www.shreveporttimes.com

July 19, 2009

Haynesville Shale activity boosts DeSoto towns’ coffers

By Vickie Welborn
vwelborn@gannett.com

Keatchie and history are synonymous. The small town in northwest DeSoto promotes its more than century-old churches, homes and cemeteries.

In stark contrast to that image, however, is Town Hall. The cinder block building built in the late 1960s is plain and doesn’t look historic.

Mayor Travis Whitfield and the town aldermen have a goal to change that, and the Haynesville Shale likely is their solution. The town, like all other governing bodies in DeSoto, is reaping the financial benefits of the natural gas formation.

Each taxing entity has seen its revenue shatter previous records. Whether it’s the oil and natural gas companies’ purchases or the newfound wealth of DeSoto residents, dollars flowed over the past year to previously unreachable totals.

Parishwide, sales and use tax revenue collected from July 1, 2008, through June 30 hit $43.4 million — almost $20 million, or 83.7 percent, more than the previous year.

In Keatchie, which had a population of 333 in 2007, the sales tax brought in $30,000 — or 163 percent — more than the $18,419 collected in 2008. The extra is being put aside toward the plan to building a more historic looking Town Hall — and to do some serious ditch cleaning.

“It’s not that much, but it’s just a whole lot more than we’ve been used to getting,” Whitfield said. “We’re still on a fairly limited budget, but we’ve got our eyes on doing this new town hall.”

Town officials haven’t gone as far as getting quotes on the building project but know it could take up to $10,000 to do what they consider necessary ditching to alleviate flooding along some of the town’s rural roads. A heavy downpour made that problem more evident in May, when water backed up throughout the town, Whitfield said.

“We know we don’t have proper drainage. We don’t know how far we can go with the money, but we will start with this one road (Depot Road) that is critical in town. We’re getting estimates on it now.”

The DeSoto Sales and Use Tax Commission classifies collections into five categories of business taxpayers: industry, vehicles, general retail, grocery and oil and natural gas. The last has seen the largest bump, growing from $2.8 million in collections last fiscal year to $7.2 million this year.

And even with the nation’s and state’s tentative economies, DeSoto has been holding its own in the other categories, with vehicles and general retail showing modest growth and industry and grocery seeing only slight declines.

It’s those lagniappe projects that the Haynesville Shale spin-off money is helping to fund throughout the parish.

For the larger taxing agencies such as the DeSoto School Board, the money — $25.8 million this year compared to $13.8 million a year ago — meant the school system absorbed state funding cuts, created trust accounts to cover future employee benefit costs and even spread it among teachers and support staffers through a supplemental paycheck.

Sheriff Rodney Arbuckle also is setting some of his additional money aside to handle future employee insurance costs. The half-cent sales tax is dedicated to employee benefits so deputies have received raises. And the sheriff is able to cover insurance rate increases and the employees’ contributions to their pension fund, which also puts money in their pockets.

The DeSoto Police Jury is shifting some its sales tax bonanza toward much-needed road projects. The portion that goes to the DeSoto Parish Library is enabling its Board of Control to build a branch in Logansport without going to taxpayers or borrowing funds.

The sales tax receipts in the municipalities understandably don’t have as large of an impact as the extra millions collected by parishwide taxing agencies. But even in places such as Stonewall and South Mansfield, the extra thousands of dollars add up.

The small village of Grand Cane is having its own boom. It caught Mayor Clayton Davis by surprise.

“We couldn’t figure out where it was all coming from. And then we finally figured the Haynesville Shale had a lot to do with it. But why?”

There is no direct drilling activity going on in the village’s corporate limits, he noted. But rigs have gone up and down to the north, south, east and west, leaving producing wells along the way.

The seemingly endless convoy of contract workers associated with the drilling also is making its presence known in the village’s two eateries. Dozens of company pickups and 18-wheelers can be found on any given day vying for parking spaces during the noon lunch rush.

Likewise, the extra traffic through the village that straddles U.S. Highway 171 also lures shoppers into Suzanne Brossette’s Village Creations.

The village government is saving its money, Davis said. Grants provide most of the revenue for the major projects that have been undertaken, and he’s likely to keep up that practice.

“We’ve kind of put this on the back burner to see where it all ends before we start spending anything,” Davis said. “We’re trying to be good stewards, you know.

“A little place like this can’t go on a spending frenzy just because we have the money. We’re kind of keeping it in reserve to see how it all plays out.”

In Mansfield, a half-cent sales tax voters approved in January to overhaul the city’s water system is adding to the bottom line. But Mayor Curtis McCoy believes some of the extra money also is generated from the additional spending going on in the city.

The cushion in proceeds means Mansfield will have funds to fall back on for unexpected expenses, he said. “But sales taxes being up 37 percent, that’s wonderful for us. That means we are going to have a good year.

“Any windfall is a good year.”

http://www.shreveporttimes.com/article/20090719/SPECIALPROJECTS02/907190314

shreveporttimes.com

July 14, 2009

Natural gas fuel of immediate future

By Don Briggs

Editor’s note: The Times will periodically run columns by Don Briggs, president of the Louisiana Oil & Gas Association, on The Times’ Business page.

The stage is set for the transformation from an oil-supplied transportation system to a natural gas-supplied transportation system.

A year ago, T. Boone Pickens went on the world stage using his own money campaigning for the “Pickens Plan.” Part of the Pickens Plan was the use of compressed natural gas-powered vehicles to wean the U.S. off the ever-growing imports of foreign oil, which has grown to 70 percent of U.S. consumption at a cost of $400 billion annually.

For decades every U.S. president has been warned of the national security risk of growing oil imports, all the way back to President Truman when imports were at 20 percent. The Energy Information Administration projects continued growth in U.S. oil demand and imports. In another 10 years we could easily be importing 75 percent of our demand at an even greater cost. However, this does not have to happen.

The United States has an abundance of natural gas. Last month the Potential Gas Committee, a natural gas think tank, released a report estimating gas resources in the U.S. have surged by 35 percent due to new technologies that have unlocked domestic supplies of the clean burning fuel. The Potential Gas Committee estimated gas reserves rose to 2.07 quadrillion cubic feet in 2008. The report confirms the Department of Energy estimates of a 100-year supply of natural gas.

It only makes sense that natural gas is the fuel of the future, or should I say the immediate future.

July 7, 2009

Fleming tours natural gas rig

By Drew Pierson
dpierson@gannett.com

Deep in the woods of western Caddo Parish, U.S. Rep. John Fleming, R-Minden, toured a natural gas rig Monday to illustrate what he wanted from it: more regulation.

“You’ve got a lot of people in Washington working very hard to make your energy bills higher,” Fleming said.

Fleming, who is on the Committee on Natural Resources in the U.S. House of Representatives, said his colleagues have started to discuss whether to include hydraulic fracturing, the process by which gas from the Haynesville Shale and elsewhere is tapped, under the Clean Water Act, potentially making much of the activity in northwest Louisiana suddenly subject to federal regulation.

“We just believe it’s unnecessary,” said Kevin McCotter, Chesapeake Energy Corporation’s director of corporate development for northwest Louisiana. “As Congressman Fleming has suggested, it would add time and expense to the drilling process.”

McCotter led Fleming and a small contingent of local media on a tour of one of Chesapeake Energy’s 27 wells on the Haynesville Shale, in the Pines Road area of Caddo Parish. While the gas from that well — and most other area gas wells — comes from deeply buried shale rock, in this case about 11,000 feet under the ground, the pipe itself must first pass through local aquifers, which are only a few hundred feet below the surface.

The state government is the body that regulates such drilling, and it requires layers of concrete casing, among other precautions, to be poured around the drilling shaft as it passes through the water table, with the intention of preventing any leakage into surrounding well water.

Fleming said that to his knowledge there has not been an incident of drinking water being contaminated by the drilling process in 60 years, and said given the track record of the industry, he saw no need for regulation at the federal level. McCotter agreed.

“The industry has been operating successfully for a number of years regulated at the state level,” he said.

So far, McCotter and Fleming said, the discussion about including hydraulic fracturing or “fracking” under the Clean Water Act appears to be just that — discussion.

But if natural gas companies one day do have to get a permit from the Environmental Protection Agency or some other federal entity in addition to getting permits from the state government to drill, that extra cost will likely be passed onto consumers, Fleming said.

“(More regulation) is not only superfluous … my point is these are deliberate attempts to raise the cost of energy,” Fleming said.

http://www.shreveporttimes.com/apps/pbcs.dll/article?AID=2009907070323

July 10, 2009

Caddo sees $6 million boost from shale gas money

By Vickie Welborn vwelborn@gannett.com
and Adam Kealoha Causey acausey@gannett.com

The Caddo Commission this week received more than $6 million in payments from natural gas company Petrohawk Energy.

Some $5.3 million came Thursday in a check for a rental payment, according to Public Works Director Robert Glass. A clause in a parish contract from summer 2008 states Caddo gets money beyond its initial lease bonus if Petrohawk doesn’t drill on some properties during the first year it controls mineral rights.

About $1,025,000 came during the state Mineral Board’s monthly sale Wednesday in Baton Rouge for leasing mineral rights on more than 146 acres in south Caddo.

That brings to about $26 million the amount of money in Caddo’s oil and gas revenue fund, Parish Administrator Woody Wilson said Thursday. That money is being invested in government-secured bonds and certificates. Caddo commissioners have not decided how the money will be spent.

“We are certainly blessed to be able to receive this revenue on behalf of the citizens of Caddo Parish,” Wilson said.

The lease bonus payment was the largest doled out among the parishes in north Louisiana sitting on top of the Haynesville Shale natural gas formation. Four of five leases were sold in Caddo and a smidgen in DeSoto.

Added to the 20 leases sold in south Louisiana parishes brought to $3.2 million the total of bonuses sold. Statewide, the leases covered more than 5,300 acres. The average per-acre lease in the north Louisiana was nearly $4,800, which is more than a few months ago but is in stark contrast to the $27,512 and $30,212 paid per acre to the DeSoto and Caddo governing bodies, respectively, a year ago as the Haynesville Shale leasing frenzy hit its peak. By comparison, lease sales averaged about $532 an acre in 2007 and $252 an acre in 2006.

The big payoff put $28.7 million in the DeSoto Police Jury’s bank account and $17.6 in the Caddo Commission’s.

Petrohawk was behind those big bonus payments that were bid by Theophilus Oil Gas and Land Services, which is the same company that successfully bid the Caddo Commission’s property this week.

Petrohawk is approximately two weeks away from completing two natural gas wells on the DeSoto Police Jury’s airport property. A third rig is within sight, and while it is on private property the Police Jury also owns property in that section, which means it will participate in royalty payments from all three.

The only other local governing entity to get bonus money this week is the Caddo Levee District. Cypress Energy Corp. was the bidder for 147.7 acres, garnering the district $458,056.

The other two tracts in north Louisiana are owned by the state. That includes less than an acre shared between Caddo and DeSoto parishes and a 6-acre plot in Caddo Parish. Matador Resources Co. paid $4,650 for the Caddo-DeSoto lease, and Trinity Exploration and Production paid $40,764 for the Caddo tract.

The city of Mansfield has initially offered a 5-acre tract north of town but it was withdrawn prior to the sale.

http://www.shreveporttimes.com/apps/pbcs.dll/article?AID=2009907100326