LOGA President Don Briggs was interviewed on Fox Business Network on Wednesday.

View the interview here.

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Parish assessors and the oil-and-gas lobby are coming to blows over a new rule that increases the taxable value of horizontal wells. Unlike conventional wells that more or less drill down to access a reservoir, horizontal wells include a stretch of pipe that actually parallels the oil zone, sometimes creating a structure that resembles a capital “L” — meaning a well that drills straight down and then jogs horizontally at the lower part of the bore.

Up until recently, the lateral sections that help define horizontal wells were not taxed by parish assessors. In September, the Louisiana Tax Commission approved a new rule including lateral sections in the subsurface oil and gas property that’s allowed to be assessed. It will officially take effect in 2011.

Last month, Don Briggs, president of the Louisiana Oil and Gas Association, was among the first to fire back by arguing that the new rule will “more than double the established rates in 2010.” Briggs said the change will “stifle” the current $10 billion investment in the Haynesville Shale area, a record-setting natural gas play that relies on new technologies like horizontal drilling.

He also rejected the notion that lateral sections of horizontal wells have an intrinsic value. “As the lateral section is permanently cemented deep below the earth’s surface, the equipment within this section becomes an asset that can no longer be recovered by an oil and gas operator,” Briggs said. “Additionally, some horizontal wells have no casing in the horizontal section, called an open hole. To tax equipment that has no potential for resale and is non-recoverable is unfair and unreasonable.” Briggs further made his argument in his regular opinion column, which is published by outlets statewide.

Not to be outdone, the Louisiana Assessor’s Association circulated an editorial last week taking Briggs to task. Lincoln Parish Assessor Pam Jones, LAA president, called Briggs’ comments “needlessly inflammatory” as well as “downright false or misleading.”

The association’s interpretation of the commission’s new rule is that it raises the 2011 cost values for oil and gas properties by slightly more than 4 percent from 2010. The group adds that next year’s depreciation schedule “effectively wipes out the increase in schedule value for existing properties.” LAA further contends that the lateral segments represent equipment and improvements “that are fully and legally taxable under the laws of the state, as upheld by the Tax Commission in its recent adoption.”

As Briggs counters, however, the proof will be in the future as industry operators figure out ways to remain competitive and profitable with a drilling scheme that has become all too vital for success in Louisiana.

“In order to adequately and economically develop unconventional resource plays such as the Haynesville Shale, oil and gas companies needed to explore new and innovative technological advancements to capture these vital energy resources,” he said. “The process of horizontal drilling became the most effective method to ensure the production of these unconventional oil and gas reserves.”

Original Article

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Although Congress lifted the ban on deepwater drilling in October and drillers are eager to return to work, the government still has not issued any permits. And the news is unlikely to improve much next year. CNNMoney reports:

Even if a few permits come through, analysts say it will be a far cry from the amount issued pre-spill. “We’re not holding our breath for a return to business as usual,” Whitney Stanco, and energy analyst at the Washington Research Group, wrote in a recent research note. “Despite pressure from Gulf state lawmakers and the oil and gas industry, we believe permitting in 2011 will likely be slower than it has been in recent years.”

The moratorium did not affect current oil production in the deepwater Gulf of Mexico, which comes from wells that have already been drilled. Currently, about a quarter of the nation’s five-million-barrel-a-day crude output comes from the deepwater Gulf, according to the Government’s Energy Information Administration. But future output could fall if new wells aren’t drilled. EIA predicts U.S. output will drop by about 170,000 barrels a day in 2011 thanks to the ban.

Part of the problem for the oil companies was figuring out the complexities and intricacies of the new rules, but now drilling requests are increasing, reports the International Energy Agency. A newly released report says, “Oil companies are queuing up to submit requests to recommence drilling, including many of those previously active in the area. Companies remain keen to work in the Gulf of Mexico, seeing it as one of the more profitable regions accessible to them.”

Seven experts from National Academy of Engineering recommended that a blanket moratorium was not the answer, would not significantly reduce the risks of offshore drilling, and would punish the innocent. The ban went forward anyway, punishing deepwater and shallow water drillers. Just two days ago, Politico broke a story in which the Department of Interior inspector general says that the White House re-wrote sections of a report to make it appear that an independent panel of experts supported the drilling moratorium.

The permitorium is causing businesses and families to unnecessarily struggle when job creation is at a premium. With regards to drilling, businesses want to create jobs without money from the taxpayer, yet the government is dragging its feet issuing permits, and the dragging will continue throughout 2011.

It’s sad (but not unexpected) for an Administration so keen on bringing objectiveness and transparency to Washington to fall victim to political pressures.

Original Article