Don Briggs

President, Louisiana Oil & Gas Association

The Deepwater Horizon well that has been leaking oil into the Gulf for 87 days has been capped. The state of Louisiana is buzzing with cautious optimism.  We may be cautiously celebrating, but we are optimistic nonetheless.

We are optimistic because there is no oil flowing from the well. We are optimistic because we can now begin to assess the damage and begin the cleanup in earnest. We are optimistic because we know that scientific processes will work, and we can foresee an end to this disaster.

We applaud the efforts of the engineers and operators who have been tirelessly at work to stop the flow of oil from this well. Thank you for helping us take the first step toward recovery.

Company officials and the government continue to work together and review data to ensure the safety of the capping process, and the process of drilling two relief wells has started again.

This is the sort of process that should have been the focus from the beginning of the disaster – a cooperative endeavor by BP, government and the industry to regulate and ensure the safety of all drilling operations for the workers on the rigs, the environment and the people of the Gulf coast.

The next step toward recovery should be the lifting of the six-month moratorium on deepwater drilling in the Gulf of Mexico. If there ever were a reason to lift the ban on drilling, it should be the proof that scientific processes work.

We must not continue to punish the workers and economy of the state of Louisiana for the mistakes of one company.

Come join thousands of concerned citizens in Lafayette on Wednesday, July 21 to urge the federal government to lift the moratorium that is crippling Louisiana’s economic activity.

The Rally For Economic Survival, held from 11 AM to 1 PM in the Cajundome, will give a united voice to all Louisiana citizens impacted by the federal ban on deepwater drilling in the Gulf of Mexico and send a message to the Obama administration to lift the moratorium for Louisiana’s jobs and America’s energy future.

The continuing moratorium on offshore drilling affects many more people than the 320,000 working jobs in Louisiana supported by the oil and gas industry. As a result, it also affects far more than the 58,000 Louisianans working in extraction, refining and pipeline jobs.

Louisiana’s oil and gas industry has more than a $70 billion annual impact. The industry supports more than 15 percent of household income in the state – $12.7 billion annually.

That means the economic standstill caused by the moratorium affects everyone – from a restaurant server in Lafayette whose tips suffer because the customers aren’t coming, to the caterer in Houma whose client base has vanished, to the small trucking company in Fourchon with nothing to transport.

Each day the moratorium continues, $34.8 million is out of commerce. That means people have less money to utilize services, to dine out, to patronize shops, to purchase goods and to support our small businesses.

This moratorium affects us all. Prolonging the moratorium only serves to hurt Louisiana’s economy and workers.

The Interior Department has announced a new, narrower moratorium on offshore drilling. This time, it hopes the ban will pass legal muster. The oil and gas industry, Louisiana Gov. Bobby Jindal and others have come out against the restriction. They say that like the first one, it will force many rigs to leave and workers to lose their jobs.

Copyright © 2010 National Public Radio®. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

MICHELE NORRIS, host:

Drilling operations in the Gulf of Mexico now have a new suspension order to contend with. Following court rejection of its previous moratorium, the Department of Interior yesterday released a new, differently worded version. The oil and gas industry, Louisiana Governor Bobby Jindal and others, have come out against a six-month restriction. They say that it, like the first one, will force many rigs to leave and lead workers to lose their jobs.

NPR’s Yuki Noguchi reports.

YUKI NOGUCHI: The oil and gas industry’s victory in the courts appears short lived. Though last month an appeals court upheld the lower court decision, calling the government’s first attempt arbitrary and unjustified, the industry has not put affected workers back on the job.

Don Briggs is president of the Louisiana Oil and Gas Association. Briggs says none of the affected rigs started cranking again, knowing the government was going to make a fresh run at shutting them down.

Mr. DON BRIGGS (President, Louisiana Oil and Gas Association): We just call it a de facto moratorium. And that’s the reality of it. And companies are continuing their exodus. They’re making plans to leave.

NOGUCHI: He says rigs and contractors are leaving for Brazil, Ethiopia, Angola. And Briggs says this time he doesn’t think the industry will fight its case in court.

Mr. BRIGGS: Oh, no. I don’t think we got the grounds now. We knew we did when we read the first one. But the way this thing is written, it’s written to take care of the problems that they had in the court.

NOGUCHI: Briggs says in the town where he lives, Lafayette, Louisiana, more than a third of the economy depends on his industry. Talking about the impact this might have there, he sounds dejected.

Mr. BRIGGS: I feel very sad about it all because I have been – I’ve been listening to the heartaches of people so much and to their fear. It truly gets to you after a while.

Mr. LAURENT SPENSON (Operations Manager, Marlin Energy): This industry has been everything to me from the time I was in college.

NOGUCHI: Laurent Spenson(ph) is an operations manager for Marlin Energy. He says his exploration and production business is now operating at 30 percent its normal capacity. And he’s watching contractors and experts Marlin depends on start to pack their bags and leave the area.

Mr. SPENSON: The Gulf of Mexico has become a politically unstable place to operate.

NOGUCHI: But in the face of criticism, the government defends its decision. Michael Bromwich heads the newly created Bureau of Ocean Energy Management. Speaking at a hearing in New Orleans, Bromwich said the Gulf simply could not handle another spill.

Mr. MICHAEL BROMWICH (Director, Bureau of Ocean Energy Management): And so long as the spill is out there, has not been contained and that the oil spill response capabilities are all being consumed by the current spill, the secretary concluded that it is simply too risky to allow deepwater drilling to continue.

NOGUCHI: He said the moratorium will last through November unless Interior Department Secretary Ken Salazar decides to (unintelligible) and proceed safely.

Ms. LOIS EPSTEIN (Engineering Consultant): I question whether there is going to be the dire consequences in terms of the economy of the region that the industry is claiming.

NOGUCHI: Lois Epstein is an engineering consultant, who along with others, helped draft an early set of recommendations to the administration. Many of the other contributors did not endorse the blanket moratorium on drilling and felt their opinions were misrepresented.

But Epstein says she endorses a temporary halt. Drilling is a relatively small part of the overall industry. Tens of thousands of existing rigs continue pumping oil in the Gulf. And she says until the root cause of BP’s spill is understood, it would be irresponsible not to stop new drilling.

Original Article

Don Briggs, Louisiana Oil & Gas Association

www.loga.la

As we all know, the White House and U.S. Department of Interior instituted a six-month moratorium on deepwater drilling in the Gulf of Mexico.  The ramifications of this action will in no doubt have a devastating effect on Louisiana’s families, businesses, and economies.  The directive from this Administration to shut down all new deepwater drilling operations in the Gulf Coast region has little to do about safety and everything to do about politics.

On April 30, 2010, ten days after the tragic sinking of the Deepwater Horizon rig, President Obama directed Secretary of the Interior Ken Salazar to conduct a thorough review of the accident.  The intention of the report was to recommend any precautions and new technologies that should be required to improve safety of offshore oil and gas operations.  In order to provide the President with an adequate report, a seven member expert panel was assembled to give advice and recommendations for these increased safety measures.

On May 27, 2010, Secretary Salazar submitted his report to the President noting that the panel of seven experts reviewed his recommendations, which included a six-month moratorium on all-new deepwater drilling.  In response to Salazar’s report, members of the expert panel are now expressing that the Administration has falsely implied that they supported any moratorium on offshore drilling.  In fact, members of the panel stated that the decision to place the moratorium was added after the final review and not agreed to by the parties involved.  In a letter directed to the White House, members of the panel made it clear that although they agreed with the detailed recommendations in the report, in no means did they support a moratorium.  The letter noted, “A blanket moratorium is not the answer. It will not measurably reduce risk further and it will have a lasting impact on the nation’s economy which may be greater than that of the oil spill.”

Using the typical bait-and-switch maneuver, it’s obvious that it was the President’s intention to implement the moratorium regardless of the results of the report.  Simply put, the report served as cover for a decision the President was already prepared to make.  This action is just another example of this Administration’s continual deception of the American people.

It is disingenuous for President Obama to come to Louisiana showing intentions of goodwill while at the same time imposing sanctions that will cost thousands of good paying jobs. In a time of significant unemployment across the country, the President has chosen his political agenda over the viability of over 100,000 direct and indirect American jobs.

A simple question, “How can we reduce risk and increase safety while continuing to supply our country with necessary energy?”  Why not have routine safety inspection of each rig and authorize the shutting down of any rig that is not in compliance with inspection standards?  Or better yet, why not have an inspector present on each rig during the drilling process?  These are just a few examples of rational approaches to solving this complex issue.

In support of expert panel, the illogical decision to shut down deepwater drilling will not reduce risk and will result in a devastating economic impact far worse than that of the spill.  The President’s action will in no doubt curtail future production and lead to increased importation of foreign sources of oil.

Don Briggs – Louisiana Oil & Gas Association -

In response to the disaster created by the tragic sinking of the Deep Water Horizon drilling rig off the coast of Louisiana, President Obama has decided to cancel the August offshore drilling lease sale in the Western Gulf and off the coast of Virginia.  In addition, companies producing our nation’s necessary energy needs in the Gulf of Mexico will be forced to suspend action on all deepwater exploratory operations. This week a White House official was quoted as saying, “The president’s eyes have been opened” in regards to the risks of offshore drilling.  Maybe some of the following information will open the President’s eyes to what his actions will mean not only for the oil and gas industry but also the entire U.S. economy.

In the Gulf of Mexico there are roughly 48 rigs drilling or under other operations.  Twenty three of the 48 rigs in operation are located in waters at depths greater than 500 feet.  Of these 23 rigs, 22 of them are located in deepwater of 1,000 feet or greater.  The President’s actions will undoubtedly lead to the shutting down of all deepwater drilling activities and nearly half of the exploration operations in the Gulf.  This Administration forgets that any action to stifle developments in the Gulf of Mexico could negatively affect almost 32,000 American jobs.  It has been estimated that as many as 6,000 to 8,000 offshore workers could be laid off in response to the moratorium put in place by the President.

Former president of Shell Oil and founder of Citizens for Affordable Energy, John Hofmeister noted that the President is most certainly overreacting.  He notes that shutting down operations in the Gulf before investigators can determine what led to the sinking of the rig that caused the spill is “akin to shutting down the airlines because there’s an anomalous aircraft accident.”  In the early stages of Washington’s response to the BP spill, Senator Mary Landrieu (D-LA) defended offshore drilling by comparing this disaster to the Challenger space shuttle explosion.  The Louisiana Senator stated, “What we did not do is end the space program. We did not stop launching. We did not stop exploring. We have to find a way to make sure it never happens again.”

Independent producers operating in the Gulf of Mexico will in no doubt cease operational activity.  What the President and bureaucrats in Washington fail to realize is that oil and gas operations in the Gulf of Mexico do not solely consist of exploration and production companies.  A large majority of those employed in the region consists of all the support activity from catering to transportation to mud, pipe and all other suppliers.

In 2008, candidate Obama made it clear that when he became President, he intended to keep in place the moratorium that prevents oil companies from drilling off U.S. coasts.  Instead of addressing the isolated and rare incident directly, this administration is using this catastrophe to push their political agenda.  The situation with the tragic BP spill is challenging to say the least.  However, taking measures to indefinitely shut down operations in the Gulf of Mexico is not only backward thinking, but will lead to a catastrophic rippling effect across our entire economy.  In a time of 10% unemployment and rising energy prices, the President should be wary to take such reactionary measures.

Don Briggs / Matt Ross Contributor

Many can agree that our dependency on foreign sources of energy poses a serious threat to our national security and economic stability.  As we speak, conversations about our future energy needs are occurring in committee rooms on Capitol Hill and in the homes of everyday Americans.  In my opinion, a future moving towards the utilization of natural gas should be a large component of these conversations.

Natural gas is a highly efficient and inherently clean burning source of energy.  Liquefied and compressed natural gas (CNG) can be utilized to heat our homes, run our plants, and even power our vehicles.

Awash with an abundance of natural gas, Louisiana could potentially become a leading example to the success of CNG.  With the momentous find of the Haynesville Shale, there are nearly 250 trillion reasons why CNG should work for Louisiana.  Containing trillions of cubic feet of potential natural gas production, the Haynesville Shale alone could fuel our nation’s energy needs for decades to come.

In Northwest Louisiana, companies operating in the Haynesville Shale like Chesapeake Energy, EnCana Oil & Gas, and EXCO Resources have made significant moves towards CNG.  Last summer, EXCO Resources constructed their CNG fueling facility at its Vernon Field site near Chatham, Louisiana.  In like manner, EnCana has moved forward with a CNG fueling station in Red River Parish.

Recently in Shreveport, Steelweld Equipment, a manufacturer and installation company specializing in CNG kit conversion, announced they will partner with Rountree Ford dealership to sell and service CNG vehicles to interested fleet operators.  Later this year, Shreveport will convert their municipal buses to clean burning natural gas.  Bossier City also began construction of a new CNG fueling station set to be in service by August of this year.

In South Louisiana, LOGA has worked closely with the City of Lafayette and the Lafayette Chamber of Commerce to promote the benefits of CNG.  Apache Corporation has committed to building a CNG station in the Lafayette area.  It is their intention to build at least five more across the southwest region of the U.S.

On May 19, Apache employee Castlen Kennedy will travel from Austin, Texas to Boston, Massachusetts in a natural gas vehicle.  Apache’s “Austin to Boston CNG Tour” will provide insight into the fuel cost savings of natural gas and offer an in-depth view into the challenges of access to fueling options.  On May 20, the Greater Lafayette Chamber of Commerce and Apache Corporation will welcome Kennedy as she passes through our area.  The Chamber notes, “The tour is to demonstrate the capabilities of vehicles fueled by compressed natural gas. The tour is a component of the Chamber’s drive to inform public and private entities of the benefits of converting fleet vehicles from gasoline and diesel fuel to CNG.”  Officials from Apache and the Chamber, as well as fleet owners interested in converting will be in attendance.

With access to an abundance of natural gas, existing tax incentives, and the progression of CNG infrastructure projects within the state, it is my hope we will soon see the emergence of a thriving marketplace for compressed natural gas.  Across the state of Louisiana, we are finding solutions to our energy needs and doing our part to bring our nation closer to energy independence.  We believe CNG should play a significant role in our energy future.  As a challenge to other states, “Won’t you join us?”

Don Briggs – Louisiana Oil & Gas Association -

This coming Wednesday at the State Mineral Boards monthly meeting, Board members may very possibly be considering proposals by DNR Secretary Scott Angelle, designed to boost the floundering Louisiana Coastal Zone drilling market.  While the inland water rig count has climbed back from an historic low this past July of 5 rigs to the current 14 rigs, inland drilling activity is still 37% below the past 5 year average.

Secretary Angelle has publicly stated, “Oil and gas companies clearly have a choice where they spend their exploration dollars and we want them spent in Louisiana.”  Angelle’s timing could well be on target for several different reasons.

The oil and gas exploration business is a “price sensitive” industry.  Simply put, when the price of oil or natural gas is up, we invest and drill more.  When prices are down, we drill less.  That is why we have witnessed over the years the ups and downs of the industry, the never-ending roller coaster ride.  Today, we are witnessing a little different phenomenon in the industry.

Historically, according to the Energy Information Administration (EIA), from 1990 to 2007 the average price ratio of natural gas to crude oil has been about 8.6 to 1.  For instance, if natural gas prices were at $1 per MCF then oil prices would be at $8.60 per barrel.  Today with oil prices at $86 per barrel and gas prices around $4, the spread is 21 to 1.  Analyst are predicting oil prices to be in the mid to high eighties for the coming year.  However, the EIA recently dropped its outlook for the natural gas prices in 2010, from an average of $5.17 per million BTU down to $4.44.  Natural gas is certainly being sold at a discount.

What does all this mean?

It means oil and gas companies are shifting gears and moving to explore for the good oil fashioned black gold, oil.  Floyd Wilson, Chairman and CEO of Petrohawk Energy noted, “With gas in the $4 range and oil in the $80s, it’s valuable to be able to switch to more oil.” With this in mind, Petrohawk announced this past week that they would cut back on natural gas drilling and double up on oil drilling on acreage it holds in South Texas.

Petrohawk was not alone.  Natural gas giant Chesapeake Energy’s CEO, Aubrey McClendon, told attendees at a recent energy conference, “The economics just compel you to look for oil rather than natural gas right now.”  Another company moving to the oil markets is Houston based EOG resources, with more than 500,000 acres in South Texas’s Eagle Ford Shale formation.

DNR Secretary Scott Angelle’s encouragement to develop in the Coastal Zone of Louisiana is timely and important to the state as well as to the oil and gas industry.  The State of Louisiana is the largest landowner in the state, thus the recipient of not only severance taxes on the oil and natural gas production but also reaps the benefits of significant royalty interest payments.  With the states current budgetary constraints, any boost to the general fund will be helpful.

Don Briggs – Louisiana Oil & Gas Association -

This week President Obama spoke about his plans for offshore energy exploration and expansion of leasing in the Outer Continental Shelf (OCS).  As part of their plan, the President and Secretary of the Interior Ken Salazar will allow for the leasing of waters off the Eastern Coast of New Jersey.  Additionally, the President’s plan will expand leasing in the eastern portion of the Gulf of Mexico at least 125 miles off the coast of Florida.  Although these gestures seem positive, this plan is simply a political carrot at best.

While the President’s plan appears to support the expansion of oil and gas development in the OCS, in reality, it does more to limit our abilities to explore these vast resources.  With praise from political pundits, you would believe that this plan will actually stand to alleviate our nation’s energy crisis.  To the contrary, the President has simply created an environment of smoke and mirrors.  While he expands small portions of the OCS in one place, he significantly locks up leasing and exploration in another.

Let’s look at the facts.

While seemingly positive on the surface, it’s important to know that the President’s new plan stands to cancel five lease sales off the coast of Alaska.  To give you an idea, one of these areas is projected to contain over 77 billion barrels of potential oil production, which is three times US reserves.  In addition, this plan delays planned leases off the coast of Virginia and calls for a “study” of southern portions of the Atlantic OCS.  This study is nothing more than a delay tactic and will prevent future lease sales for another year.

Coupled with this backward approach, the President failed to remind the American public that his FY2011 budget proposal stands to tax the oil and gas industry at an overwhelming $37 billion.  Removal of these vital tax incentives will result in significant reduction in our domestic production and the elimination of thousands of jobs.

Ironically, President Obama unveiled this plan while standing next to the Environmental Protection Agency Administrator Lisa Jackson and his climate change advisor, Carol Browner.  This seems ironic simply because these two individuals are key components in the systematic destruction of the oil and gas industry.  While making his statement to increase exploration and production of oil and gas, the President stands next to Administrator Jackson, who is keen on regulating CO2 and the process of hydraulic fracturing.  Simply put, these two initiatives and the inclusion of the President’s tax policies are a recipe for disaster.

Without doubt, the President’s actions are political in nature.  His plan moves the ball backward, not forward.  His plan will result in a significant decrease in our domestic production, less job creation, and a perpetuation of our dependence on foreign sources of oil.  Instead of playing political games, let’s expand exploration and development of our resources in the OCS and open up ANWR in Alaska.  Let’s develop our nation’s natural resources to ensure our economic stability.  In the state of Louisiana, more than 20,000 jobs exist as a direct result of oil and gas activities in the Outer Continental Shelf. It is estimated that the actual average salary of these jobs is around $60,000 per employee. At a time of unprecedented unemployment, it would be wise for the President to support job-creating initiatives that our industry can offer.