-

By Associated Press, Published: August 4

NEW ORLEANS — A liquefied natural gas terminal in Louisiana has been approved to export natural gas.

Federal Energy Department records show that Lake Charles Exports LLC was granted authority on July 22 to export domestic natural gas from its Lake Charles terminal to countries that the U.S. has free trade agreements for gas. The Energy Department is still considering whether to allow exports to countries not covered by the pacts.

Lake Charles Exports LLC is a subsidiary of Houston-based Southern Union Co., a natural gas pipeline company, and BG Group, a Great Britain-based natural gas company.

A spokesman for Southern Union did not return a call for comment Thursday.

The Energy Department decision said Lake Charles Exports could export up to 2 billion cubic feet of natural gas a day for 25 years. The terminal was authorized for imported LNG in the late 1970s and construction was completed in 1981. According to the agency document, the company plans to modify the terminal to handle exports.

In May, Cheniere Energy Partners, based in Houston, was given federal approval to export up to 803 billion cubic feet of gas a year from its Sabine Pass LNG terminal in southwestern Louisiana. It was the first such export permit granted for the lower 48 states.

Cheniere has been approved for exports to countries with and without free-trade agreements with the United States.

Exported gas will be carried on tankers after being chilled to super-low temperatures to become liquefied natural gas, which makes it easier to transport by ship. The terminals were originally built to import LNG, but increased attention has recently shifted to exporting part of the huge gas deposits found in U.S. shale formations.

According to the Energy Department, the United States currently has free trade agreements covering natural gas with Australia, Bahrain, Singapore, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Chile, Morocco, Canada, Mexico, Oman, Peru and Jordan.

Southern Union recently agreed to be acquired by Dallas-based Energy Transfer Equity for $5.7 billion.

Original Article

-

By Robert Ross

Pelican Institute

Shale drilling is creating jobs, slashing natural gas prices and spurring billions in investment for Louisiana

NEW ORLEANS, La. – The American natural gas boom will cause the U.S. to dethrone Russia as the world’s leading supplier of natural gas, and will continue to bring jobs to Louisiana, according to a new study.

The Baker Institute for Public Policy at Rice University study, titled “Shale Gas and U.S. National Security,” claims that Russia’s share of western Europe’s gas market will fall from 27 percent in 2009 to 13 percent by 2040 as a result of rising U.S. shale-gas production, specifically from increased activity at the Haynesville Shale in Louisiana and the Mercellus Shale in Pennsylvania, creating an opportunity for the U.S. to increase exports of natural gas to European and Asian markets.

Over the last 12 months, roughly 48,000 people have been hired in Pennsylvania to work on the Mercellus Shale, and in April, Dow Chemical announced plans to expand several facilities in Louisiana, including construction of a new ethylene plant on the Gulf Coast that will begin operating in 2017, and a new propylene production facility that will open for business by 2015.

The reason Dow chose Louisiana? “Competitively priced ethane and propane feedstocks,” which are used for a wide variety of consumer products, including plastics, fibers and lubricants and are produced through hydraulic fracturing – the process of injecting millions of gallons of water, sand, and chemicals into the ground to crack shale formations

Additionally, liquefied natural gas (LNG) import terminals, such as Cheniere Energy’s Sabine Pass in Louisiana, are seeking permits and funding to build the capacity to export U.S. natural gas.

The study, sponsored by the U.S. Department of Energy, claims European countries are in the process of developing their own shale-gas production, which will further impact the region’s demand for Russian and Iranian imports, and contends shale gas production will reduce Russia’s ability to use its oil and gas wealth as a “tool for political gain.”

Russia is the world’s number one exporter of natural gas, with 187 billion cubic meters exported in 2010, and has the world’s largest proven natural gas reserves.

However, Russia has already begun to accept lower prices for its pipeline supplies to some customers in western Europe, and is now allowing some sales to the region to be indexed to spot gas prices, as opposed to trading on the futures market.

Rice University claims this change in the pricing mechanism signals a “paradigm shift” in Russia’s dominance over Europe’s energy supplies. In addition, countries such as Poland are in the process of producing natural gas on a commercial scale, and according to the U.S. Energy Information Administration, may hold over 5 trillion cm of shale-gas resources.

U.S. Shale Gas Reserves

Amy Myers Jaffe, one of the study’s authors and associate director of the Rice Energy Program, claims that the geopolitical repercussions of expanding U.S. shale-gas production “will be enormous.”

“By increasing alternative supplies to Europe in the form of liquefied natural gas displaced from the US market, the petro-power of Russia, Venezuela and Iran will falter”

The study contradicts the notion that the U.S. natural gas shale revolution is short-lived, and concludes that domestic production will more than quadruple by 2040 from 2010 levels, and will account for more than half of U.S. gas production by 2030.

A decade ago, U.S. companies were investing heavily in LNG import terminals based on the assumption that domestic natural gas production would continue to decline, and that the U.S. would become dependent on imports from Russia, the Middle East, Africa and Australia.

However, with the advancement of horizontal drilling techniques and hydraulic fracturing, energy companies can now economically reach hard to access natural gas reserves.

Not everyone is lauding the new technological advancements. Jackie Savitz of Oceana claims that natural gas is not the panacea our economy has been looking for.

“The fracking process is very destructive, and can lead to groundwater contamination, which is difficult, if not impossible, to fix.”

Robert Bryce, senior fellow at the Manhattan Institute, contends that drinking-water aquifers are separated by as much as two miles, or eight Empire State Buildings, of impenetrable rock from the shales that are being targeted by the fracturing process, and that hydraulic fracturing has been used over a million times in the U.S. over the past 60 years.

Additionally, Matt Ross of the Louisiana Oil and Gas Association claims that there has not been a single instance of ground water contamination reported as a result of hydraulic fracturing across the country.

“There are proper procedures mandated by the industry and state agencies that ensures that the freshwater aquifer is protected throughout the entire process of drilling the well.”

However, Savitz cites a recent Duke University study that shows wells near hydraulic fracturing sites were contaminated with methane gas at levels “much higher than background,” and that levels were “high enough to cause an explosion.”

Hydraulic fracturing has allowed U.S. natural gas production from shale to increase to 20 percent of domestic production today from nearly nothing in 2000. Due to increases in supply, the price of natural gas has plummeted from an average of $7/million British thermal units (Btu) in 2005 to roughly $4/million Btu in 2011.

The International Energy Agency claims that the global supply of natural gas is on the rise as a result of unconventional production, such as hydraulic fracturing, and that over-supply could continue until 2030.

Original Article

-

MANSFIELD — Sales tax collections that had stalled over the past few months shot up again last month, according to a report from the DeSoto Parish Sales and Use Tax Commission.

That said, collections still are higher than this time a year ago. The nine taxing agencies received $12 million in July, compared to a little more than $9 million each of the past two months. In July 2010, collections were $11.4 million, and the year before that, $5.8 million.

Continued development of the Haynesville Shale natural gas play along with spin-off and new businesses get the credit for the inflated figures. “While the net increase has slowed, collections are still up,” schools Superintendent Walter Lee said.

The School Board is the largest benefactor. Its dedicated 2.5-cent sales tax generated almost $7.3 million last month. That’s more than $2 million more than the previous month.

Other receipts include:

# DeSoto Parish Police Jury: $2.9 million, up from $2.2 million.

# DeSoto Parish Sheriff’s Office: $1.4 million, up from $1.1 million.

# Mansfield: $296,584, up from $235,556.

# Stonewall: $25,270, up from $17,604.

# Logansport: $25,828, up from $22,919.

# Grand Cane: $25,222, up from $22,987.

# Keachi: $6,545, up from $4,411.

# South Mansfield: $12,280, down from $15,570.

Original Article

-

Louisiana’s strong ties to the oil industry were exposed to the nation last week when the Associated Press uncovered documents showing just how cozy a relationship the state has with the industry it regulates. The AP found one of every five employees involved with offshore inspections in the Gulf of Mexico were recused from duties because of potential interactions with a friend or family member.

It raises the question: Where else would an agency turn to find employees familiar with the industry?

Matt Ross, communications director for the Louisiana Oil & Gas Association, told Gambit there are little or no alternatives to recruiting from within the same stock. No institutions can provide the same type of on-the-ground experience and familiarity that offshore workers bring to regulatory agencies. “Usually their experience comes from being on the ground and being a part of the industry and understanding proper protocols the industry does in the private sector,” he said.

Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement (or BOEMRE, formerly the Minerals Management Service), told the AP those conflicts of interest exist “because of close-knit communities in which much offshore activity takes place. The issue is not with the conflicts themselves, which have existed for decades, but whether they are identified, addressed and managed.”

For example, in Lafayette 35 percent of inspectors were recused; in Lake Charles, 30 percent were recused. Inspectors’ relationships with offshore companies also extended to informal lunches, hunting and fishing trips and football games, the report said. But Ross said the report is a sign that the “system is working,” despite signs of dysfunction within the state’s regulatory agencies.

“As an industry we certainly support the recusals of individuals that have relationships with companies previously that may somewhere down the line end up regulating those companies,” Ross said. “There’s a similar protocol in a lot of other industries, a lot of other sectors, where individuals have to sit on the sidelines because of the ethical nature of a previous job and what they do currently.” — Alex Woodward

Original Article

-

Jeremy Alford

Capitol Correspondent

Published: Saturday, July 30, 2011 at 10:33 p.m.

Last Modified: Saturday, July 30, 2011 at 10:33 p.m.

BATON ROUGE — The 2011 regular session of the Louisiana Legislature might be over, but the debate over so-called legacy sites isn’t going away.

Legacy sites are essentially oilfields that have been contaminated and require mitigation.

The oil and gas lobby wanted to give the state more control over legacy sites and speed up litigation.

Meanwhile, landowners and trial lawyers wanted to maintain the status quo of allowing the courts to settle major disagreements. This year, the issue went nowhere fast and was voted down during the committee process.

Don Briggs, president of the Louisiana Oil and Gas Association, said he’s already working on a sequel.

“There will be legislation next year,” Briggs told those gathered at Louisiana Energy Day in New Orleans last week. “We’re going to be working with the trial lawyers to find a solution.”

The Legislature first got involved with this touchy issue in 2003 after the state Supreme Court affirmed a $33 million property damage award in Corbello v. Iowa Production.

Some lawmakers saw what they described as a disturbing trend in the judgment — landowners were not required to use the money for clean-up and huge awards that could endanger the business climate.

As a result, the Legislature adopted what was then referred to as the “Corbello bill,” which required the feuding parties to work out their differences with the state Office of Conservation if possible.

Once a plan and monetary figure are brokered under the system, money is placed in a court registry and used solely for clean-up. Anything left over goes back to the oil company.

But the biggest hiccup, from the perspective of the oil-and-gas industry, is that companies that are operating a site that was contaminated by a previous user are being pulled into the system, which is why they’re called “legacy” sites in the first place.

“Companies with nothing at all to do with the damages are getting caught up in this,” Briggs said. “And that’s just not right.”

During the recent session, wealthy, independent landowners like Roy O. Martin of Alexandria, a major supporter of Gov. Bobby Jindal and north Louisiana lumber tycoon, weighed in against the bill sponsored by the oil industry.

Cheron Brylski, a New Orleans-based consultant working with both environmentalists and landowners, said at the time the bill was debated that she feared that 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.

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

“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,” he said in a press release. “Developments like this are going to shut this industry down, as far as Louisiana is concerned.”

Original Article