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Louisiana’s petrochemical industry is in a renaissance period due to low natural gas prices and major discoveries, including northwest Louisiana’s Haynesville Shale, a chemical industry executive said Wednesday.

Dan Borné, president of the Louisiana Chemical Association and the Louisiana Chemical Industry Alliance, told the Rotary Club of Baton Rouge that the industry was in perilous times just five years ago.

The price of natural gas, a fuel and feedstock for the chemical industry, was high. Many ammonia plants had shut down and Louisiana chemical plants along the Mississippi River and Interstate 10 corridor from Baton Rouge to New Orleans had cut back. Chemical companies found it more advantageous to open and expand overseas.

Employment in the industry had fallen from 34,000 in 1999 to 24,000 only 10 years later.

“We were really in a pickle,” Borné said. “We weren’t really sure where we were gonna end up.”

But Borné credited “the magic of the marketplace,” in the form of falling natural gas prices and development of the Haynesville Shale for bringing the good times back.

Borné said that because the chemical industry uses natural gas the way a bakery uses flour — for everything it makes, essentially — Louisiana’s industry is at its strongest when the price of oil per barrel is seven times the price of natural gas per million British thermal units.

Today, gas is roughly $3 per MMBTUs, while oil is about $90 per barrel — about a 30-to-1 ratio.

“That makes Louisiana incredibly competitive,” he said.

Borné said there is a lot of activity in the chemical industry, which has added 1,000 jobs a year for the last three years. He said Methanex is going to dismantle a methanol plant in Chile and move it to Geismar and is considering another facility in Geismar.

He said Cornerstone Chemical is doing a $30 million feasibility study on building an $800 million ammonia plant in Jefferson Parish.

Even the railroad is expanding in the state — in particular, Union Pacific is laying track.

“When they start laying track, they’re betting on a strong economy,” Borné said.

The industry is going to need thousands of construction workers for expansions and new plants.

“This is an exciting time for our industry,” he said.

But Borné warned that competition remains stiff from China, Malaysia and other Asian nations, not to mention other states like Texas, Pennsylvania, Ohio and West Virginia, which are developing shale plays of their own.

He said fair, consistent regulation; a less litigious legal climate; strong infrastructure; and a well-prepared workforce are keys to competing.

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Red River Sheriff Glen Edward promised more services if elected. But to do that his deputies are getting less in their pay checks.

After taking office July 1, Edwards sliced the salaries of his 48 employees anywhere from $5,000 to $15,000 each, which cut approximately $230,000 from the payroll. The amount of reduction varied depending on the employee’s position and years of service.

The drastic step was needed because the sheriff’s office no longer has the luxury of the extra income the Haynesville Shale was providing. Sales tax revenue in the 2010-11 fiscal year tumbled almost 50 percent from the previous year. And it had already taken a hit from 2009-10.

But Edwards is not the only public official with a close eye to expenses. Gone are the big supplemental checks Red River Parish teachers were accustomed to, and the Red River Parish Police Jury is holding a status quo budget.

“There was a lot of hype during all of that leasing, then when the lease prices started dropping I knew the money would get back to where it used to be,” Police Jury Administrator Jessie David said.

While the money was good, former Sheriff Johnny Ray Normal doled out $20,000 in supplemental payments in 2010 and 30 percent across the board raises in March 2011. Some deputies were taking home anywhere from $65,000 to $87,500.

On Day 1 in office, Edwards unveiled his newly revamped pay scale and laid out the job applications. No one resigned. The salaries remain competitive – with starting pay for a commissioned deputy at $42,480 annually – and include a $600 yearly increase.

The loss of revenue caused Edwards to tweak promises made during the campaign. For example, instead of beefing up patrol shifts from two to four deputies, he’ll have to settle for three. Interviews for those jobs and two additional investigators are under way.

Three new employments fill leadership roles: Rod Scobee, captain over detectives; Greg Moore, lieutenant and assistant warden of the jail; and Troy Murray, lieutenant serving as administrative assistant and public information officer.

The adjustments in the pay scale are allowing Edwards to do the additional hiring while still maintaining a budget almost identical to the one Norman operated under last fiscal year. Revenue is forecast at $6.8 million, compared to $8.1 million last year.

“Sheriff Norman was not reckless. He did not waste money. We have a good safety net. With the money we have set back we could operate three years without any revenue. If we go back to pre-shale (sales tax) figures it will be difficult,” Edwards said. “We’ll take it slow and watch the monthly revenue to make sure we stay in good shape. … I won’t be able to do as much as I wanted but my goal was to not exceed the previous year’s budget even though we’re increasing services.”

Edwards is still on track to move forward with additions to the fleet and add networked laptop computers in all patrol vehicles.

At the School Board office, all travel is being screened and the use of substitutes scrutinized. Some of the 13 openings from resignations and retirements are unfilled, business Director David Jones said.

The school system has been hit with a double-whammy: an almost 50 percent decline in sales tax revenue since last year and a 75 percent cut in state funding over the past three years. “So it’s definitely impacting us,” Jones said.

The state decreased Minimum Foundation Program funding because of the increased wealth the shale development brought over the past four years. MFP dropped from $9.2 million in 2010-11 to $3.3 million for 2012-13. “That’s the lowest it can go – almost,” he said. “We’re paying 25 percent and the state 75 percent. That’s the opposite of what it was. And it’s a two-year delay in getting it back. It will kick back in but it won’t be back to where it was.”

The school district has two one-cent sales taxes, with one solely dedicated to salaries and benefits along with 40 percent of the other penny. So in 2010-11, that meant pay supplements for teachers ranged from $40,000 to $49,000, which was more than the standard pay for beginning teachers.

Supplements decreased by about $15,000 in 2011-12, and they’ll hover around $10,000 this year, Jones said, which is about where they were before the shale pumped up revenue.

The School Board will vote next month on an approximate $22 million general fund budget for 2012-13, compared to $30 million in 2011-12. The budget reflects an almost $3 million deficit that Jones said will be remedied by transferring money out of a $20 million fund balance.

“We did hold on to some money because we knew we would have two dim years until the MFP picks back up. I don’t think we’ll ever be back where we were but hopefully the sales tax won’t be back to where it was either,” Jones said.

The Police Jury doesn’t have too many changes to make in its spending because it “held the line as if we didn’t have it,” Davis said. “I just went by a certain level. If sales tax went up, we put it in savings and bonds. Then we could watch (the sales tax) to see where it would go and stay because I felt it wasn’t going to stay too long. I didn’t overspend; I under spent.”

Fund balances are providing financial cushions in every department. Davis estimates $3 million to $4 million is in the ambulance service reserve account.

By the numbers
 Sales tax collections in Red River Parish have taken a hit due to the slowdown in the Haynesville Shale activity. The breakdown in collections by agency for the past two fiscal years includes:

Agency 2010-11 2011-12
School Board $19.7 M $10.3 M
Police Jury $14.7 M $7.7 M
Sheriff’s office $9.8 M $5.1 M
Coushatta $876,961 $886,920
Hall Summit $41,902 $45,880
Total $45.2M $24.1 M.

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American Right of Way Academy’s CEO, Don Valden says “We are offering two Oil & Gas Training Workshops in order to prepare individuals to become new Right of Way and Land Title Agents to serve the various oil and gas companies drilling in the Eagle Ford Shale play counties, between San Antonio and Corpus Christie, Texas…We have trained hundreds of men and women that have become successful in the Barnett Shale, the Haynesville Shale and the Eagle Ford Shale plays for over six years.”

With the increased need for alternative energy, right of way would be the next opportunity for an Exciting and Lucrative career in the Oil & Gas Shale Plays.

There continues to be a need for trained Right of Way and Land Title agents to assist with acquiring surface right of way for pipelines to carry natural gas and crude oil from individual well sites to existing pipeline infrastructure located and Southeast of San Antonio, Texas. It is anticipated the development of the Eagle Ford Shale will continue for the next twenty to thirty years.

Because of these high demands from the consumer the oil & gas companies are currently drilling for oil and gas near San Antonio, Texas. American Right of Way Academy will hold two more exciting Eagle Ford Shale Training Workshops on Saturday, September 22nd, 2012 at the Crowne Plaza San Antonio Airport Hotel. These Workshops are titled Right of Way Acquisitions Training and Land Title Research Training.

According to local professionals, Right of Way agents and Title agents working in the Energy Industry typically earn between $50,000 and $150,000 annually depending upon experience and personal initiative.

American Right of Way Academy’s P.R. Director, Rebecca Castro says, “Oil & Gas companies depend on a Professional Training Academy such as; ARWA to provide the education by teaching them the art of Right of Way, Negotiations and Land Title Research, where the shale plays are in current demand..Our workshops provide a warm and friendly atmosphere for learning with an interactive environment according to the individuals who have one or more of our offered workshops.”

These classes will be taught by Don Valden, oil & gas industry expert and title expert Charlie Finley on Saturday, September 22nd, 2012 from 8:30am to 12:30pm & 1:30pm to 5:30pm at the Crown Plaza San Antonio Airport Hotel and will provide training in the areas of Pipeline Right of Way Easement Acquisitions, Land Owner Negotiations, Real Estate Evaluation, Plats & Engineering, Route Selections, Pipeline Construction as well as Title Research, Title Runs Sheets, Plat & Deed Records. People who successfully complete the Training Program will receive a Certificate of Completion.

Limited Seating. For more information, call 1-855-737-ARWA or go to the website.

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According to new data out from the U.S Energy Department, natural gas output along the Haynesville Shale in Louisiana and Texas dipped in May, but the area was still producing the highest daily output among all American shale formations. The Haynesville Shale’s average output in May was 6.92 billion cubic feet a day. That’s down from 6.93 bcf in April, but up from 6.43 bcf in May 2011, according to a Bloomberg report on the data. But output in the Marcellus Shale in the Northeastern U.S. appears to be poised to soon outpace the Haynesville. Output along the Marcellus averaged 6.85 bcf a day in May, up 6.4% from the previous month—and more than double the 3.37 bcf daily output recorded in May 2011. Natural-gas production from all American shale formations rose in May on increased supplies from the Marcellus, even after prices fell to a 10-year low during the month. Total output from shale formations in the continental U.S. averaged 25.58 bcf in May—24% higher than a year earlier and up 1.7% from April, according to slides that accompany a presentation the department will make to Congress on Aug. 1. Shale production nationwide has increased 5.7% this year. 

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DEEP IN THE rolling tree-clad hills of Pennsylvania, on a hilltop close to a group of barns and farmhouses, Chevron’s Kikta well pad can be found at the end of a narrow country lane. This is part of the Marcellus shale, 250,000 sq km (96,500 square miles) of gasfields stretching across Pennsylvania, West Virginia and New York state. The drilling rig is 30 metres high, so large that it is hard to imagine how it could have got to the site, but it comes apart and the components fit onto lorries. It sits on an acre of flattened hilltop, along with a million-gallon reservoir to provide the huge quantities of water needed for extracting shale gas. Vehicles and machines are poised for action. Four wells will be drilled from this one pad. The drill will first bore 2,300-2,600 metres (7,500- 8,500 feet) downwards; then the drill bit is coaxed to the horizontal and the drilling continues outwards. Gas will start rising to the wellheads, just a few metres apart, after the next task is performed: hydraulic fracturing, or fracking.

Shale is a hard rock made up of sediments deposited on sea and lake beds hundreds of millions of years ago. To make it give up the gas held within, it needs to be broken up. Along up to 2km of horizontal pipes 14cm wide, holes open out onto the shale. Along small sections, water, fine sand (the “proppant”) and fracking fluid are injected under high pressure.

The fracking fluid, which makes up about 1% of the brew, is a combination of gelling polymers of the sort found in food and cosmetics, to keep the sand suspended in the fluid as it is pumped into the well; chelants (like kettle descaler) to break down the polymer and release the sand when it arrives in the fractured shale; friction reducer (as found in nappies) to keep the flow smooth; and biocide, a disinfectant that stops bacteria gumming up the well.

On reaching the shale, the mixture of water and fracking fluid bursts open the rock and the sand keeps the fractures open, allowing the gas to flow to the surface. The power for the operation is supplied by the engines of a fleet of trucks, so this stage of the process can be noisy. But it takes only five days to complete, and then the shale gas begins to flow and the trucks, portable offices and hoppers are taken to another site to start all over again.

After a little over a year of activity, at least half of which is taken up with planning and obtaining permits, most of the land is reclaimed, apart from a little pipework and a water tank on a small section of the original site. At Elias, a completed Chevron operation, the only sound to disturb the replanted clover meadow is a faint whooshing as gas passes to an underground pipe network. It is the sound of dollars clocking up, and it could go on for 30-50 years. The gas rushes out rapidly in the first year or so before tailing off quite fast to a third of the original flow and gradually declining thereafter.

The remarkable thing about extracting shale gas, says Bruce Niemeyer, Chevron’s regional boss, is “the absence of anything remarkable going on” above the ground. The Marcellus is not what you might expect a gasfield to look like: the views can be spectacularly beautiful. And not only is it good to look at, its gas is also cheap to develop and cheap to produce. The average cost per well is $6m-7m, against $7m-11m in the Haynesville shale, spread across parts of Arkansas, Louisiana and Texas. Moreover, the Marcellus is close to the big markets of the Atlantic coast, so the gas is cheap to transport too. If only every gasfield were like that.

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Several new short films, focusing on our nation’s energy situation, premiered Wednesday night in front of a sold out crowd at Sci-Port in Shreveport. The movies were shot and produced in the Ark-La-Tex.

The energy series came to life after Gregory Kallenburg’s first movie on Haynesville Shale. The movie opened his eyes to the vast difference between the way people think about energy. Kallenburg then produced 10 short films titled

Rational Middle: Energy Series.

“I think right now what we’re trying to get past is the polarized bias that exists in energy today,” said Kallenburg, who directed the series. “There is this one side having insults at the other side. What we’re trying to do is create this middle.”

Kallenburg said it was important for him to bring the movies back to his

hometown. The film was made in Shreveport by residents.

“It’s so easy for all of us to take or granted what’s around us. It’s an intellect in the United States. We flick on our light switch and lights come on. I think that once you’re able to see it’s really a privilege. That’s when you really get interested in the issue.”

The have already released three of the 10 films and Wednesday night they released another three. They expect to have all 10 released by the end of the summer.

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DeSoto Parish sales and use tax collections are down $30.6 million from a year ago, raking in almost $90 million in 2011-12 vs. the all-time high of $120 million in 2010-11, according to the annual report released late last week.

The decline is directly related to the downturn in oil and natural gas activity, DeSoto Sales and Use Tax Commission Administrator Chris Robinette said. “It went down; straight down. No warning,” Robinette said of the drastic slide that started about three months ago.

On the plus side, other facets of the parish’s economy are “holding their own,” Robinette said. Industry and retail businesses are reporting “pretty steady” collections each month, as are the occupancy taxes from the three new hotels that opened a year ago in Mansfield. Car sales also are “OK right now,” even showing a slight increase last month.

The parish’s nine tax-collecting entities have been bracing for the fall since the major oil and natural gas companies earlier this year announced a slowdown in Haynesville Shale drilling as they seek out more lucrative oil plays elsewhere in the nation.

Drilling is not at a complete stop, though. Seven rigs are operating in the parish. A year ago, the number was 48. Two years ago: 60-plus.

It’s those rigs and everything associated with them that boosted DeSoto’s sales taxes to astronomical levels. Knowing this day would come, many of the governing bodies have socked tens of millions of dollars into reserve accounts and trust funds.

The DeSoto School Board, the largest benefactor of sales taxes collected in the parish, already has cut by almost $2 million the amount of money designated for a trust fund for retiree benefits. The reason: “Sales taxes didn’t reach the level that was budgeted,” Business Department Director Steve Stanfield said.

The School Board was able to build the trust fund to $43 million over the past four years. Interest has earned approximately $2.8 million.

Spending will be more heavily scrutinized since the School Board’s sales tax revenue dropped from $72.7 million in 2010-11 to $53.4 million in 2011-12. “We won’t be giving supplements. None will go into the trust fund, and none will go into capital projects,” Stanfield said.

Robinette said he “doesn’t have a clue right now” what to expect from sales tax revenue in the fiscal year that started July 1. “Maybe after a quarter we may come up with an estimate that’s pretty close. Hopefully.”

Leading up to the Haynesville Shale’s influence, DeSoto’s sales tax collections hovered around $20 million annually.

The tax commission is still holding approximately $7 million in escrow from three oil and natural gas companies that made payments in protest over the past year. Some of the funds have been distributed in recent weeks as the companies and commission officials slowly work through the disputed payments.

The following is a breakdown of collections by agency for 2011-12 vs. 2010-11:

• DeSoto Police Jury – $21.4 million, down from $29 million.
• Law Enforcement District – $10.7 million, down from $14.5 million.
• Mansfield – $2.9 million, up from $2.5 million.
• Stonewall – $256,757, down from $284,863.
• Logansport – $281,154, down from $275,838.
• Keachi – $86,324, down from $102,344.
• Grand Cane – $202,787, down from $230,138.
• South Mansfield – $132,505, down from $176,516.

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The domestic energy boom of the last five years also has produced a gusher of documentaries and movies about the industry.

Gregory Kallenberg, who made one of the first documentaries on the natural gas boom, has returned with a series of short films, called the Rational Middle Energy Series, which were introduced last week at the 2012 Aspen Ideas Festival.

The Rational Middle Energy Series is a set of several 10-minute films that discuss the role of energy and the challenges of meeting energy needs, while also addressing  environmental and economic concerns.

“The films are trying to provide balanced information for a public that needs to know about an incredibly important topic,” Kallenberg said in an interview with the Houston Chronicle. “My feeling about our energy future is that it has to be sustainable and affordable and as environmentally friendly as possible. Energy is so entwined in our lives — we need to start discussing how to create an energy future.”

The first three films — “What’s the Rational Middle”?, “Energy 101″ and “What’s At Stake” –  premiered at the Aspen festival and are also available on a public website, www.rationalmiddle.com. Kallenberg expects to launch the next short film on July 11 in Shreveport and then release a new film each week throughout the summer.

The message behind the films, Kallenberg explained, is that the United States stands to gain by trying to depolarize the discussions about energy.

“I think that there is this natural distrust that has always existed between certain elements of the environmental side — that the energy industry will never deliver energy in a fair and responsible way — and the energy industry, which has a natural defensive posture,” Kallenberg said. “Those are the high, shrill voices that are out there, but we are entering this amazing time, where people are sick of it. What the rational middle wants to do is get to place where you understand what the real risks are of an industrial process like hydraulic fracturing.”

Kallenberg said that the inspiration for the series came while he was working on his first energy-related documentary, Haynesville, which explored how the development of the Haynesville shale impacted various people and communities in Louisiana.

“When I started working on Haynesville, I saw that many people were confused and underinformed or misinformed,” Kallenberg said. “One of the things we are trying to do is to back it up and discuss what we consider the real risks. Drilling is an industrial process – it is a disruptive process. There are other things you have to watch for – what you have to be vigilant about is the construction of the well, that the casing is sound, and that some of the chemicals are not spilled on the surface. But if the gas industry does their job right, I am convinced there is a way to make the hydraulic fracturing pretty safe.”

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