-

by Christian Moises, News Editor

After a five-year slide in construction spending, it is tempting to believe the industry will be back to normal sometime in the next five years, Associated General Contractors of America chief economist Ken Simonson said Wednesday in predicting what the next five years will bring for the construction industry.

But it’s more likely some segments will never match their peaks of the past decade, whereas other categories will far exceed past levels, he added.

Ironically Louisiana, and specifically New Orleans, are already ahead of the curve when looking at Simonson’s predictions.

The rapid growth of shale gas drilling in several parts of the country is likely to produce long-lasting changes in the economy and in demand for some types of construction, he said.

Looks like Louisiana is already there after several years of activity around the Shreveport area with the Haynesville Shale discovery and more recent interest in shale play around Baton Rouge.

Simonson said the outlook seems favorable for alternative power construction from various sources, as more states adopt “renewable portfolio standards” that require utilities to produce or buy power from sources that are not carbon-based.

Whether the facilities that are built use wind, solar, geothermal, biomass, hydropower, ocean currents, nuclear or other sources will vary with the region, technological advances, regulatory and tax incentives, he said. But demand for “clean” power of some kind, and for transmission lines to deliver it to customers hundreds of miles, will keep growing as the economy and population expand and more coal-fired plants are shut down.

Ironically, Greater New Orleans Inc. recently launched a Sustainable Industries Initiative to position the region as a hub for businesses that tackle environmental challenges and identified 13 sectors as “strong fits” for southeastern Louisiana.

Demand for medical facilities is likely to intensify, he said. Yet another area the New Orleans area specifically is already venturing into with the new Veterans Affairs hospital going up and the University Medical Center on the horizon.

Many people assume this is a natural result of the aging of baby boomers, he said, but that is a gradual process offset in part by lower demand for obstetric and neonatal facilities. Don’t forget, the New Orleans BioInnovation Center is about to open.

The biggest drivers for health care construction will be the continuing technological evolution of diagnosis and care, Simonson said, along with pressure to reduce costs, he said. Hospitals will need to be rebuilt and more specialized structures erected.

High fuel and transportation costs, growing congestion, and a shift in consumer spending toward Internet purchases are encouraging the construction of optimally located and configured warehouses and fulfillment centers, the economist said.

On the downside, he said, there is unlikely to be enough tax revenue at any level of government to fund prior levels of public construction. As this trend continues, New Orleans retailers are already fighting that by pushing lawmakers to capture Internet sales tax. The shift from brick-and-mortar to Internet retail sales, he said, along with a possible trend toward living closer to central cities, will keep retail construction, especially of big-box stores and shopping centers in far-out suburbs, well below previous peaks.

Contractors who can adapt to the changing markets can thrive in the next five years, Simonson said, but they will have plenty of competition as the overall ratio of construction to gross domestic product may not reach prior peaks.

Unfortunately, that’s something New Orleans is already facing, too.

Original Article

-

By Connie Lewis

The approval of a permit to drill an oil well off the coast of Louisiana by the federal Bureau of Ocean Energy Management, Regulation and Enforcement is significant in more ways than one.

The permit is for BHP Billiton Petroleum Inc. to drill a new developmental well off the state’s shoreline, 120 miles south of Houma at a depth of about 4,230 feet.

It signals a continuation of drilling permits in the Gulf of Mexico. But the announcement by the newly formed bureau Wednesday that it approved its 15th deepwater well triggered yet another announcement the same day.

U.S. Senator David Vitter (R-La.) stated that he will release his hold on Dan Ashe, President Barack Obama’s nominee to head the U.S. Fish and Wildlife Service under the Department of the Interior.

“On Feb. 15, I placed my hold on a top Obama Interior nominee in light of the administration issuing no deepwater exploratory permits,” Vitter said in a statement. “I said I would lift it when we got to 15 permits. We finally reached that mark today and I’m lifting my hold.”

He further stated that the administration’s pace of issuing permits is “anemic” compared with the rate prior to the Deepwater Horizon oil spill. That disastrous event in April 2010 prompted a months long drilling moratorium and though it was lifted, BOEMRE did not start to issue permits until late February.

“I will continue to use every tool available – absolutely every tool – to put Americans back to work in the Gulf,” Vitter said.

It’s also interesting that after issuing its 10th permit a couple months ago, BOEMRE, which replaced the Minerals Management Service, said it would no longer make announcements as new permits were approved. But updated data could be found on its website, gomr.boemre.gov.

Matt Ross, communications director for the Baton Rouge-based Louisiana Oil and Gas Association, said the trade group’s stance is that the agency should issue official announcements on each and every permit and plan it approves.

“It’s important to companies operating in the Gulf of Mexico to know who’s getting permits and to the American public to know oil and gas companies are getting back to business,” Ross said. “The public also needs to know that their government is getting out of the way of using domestic natural resources to help bring down the high cost of gasoline.”

Ross stressed that if the operations of oil and gas companies “are wide open for their review,” then BOEMRE’s activities should also be “transparent.”

“If the government shuts down offshore oil and gas operations for nearly a year, then it should release information on well permits for a year,” he said.

Original Article

-

A Senate committee has approved a Slidell lawmaker’s proposal that would effectively ban the use of dispersants in responding to oil spills in Louisiana waters, which extend three miles into the Gulf of Mexico.

Republican A.G. Crowe said Tuesday he proposed the ban because the federal government hasn’t responded to his requests to switch the oil spill strategy to a less-toxic alternative.

“Why these technologies were not used but yet, in place of that, highly toxic chemicals were used is beyond me,” said Crowe.

His bill, which heads to the Senate floor for debate, would prohibit the use of dispersants unless they are classified as “practically non-toxic” under the U.S. oil spill response plan and break down into carbon dioxide and water.

Dispersants break up oil into smaller particles. They are generally less toxic than oil. Use of the chemicals became a major concern for environmental groups after roughly 1.84 million gallons of the dispersant Corexit were applied in response to last year’s Deepwater Horizon oil spill in the Gulf of Mexico.

Kathy Wascom, a board member for the Louisiana Environmental Action Network, said environmental groups are concerned that there could be unknown consequences from mixing such a large quantity of the dispersant with the oil and other hydrocarbons released in the spill.

“We are currently working with doctors to try to help the people in the communities,” Wascom said.

She pointed to a letter sent by a coalition of Gulf Coast environmental and faith groups pressing the Obama administration to release more information about the environmental and health impacts of the oil spill response.

The letter was sent on May 24 to Lisa Jackson, administrator of the Environmental Protection Agency, and U.S. Health and Human Services Secretary Kathleen Sebelius. The groups ask for “documents containing lists of potential synergistic health effects of exposure to the combination of oil, dispersants, oil and dispersants combined, any natural and/or bioengineered bacteria, and any other chemical or ‘natural’ product used in response to the BP spill.”

Despite these concerns, state and industry officials say the bill could prevent the state from using a necessary strategy.

State environmental official Sam Phillips said that the criteria laid out in the bill would prohibit all dispersants currently on the market. And a chemical industry representative expressed concern that the ban could keep the state from using dispersants in the event of a major oil spill closer to the shore.

Crowe agreed to make changes that would allow some dispersant use while getting as close to non-toxic as possible.

“I think our concerns may be addressed with what Sen. Crowe and (the Department of Environmental Quality) are going to work on between now and the floor,” said Jim Harris, a spokesman for the Louisiana Chemical Association and the Louisiana Ammonia Producers.

The bill was passed by the Senate Environmental Quality Committee with no objections.

Molly Davis of The Associated Press wrote this report.

Original Article

-

To tighten budgets and find relief from rising gasoline prices, it’s time to shift toward natural gas

Louisiana ranks fourth among the states in crude oil and natural gas production, behind Texas, Alaska, and California. However, if we include production from the Outer Continental Shelf (OCS), our state produces more oil and natural gas than any single state in the U.S.

Louisiana ranks first in natural gas processing capacity and second in petroleum refining capacity. Two of the U.S. Strategic Petroleum Reserve’s four storage facilities are located in our state. We also house the Louisiana Offshore Oil Port (LOOP), which is the only port in the U.S. capable of accommodating deepdraft tankers. Louisiana’s Henry Hub is the largest centralized point for natural gas trading in the country and provides vital access to major U.S. markets.

Another facet of our state’s diverse energy portfolio is the liquefied natural gas (LNG) import terminal at Sabine Pass. This terminal is the largest of nine existing import facilities in the U.S. Future plans for the Sabine LNG terminal could result in a new and lucrative addition to Louisiana’s energy infrastructure and could mean great news for our state and nation.

In late 2010, the Department of Energy approved the exportation of LNG from Sabine Pass to 15 countries with which the United States has a free trade agreement on natural gas. Recently this month, the Department of Energy issued conditional authorization to Cheniere Energy’s application to export LNG from its Sabine Pass terminal in Louisiana. Cheniere Energy plans to retrofit its existing import terminal and allow for liquefaction capabilities. The authorization allows Cheniere to export up to 2.2 Bcf/d of natural gas from the facility for a period of 20 years. Construction of the project is set to begin in 2012, and will come online in 2015.

The shale gas revolution sweeping across the nation has led to the creation of thousands of jobs and generated significant tax revenues for local and state governments. In northwest Louisiana, the Haynesville Shale has become the largest producing resource of natural gas in the U.S. and has had an economic impact of $17 billion in 2010 alone.

One thing that the Haynesville and other bustling shale plays have created is a significant supply glut of natural gas. The end result of this prolific natural gas production has been slumping and stagnant natural gas prices.

The authorization of the Sabine LNG export project could mean long-term relief from these low natural gas prices by opening up access to new markets, but more importantly, this project could have a positive impact on our nation’s ballooning foreign trade deficit.

The continual development of the OCS, the Haynesville Shale and the prospective future of the Tuscaloosa Marine Shale mean that Louisiana will play a vital role in determining our nation’s natural gas future. For decades we have tossed around the prospective idea of utilizing clean burning natural gas to fuel our economies into the distant future. At times the discussion has been lofty and hopeful at best. However, unlike decades past, the natural gas industry no longer faces volatile price fluctuations and questionable supply.

Today, all Louisianans are looking for ways to tighten their budgets and find relief from rising gasoline prices. With the hurdles of limited supply, adequate infrastructure, and an unstable price environment no longer issues, it’s time that we all look toward making a shift to natural gas.

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

Original Article

-

By Don Briggs

Columnist

The all-too-familiar rhetoric and political posturing is taking place on Capitol Hill in response to rising oil and gasoline prices. Earlier this month, Senate Democrats summoned CEOs from a number of major oil companies to discuss their growing profits and question whether they still required certain federal tax breaks and deductions for drilling, exploration and production operations.

Corporate executives from ExxonMobil, ConocoPhillips, BP and Shell attended the hearing where they faced a barrage of accusations from Senate Democrats.

Sen. Robert Menendez, D-N.J., authored a bill that would repeal vital tax breaks that America’s oil-and-gas companies utilize to ensure the affordable production of domestic energy. Sen. Menendez claimed, “It’s time for the big five oil companies to give up these subsidies and allow their companies to pay a fair share towards reducing the deficit.” Sen. Richard Blumenthal, D-Conn., commented, “They ought to be making profits fairly, not with the kind of giveaways that they are receiving now.”

In response to the Democrats’ tax proposal, Exxon Mobil CEO Rex Tillerson said that it “would discourage future investment in energy projects in the United States and, therefore, undercut job creation and economic growth.”

Chevron CEO John Watson, made the case that the U.S. oil-and-gas industry already pays its fair share in taxes. He noted that companies do not acquire subsidies but benefit from “long-standing oil-and-gas provisions in the tax code (that) parallel tax treatment of other industries are designed to prevent double taxation.”

Democratic leaders in Washington are misguiding the public by identifying these tax breaks and deductions as subsidies. It’s their intention to create the perception that the U.S. taxpayer is in someway footing the bill for the industry. The simple fact is that these tax breaks and deductions are key components to keeping the cost of operations down and essentially ensuring lower energy prices.

Democratic leaders aren’t telling the public that the end result of removing oil-and-gas tax breaks is to ensure subsidies for another industry. These same leaders calling for the end of these tax breaks intend on turning around and subsidizing the renewable energy market. Today, companies operating in the solar energy industry receive direct subsidies from the federal government that equate to nearly 80 percent of their required start-up capital.

Additionally, leaders in Washington may need to revisit the simple basics of economics. Oil companies reinvest tax breaks into exploration and production, which ultimately generates more tax dollars and increases the production and supply of oil. Eliminating tax breaks would raise the cost of doing business and lead to higher prices.

In response to the proposal, U.S. Sen. David Vitter, R-La., noted, “This is a pretty interesting approach to decreasing the price at the pump since two of the most basic rules of economics are that corporations don’t pay taxes, people do, and that if you tax an activity, you’re going to get less of it, not more.’

What the public wants to know is, “Why are oil prices so high?” The answer is that the declining U.S. dollar, rising demand in global markets and political instability at home and abroad are the results of rising oil prices. Instead of lambasting U.S. oil companies, leaders in Washington may want to look in the mirror. There they will find who is actually the culprit for skyrocketing energy prices.

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

Original Article