil and gas industry.

The Center of the Natural Gas Universe

Here in Louisiana, a source of pride amongst our oil and gas industry has been the pipeline infrastructure and exporting facilities we possess in the state. This infrastructure has allowed Louisiana to lead the charge as we pursue energy security and haul energy resources across the state, nation, and globe. There is one place, an unassuming Cajun town in south Louisiana, where all transportation aspects intersect and shape the natural gas market as we know it, the Henry Hub.

Named after its location in the Henry hamlet of Erath, Louisiana, the Henry Hub is the center of the natural gas trading universe. The North American gas market relies on this hub to set the “Henry price” that will allow all other natural gas trading points to set their reference price on thousands of commercial contracts. According to a 2012 article by RBN Energy, an average of nearly 400,000 natural gas futures contracts are traded at this hub every day.  Today, the Henry Hub stands as one the best-known known trading post in all of North America.

The Henry Hub, which is owned and operated by Sabine Pipe Line, LLC, a subsidiary of EnLink Midstream, serves as a connecting point for nine interstate and four intrastate pipelines that includes: Gulf South Pipeline, Southern Natural Gas, Natural Gas Pipeline Co. of America, Texas Gas Transmission, Sabine Pipeline, Columbia Gulf Transmission, Transcontinental Gas Pipeline, Trunkline Gas, Jefferson Island Pipeline and Acadian Gas. These pipelines, along with the two compressor stations on site, allow for extreme flexibility and the ability to transport 1.8 billion cubic feet per day (bcf) of natural gas.

For more than a quarter of a century, traders from across the nation have revered the Henry Hub as the ultimate pricing authority to set current and future U.S. natural gas contracts. This hub is the center of natural gas spot trading and virtually every British thermal unit, more often referred to as BTU, that is sold can be linked to the Henry Hub. In one way or another, the Henry Hub touches almost every single aspect of the United States’ natural gas market.

Among other things, the location of the Henry Hub is very advantageous for Louisiana. We are in the midst of what some would say is an LNG revolution. The technology used to produce natural gas has dramatically improved. This was not always the case, as some used to argue that it was too costly to produce. In Louisiana, the Haynesville Shale was once pushed aside because shale gas could be produced in the northeast at a lower cost. Now companies are reexamining that decision because of Louisiana’s access to the Gulf and more importantly, the abundance of pipeline infrastructure.

This vital infrastructure is taking the ability away from OPEC to control the price of the global market. The operation of the Henry Hub, the reemergence of the Hayensville Shale, and the expansion that LNG facilities are experiencing throughout south Louisiana are all contributing toward a brighter future and something we must continue to work towards.