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The first successful oil well in Louisiana was drilled in Jennings in late 1901, spawning an industry that dominated the state for decades. The strike came about nine months after the massive Spindletop find in nearby Beaumont, Texas, set off oil fever throughout the Southwest.

A group of Jefferson Davis Parish businessmen went to Beaumont to recruit oilman W. Scott Heyward to drill a well at the site of a natural gas seep. The plan was to quit after drilling 1,000 feet. But undeterred by nervous investors, Heyward kept going until he was down to his last piece of drill pipe at 1,700 feet. Soon a four-inch geyser spewed from the well and Jennings was in full production by 1902.

By the late 1920s, the oil rush turned to south Louisiana. Tens of thousands of workers descended on the area from across the country, digging pipelines, erecting rigs and servicing wells.

Louisiana production nearly matched that of Texas just before World War II. Refineries sprung up, including the Humble Oil Co. refinery in Baton Rouge, still one of the largest in the world.

After fevered drilling in west and north Louisiana, the shallow marshes of South Louisiana became the center of the nation’s oil production in the 1930s. Oil production on land and in state-controlled waters peaked in 1969. The state is the sixth largest producer today.

To get to the oil fields, canals were dredged through the marshes. Today, those canals are seen as a huge environmental blunder, as the spoil banks interrupt the natural flow of the water and the canals channel grass-killing salt water inland.

Original Article

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By Skip Descant

Advocate business writer

Industrial construction related to Baton Rouge’s petrochemical and area oil and gas industries will drive strong job gains in the Capital Region in the next two years.

The region is expected to gain 4,400 jobs in 2012 and another 3,300 in 2013, according to the 30th annual “Louisiana Economic Outlook: 2012 and 2013,” co-authored by retired LSU economist Loren Scott, a long-time follower of the state’s economy.

The report’s other authors include LSU economics professors James Richardson and John Rhea.

“We have a very positive future, and one of the primary reasons for the boom is the chemical industry,” Scott told a packed ballroom of some of the region’s top business leaders at the Crowne Plaza Hotel on Wednesday.

Baton Rouge — the state’s second-largest metro region after New Orleans — will see the most job gains, according to the report, though the rate of growth is not as strong as some other metro markets in the state.

Scott’s outlook for the Baton Rouge region comes despite a sluggish national economy that has been slow to recover from the recent recession, the longest and deepest recession since the Great Depression.

Statewide, the forecast predicts 13,700 new jobs for Louisiana in 2012 and 14,800 in 2013, for annual annual growth rates of 0.8 percent and 0.9 percent.

Capital expansion and upgrades along the Mississippi River petrochemical corridor, driven by low natural gas prices, are expected to buoy the Baton Rouge region for the next two years, Scott predicts.

Some $3.4 billion in industrial construction has been announced for Baton Rouge, Scott said, adding oil extraction activity related to the Tuscaloosa Marine Shale formation stretching across central Louisiana and into the Feliciana Parishes remains, “the real sleeper for you to watch going forward.”

Other economic watchers agree the Tuscaloosa Shale deposit could pay big dividends to the Louisiana and, especially, Baton Rouge economy.

“The big swing factor that he alludes to, that still is an upside opportunity that has not been fully defined yet, is the Tuscaloosa Marine Shale,” echoed Adam Knapp, president and CEO of the Baton Rouge Area Chamber. “That really won’t be known until, we think, later in the year or maybe early next year.”

Oil and gas activity also is expected to help drive the oil patch and oil service economies of Lafayette and Houma and the petrochemical-related economy in Lake Charles.

The two-year outlook is 5,200 jobs for Lake Charles, 4,400 (4,200 in chart????) for Lafayette and 2,200 for Houma.

Lake Charles is projected to see 5.6 (5.5%???) percent job growth over the next two years, the strongest in the state.

The gains are largely due to increased activity around that region’s 19 chemical plants and two refineries as well as gambling and aircraft repair.

The outlook is less rosy for New Orleans, the state’s largest metro region.

The forecast projects zero job growth next year and a net loss of 600 jobs in 2013.

The reductions are largely due to the closure of the Avondale Shipyard, reduced construction spending — falling $2.5 billion from 2010 — and vanishing BP payments related to damages as a result of the 2010 oil leak.

Some $1.3 billion made its way into the New Orleans economy in the wake of the disaster, the report said.

“I’m certainly significantly more optimistic about the outlook of New Orleans than Dr. Scott,” said Stephen Moret, secretary for the Louisiana Economic Development department.

“There are a lot of positive things happening in that part of the state right now that are going to continue,” he said. “Now, certainly there’s the challenge of Avondale, but there are other projects in the region that I think are going to offset (Avondale).”

Moret said the New Orleans region has seen a noticeable uptick in entrepreneurial activity.

The region is also home to a significant number of jobs in the state’s chemical and energy industries.

“I agree with Dr. Scott’s outlook, in this regard, that the chemical industry prospects are very, very bright for many billions of dollars of new capital projects over the next few years,” Moret said.

“The river corridor continues to be a positive bright spot for both economies,” Knapp added.

In the Shreveport region — the third-largest metro area after Baton Rouge — the economy will continue to add jobs, due in large part to activity related to the Haynesville Shale natural gas deposit, the report said.

The area also has a growing casino gambling economy and defense spending related to Barksdale Air Force Base.

Looming over northwest Louisiana is the closure of the General Motors manufacturing plant in 2012, where some 800 high-wage jobs will disappear.

Both Monroe and Alexandria, the state’s two smallest metros, will add only a few jobs in 2012 and 2013, as activity remains steady but with no large economic gains, the report said.

Original Article

PLANO, Texas, Oct 04, 2011 (BUSINESS WIRE) — Denbury Resources Inc. DNR +4.70% (“Denbury” or the “Company”) today announced that Tracy Evans has resigned from his position as President and Chief Operating Officer. Mr. Evans began his career with Denbury in September 1999 and became President and Chief Operating Officer in June 2009.

Phil Rykhoek, CEO of Denbury, said, “Tracy has made a significant contribution to the strategy and growth of Denbury for more than a decade and the Board and I would like to sincerely thank him for this valuable service. We wish him the best in the future and also appreciate his willingness to remain available to us as a technical consultant for the next several years.”

Tracy Evans said, “In the past 12 years, I have been fortunate to work with a great group of people and together we have been successful at transforming Denbury into the world’s leading CO2 enhanced oil recovery company. There are many great days ahead for Denbury; nonetheless for me, it is time to pursue other opportunities and challenges. I appreciate the opportunity to come to Denbury and the support of all the employees and Board of Directors during my tenure.”

The Company does not plan to immediately name another Chief Operating Officer. The operational aspects of the Company will continue to be managed by the Company’s two operations Senior Vice Presidents, Robert Cornelius, Sr. Vice President of CO2 Operations, and Craig McPherson, Sr. Vice President of Production Operations, with overall oversight responsibility to be assumed by Mr. Rykhoek, CEO of Denbury, who will also assume the title of President of the Company.

The federal organization charged with regulating the oil-and-gas industry says deepwater drilling has returned to pre-moratorium levels, a claim that many local officials and industry workers dispute.

The Obama administration imposed a six-month moratorium on deepwater drilling in the Gulf of Mexico, after the blowout of BP’s Deepwater Horizon well killed 11 workers and leaked 4.9 million barrels of oil into the Gulf.

Even after the drilling freeze was lifted in October 2010, oil industry advocates said the federal regulatory bureaucracy had become stricter and more difficult to navigate, citing the fact that it took another four months before the first deepwater permit was issued.

The rate of new well permit approvals is down, compared with pre-moratorium levels. During the six-month period beginning when the first post-moratorium deepwater permit was issued on Feb. 28, 2011, 15 new wells were granted permits, compared to 30 new well drilling permits approved between February and August 2009.

But Bureau of Ocean Energy Management Regulation and Enforcement spokeswoman Eileen Angelico argues the rate of permitting is up. Once you account for several old permits which were revised and reissued, she says, the total goes up to 41 post-moratorium approvals, which is an increase, compared to 30 new well permits in 2009.

Angelico also cited numbers that indicate deepwater drilling work has returned to normal. During the third week of September 2009, there were 32 deepwater operational rigs in the Gulf of Mexico, she said, and on Monday there were 30.

Chett Chiasson, executive director of Port Fourchon, was incredulous about the bureau’s numbers.

“I cannot believe they said that, to be honest. If it were back to that level, then we’d have the activity,” he said. “All you see is pallets here. Typically, it was so busy, you couldn’t see the slip because the yard was so full.”

Don Briggs, president of the Louisiana Oil and Gas Association, laughed when he heard the numbers. He said that in the entire Gulf of Mexico, drilling levels were half of what they were prior to the BP oil spill, when there were 61 offshore rigs.

“I can’t imagine what they’re talking about,” he said. “Dozens of companies are working on getting those permits, and doing what they can to move the needle forward so they can go back to work.”

As of Aug. 30, the bureau said it still had 17 permits pending for subsea containment wells and that 22 permits had been returned to operators with requests for additional information. The government claimed it had approved 113 deepwater permits for 34 unique containment wells and 45 permits for other actions ranging from water injection wells to blowout preventers.

Scott Angelle, secretary of the Louisiana Department of Natural Resources, who advocated strongly for an end to the moratorium last year, told the Houma-Terrebonne Chamber of Commerce earlier this week that the Obama administration is “biased against the industry.” He later said he doubted the bureau’s claim that drilling has reached pre-moratorium levels, but he did admit “they’re making progress.”

“I don’t have my head in the sand. They need to regulate for environmental and safety concerns. But the regulators have a duty to explain what those new rules mean, and how one goes about navigating them,” he said.

The bureau doesn’t deny that its safety and environmental regulations have grown more strident over the last year. In a statement before Congress on Sept. 13, the bureau’s commissioner, Michael Bromwich, said his staff was working to demystify the new permitting process by meeting with operators and trade associations.

“We have made special efforts to ensure that offshore operators understand the new standards and that they have the tools and information needed to fully comply with those requirements,” he said. “I continue to be disappointed to see politically-motivated, erroneous reports and commentaries, sponsored by various industry associations and groups, criticizing the bureau for allegedly ‘slow-walking’ permits and plans.”

Effective Saturday, the Bureau of Ocean Energy Management Regulation and Enforcement split into two agencies: the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement. The bureau said this move would complete the reorganization of the former Minerals Management Service, which was overhauled in the wake of the Deepwater Horizon disaster. Bromwich said this would further streamline the permitting process, by separating resource management and environmental oversight.

Original Article

The very elements that make the oil and gas industry a leading contributor to Louisiana’s economy are the same components that could keep the state reasonably comfortable in the coming months while other parts of the nation prepare for another financially cold winter.
On the other hand, increased federal regulations could set petroleum and natural gas activity on a slower pace as those who produce, manufacture and consume goods connected to oil and gas take a hard look at the costs and risks involved.

Varied Benefit

Diversity makes the difference, and it is difficult to find in abundance north of the Gulf Coast with the depth and breadth within one single industry that Louisiana has with petroleum and natural gas.

“All you have to do is look at Louisiana’s pipeline structure and realize that Louisiana is absolutely critical to the entire country,” Louisiana Oil and Gas Association President Don Briggs said.

As a leading voice for the business, Briggs explained that natural gas and petroleum should be described more as four industries than two parts of a whole.

Exploration and production might be the most apparent elements recognized by others looking at the Tri-parish region, but with 19 active Louisiana refineries employing more than 8,700 people and processing 15 percent of the nation’s entire raw product into usable fuel and chemical stock, manufacturing becomes an important part of the mix.

Marketing leads to outlets such as service stations to fill motor vehicles and utilities that run and maintain pipelines and carry gas for cooking, heating and manufacturing in homes and businesses. Many electrical processing plants across the nation would not function without natural gas.

Finally, Briggs noted the transportation sector, tankers delivering crude from recovery locations under the sea floor, to a network of pipelines that route a flow of product across the land, to on-land transport vehicles which both consume the product and deliver goods, that have one way or another been made, processed or packaged in part because of petroleum, definitely is part of the mix.

By the Numbers

During May, national gasoline prices at the pump averaged $3.97, but had dropped back to $3.57 per gallon by September, because of a market decline in crude prices. Those same pump price averages are expected to decline to $3.47 a gallon by the end of this month.

In August, the U.S. Energy Information Administration predicted that refinery costs for crude oil would increase to an average of $100 per barrel by the end of 2011, and reach $103 by 2012. During that same month, natural gas inventories were listed at 3 trillion cubic feet. This was below usage levels from the same time one year earlier. That market is expected to tighten by the end of the year.

Last week, the International Energy Agency forecast that global oil consumption will slow during the remainder of the year. The organization reduced its global demand rate estimate by 160,000 barrels a day to 1.04 million barrels and held back on 2012 demand growth estimate by 190,000 barrels per day to 1.42 million barrels per day.

In addition to Louisiana being the third leading producer of natural gas and fourth top petroleum producer in the nation, it is the gateway that receives U.S. delivery of both offshore domestic and imported crude.

Economist Loren Scott estimated that the total direct and indirect impact of oil and gas on Louisiana stands at approximately $65 billion. He explained during an August presentation in Houma that the direct impact of the industry is witnessed through outlets such as salaries, taxes and fees spent directly by the industry. Indirectly, some salaries and expenditures are utilized by oil and gas company employees and service providers to conduct business with other companies.

Louisiana refineries alone spend more than $17 billion a year on wages, taxes and vendor services, according to the Louisiana Mid-Continent Oil and Gas Association. Nearly 48 percent of refinery vendors make more than 25 percent of their income from the refinery business.

Industry Challenged

One of the hardest blows to the oil and gas industry since the April 2010 BP disaster was not that event in itself, but the subsequent drilling moratorium placed on offshore operations by the federal government, a host of new rules and regulations issued by the Bureau of Ocean Energy Management Regulation and Enforcement, and a delay in returning the issuing of permits to pre BP spill levels.

Last week, BOEMRE announced a new offshore safety rule identified as the Safety and Environmental Management Systems rule, identified by industry insiders as just another change to another way to manage safety operations at all oil and gas facilities.

“This proposed rule is the latest regulatory reform we have undertaken to enhance the safety of offshore energy operations,” BOEMRE Director Michael Bromwich said in a printed statement. “The protection of human life and the environment are top priorities for BOEMRE. Implementing a comprehensive program with these additional features will further our goal of avoiding accidents that may result in injuries, fatalities and serious environmental damage.”

The SEMS rule adds to existing requirements for conducting job safety analysis, implements a stop work authority, tells how to identify a work and safety decision maker on site, gives procedures in reporting unsafe work conditions and carries the requirement of third party safety audits. The details are still being sorted through by industry leaders.

“We still don’t know how everybody is going to be able to react to all that stuff that BOEMRE is putting on us,” Briggs said. “And we don’t know about insurance caps.”

Speculation Doubted

The challenge for oil and gas, according to those working in the field, is not the market, but the doubts that have been placed in the minds of many because of federal tightening of activity.

“If you had $100 million, would you want to invest it in the Gulf of Mexico right now?” Briggs asked. “I’d be scared to death to do it. That’s the problem.”

Briggs said that even with the supportive data and diversity that Louisiana has to offer, a cloud of uncertainty will require a change in how business is conducted.

“The permits are being held up,” he said. “We still have complications in shallow water. And those guys are still trying to recover from insurance costs because of hurricanes we had the past five years.”

Prospects Positive

As the leader of LOGA, Briggs said even in the face of uncertainty he remains positive about the future because Louisiana, as such, is an energy business. “I know that is a very simplistic answer, but it is the reality of it all,” he said.

Briggs stressed that oil and gas produced, refined and marketed from Louisiana are critical to the U.S. infrastructure of commerce in its many forms. “It’s not going to be replaced in any or our lifetimes,” he said. “Have we seen some ups and downs? Yes we have, but we’ve got more rigs working across the United States today than we have had in decades. Right now, we are actually going through an upswing.”

Many of the elements that have caused oil and gas to experience ups and downs during the past 17 months are expected to turn in its favor and become the very components that keep this diverse industry stable.

Original Article