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In the midst of the worst oil spill in U.S. history, President Obama imposed a moratorium on deepwater oil drilling one year ago this week. What was supposed to be a months-long ban on Gulf of Mexico operations has dragged on for a year in what’s now been dubbed a “permitorium” by critics of the administration.

The Department of Interior justified last year’s moratorium as a necessary step to develop new regulations for offshore drillers. But a year later, those closest to the action in the Gulf of Mexico see it as something different—a deliberate freeze on energy production.

Even after facing criticism about the slow rate of permit approvals, the administration still lags far behind the historical average for new deepwater permits. That’s cause for concern not just for the people of Louisiana and neighboring states. It also has nationwide economic consequences.

Heritage and the Institute for Energy Research recently sent a team to Louisiana to hear directly from the people most impacted by the Obama administration’s policies. Our new video reveals their frustration, particularly with Obama for his words of praise about offshore drilling in Brazil while doing the opposite here at home.

Watch the Video here

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The Louisiana Oil and Gas Association (LOGA) has updated its groundbreaking iPhone application to include a searchable database of LOGA member companies.  Users can now search through public LOGA member information such as physical address, office phone number and website, as well as by company category or state.

It should be noted that employee names and email addresses are NOT included in this searchable database.

The application update includes “Tap to call & map” technology.  This technology allows a user to tap a phone number and immediately initiate a phone call to the respective company. It also enables users to tap the address of the company and immediately open the iPhone map function.

Released in late 2010, LOGA’s “Oil & Gas” app is free to download through the Apple iTunes App Store and includes up-to-date news and opinions specific to the Gulf Coast oil & gas market as well as national and international industry news.   The LOGA Oil & Gas app includes a listing of latest stories as well as an option to mark specific articles as “favorites” and a link to the LOGA events calendar.

You can download the LOGA “Oil & Gas” app by clicking here.

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Wednesday, May 25, 2011

Less than a year after thousands converged in the Cajundome fearing the worst, Lafayette’s economy has taken a turn for the better.

By William Kalec

They came in droves – your angry, your worried, your curious, your concerned — all congregated beneath the Cajundome’s concrete roof, suitable shelter from a falling sky.

On July 21, 2010, a confluence of fear, uncertainty and perceived desperation permeated “The Rally For Economic Survival,” the oil sector’s organized response to the federal moratorium placed on deepwater drilling and exploration after the Deepwater Horizon rig blowout.

A wide-ranging but united mix of 11,000 attendees — from those wearing Half Windsor knots to those whose names were sewn in script on their work shirts — sat for two hours and absorbed essentially the same morbid message delivered in a multitude of ways by headlining politicians and industry leaders.

Then-interim Lt. Gov. Scott Angelle, who emceed the majority of the event, won favor from the crowd by reminding President Obama this moratorium hurts “the Cheramies, and the Colliers, and the Dupuys, and the Robins, and the Boudreauxs, and the Thibodeauxs” much more than it did the BP stockholders — claiming the decision to cease deepwater activity was “crippling the middle class of the Gulf Coast.”

Don Briggs, president of the Louisiana Oil and Gas Association, predicted the moratorium would be a financial disaster for Louisiana. Gov. Bobby Jindal insisted Louisiana residents didn’t want to collect unemployment or cash BP checks. Plaquemines Parish President Billy Nungesser told the audience the moratorium would turn “Louisiana into a state of bankrupt businesses.”

Nearly a year later, the dire issues these men spoke so passionately about persist. While the moratorium and equally potent “defacto moratorium” have given way to the slow trickle of deepwater permits, the total of active rigs in the deep and shallow waters of the Gulf of Mexico on April 15 was 26 – half the number of that date a year ago.

“You could hold the rally, again, today, because it’s just as relevant today as it was then,” Briggs says. “The message hasn’t changed: If we shut down the rigs in the Gulf of Mexico that are sitting out there waiting to go to work, you’ll see a tremendous impact. The story of our industry in the Gulf of Mexico isn’t over.

“Those companies…They’re still sitting out there with full crews, sitting over well sites, waiting for those permits,” Briggs continues. “There’s no way they’ll wait much longer. Time is running short.”

All of which makes Lafayette’s immunity to the certain economic pestilence these political and petroleum prophets forecasted last summer so perplexing.

According to numbers released by the Louisiana Workforce Commission, unemployment in Lafayette Parish as of January 2011, 6.6 percent, pretty much mirrored statistics of the previous year, 6.5 percent. Of those employed, 22.8 percent held jobs in wealth-creating industries, a mark substantially above the state average of 17.9 percent. In that same time period, the total nonfarm employment in Lafayette rose by 2,700 jobs, and retail sales in the first two months of 2011 were up 8.64 percent compared to January and February last year (March came in 11 percent higher than March 2010). That statistical sunshine was bolstered in April when Halliburton announced its plans to build a $65 million manufacturing facility in north Lafayette that is predicted to create 500 new jobs.

Even Angelle, who has returned to his job as secretary of the Louisiana Department of Natural Resources, has changed his tune considerably. In an April 21 press release, Angelle said, “Encouraging developments indicate a resurgence of investment and interest in energy exploration in South Louisiana,” specifically noting McMoRan Exploration’s announcement of strong results from a new deep natural gas well in St. Mary Parish.

“I’m not prepared to declare a boom in sight, like some people, but I am prepared to say I’m optimistic,” says Gregg Gothreaux, president and CEO of the Lafayette Economic Development Authority. “It always seems like every three to four months there’s some world event that affects us one way or another. So, barring the quarterly world event changing this, it just seems like our economy will continue to pick up.”

So, then, what happened? It seems almost paradoxical that an economic resurgence could coincide with a stunted recovery in offshore operations. What of the crippling of the middle class, the plight of the Robins and the Thibodeauxs, the financial disaster that would turn Louisiana into a state of bankrupt businesses?

Why isn’t the sky falling?

“I don’t know,” says LSU professor emeritus of economics Loren Scott, who to his credit has recently refused to cower from the Chicken Little outlook he shouted last summer and fall. “What’s going in Lafayette with the employment numbers right now is a great puzzle for me. I mean, I’ve been watching the Louisiana economy for years and this, well, this just befuddles me.”

The answers, at this point anyway, aren’t really answers as much as they are hypotheses — guesses to explain what Scott and others believe to be the unexplainable.

Some speak of the strength and resiliency of oil and gas companies, those willing to continue reaching into their deep pockets and stomach the financial blow for the hope that if/when their deepwater permits are issued or re-issued, they’ll still possess the personnel to capitalize on the escalating price of oil.

That companies would literally stand idle, Briggs says, awaiting a cue from the federal government illustrates the vast economic potential found in deepwater exploration and, conversely, validates some of the regional panic initially caused by the moratorium.

“We were thinking 20,000 people [would lose their jobs], and those numbers weren’t real,” Briggs says. “I didn’t realize, and I don’t think anybody realized, that our companies would keep those rigs out there waiting. We didn’t think of the fact that when you have that number of billions of dollars invested that companies would sit there at a cost of $400,000-plus a day and keep those rigs sitting there waiting to get those permits.”

Others note that in hindsight, as weird as this sounds, the timing of the moratorium couldn’t have been better, as it permitted many service and equipment companies to audible and shift focus to the sharp rise in active U.S. land rigs. While operations in the Gulf continue to crawl, the number of land rigs operating in the last week of April 2011 was at 1,772, compared to 1,429 one year earlier.

The enormity of the Haynesville Shale deposit in northwest Louisiana offered ample refuge for Acadiana-based service and equipment companies throughout the moratorium — a viable safety net that simply wasn’t an option had this crisis happened five years ago. Briggs couldn’t emphasize enough the importance of the Haynesville development, going as far as saying that “Louisiana’s economy in the oil and gas sector has been jacked up by the billions of dollars poured into the Haynesville Shale.”

“The Haynesville Shale,” Scott says, “in technical economic terms is a ‘Big Mother.’”

Therefore, redirecting attention toward that project was a logical next-step for many companies with the means to shift crew locations. For instance, when the moratorium was implemented, Frank’s Casing Crew of Lafayette, a provider of tubular equipment and personnel, generated 30 percent of its business from deepwater exploration, according to vice president of corporate sales Leonard Castille. With that revenue source temporarily dried up, Frank’s repositioned its service sector on jobs in the Haynesville Shale project in addition to sites in Pennsylvania, North Dakota and parts of south and east Texas. A few employees were sent to Brazil and Africa.

Castille says Frank’s did not lay off anyone because of the moratorium, nor was it forced to cut back on “shop” hours because its manufacturing team still produced parts for other areas of the country and world.

“Your first concern was, ‘Where are you going to put these people?’” Castille says. “It wasn’t cutting costs. We’ve tightened our belts before, but we’ve never gone to the extremes that a lot of public companies do ­— cutting people for fear the bottom line might not look good on Wall Street.”

Local branches of large service companies, such as Schlumberger, took a similar course of action — relocating its workforce rather than laying it off. Jennifer Smith was hired by Schlumberger as a field engineer and moved to Lafayette shortly after her 2008 college graduation from Penn State University. Up until the moratorium, the majority of Smith’s service took place on offshore rigs located in the Gulf of Mexico.

Smith, like several of her co-workers, was re-stationed internationally — in Smith’s case, Brazil — but decided to keep paying rent on her then-dormant River Ranch apartment, thus keeping a portion of her income local while she continued her employment overseas.

“When they redeployed — when they sent people to the shale [sites] and sent people overseas, those people don’t move,” Gothreaux says. “They come home and spend their money. I think that is what has bolstered this economy, and I think that will work for awhile.

“But you don’t know how long people are willing to hang on,” Gothreaux continues. “Whether that means hang on to an employee, or whether how long an employee is willing to live in Lafayette or live in Acadiana and work in another country before they decide to go someplace more convenient.

“So the only solution for the future of our workforce, our economy and our country is for the Gulf of Mexico to be viable.”

On the Cajundome concourse, tucked away from the panicked pageantry of the arena floor, the voice of the people was not only heard but recorded.

Standing in front of a simple camera-tripod setup and behind a canopy sporting the Rally’s logo and the phrase “Citizens Speak Out,” attendees were encouraged to articulate the hardships the moratorium brought forth today and those it might bring forth tomorrow. Those recordings — most of which are archived on the Rally’s website — stand as video time capsules of the region’s concern. Almost every emotion is represented. Some pleaded. Some reasoned. Some warned of impending doom. Some fathers stood next to sons, husbands next to wives, creating a powerful visual. Some bargained. Some got tough. Some got smart-alecky.

When it was Nancy Marcotte’s chance to speak, she told of the moratorium’s immediate effect on her business, Keller Williams Realty of Acadiana. In July 2010, the agency’s monthly volume in sales was more than $1 million off compared to the same month a year earlier. The average price of the homes Keller Williams sold in July 2010 was $161,988. In July 2009, the average price was $186,134.

“Let them keep drilling so that people can keep their jobs,” Marcotte said into the camera lens at the Rally. “Jobs are important right now. I think that’s the focus of the country. Let’s not lose thousands and thousands more.”

Luckily for Marcotte, those July 2010 statistics were a mere anomaly and not a forecast of things to come. In fact, Keller Williams sold 11 more homes in 2010 than it did in 2009, and the average price of those homes was $176,727 compared to $155,799. Looking back, Marcotte isn’t sure if Keller Williams’ summer dip was caused by the moratorium, the end of the $8,000 tax credit to first-time homebuyers or a combination of both.

Sales in 2011 are pretty much on par with sales through the first four months of 2010, but the average price of the homes sold — $191,444 — continues to increase.

“The more expensive homes are starting to move again,” Marcotte says. “Not in a crazy, flying-off-the-shelf kind of way, but at a better pace than they have been in the past one to two years….I’m fortunate to say the [housing] market has done a lot better than the outlook appeared at the time of the moratorium.”

Andre Comeaux, senior vice president of Regions Insurance in Lafayette, also chose to speak in front of the camera that day, urging the government to lift the moratorium and not bog down the economic recovery with unneeded additional regulation of offshore drilling. Because the commission insurance agents make is directly connected to the cost of insurance premiums, and those premiums are directly connected to the client’s payroll and revenue, Comeaux estimates Regions experienced a 15 to 20 percent drop in commissions collected from transportation and energy service clients.

“It was significant, and it’d be more significant if that’s all we did. But we do more,” Comeaux says. “So we stuck it out. And sticking it out entails hitting the pavement, [beating] the doors to find more business to make up for what we lost with the clients we service being on hiatus.”

Several economists believe the escalating price of oil, and the pressure it is putting on the government to expedite the green-lighting of offshore permits, should correct any financial dips experienced by Regions and other businesses indirectly burdened by the moratorium. An increase in offshore rig count would also give service and equipment companies the desirable dilemma of calling back relocated employees or hiring skilled labor from other parts of the country or world.

“Can we cover the work? That’s our concern right now if deepwater work picks up,” Castille says. “We’re short on people, short on equipment.

“But that’s a very good problem to have. We’ll definitely adjust.”

From an economic standpoint, Scott says, an increase in activity in the Gulf would likely kick-start the stunted growth experienced along the Highway 90 corridor from Houma to Lafayette. Perhaps, Scotts says, the ultimate effect of the moratorium was that unemployment figures and economic productivity remained relatively stagnant during a period when oil fetched more than $100 a barrel. Still, he admits, it’s a far less harrowing outcome than the one he and many others foresaw last summer, which has led many to wonder if all the doom and gloom was justified.

“Well, apparently not,” Scott says. “Because, to be honest with you, I was part of the fear-mongering. We thought Lafayette would be absolutely losing jobs this year and next year.

“And, it turns out, it’s exactly the opposite.”

Original Article

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By Steve Landry, Gazette Reporter

President Barack Obama said last week he’d be fine with more offshore drilling, but his speech apparently did not impress people down near the Gulf of Mexico. We spoke to Don Briggs, president of the Louisiana Oil and Gas Association, and the man did not refrain from his disdain for what he considered Obama’s duplicitous message.

Acadiana Gazette: President Obama seemed to reverse his tack by saying he’d be OK with more offshore drilling. What are your initial thoughts on that?

Don Briggs: Do I believe that? No, I do not.

AG: So, you think he was just spouting political rhetoric.

Briggs: Exactly. That’s exactly what he’s spouting. That’s another of the president’s talk of, “I love oil and gas but I want to take away all incentives.” He’s already said this before. He’s all for this and all for that, but what has he done for the industry? Right now you can’t drill on the east coast and the west coast or up in Alaska. The Gulf has 29 rigs working now. This man has crippled this industry. Spare me. It’s very difficult for us to buy anything this man is saying for the oil-and-gas industry. That’s the reality.

AG: So, 29 rigs is the below the norm?

Briggs: A year ago we had 69 rigs working in the Gulf, and we were waiting for eight more. We’re not back to work in the Gulf of Mexico.

AG: This is just leading to uncertainty for companies to come here?

Briggs: He has created unprecedented uncertainty in the domestic oil-and-gas industry. They actually need higher energy prices to justify all the calls for alternative energy and biofuels and all that.

AG: We’ll have alternative fuels one day, right? I mean, oil is a finite resource.

Briggs: It is finite, but we also have natural gas, which is clean-burning — and he says that. He wants to criticize hydraulic fracturing (for oilshale drilling), but it was just studied by the EPA a few years ago. I’ve got statements from the heads of EPA and they say there are no contamination problems. He’s full of rhetoric. Gas prices are high, so what do you say? You say you want to drill more. And yet there’s nothing this administration is saying — or doing — that leads us to believe they want to promote the domestic oil-and-gas industry.

Original Article

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By Jeremy Alford

“What started out as little land and little oil has become Big Land and Big Oil.”

— Rep. Sam Jones, D-Franklin

Our story ends with a rare defeat for Big Oil. Actually, it was more than that. By a vote of 10-7, the House Natural Resources Committee “deferred” the so-called legacy lawsuit bill, which Big Oil desperately wanted to pass.

To fully grasp the import of the committee’s action, one must recognize that the layman’s definition of “deferred” differs radically from that of lawmakers. In the legislative lexicon, deferring a bill in committee is the same as spiking it, effectively killing it even before it comes to an official vote.

Technically, Big Oil has a duplicate Senate bill, which can be taken up and navigated back to the House, forging potential compromises along the way in the hope of a different outcome before the same House committee next time — but the odds are stacked heavily against success.

“There’s discussions going in all ways right now,” Gifford Briggs, vice president of the Louisiana Oil and Gas Association (LOGA), said several hours after the May 18 vote. “But I think the general consensus is we brought the issue to the committee and lawmakers have acted. I think at this point it’s highly unlikely that we’ll proceed again.”

With that, Louisiana’s top lobbyists gave a collective sigh — not of relief, but of what might have been. And then eyebrows started to arch and ears perked up as the weekend break gave way to chatter about a resurrected bill. This version, which could be tied to yet one more duplicate bill pending in the House, would focus on lessening liability for oil companies while fast-tracking cleanup. The sequel could surface as soon as this week.

So what’s all the fuss about?

Legacy sites are old oilfields that have been contaminated by previous owners or operators, but which still require mitigation, which is expensive. The issue pitted landowners against oil companies, and it drew a Who’s Who of government consultants and lobbyists to the committee room for last week’s showdown. If a bomb had gone off in the room, the bulk of the Legislature’s institutional knowledge would have gone with it.

The battle lines were clear: Big Oil wanted to give a state agency (as opposed to judges) more control over legacy sites in the name of speeding up litigation; Big Land wanted to maintain the status quo, which has courts deciding legacy cases. The status quo itself was the subject of a legislative war several years ago — and the result of an uneasy compromise. Now Big Oil wants to change the rules … again.

While the issue went nowhere in committee last week, it served as a case study for what can happen at the Capitol during a very brief period of time when there’s a lot of money at stake. House Bill 563 by Rep. Page Cortez, R-Lafayette, was filed prior to the session’s start, and it flew largely under the radar until this month.

By the second weekend in May, just days before last week’s hearing, the energy lobbyists were scrambling to rewrite the bill to satisfy large (read: influential) landowners. “At this point I don’t even know what it’s going to look like,” said one lobbyist involved in the drafting process. Another, on the dole for landowners, suggested, “That’s exactly how they want it.”

As the weekend rewrites proceeded, robo-calls in opposition to the bill were unleashed in House districts represented by committee members. Energy lobbyists responded quickly — and so forcefully that LOGA officials, among others, apologized for their full-court press.

LOGA alone has 15 paid lobbyists representing its interests, according to the Louisiana Ethics Administration Program. They include top-tier lobbying firms like Courson Nickel and Harris, DeVille and Associates. In carrying out their jobs, the lobbyists mostly spoke with lawmakers about the need to have the state wrest control of the legacy cases from the courts and speed litigation along. “(LOGA) cannot go around and educate every single lawmaker on this very complex issue,” Briggs said of his lobbying phalanx. “We needed help.”

Not to be outdone, the Louisiana Landowners Association lined up their own ringers, such as the New Orleans law firm of Adams and Reese. Mix in the lobbying teams of the Louisiana Farm Bureau, the state Timber Association and the Forestry Association, and the big picture comes into focus. Now consider how much each lobbyist earns in salary and how much he or she spends over lunch or dinner with their intended targets — not to mention research and outreach — and the cost of bringing the bill easily goes to six figures.

What’s at stake, however, is much more. Plaintiff attorneys and law firms representing Big Oil have made millions pursuing and defending legacy lawsuits, and if an oil company or contractor loses such a suit, the damages can be huge.

Wealthy, independent landowners like Roy O. Martin of Alexandria, a big supporter of Gov. Bobby Jindal and all-around lumber tycoon, weighed in personally against Big Oil. He not only wrote personal letters to members of the House Natural Resources Committee, but he also recruited Jimmy Faircloth, Jindal’s former executive counsel, to present the opposition’s case.

With statewide elections just five months away, most lawmakers wanted nothing to do with the issue.

Still, if there was a tipping point, it may have been Faircloth’s offensive. With the state’s largest landowners sitting not far behind him (including the Louisiana Landowners Association, which represents some 3 million acres in the state), Faircloth was able to accuse the oil lobby of lying about having landowners at the table during the weekend drafting session. “I categorically disagree,” he said. “I won’t go any further than that. You can draw your own conclusions to what I’m saying.”

Faircloth also recounted a story about being cornered by an oil lobbyist outside the House chamber unexpectedly and being presented with a bill and being asked on the spot to agree with it. “I couldn’t believe that,” he added.

Despite facing the likes of LOGA, which mostly represents independent oil companies, and the Louisiana Association of Business and Industry (LABI), opponents built a strong case for their claim that the Louisiana Department of Natural Resources (DNR) doesn’t have the resources to take over the claims process from the courts.

That case was built without the help of DNR, by the way. In fact, some lawmakers looked irritated when DNR refused to take a position. “Are they capable of doing this job or not? I don’t want to create another layer of bureaucracy with this,” said Rep. Joe Harrison, R-Napoleonville. “I don’t understand that. I’ve never been neutral in my life.”

Environmentalists were responsible for their own fancy footwork. Cheron Brylski, a New Orleans-based consultant working with environmentalists and landowners, says she feared the proposed legislation would take away the right of claimants to go to court. Brylski linked the legacy site bill to last year’s BP oil disaster, arguing that it could potentially affect claimants’ rights against BP or companies like it. While it’s highly unlikely the legislation would have affected anything related to the spill, the claim gained traction when officials from BP showed up last week to endorse the bill.

If nothing else, lawmakers may have taken note and realized how easily the situation could have been spun against them in the fall elections. “Big Oil and Gas hire the best lawyers and lobbyists money can buy,” says Brylski, who also oversaw an email campaign that informed opponents in real time as to which lawmakers were wavering. “They don’t want you to hire any lawyer. Ever. Period.”

On the other side of the issue, David Russell, president of McGowan Working Partners, which is domiciled in Mississippi but has offices in Roanoke, Va., said he deserves protection, too.

“Obtaining proper insurance to cover non-sudden or accidental (legacy) pollution liability for oilfield operations is not difficult to get,” Russell said. “It’s impossible. After 15 years of providing coverage, my company’s provider declined pollution liability insurance coverage simply due to the legacy lawsuit issues in the state. Developments like this are going to shut this industry down, as far as Louisiana is concerned.”

While the legacy debate, at least last week’s incarnation, was a case study in how much money can be dumped behind (and against) a proposed bill in a short period of time, it also underscored why the public is so often oblivious to such issues. Only a sprinkling of mainstream media outlets covered the committee hearing, and barely any peeled back the layers of the story.

It makes one wonder how many other accounts of power politics are slipping through the cracks — but that’s an entirely different kind of legacy.

Original Article

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WASHINGTON — The Department of Energy gave Cheniere Energy tentative approval Friday to export liquefied natural gas from its Sabine Pass LNG Terminal in Cameron Parish, a project Louisiana lawmakers say will create thousands of construction and production jobs.

“Cheniere Energy’s plan to transform its existing terminal into a facility that can both import and export liquefied natural gas is a precedent-setting breakthrough that will bring substantial economic benefits to southwest Louisiana,” said Sen. Mary Landrieu, D-La.

After the Energy Department announced its approval, shares of Cheniere, based in Houston, rose 31 percent.

Energy Department officials said the approval is subject to final environmental and regulatory approval, though some industry experts suggest that it is a mere formality.

“Our long-term economic strength depends on safely and responsibility harnessing America’s domestic energy resources while developing new and innovative clean energy technologies,” Energy Secretary Steven Chu said. “This project reflects a broad ‘all of the above’ approach that will put Americans to work producing the energy the world needs.”

Rep. Charles Boustany, R-Lafayette, praised the Obama administration’s approval of the Cheniere project, but continued to criticize its overall energy policies.

“This development is critical for Southwest Louisiana’s economy, and gives the United States a boost on the global energy stage,” Boustany said. “With so much uncertainty from the administration and no clear energy strategy for this country, this approval proves the United States has an abundance of natural resources to be utilized in both foreign and domestic markets.”

Original Article