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By Naomi King

HOUMA — Under pressure from residents, Terrebonne Parish officials rejected an effort to loosen a local law so commercial oilfield-waste-disposal wells could locate closer to neighborhoods.

The nine member Terrebonne Parish Council voted unanimously Wednesday to keep its 30-year-old restrictions intact.

Applause and cheers erupted from the more than 200 residents who filled the council’s meeting room and overflowed into the hallway.

Terrebonne’s law says any waste-disposal or storage site must be at least a mile from homes, businesses, schools or other inhabited buildings. Neighboring St. Mary and Lafourche parishes have similar one-mile limits.

State law requires at least a 500-foot buffer for injection wells. The sites pump potentially hazardous water used in oil production thousands of feet underground.

Councilman Johnny Pizzolatto had proposed changing the parish law so it offered the looser 500-foot buffer the state allows.

On Wednesday, he said he changed his mind after about a third of his constituents contacted him about his proposed law change.

“I’ve heard you very loud and clear, and tonight I’m voting ‘no’ on the ordinance,” Pizzolatto said as the crowd applauded.

While some in the audience thanked him for the decision, the 20 residents who spoke after him still presented their reasons for opposing the law change. They listed the potentially harmful substances in produced water, such as benzene, which is known to cause cancer in humans. While a company can have good intentions, accidents happen if trucks or valves leak, said Gordon Landry, a resident of Pineland Drive.

“If anyone doubts that oilfield accidents can cause disaster, I have a short rebuttal to that: BP,” Landry said.

Pizzolatto had said his proposal was related to a Houma company’s plans to drill an injection well in his district on La. 182. Vanguard Vacuum Truck’s affiliated company, Vanguard Environmental, has a injection-well permit application pending with the state Department of Natural Resources for a 2-acre lot of land directly south of its current truck yard, 725 La. 182.

That well is within a mile of neighborhoods, two schools, public parks and the Gulf Intracoastal Waterway, the drinking-water source for the city of Houma and Grand Caillou.

One of the company’s owners, Brigette Gawlick, who attended Wednesday’s meeting, refused to comment afterward after a Courier reporter asked about Vanguard’s plans based on the council’s decision. Company officials have not returned multiple calls to their office since mid-January.

Pizzolatto said Wednesday he previously thought that if the parish didn’t change its law to follow the state’s rules, the parish could face a lawsuit from the company. But, he said, the local law can be upheld in court according to Parish Attorney Courtney Alcock. In a legal memo to Pizzolatto last week, Alcock explains the parish’s right to regulate the placement of waste-disposal businesses as part of land-use planning.

The 20 or so residents who spoke Wednesday presented three petitions opposing the proposed change:

Phyllis Schmidt, a parent of two St. Gregory School students, presented a petition with signatures from 104 homes within a half mile of the proposed Vanguard well.

Andrea Dupree, who helped create a new activist group called Citizens Against Toxic Towns, said an online petition gathered 100 signatures.

Liz Scurto, principal at St. Gregory, had 451 signatures from school parents and church parishioners.

Nolan Bergeron and Allen Bonvillain, two former Terrebonne councilmen who crafted the 1982 local law, said its purpose is to give communities additional protection from oil-waste sites, specifically open pits such as those in Grand Bois.

“Before we adopted this ordinance, we deliberated and gave a lot of consideration on its short- and long-term impact,” Bonvillain said.

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As oil prices rose to around $96 a barrel Wednesday — a two-year high — amid fears that a continued violent power struggle in Libya could disrupt supplies, motorists are feeling the pinch here at the pump even as drilling activity was ramping up in local onshore plays.

According to AAA’s Daily Fuel Gauge Report, the current average price statewide for a gallon of regular gasoline was $3.05, up from $3.03 yesterday, and also up from $3.00 a week ago.

A month ago regular was going for $2.99 a gallon on average, and a year ago it was priced at $2.56.

AAA’s report also showed that drivers in Lafayette were feeling a little lighter in the wallet than those in other cities across Louisiana. While regular was selling for $3.07 a gallon here, or a couple pennies more than the state average, drivers in New Orleans were spending about a nickel less.

The price of gasoline at the Chevron station on the corner of Bertrand Drive and Congress Street reflected the average for Lafayette, but that was no consolation to Richard Cassidy.

“It is terrible. My whole check is going for gas,” said Cassidy, who drives to Lafayette from his home in Erath daily in his SUV to go to work. “It is costing me about $20 a day. I sure hope it comes down soon.”

James Aucoin, who said he drives his car 60 miles each day to get back and forth to work, shared that view.

“I used to be able to fill up my tank for $15, now it is $35. That is way too high. It is really hard,” Aucoin said.

Despite the fact that his car gets close to 30 miles a gallon, Sonny LeBlanc said the higher price of gasoline is causing him to avoid any unnecessary trips.

“Every time it goes up, I drive a little less,” LeBlanc said.

Holding a slightly different view was Erin Blanchard, who is a land contractor for an oil company. “This is what is paying my bills,” Blanchard said.

Still, she said the rapidly rising prices are hurting. She is compensated by her company at the mileage rate set by the Internal Revenue Service, which is currently 51 cents a mile.

As oil prices rose to around $96 a barrel Wednesday — a two-year high — amid fears that a continued violent power struggle in Libya could disrupt supplies, motorists are feeling the pinch here at the pump even as drilling activity was ramping up in local onshore plays.

According to AAA’s Daily Fuel Gauge Report, the current average price statewide for a gallon of regular gasoline was $3.05, up from $3.03 yesterday, and also up from $3.00 a week ago.

A month ago regular was going for $2.99 a gallon on average, and a year ago it was priced at $2.56.

AAA’s report also showed that drivers in Lafayette were feeling a little lighter in the wallet than those in other cities across Louisiana. While regular was selling for $3.07 a gallon here, or a couple pennies more than the state average, drivers in New Orleans were spending about a nickel less.

The price of gasoline at the Chevron station on the corner of Bertrand Drive and Congress Street reflected the average for Lafayette, but that was no consolation to Richard Cassidy.

“It is terrible. My whole check is going for gas,” said Cassidy, who drives to Lafayette from his home in Erath daily in his SUV to go to work. “It is costing me about $20 a day. I sure hope it comes down soon.”

James Aucoin, who said he drives his car 60 miles each day to get back and forth to work, shared that view.

“I used to be able to fill up my tank for $15, now it is $35. That is way too high. It is really hard,” Aucoin said.

Despite the fact that his car gets close to 30 miles a gallon, Sonny LeBlanc said the higher price of gasoline is causing him to avoid any unnecessary trips.

“Every time it goes up, I drive a little less,” LeBlanc said.

Holding a slightly different view was Erin Blanchard, who is a land contractor for an oil company. “This is what is paying my bills,” Blanchard said.

Still, she said the rapidly rising prices are hurting. She is compensated by her company at the mileage rate set by the Internal Revenue Service, which is currently 51 cents a mile.

“That is enough to pay for my gas, but it isn’t enough for oil, tires and all the rest,” Blanchard said. “They need to raise that rate.”

Planning ahead helps company’s bottom line

Richard Zuschlag, chairman of the board and founder of Acadian Cos., has a fleet of 360 ambulances in Lafayette, 300 of which are in regular use. He said higher gasoline prices will hurt the company’s bottom line, but not as much as they did in 2008.

“In 2008 we had a $7 million budget for fuel and we went over budget by $2 million that year,” Zuschlag said. “It crippled us.”

The company found that it couldn’t add a surcharge for its fuel rate. But on the advice of Bill Vidacovich, Acadian’s vice president of vehicle management, the company made a decision to hedge 75 percent of what it pays its supplier for fuel.

“So if the price goes below $2.75 a gallon we pay a hedge, but if it goes over $3.50 a gallon, they pay us,” he said. Acquiring 100 smaller, more fuel-efficient ambulances have also lowered costs, he added.

Increased oil prices will spur more onshore drilling in Louisiana and Texas predicted Don Briggs, president of the Louisiana Oil & Gas Association.

“We’re already starting to see more activity in onshore oil plays,” he said. “But we in this industry have to fill our cars up and buy groceries, and we don’t want to see oil and gas prices that are extravagant. It’s not good for the national economy and that’s not good for the local economy.”

If the chaos in Libya spreads to other bigger energy producers in the region, such as Iran or Saudi Arabia, price fluctuations could become as sharp as those in the 1970s, when an OPEC embargo caused gasoline shortages in the U.S., analysts warned.

Briggs said that reopening drilling in the Gulf of Mexico, which has been at a near standstill in the aftermath of the BP blowout in April 2010, would go a long way toward creating what he calls “energy security” for the United States. “I don’t know of anybody in their wildest imagination saying they feel secure about energy prices knowing that the Middle East is as volatile as it is.”

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By Don Briggs

Since the lifting of the moratorium in early October, industry continues to suffer from a de facto moratorium resulting from the federal government’s inability to permit drilling projects and effectively impose new rules and regulations.

The decision to lift the deepwater drilling ban was certainly a step in the right direction, but action carries more weight than words.

Industry has done its part by meeting the conditions set forth by the BOEMRE.

Those conditions included improvements of industry response plans, availability of spill cleanup resources, and the final plugging of the Macondo well.

Industry has also shown great progress in adhering to new safety and drilling practices in order to obtain drilling permits.

In the end, the unfortunate case is that the federal government is not doing its part. It was only until a month ago that several deepwater drillers obtained permits for new drilling operations in the Gulf.

Since the lifting of the moratorium there has been little progress for shallow-water drillers.

The BOEMRE has effectively shut down shallow-water drilling by refusing to issue new drilling permits. This de facto moratorium hits especially hard on a sector of offshore drilling that is volatile even in the best of times. Shallow-water companies are waiting for months to obtain permits that took days to obtain prior to the spill.

Instead of ensuring a streamlined process for companies to obtain permits, the federal government is now moving to propose increased fees for offshore activities.

If it’s increased revenue they seek, maybe they should promote business rather than chase it away. Last year alone, the industry paid $4 billion in royalties, $245 million in rent and $979 million in lease bids.

The situation in the Gulf of Mexico is creating much uncertainty for offshore companies.

Just last week, Seahawk Drilling, a major offshore drilling company, filed bankruptcy due to the inability to solidify permits and establish future plans and projects.

In my opinion, this is only the beginning of a continued economic decline due to the fallout of the moratorium.

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By TED GRIGGS

When BP’s well blew out in April in the Gulf of Mexico, the repercussions of the disaster eventually spread 75 miles inland, wiping out the company’s natural gas drilling plans in East Baton Rouge Parish and the surrounding area.

“I was real active leasing for about the last four years up until last year right in central Louisiana, here in East Baton Rouge Parish. … My client was BP,” said Ric Bajon, owner of Lloyd Energy in Baton Rouge. “And then the spill occurred.”

In the past five years, Bajon put together more than 800 leases for BP on close to 5,000 acres.

BP is the biggest player in the Tuscaloosa trend, a natural gas formation that stretches across the state’s midsection. In the mid-2000s, BP said it controlled around 80 percent of the trend’s daily production.

Bajon was still putting together leases months after the blowout. But in August, two months after establishing a $20 billion claim fund, BP began trying to sell its Tuscaloosa trend properties. Those properties include leases on thousands of acres in East and West Baton Rouge and Pointe Coupee parishes, and roughly three dozen wells.

In an August interview with UpstreamOnline, a BP official said the company’s Tuscaloosa trend production was around 70 million cubic feet of gas per day.

However, an analyst with IHS Herold estimated that BP’s production was closer to the equivalent of 90 million cubic feet of gas if one included the wells’ condensates, which are liquids similar to light crude.

IHS Herold estimated the properties could fetch $600 million to $800 million.

BP said it hoped to complete the sale of the Louisiana properties by the end of 2010.

BP spokesman Daren Beaudo said Monday the company had nothing new to share regarding the Tuscaloosa trend properties.

Bajon said he has heard a sale is in the works, but until that happens, there isn’t going to be a lot of leasing activity in the trend.

Even before the spill, BP was looking for partners to invest in its Tuscaloosa properties, Bajon said, because a well can cost $25 million to $30 million.

According to BP’s past information, its wells in the Tuscaloosa trend were typically drilled to 18,000 feet to 22,000 feet.

Unlike wells in the Haynesville Shale in northwest Louisana, the Tuscaloosa trend wells are conventional, Bajon said. They don’t go down and then kick out horizontally; the Tuscaloosa trend wells are drilled vertically.

But the high pressure and temperatures in the formation require specialized equipment for drilling and production, Bajon said, and that adds to well costs.

Bajon said with natural gas prices around $4 per thousand cubic feet, or less, there’s some question whether drilling in the Tuscaloosa trend makes economic sense.

“Companies that have gas prospects to drill are having a lot more trouble finding partners,” Bajon said.

Everybody wants to look at oil prospects because the prices are so much higher, he said.

Original Article

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By Naomi King

HOUMA — A statewide movement to better regulate the oil-and-gas industry in the late 1970s led to Terrebonne’s creating its own rules on where oil-waste storage and disposal sites could set up, a law that could now be weakened.

Those in favor of changing the law say the type of disposal in question, commercial injection wells, are safer than other methods and monitored properly by the state.

Others say the law appropriately goes beyond state requirements to ensure residents’ protection in the event of accidents or lax oversight.

Commercial injection wells send saltwater under high pressure into sand or porous formations thousands of feet underground. The waters can come from a variety of sources, such as pipeline testing, cleaning or be brought to the earth’s surface during oil extraction. The water can contain radioactive materials, toxins, chemicals and metals that can pose health risks if not properly handled.

CHANGE TO LOCAL LAW

The Terrebonne Parish Council is considering allowing commercial injection-well sites, which the state calls “Type B facilities,” closer to homes and businesses.

Terrebonne’s waste-disposal law, adopted in 1982, says all commercial oilfield-waste disposal operations must be at least one mile, or 5,280 feet, from any home, school or business. It applies to the disposal or storage of any liquid, solid or gas waste generated or produced during oil-and-gas operations. The council’s proposal would exclude Type B facilities from the local law. They would remain governed by state law, which requires a distance of at least 500 feet from any inhabited building. The change will be voted on immediately after a public hearing set for 6:30 p.m. Wednesday in the Government Tower, 8026 Main St., Houma.

Councilman Johnny Pizzolatto proposed the change, saying injection is the safest method for disposing of oil-waste fluids. When asked last month about the timing of his proposal, Pizzolatto said a company in his district, Vanguard Vacuum Trucks, is seeking the state’s approval to drill a commercial injection well and install 13 above-ground storage tanks on roughly two acres adjacent to its yard on La. 182 in north Houma. Numerous homes, two schools and outdoor recreation fields are within a mile radius.

TERREBONNE’S LAW

Bourg resident Nolan Bergeron traveled the state and testified in Baton Rouge in favor of stricter oil-industry rules in the late 1960s and 1970s after witnessing the effects of open waste pits and other disposal sites. The state’s approval of a waste-disposal facility in Grand Bois, now owned by U.S. Liquids, was also a major reason for the local law, he said.

“We were seeing that if we didn’t have any local control, everything was in the hands of the state,” said Bergeron, who also sat on the Terrebonne Police Jury and Parish Council from 1984 to 1996. “The law that we have in Terrebonne is so a small group of people don’t have to take on the whole world again, so at least we have the local government backing us.”

Bergeron said he created the local law with the help of then-parish attorney Jerry Hermann and the late Police Juror Donald Landry. Hermann was not available for comment Thursday.

While state regulations and laws have changed since that time, the local rule shouldn’t be weakened, Bergeron said.

“How can you go from a mile to 500 feet?” Bergeron said.

State inspectors visit commercial injection wells twice a year and make permit-compliance reviews every five years, said Gary Snellgrove, director of the Department of Natural Resources’s Environmental Division. The sites also have to keep daily logs of the well’s pressures, which are sent monthly to the state. Monitoring the pressures is important because that can indicate if there’s a problem with the casing or if the well is backing up.

“We have a really sound monitoring-and-review process,” Snellgrove said.

Injection wells can be safe provided there’s proper enforcement, transportation and storage of produced water, said Kerry St. Pé, director of the Barataria-Terrebonne National Estuary Program, who also worked in state environmental agencies for decades. But accidents can happen or enforcement measures can fall short, St. Pé said, and he wouldn’t recommend changing Terrebonne’s rule requiring a one-mile buffer.

Concerns over those potential hazards led Bergeron and others to testify against Terrebonne’s only existing commercial injection well, Houma Salt Water Disposal, when it was seeking its state permit in 1982. Its neighbors were also concerned about property values, Bergeron said.

Current neighbors said they haven’t had problems related to the facility at flower Coteau and Bayou Blue roads. Calls to the facility, run by relatives of the original owner, the late U.J. Fournier, were not returned.

“No problems at all,” said Wills Bergeron, 70, a resident of Bayou Blue since before the injection well’s approval.

“I didn’t know what it was,” said Alyssa Provost, 34, whose family has lived for more than four years on Annette Court off Coteau Road. After reading in The Courier that her industrial neighbor was an injection site, the mother of two said she’s concerned.

“We’ve got that and the (Gulf) Intracoastal (Waterway) on the other side,” Provost said, pointing to the nearby industrial yards and ship channel plied by boats and fuel and chemical barges. “You never know what comes through on any of those things.”

The company’s safety record has a few blemishes.

In 1995, a barge exploded in the slip next to the disposal facility days after the barge had off-loaded produced water. Two workers were using a cutting torch on the empty barge, owned by Brian Fournier, according to the report on file with the Department of Environmental Quality. Four years later, lightning struck a tank at the injection site, igniting and burning nine tanks in all, according to the spill report. The fire was allowed to burn and contaminated soils were removed from the site, which has an earthen levee to contain spills.

“There’s really no problem with injecting it,” St. Pé said of produced saltwater, which he said has radium levels higher than those allowed to be discharged from a nuclear power plant. “The problems can occur with the transport. …Barges can explode if there’s gas. Trucks leak. There’s spillage that could happen. The casings for the wells have to be maintained.”

Original Article