BATON ROUGE, La. (Legal Newsline) – A bill supported by the oil and gas industry that would change the way legacy lawsuits are handled is being “held hostage,” according to one of its staunchest supporters.

_

By Don Briggs

President, Louisiana Oil and Gas Association

As the summer months approach and consumers are now paying in excess of $4.00 per gallon for gasoline at the pump, the Obama administration is pulling out all stops to win votes during this presidential campaign season. President Obama has announced yet another oversight committee that will allegedly allow for better coordination of federal oversight for the natural gas industry. According to the Associated Press, the committee includes representatives from multiple agencies that oversee various aspects of drilling, including the Interior, Transportation and Energy departments, as well as the Environmental Protection Agency and White House Council on Environmental Quality.

While this committee’s formation is indeed a peace offering to the oil and gas industry, the Obama administration has yet to produce action that supports their rhetoric. Thus far in 2012, the Administration has continually touted the United States’ need to reduce its dependence on foreign resources, yet they are still attempting to stifle the industry by calling for the removal of the so-called “tax subsidies”.  By creating the oversight committee, this will simply allow for more opportunity for instances like the drilling moratorium after the BP oil spill. Due to the federal government denying those offshore drilling permits in 2010, billions of dollars were lost, thousands of employees were sent home, and all the while the US economy was in a massive economic recession.

One Executive Order at a time, agencies like the EPA are inching closer and closer to their goal of taking the regulation of practices such as hydraulic fracturing from the states. The EPA is set to release its report on hydraulic fracturing and the use of water, sand and chemicals to break apart the ground to extract gas. Once the EPA releases their report, industry leaders all fear the same thing – more restrictions on this revolutionary drilling method. It will only take one accident or mishap for the EPA to step in and halt all hydraulic fracturing in the United States. If this were to happen, 85% of all wells in the United States would be shut down. So, while this new oversight committee sounds appealing, it is merely a slippery slope that gives the EPA another foot in the door to accomplish the goal that they adamantly deny having – complete oversight of the industry.

Across the country, opinions differ on the necessity of the oversight committee. Jack Gerard, president of the American Petroleum Institute, said, “We’re pleased the White House recognizes the need to coordinate the efforts of 10 federal agencies that are reviewing, studying or proposing new regulations on natural gas development and fracking.” However, on Capitol Hill, House Speaker John Boehner’s office says that a “working group is not needed”. Whether this working group turns out to be a positive thing or not, the oil and gas industry must continue to produce consumer-ready resources, create thousands of jobs for our workforce, and remain committed to the safety of our communities and the preservation of our environment to which we have been entrusted.

_
URGENT REQUEST

TOMORROW, on Tuesday, April 10, at 9:00 am in the Senate Committee on Judiciary A, the LOGA and business industry sponsored LEGACY bill, SB 443 by Sen. JP Morrell, will be heard.

I NEED YOUR HELP TODAY.

Please email or call the committee members below and ask them to vote “YES” on SB 443.  Also ask your employees to do the same.  I do not take lightly asking you to do this.  At the conclusion of this email is a sample letter that you and your companies can use in your correspondence with the members if you choose.

Those that wish to continue extorting millions of dollars out of the oil and gas industry are hard at work asking committee members to vote against our bill.  Our opposition has been misleading members of our industry with false promises of solutions to all of our problems.  It is time for the oil and gas industry to come together as one and stand behind the only side that truly cares about finding a resolution.

We have worked hard to try and gain the support of the Governor and his Administration.  We do not expect that they will be in committee to support our bill.  Unfortunately for the industry, the STATUS QUO only benefits the plaintiffs.

SB 443 simply allows defendants to stand up and admit responsibility for the regulatory damages without admitting liability for the billions in private claims.  This admission helps to create an open and transparent process with a public hearing at DNR and a plan developed by the State of Louisiana would be admissible at trial. We strongly believe that our bill provides a remedy to “legacy” litigation, while protecting the landowners’ rights and the district court’s role in the judicial process.

If you have any further questions, please contact Gifford Briggs at gifford@loga.la or myself at don@loga.la or we can be reached by phone at (225)-388-9525

Thank you for your help.  Again, I want you to know that I do not take lightly asking you to contact the Committee members regarding this bill.

Senate Committee on Judiciary A

Chairman Ben Nevers                  neversb@legis.la.gov                (985) 732-6863

Vice-Chairman Dan Claitor          claitord@legis.la.gov                 (225) 765-0206

Conrad Appel                                appelc@legis.la.gov                   (866) 946-3133

Jack Donahue                               donahuej@legis.la.gov              (985) 727-7949

Danny Martiny                               martinyd@legis.la.gov                (504) 834-7676

Edwin Murray                                murraye@legis.la.gov                 (504) 945-0042

Rick Ward III                                  wardr@legis.la.gov                      (225) 246-8838

Dear Senator:

On behalf of the Louisiana Oil and Gas Industry, I urgently request that you vote YES on Senator JP Morrell’s SB 443 regarding limited admission of liability in lawsuits for environmental damages.This legislation allows for an open and transparent process which helps to ensure the State of Louisiana fulfills its Constitutional obligation to protect the health and welfare of its citizens and the environment.

As you know, Legacy Lawsuits have led to the loss of nearly 1,200 new wells in Louisiana, translating to an astonishing 6.8 billion dollars in lost drilling investments and the loss of over 30,000 jobs.

Please help stop the attack on Louisiana’s economy by voting YES on SB 443.

Sincerely,
Don Briggs
President, Louisiana Oil & Gas Association (LOGA)

By Don Briggs

President, Louisiana Oil and Gas Association

Driving down the road searching for cheap gasoline can be a touch disheartening. Individuals across the country are feeling the effects of the price ticker at the pump continually climbing. As the country mulls through yet another political campaign season, solutions for bringing gasoline prices down are abundant. Can these Presidential candidates really do anything about the prices or is it nothing more than political rhetoric? The GOP claims it is President Obama’s problem, President Obama blames former President Bush, and the blame game continues. However, many factors play into the high gasoline prices.

The price of crude oil is a leading factor for high gasoline prices. As crude oil is currently trading over $100 per barrel, the US market will naturally fill the increase in pricing at the pump. While the price of crude oil rises and falls over time, the price per gallon of gasoline is estimated to be at nearly four dollars by July 4^th. As with any market, crude oil is a cyclical market that traditionally corrects itself as the summer months close out. While the cause of these cyclical prices is due to the world market demand, the United States helps contribute to the problem by importing around 9 million barrels of crude oil per day.

As the US demand for crude oil increases each year, it appears that the United States will never truly reach energy independence. However, thanks to the new developments surrounding Natural Gas plays in the United States and the advancement in horizontal drilling technology, resource independence can be a potential reality for Americans. As more vehicles each month are introduced that run on compressed natural gas, this will only assist in lowering the demand for crude oil, which in turn could reduce the price of gasoline.

Another influence on gasoline prices is the geo-political unrest in the Middle East. The United States has been in a decade-long conflict with Iraq, Iran is hostile towards Israel, and the list goes on. With the constant threat of these wars and international crises in the Middle East, pain will continually be felt at the pump. Again, whether peace is ever achieved oversees, America will only feel relief surrounding gasoline prices when our own natural resources are used to fuel the country.

Lastly, the value of the US dollar plays a major role in the price of gasoline. As the US dollar becomes less and less valuable, the cost of gasoline seems to grow higher and higher. Since stabilizing the US currency against international currencies is a battle all of its own, first stabilizing the US economy must take place. The oil and gas industry is contributing to economic stability by adding hundreds of thousands of direct and indirect jobs thanks to the massive increase in drilling for newly reachable shale plays. While gasoline prices are a good cause for gloom and despair for pumping patrons, the solution can be achieved by utilizing US-produced natural resources.

_

By Don Briggs
President, Louisiana Oil and Gas Association

Over the coming days, the top four Republican presidential candidates will make stops in Louisiana pleading their case of why they should become the nominee to face President Barack Obama. Each contestant has slightly different views that differentiate him from the President. As Louisianans go to the primary voting booth on March 24^th, they will have the choice to support the person they feel has views most closely connected to their own. Regarding energy, Rick Santorum, Mitt Romney, Newt Gingrich and Ron Paul each take a different approach to their energy policy, yet each of their positions have common threads.

Rick Santorum’s energy policy pushes for the removal of drilling bans on and offshore. Romney, Gingrich and Paul all agree on this issue as well- more drilling equals less dependence on foreign oil. Santorum is promoting the use of natural gas on the basis that more than half of US homes are heated by it. Senator Santorum is calling for the immediate approval of the Keystone Pipeline, which would create over 20,000 direct and indirect jobs. However, Rick Santorum is calling to end what he and President Obama call “energy subsidies”.  The oil and gas industry is presently in direct opposition to President Obama on this very issue.

Governor Mitt Romney focuses on regulatory reform within the energy industry. He desires to see fixed timetables for all resource development approvals, the creation of a one-stop shop to streamline the permitting process and the implementation of fast-track procedures for companies with established safety records. Romney, like Santorum, is also in favor of the Keystone Pipeline project; he is against overregulation of the extraction of shale gas, and he is in favor of creating partnerships with other countries to assist resource developers.

Newt Gingrich is making waves amongst the candidates by campaigning for the closure of the Environmental Protection Agency (EPA). He believes the EPA to be a “job killing regulatory engine of higher energy prices”. Gingrich has made it clear that reform must take place surrounding frivolous lawsuits, or what Louisiana knows as Legacy Lawsuits. He is in favor of a “loser pay” law that forces the losing party to pay the legal fees for the other party.

Along with Speaker Gingrich, Ron Paul is pushing for the closure of the EPA. He feels that those causing pollution issues should answer to property owners in court for the problems they cause, rather than Washington DC. Paul’s energy stance calls for the repeal of the federal gasoline tax, which would save consumers 18 cents per gallon. Paul would then make tax credits available for the purchase and production of alternative fuel technologies.

While these candidates engage in an important part of the electoral process, the oil and gas industry will continue in the fight to end Legacy Lawsuits, oppose the removal of investment tax credits by the Obama Administration, and remain diligent in the US production of oil and natural gas as we move closer to becoming independent of foreign oil and their resources.

_

By Don Briggs
President, Louisiana Oil and Gas Association

This week, Dr. David Dismukes with the LSU Center for Energy Studies released a report on the impact of Legacy Lawsuits on conventional oil and gas drilling in Louisiana. Legacy Lawsuits are simply court-sanctioned extortion taking place at the expense of companies that drilled on a given piece of property with little or no proof from the landowner or plaintiff that any environmental damage to the property even exists. Legacy Lawsuits find their name from, according to Dr. Dismukes, “cases based on claims in which the purportedly damaging actions were taken not recently, but several decades into the past”. Vast majorities of the Legacy Lawsuits have taken place in South Louisiana.

Trial lawyers do not agree with the oil and gas industry on the massive impact the Legacy Lawsuits are having on the people of Louisiana. To date, more than 270 Legacy Lawsuits have been filed with more than 1,500 defendants. You cannot sue that many defendants without having an impact on where companies explore for oil and gas. The LSU study estimates that Legacy Lawsuits have led to the loss of nearly 1,200 new wells in Louisiana, translating to an astonishing 6.8 billion dollars in lost drilling investments. The study also highlights how Louisiana has lost over 30,000 jobs as a result of these frivolous suits.

David Russell, President of McGowan Working Partners, said that within the last year, he sought to obtain “contamination insurance” for his Louisiana oil and gas properties. Each insurance carrier he contacted declined to write him a policy directly due to the Legacy Lawsuit environment in Louisiana. However, the insurance companies said they would write policies for his properties in Arkansas, Mississippi and Texas. Russell continued by saying, “At a recent prospect expo, I sat down with investors willing to spend hundreds of millions of dollars to explore for oil and gas deals, but when they heard we were from Louisiana, they would not even speak with us due to the Legacy Lawsuits.”

Independent producers like McGowan Working Partners face not only time consuming lawsuits, but are forced to spends hundreds of thousands of dollars to defend their case before the first dollar is spent on any land remediation if the verdict so demands. While some of the larger oil and gas corporations have strong defense attorneys and sizeable budgets, it is the independent oil and gas companies that will potentially be forced out of business due to these suits.

In 2006, the Louisiana Legislature passed ACT 312, which would hopefully solve the Legacy Lawsuit problems. However, a recent study conducted by the Louisiana Department of Natural Resources for the House Natural Resources Committee revealed data showing that 210 of 270 cases were brought to the courts with no environmental data submitted to the Louisiana Office of Conservation, which is required by ACT 312.

While the Legacy Lawsuits seem to have no end in sight, the burden on oil and gas companies will continue to grow until this problem is corrected.

_

By Don Briggs
President, Louisiana Oil and Gas Association

President Obama released his budget this week for 2013. With high hopes that the energy sector might receive support, reality says different. The President has clearly stated that he would like to “eliminate unwarranted tax breaks for oil companies, while extending key tax incentives to spur investment in clean energy manufacturing and renewable energy production”. Therefore, he is making good on his plan to “double down” and kill the incentives of the oil and gas industry, while continually promoting green energy and tax cuts for wind and solar power. We are seeing natural gas prices at an all-time low in the United States, while wind and solar power continue to be exponentially more costly per unit to produce. Not only is the production of natural gas more cost efficient than wind and solar, but the oil and gas industry has also created thousands of jobs for a hurting U.S. economy. American Petroleum Institute President Jack Gerard stated, “Frankly, the administration should be trying to replicate the success America’s oil and natural gas industry has had in creating jobs and growing the economy primarily through development on private and state lands. The evidence clearly shows that what we’re doing is working.”

With the vast amount of shale oil and gas available, America has the potential to become less dependent on foreign resources in the coming years. But, we have an administration that is trying to slash investment incentives and in turn, give government dollars to the clean energy sector – wind and solar. The oil and gas industry currently invests its dollars, and then receives credit; The Obama plan would give out hundreds of millions of dollars before the wind and solar companies have invested their first dollar. Again, the Federal Government is cutting investment incentives to the very industry that has created thousands of jobs for the United States.

President Obama also included in his budget $45 million in funding to the U.S. Department of Energy, the Environment Protection Agency (EPA), and the U.S. Geological Survey to further research “reducing the potential health, safety and environmental risks of hydraulic fracturing”. While no government or private organization has any concrete evidence that hydraulic fracturing causes environmental or health-related problems, this $45 million funding is yet another avenue for the Federal Government to take oil and gas regulations from the states’ jurisdiction. Deputy Interior Secretary David Hayes stated, “We have no interest in creating conflict with state regulation.” In direct contradiction to Deputy Secretary Hayes, Interior Secretary Ken Salazar says that due to companies not liking patchwork regulations from state to state, Interior will be creating a template to be used across the country. This countrywide template idea rings of federal regulation and is not acceptable to the oil and gas industry.

The President has attempted to persuade the general public that his intent is to develop and assist America’s energy industry. However, it is clear that his plan diminishes a thriving oil and gas industry and he clearly does not desire to see America become truly energy independent.

If the U.S. Environmental Protection Agency is allowed to regulate hydraulic fracturing, a single incident anywhere in the country could “shut down the domestic industry,” an oil and gas industry representative said Tuesday.

“The industry that you’re in today is being revolutionized like you’ve never seen before,” said Don Briggs, president of the Louisiana Oil and Gas Association.

Speaking during LOGA’s annual State of the Industry meeting, Briggs credited the industry’s revolution to hydraulic fracturing, commonly referred to as “fracking,” which he said could help make the country less dependent on foreign resources.

More than 1 million wells have been hydraulically fractured, Briggs said, and about 85 percent of all the wells in use were completed using the technology. It involves injecting chemicals, water and sand into the ground under enormous pressure to crack open and prop up the rocks, thereby releasing the oil or natural gas.

Briggs said the EPA is studying the issue and getting “closer and closer” to controlling regulations, which are currently overseen by each state.

If the EPA were to gain control of that process, Briggs said, the country could one day see a repeat of what happened in the aftermath of the April 20, 2010, Deepwater Horizon oil spill in the Gulf of Mexico.

“They could shut the domestic industry down if some company somewhere makes a mistake,” Briggs said, adding that such mistakes are possible.

Wilma Subra, technical adviser to the Louisiana Environmental Action Network and an expert on “fracking,” disputed those statements.

The EPA is studying what effects “fracking” has on water supplies, Subra said.

“What will come out of it may be federal guidelines or federal regulations, but it will not shut the industry down,” Subra said.

The EPA already has some oversight over the issue, and should it assume complete authority, it would still delegate much of that responsibility to the states, Subra said.

Briggs also singled out U.S. Rep. Jeff Landry for his Coast Guard Reauthorization bill, which, if passed, would require operators to have standby vessels near their offshore facilities.

The additional costs to the industry would be huge as the legislation would put more than 200 large vessels out in the Gulf each day of the year, Briggs said.

A single company, which Briggs did not name, could face increased costs of $50 million, he said.

With all the challenges the industry is facing, “for one of our own congressmen to put something like this out there is absolutely absurd,” Briggs said.

In response to Briggs’ comments, Landry, R-New Iberia, said he represents everyone in south Louisiana — both the people who own the oil and gas companies and their employees.

“This is a life-saving piece of legislation,” Landry said, adding that it is one that the men and women who work on those platforms have asked for.

Prior to bringing the legislation before the House of Representatives, Landry said, his office reached out to industry officials and to Briggs, whom he said did not respond until after the legislation was presented to the House.

Landry said he has since spoken to Briggs and others in the industry in the hopes of reaching an agreement that would protect lives in a cost-effective manner.

The congressman also disagreed with Briggs’ calculations, which he said do not “accurately reflect the agreements that we’ve made so far.”

“Again, I’m not going to risk the lives of the people that I’m bound to protect simply because Mr. Briggs believes that those lives are not worth a certain dollar figure,” Landry said.

Tuesday’s meeting was the second in a series of regional luncheons.

Briggs also shared the latest updates on the status of U.S. offshore oil drilling, shale gas exploration and development and the effects Louisiana’s legal environment is having on the industry.

The number of rigs in the Gulf has fallen from about 60 before the oil spill to about 40 today, Briggs said.

Meanwhile, the time it takes to get a permit for deepwater drilling has also increased from about 36 days to about 131 days, Briggs said.

Having said that, “the Gulf is still going to be a very viable part of our energy infrastructure for years to come,” Briggs said.

Currently, the United States produces 9.6 million barrels of oil per day, putting it behind only Russia and Saudi Arabia, and consumes about 19 million barrels per day, which represents about 22 percent of the world’s consumption, according to figures in Briggs’ presentation.

Briggs said some estimates have the United States surpassing Russia for the top-producing spot by 2020. The country could also see its dependence on foreign oil fall from 49 percent in 2010 to 36 percent by 2035, Briggs said.

While the average price for a barrel of oil hovers around $100, the price of natural gas is much lower — about $2.45 per 1,000 cubic feet, Briggs said.

Low natural gas prices have led to declining natural gas rig numbers from 82 percent of the total number of rigs drilling in the United States in 2008 to 42 percent today, Briggs said.

Still, the Haynesville Shale site, located partially in northwest Louisiana, remains the largest in the country and the fourth largest in the world, Briggs said.

Since October 2008, about 1,700 wells have been drilled in the Haynesville site, he said.

The Haynesville site has generated tens of thousands of jobs and is expected to have an estimated impact of $14 billion this year alone, Briggs said.

The Tuscaloosa Marine Shale, which cuts through the center of Louisiana, has shown lots of promise and will likely help to bring balance as companies pull out of Haynesville, Briggs said.

Briggs also spoke at length about “legacy lawsuits,” which allow landowners to sue oil companies for the environmental messes left behind on their land from old oil fields that were drilled by major oil companies with technology that has since been discarded.

Briggs said the lawsuits allow the landowner to make claims against anyone who has had any contact with the oil lease, from those who drilled the land to those who have assumed the oil leases years later.

More than 800 of LOGA’s 1,400 members are involved in legacy lawsuits, Briggs said.

“It’s pure unadulterated extortion,” Briggs said, adding that he believes these lawsuits discourage drilling in the state.