-

(The Hayride)

If there is a more left-wing newspaper in Louisiana than the Baton Rouge Advocate we sure haven’t seen it.

In case anybody needs further evidence behind this assertion here’s some, courtesy of the editors on Monday…

Call it the great Haynesville Bust.

Yes, the Haynesville Shale deposits that are America’s new great source of natural gas. In northwestern Louisiana, on land, not offshore in federal waters where the state gets little tax benefit from energy production. But it turns out that Louisiana isn’t getting much tax benefit from the Haynesville play, because of its own decisions. A new state budget downturn is forcing some cuts this holiday season, during the middle of the state’s fiscal year.

How can that be? The Haynesville drilling is booming. Even if natural gas prices are far off their peak, the drilling activity alone — on land, again — should provide for extra money for education, health care and other purposes in the state budget.

“As far as I know, there has been about a thousand wells drilled and not one dry hole,” said Foster Campbell, the Public Service Commission member from the area.

Wait, there’s more.

Alas, as economists reported to the state this week, most of that production is exempt from state taxation. In the 1990s, when horizontal drilling and hydraulic fracturing were new methods, the state passed at the behest of the powerful oil industry a 100 percent tax exemption for the cost of drilling wells. Once the well paid its drilling costs, or two years had elapsed, then the state would start to collect severance taxes. That “incentive” to promote new methods was never examined, apparently, again. It was just kept on the books. Apparently, no one in the state’s brains trust — from Gov. Bobby Jindal on down — ever thought that this deserved discussion. Certainly not before the Haynesville Shale exploded into production.

It is not yet clear from the presentations to the state revenue estimating committee how many or how soon many of those 1,000 wells that Campbell spoke of will start paying tax revenues. Natural gas wells tend to produce on a steep curve early and moderate quickly; maybe the severance tax break will be used up in a year or so. And yes, there are lease payments and other money that the state gets to tax, directly or indirectly, from the shale activity. But the severance taxes will be a fraction of what would have been received from full taxation from the get-go.

And the grand finale…

Ultimately, in the case of budget cuts this week, the fact that the Haynesville Bust occurred is a self-inflicted wound by state politicians in hock to powerful interests.

Does this really merit a response? First, in order to think the Haynesville Shale is a bust you’d have to believe that Louisiana is somehow Cuba or North Korea, where the government is the only important party to be found within our borders. The fact is that thousands and thousands of Louisianans have reaped fortunes from the Haynesville Shale and have paid out in state income and property taxes as a result. The find has produced thousands of jobs for the state, from which income and property taxes have resulted – one company, Chesapeake Energy, has paid $9 million in property taxes alone this year. It has resulted in significant economic growth in an area of the state which for a long time didn’t have any. And it has contributed to cheaper natural gas, which has benefited industry in the state and created or saved a great many jobs.

You have to be either incredibly myopic or far-gone to the left to consider such an economic boon to be a “bust.” But somebody at the Advocate believes this bilge.

Second, Louisiana doesn’t have a revenue problem. Louisiana has a spending problem. Louisiana has had a spending problem for a long time. Even when the state’s revenues were flush thanks to the confiscatory taxation of the Stelly plan and then the post-Katrina bubble, the economy and the population were stagnant because the government crowded the private sector out. That’s why Texas has grown into an economic behemoth the last 15 years and we’ve been stagnant (at least until very recently).

The Haynesville Shale is playing out exactly as it should. It doesn’t exist to provide politicians at the State Capitol with oodles of dead presidents to buy votes with; it exists to benefit the owners of land who lease their property for mineral exploration and the entrepreneurs who take the financial risk to create fuel for our economy. And the workers who facilitate the transfer. As those parties benefit, the government does as well. And Louisiana’s severance tax law was drawn up in order to encourage that exploration, not to create some public-sector windfall when it produced results.

As for the crack about “powerful special interests,” please. Teachers’ unions and the NAACP and university administrators and state workers, who will be howling when there are budget cuts, aren’t “special interests?” If they’re not “powerful,” blame the voters – they’re the ones who chose business and industry over the public sector by running the Democrat Party out of state government. People have decided they’d rather have a growing private sector and a shrinking public sector after decades of the opposite.

A few years ago the Manship family plunked down $70 million for a brand new press and facility at the Advocate, which was a pretty dubious investment given the future of the print newspaper business. They should have added a few bucks for editorial writers who don’t belong in San Francisco or Massachusetts; with this kind of idiocy appearing as the paper’s in-house opinion they’ll soon be printing wedding invitations on that press rather than the fishwrap housing Monday’s editorial.

Original Article

-

(Monroe NewStar)

In a recent Associated Press article titled, “Energy tax refund hits state coffers,” the author suggests a large part of the state’s recent budget deficit and lower outcomes for mineral income are a result of companies paying limited taxes through the horizontal well incentive.

First, projected mineral revenues are down significantly because natural gas prices are at an all-time historic low. The amount of severance tax dollars the state receives is dependent upon the price of the minerals being severed from the state. No one could have predicted the natural gas market fluctuation from $13 per 1,000 cubic feet in 2008 to $3.08 today.

The author notes other taxes are paid to the state through the Haynesville development but does not add any detail as to how large that impact actually is for the state. Natural gas extraction operations in the Haynesville generated more than $40 billion in direct and indirect economic growth between 2008-2010. Over that time, the Haynesville Shale has supported more than 100,000 jobs and provided Louisiana with nearly $1.3 billion in local and state tax revenue. Louisiana receives tax revenue in the form of corporate, sales, ad valorem and personal income taxes.

While Haynesville wells are some of the most expensive to drill in the U.S., the state’s horizontal severance tax investment incentive has made Louisiana a more attractive place to do business. Haynesville production is driving investments that seek natural gas for fuel or as a raw material. Many manufacturers are eyeing Louisiana as a viable place to construct plants that make chemicals, plastics, fertilizer, steel and other products. These businesses, like Sasol and Cheniere Energy Partners, will generate thousands of jobs and billions in tax revenue that will far eclipse the amount received from severance taxes.

The Haynesville development has shielded our state from the global recession by generating significant economic growth, maintaining property values and creating thousands of jobs.

Losing the incentive would make Louisiana less attractive in a tough market, resulting in even less overall tax revenue to the state.

Don Briggs, president,

Louisiana Oil & Gas Association

Baton Rouge

Original Article

-

BY Vickie Welborn

Chesapeake Energy Corp. is paying more than $9 million in property taxes this year to parishes where the Haynesville Shale natural gas exploration and development is taking place.

Of that, $7.3 million is going to DeSoto Parish taxing agencies. The parish is in the heart of the shale play.

The payments are for property, real estate and personal property taxes paid by Chesapeake, the parent company, and its related operations, including Chesapeake Midstream and drilling subsidiary Nomac Drilling LLC.

“Chesapeake is proud to contribute to Louisiana’s economy while also producing a carbon light fuel that cleans our air and builds our nation’s energy security,” Paul Pratt, Chesapeake’s director of corporate development said in a news release. “In every measure of our local economy, whether it’s sales and ad valorem tax receipts, real estate values and direct or indirect employment, the Haynesville Shale economies have been largely insulated from the economic downturn impacting the remainder of the country.”

The tax payments represent millages set by the parish governing bodies, school boards, municipalities, law enforcement, fire districts and any other taxing entities.

In addition to DeSoto, other payments include:

Bienville Parish, $297,155.15

Bossier Parish, $675,043.73

Natchitoches Parish, $173.438.73

Red River Parish, $288,263.36

Sabine Parish, $597,467.04

Webster Parish, $66,981.14

Chesapeake’s check to DeSoto tax collectors is the largest cumulative payment in the parish. Of the top 10 taxpayers, oil and gas companies fill eight spots.

Leading the list as the single largest taxpayer, however, is International Paper Company’s Mansfield Mill, at almost $6.9 million. Cleco Power is eighth with $1.7 million.

Second to Chesapeake is EXCO Operating Co. at $5.1 million, and third is El Paso E&P Company LP at $3.6 million.

Original Article

-

By RICHARD BURGESS

Acadiana bureau

December 27, 2011

LAFAYETTE — Two public fueling stations for natural gas-powered vehicles are set to open next year in Lafayette as part of nitiatives that include new natural gas buses and the conversion of at least 40 city-parish vehicles to run on natural gas.

The efforts come in a wider push by government and industry to develop natural gas as an alternative vehicle fuel that is touted as a cleaner burning and cheaper alternative to gasoline.

City-parish government is planning to open a natural gas fueling station at the public works facility on East University Avenue by next fall, said Tony Tramel, Lafayette city-parish director of traffic and transportation.

A second natural gas fueling station is already under construction off East Verot School Road by Apache Corporation, a Houston-based oil and gas company that has been at the forefront of promoting natural gas as a vehicle fuel.

That fueling station is expected to open by February, said Frank Chapel, who oversees Apache’s natural gas initiative.

He said the company has already built seven natural gas fueling stations in Texas, Oklahoma and New Mexico and is planning nine more, including the one in Lafayette.

The Apache and city-parish government fueling stations will be open to the general public, but the main market is expected to be the large vehicle fleets maintained by government agencies and private industry, particularly the oil-and-gas service companies in and around Lafayette.

“Lafayette has the largest concentration of fleet vehicles in Louisiana,” Chapel said.

He said natural gas could offer those companies an alternative fuel that is on average about 30 percent cheaper than diesel or gasoline.

Lafayette city-parish government has already seen the savings since rolling out five natural gas-powered buses earlier this year, Tramel said.

The new buses had been traveling to Baton Rouge for natural gas before a temporary fueling station was installed in Lafayette this month, he said, but the fuel costs have still been cheaper than the older diesel-powered buses.

“Even driving over there and back, we were still saving money,” Tramel said.

He said city-parish government plans to replace the entire municipal bus fleet with natural gas-fueled buses when the older diesel vehicles are retired in the coming years.

If the entire fleet of about 20 buses all ran on natural gas, the annual fuel cost for the bus service would likely drop from $800,000 a year to less than $600,000 a year, Tramel said.

Fuel savings could be seen in other departments after city-parish government completes a project to convert 40 government vehicles to run off natural gas.

The conversions are expected to be done by April, Tramel said.

The caveat, he said, is that the economics would not work if city-parish government had to pay the up-front costs of converting vehicles, building a new fueling station and retrofitting maintenance facilities to work with natural gas vehicles.

“The only way this works is if we get grant money to make this happen,” Tramel said.

City-parish government has received more than $2.5 million in federal grants and state appropriations for natural gas initiatives, most of which has gone toward the $1.7 million natural gas fueling station.

City-parish government has been approved for an additional $750,000 in federal funds for the conversion of another 65 government vehicles to run on natural gas.

Tramel said the money is available because other cities in the state that had initially applied for federal dollars to pay for natural gas initiatives have not moved quickly enough to meet the deadline for spending the money.

Tramel said it is still uncertain whether Lafayette will be able to take advantage of the windfall, because the additional conversions would probably need to be done by April.

That’s a tight deadline considering that the project must be put out to public bid and that it is difficult to find a company to handle a large volume of natural gas conversions on such short notice, he said.

The two new natural gas fueling stations taking shape in Lafayette will expand the network of existing natural gas stations in the state and could spur more interest in using the alternative fuel, said Louisiana Oil and Gas Association Vice President Gifford Briggs.

He said that the only publicly accessible stations at this time are in Baton Rouge and in the Shreveport/Bossier City area.

LOGA has been active in promoting natural gas as a vehicle fuel, in part to find a new market for a supply of natural gas that has increased dramatically in recent years because new drilling technologies have opened up massive finds like the Haynesville Shale in north Louisiana.

Original Article