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Hurricane Isaac continued to batter the Gulf Coast on Wednesday, causing flooding in Southern Louisiana but no discernible damage to refineries. The storm’s passage left offshore oil and gas platforms largely unscathed.

Isaac, currently a Category 1 hurricane, was centered 40 miles (70 km) southwest of New Orleans as of 9:00 a.m. (1300 GMT), provoking a dangerous storm surge and pelting coastal Louisiana with heavy rain that could prompt flooding through the day, the National Hurricane Center said.

Louisiana’s Plaquemines Parish reported flooding after storm waters flowed over a levee designed to protect the area. The 247,000-barrel-per-day Phillips 66 Alliance refinery, which is located in the parish, reported no damage, but had shut down to brace for the storm.

Isaac lingered on the Gulf Coast, packing winds up to 80 miles (130 km) per hour and raising the specter of further flooding. But the storm’s passage left the Gulf’s offshore oil and gas platforms without reported damages, which could allow production to restart in coming days following sharp cuts in recent days as oil firms evacuated them.

The flooding in coastal Plaquemines “is horrible for the people there, but I do not think this affects any oil and gas infrastructure,” said Kenneth Medlock, an energy expert at Rice University’s Baker Institute in Houston.

“The rigs offshore should be up in about a week,” Medlock said. “The offshore facilities should be OK with regard to major damage … I would not expect a prolonged production outage.”

Offshore production in the U.S. Gulf of Mexico, which accounts for nearly one-fourth of domestic oil production and 7 percent of the nation’s natural gas output, was largely shut down in recent days as crews evacuated rigs to brace for Isaac. U.S. government figures showed 93 percent of offshore Gulf oil and around two-thirds of gas output offline as of Tuesday.

Early Wednesday, U.S. oil futures fell by 1 percent to $95.40 a barrel. U.S. gasoline futures were down 0.2 percent as many traders bet that Isaac would not cause major damage to regional refineries.

“It is expected that oil production in the Gulf of Mexico will quickly return to normal,” said oil analyst Carsten Fritsch of Commerzbank in Frankfurt.

Initial reports on refinery operations in Louisiana did not indicate damage to plants, although energy analysts said that could remain a concern through Wednesday.

Emergency management officials in Garyville, Louisiana, said there were no reports of flooding or damage at Marathon Petroleum Corp’s 490,000 bpd refinery.

Louisiana typically processes around 3 million bpd in its plants, many of which are located in low-lying areas near the coast. The broader Gulf Coast region is home to a refining hub with 7.8 million bpd capacity, or 45 percent of the U.S. total.

As of Tuesday afternoon, about 12 percent, or 936,000 bpd, of Gulf Coast refining capacity was closed down due to Isaac, the U.S. Department of Energy said.

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If you have ever traveled into the Gulf of Mexico or flown over the region, hundreds of oilrigs (also known as oil platforms) can be seen. The Gulf of Mexico is home to one of the world’s largest crude oil supplies, stored deep beneath the great waters. Depending on the type of drilling that is to be done, some of these rigs stand for up to three years.

Through many years of research, the Minerals Management Service discovered a great link between the rigs and the marine community. Fish and aquatic wildlife of many different species make their home deep beneath the water’s surface around the structure of these offshore rigs. Fishermen, scuba divers and the coastal communities surrounding the Gulf of Mexico have long lobbied the oil and gas community and the federal government to not remove the obsolete or non-productive platforms. The fishermen have found that some of the best catches can be found near these rigs. Scuba divers, like the gamesmen, claim that the most colorful dives can be had at these older rig sights due to the structure becoming an artificial reef.

The politics of the day have brought about many different opinions on how to handle these obsolete rigs. Many pieces of legislation have found their way onto the docket for discussion as different interest groups presented different positions.

According to the Bureau of Ocean and Energy Management, talk of a “Rigs-to-Reefs” idea was first publicized in 1983. The Rigs-to-Reefs Program was then adopted by Congress in the National Fishing Enhancement Act of 1984. The Rigs-to-Reefs Policy was officially formalized in 1985 defined as converting obsolete, nonproductive offshore oil and gas structures into designated artificial reefs.

The Rigs-to-Reefs program does two positive things. First, it presents a positive environment that offers an expansion of the natural biological marine life. By leaving these obsolete rigs in the water, a new artificial atmosphere is created for the natural surrounding habitat. This not only is an advantage for the sportsmen, but it helps with the advancement of the natural food chain and the general health of the ecological system.

Second, the Rigs-to-Reef program enhances the fishing community’s daily catch count and can increase the variety of what is available to them. Positive economic development stems from this process. The fishermen come back into the communities, sell their catch to the local groceries or the national chains, and ultimately the catch can end up on your plate at the nearest seafood restaurant.

This discussion about what to do with “old” oilrigs is not a new topic and will not be ending anytime soon. As legislation and federal rules are frequently proposed and voted upon, it will be important for the marine, sportsmen and oil and gas communities to stay informed as to how the laws that are important to them are being challenged. To date, more than 100 oil platforms have been contributed to the Rigs-to-Reefs program by the oil and gas industry.

Don Briggs is president of the Louisiana Oil and Gas Association. His column is published every other Thursday.

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Continuing the partisan divide over energy production policy, the Republican-led House on Wednesday replaced President Barack Obama’s five-year plan for offshore drilling with a far more ambitious proposal to expand exploration in the Atlantic and Pacific oceans. Rep. Charles Boustany, R-Lafayette, chided the president for offering a drilling plan he said cuts off a large majority of offshore sites to exploration, making a mockery, he said, of the president’s proclaimed “all of the above” energy strategy. “Not only will this bill generate a robust drilling plan, creating thousands of new jobs, helping to lower the price at the pump, improve American energy security, and strengthen our national and economic security, but it requires separate environmental reviews for each specific lease sale,” Boustany said. “This is good policy.”

View full sizeGerald Herbert, The Associated Press archiveRep. Charles Boustany, R-Lafayette, said President Barack Obama’s drilling plan would cut off a large majority of offshore sites from exploration. This oil rig and supply vessel were photographed in the Gulf of Mexico off the coast of Louisiana in April 2011.

The Obama plan, unveiled June 28, authorizes 12 lease sales in the Gulf of Mexico and three off the coast of Alaska between 2012 and 2017. The GOP drilling bill, which passed 253-170 with support from 25 Democrats, authorizes 29 lease sales, including areas off the Atlantic coast from Maine to Virginia, the southern coast of California, as well as areas off Alaska and the Gulf Coast.

The bill got the votes of all six Louisiana Republican House members. The delegation’s only Democratic member, Cedric Richmond, D-New Orleans, missed the vote to be with President Barack Obama during his visit to the city Wednesday.

Rep. Ed Markey, D-Mass., called the bill another giveaway to the oil and gas industry, authorizing oil and gas exploration off California and East Coast beaches where local citizens and businesses oppose drilling due to environmental concerns.

“Whatever ExxonMobil wants, whatever Shell wants, whatever BP wants, we’ll do it, even if we know millions of people will just be protesting right from the very beginning — and by the way, without passing one of the reforms from the BP spill commission to make sure that the drilling occurs in a safe fashion,” Markey said.

The White House issued a veto threat, saying the plan would force oil and gas development where it isn’t wanted or environmentally prudent. Senate Democratic leaders said the House bill will never make it through the Senate.

Rep. Steve Scalise, R-Jefferson, said the House bill will produce jobs and lead to less dependence on foreign oil.

“It’s time for President Obama to work with us to develop a long-term plan to promote safe domestic energy production so America can finally reduce our dependence on Middle Eastern oil and increase our energy security,” Scalise said.

Meanwhile, Sen. Mary Landrieu, D-La., joined Sen. Lisa Murkowski, R-Alaska, in offering a Senate bill to expand drilling on the Outer Continental Shelf beyond that called for in the Obama administration’s plan, though not into the most controversial locations included in the House bill.

The bill also would eliminate the $500 million cap on revenue sharing, slated to begin in 2017, for the four-oil producing states and would extend the 37.5 percent share of federal royalty payments to all states that accept energy production, including alternative fuels.

“This legislation would replace the administration’s shortsighted five-year plan for drilling in the OCS, and instead allow the U.S. to tap into the vast oil and gas potential off our coasts,” Landrieu said. “In addition to creating jobs and giving the U.S. economy a much-needed boost through increased energy production revenues, this bill includes revenue sharing for coastal states that produce essential energy resources for our country, something that is lacking in other drilling legislation.”

Sen. David Vitter, R-La., also has introduced legislation to allow for significantly more oil and gas development than authorized by the administration’s five-year plan.

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For the first time since the BP oil spill, millions of acres in the Central Gulf of Mexico are up for grabs during an oil and gas lease sale taking place in New Orleans. In all, 39 million acres of potential oil and gas drilling are for sale, with 48 companies submitting bids on hundreds of tracts – anywhere from three miles to more than 230 miles off the Louisiana coast.

Wednesday’s oil and gas lease sale is the first in the Central Gulf, since the Deepwater Horizon exploded more than two years ago. It is attracting attention and added scrutiny.

“It can be intimidating for a regular person to just walk into a meeting by industry and by government,” said Anne Rolfes, director of the Louisiana Bucket Brigade. “And so, this is a way to train people on how to use their voice.”

The Louisiana Bucket Brigade and others are forming a Citizens’ Monitoring Group to keep tabs on Wednesday’s sale.

“This is a very important event that will affect the public, public property,” said Kristen Evans, who is helping to organize the Citizens’ Monitoring Group. “The very effect of seeing and being seen, reminds government and industry, that they have responsibilities and that they are accountable to the public.”

In addition, several environmental organizations are suing the federal government, in an attempt to stop the sale altogether, because of concerns about potential oil spills.

“We’ve drilled literally thousands and thousands of wells in the Gulf of Mexico and you can ask any fishermen out there how important the infrastructure is out there for fishing,” said Don Briggs, President of the Louisiana Oil and Gas Association. “I expect environmentalists to do what they’re going to do, but it’s unjustified.”

The sales demand is high in the Central Gulf, in part, because Congressman Steve Scalise said there is uncertainty about when the next sale will be.

“Just like in this case, we’re expecting a whole lot of interest because it’s been so long and it’s also coupled by the fact that President Obama has still yet to release his five-year lease sale plan,” said Rep. Scalise, R-Louisiana.

The oil and gas lease sale will take place at the Superdome on Wednesday, beginning at 9 a.m. Secretary of the Interior Ken Salazar will be on hand to announce the results of the sale at noon.

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The 90-day 2012 Louisiana legislative session has come to a close. While most sessions have their ups and downs, this particular session was an all-out battle for the oil and gas industry. Several pieces of legislation were filed that would have been injurious to the industry, and numerous other bills were filed that would benefit the industry and offer new ideas of how to better the future of oil and gas in Louisiana. Overall, the bad bills were killed and the good bills were passed, and the oil and gas industry is pleased at the outcome.

Specifically, the oil and gas industry was able to work with the necessary legislators and stakeholders to pass two bills designed to reduce the backlog of the so-called “legacy lawsuits” and speed up remediation of landowners’ properties. House Bill 618 by Rep. Neal Abramson and Senate Bill 555 by Sen. Robert Adley have now passed out of both chambers and are on their way to the governor’s desk for his signature. State Representative Gordon Dove (R-Houma) was recently quoted in reference to the new legislation as saying, “It allows oil companies to take responsibility for the environmental portion of the site only, clean it up and have that admissible in court.” The Legacy issue has caused, according to a report released by the LSU Center for Energy Studies, the loss of nearly 1,200 new wells in Louisiana, translating to an astonishing $6.8 billion dollars in lost drilling investments, and the forfeiture of over 30,000 jobs.

Also an ultra-deep units bill, HB 504, passed allowing the Department of Natural Resources to consolidate leased lands so operational costs for ultra-deep drilling exceeding 22,000 feet could be shared. This bill enhances drilling in the southern portion of the state of Louisiana allowing for new economic development to take place. Not only will this bill help bring about new jobs directly tied to the drilling itself, but it creates a ripple effect for that region adding jobs to industries such as the hotel, restaurant and transportation sectors.

Other positive pieces of legislation were passed pertaining to hydraulic fracturing, water usage, coastal restoration and alternative fuel for vehicles. Individually, these bills each touch the process of how oil and gas companies conduct their day-to-day activities. If

regulations are set at appropriate levels, the oil and gas industry is able to focus on exploration and production and not be bogged down by the red tape of laws that only hinder operations. When the industry is able to work with the legislators and come to peaceful compromise, we get the opportunity to see our democracy at work.

While this session brought about countless conversations, negotiations, and compromise, the end result was positive for the oil and gas industry.

The next step in the process is for the necessary bills to be signed into law, and the industry move forward in a positive direction, not only for oil and gas, but also for the entire state of Louisiana.

Don Briggs is president of the Louisiana Oil and Gas Association (LOGA).

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The state House of Representatives granted final passage to five local bills Thursday, and now Gov. Bobby Jindal has the choice to veto the proposals or sign them into law.

They range in scope from defining the Houma police chief’s job classification and regulating Bayou Lafourche to expanding oyster research in Grand Isle and permitting ultra-deep drilling.

With the regular session slated to adjourn June 4, there’s a little more than a week for lawmakers to finish their work. That creates a fast-paced environment in the session’s closing days, and Thursday’s action in the House showed how quickly proposed laws can near the proverbial finish line.

House Bill 504 would allow the Department of Natural Resources to consolidate leased lands so operational costs for ultra-deep drilling exceeding 22,000 feet could be shared.

The proposed act by House Natural Resources Chairman Gordon Dove, R-Houma, gives an investor or oil company the right to petition for the creation of a unit of up to 9,000 acres.

It’s a process known as “unitization,” and it allows for the price tag of a costly ultra-deep operation to be shouldered by leaseholders around the drilling site.

If the petition is approved, following public hearings and a waiting period, the petitioner would be allowed to approach the other leaseholders inside the unit about paying for their proportional share of the drilling operations.

Dove’s bill details a payoff model based on what level leaseholders decide to participate, and the Senate inserted protections for landowners that the House agreed to Thursday.

Chris John, president of the Louisiana Mid-Continent Oil and Gas Association, said the legislation essentially updates existing state law in a way that recognizes advancements in drilling technology.

“Increased drilling from ultra-deep exploration will bring a significant economic boost to all of Louisiana, specifically south Louisiana, revitalizing oil and gas activity in the region,” John said.

He added that the resulting projects will generate “thousands of much-needed, well-paying jobs and increase revenues for the state and landowners through severance taxes and royalties.”

Dove is also the sponsor of House Bill 106, which was one of the most hotly debated local issues of the session — a temporary departure from the civil service system for Houma’s police chief.

Terrebonne Parish officials initially removed the police chief from the system in 2009 with permission from the Legislature, but that law is set to expire July 1. Dove’s legislation would extend the provision until July 2016.

While the Terrebonne Parish Council voted unanimously to extend the provision for another four years, the Houma Police Association and others argued against the change.

Under classified service, an employee can only be fired for wrongdoing after a hearing and due process. But in the case of Houma’s police chief, which is an unclassified position, the Terrebonne Parish president can hire and fire at will.

Dove said he wanted the state law to mirror the Parish Charter, which grants the parish president the authority to hire and fire the police chief.

“This is important to the region,” Rep. Joe Harrison, R-Napoleonville, told the House Thursday before it gave final approval.

Harrison, meanwhile, passed his own House Bill 413 through the lower chamber to create a new management structure for one of the most recognizable bayous in the nation.

If Jindal endorses the proposal, members of the Bayou Lafourche Fresh Water District Board could gain the authority to regulate a wide range of activities along the banks of the bayou.

More specifically, the board would have the ability to “regulate the location, construction, or use of any building or structure within the district where such structure or building may interfere with water resources development or integrated coastal protection.”

The state recently spent $20 million on rehabbing the Donaldsonville-to-Belle Rose stretch and has dedicated another $20 million to continue the clean up to the Gulf of Mexico. Harrison said his proposed legislation would help leverage that money.

The bill also transfers engineering responsibility and other tasks from the Department of Transportation and Development to the Coastal Protection and Restoration Authority. In turn, the CPRA would have the final say over any decisions the local board makes in regard to activities that take place along the banks of Bayou Lafourche.

Rep. Truck Gisclair, D-Larose, pushed two of his bills through the final legislative hurdle Thursday as well.

House Bill 317 would authorize the state to begin using salvage materials from construction projects to bolster coastal restoration and protection initiatives. Gisclair said there are a number of places where the proposed law could be beneficial, like in Grand Isle, where pieces of an outdated bridge can be leveraged.

Existing state law already allows the secretary of the Department of Transportation and Development to donate to any political subdivision “salvage recovered from the reconstruction or repair of any state road or bridge, or from any other work performed by the department.”

Gisclair’s bill would allow the same material to be used on coastal protection and restoration projects, as long as state officials deem them of “no salvage value.”

As proposed, the salvaged materials would be donated to the nearest coastal project. Gisclair said the concrete and metal could be used for breakwater materials and other purposes.

House Bill 478 expands the oyster research being conducted by the Louisiana Sea Grant program in conjunction with the Grand Isle Port Commission.

The seafood production research is located in the vicinity of Caminada Pass and focuses on new oyster culture methods, meaning those that don’t involve wild seed or on-bottom production. Gisclair’s proposal seeks to leverage these methods, which have been proven to improve survival rates.

John Supan of the LSU AgCenter, who is heading up the research, said the legislation would expand the research area from 5 acres of water bottoms to about 25 acres. Alternative oyster culture activity, which the research supports, is generally defined as any method of growing oysters that doesn’t involve harvesting directly on reefs or other water bottoms.

Supan’s research shows oyster crops actually grow faster and more successfully when they’re suspended high up in the water column, in part to improve water flow. He said the method is more efficient and faster to harvest. It also speeds up the growth rate to one year, compared to two or three with traditional methods, research shows.

He said that’s especially important to remember in light of recent oil spills, hurricanes and freshwater diversions.

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