Lt. Gov.: Our ways are fading

A proposal backed by newly-appointed Lt. Gov. Scott Angelle could encourage more traditional oil and natural gas exploration in the coastal areas of south Louisiana, a region that has been overshadowed by the highly popular shale plays in the northern part of the state.

While officials are beginning to see a small return to deep-well drilling operations in the south, “…there is cause to be concerned,” said Angelle at a South Central Industrial Association meeting last Tuesday. “There is a new cheerleader at high school and it’s called the shale plays.”

There are currently 142 drilling rigs located in north Louisiana, a number that far outweighs the 35 in the south that are struggling to keep pace.

If approved, Angelle’s proposal, which is being considered by the Louisiana Mineral and Energy Board, would reduce royalties paid to the state for wells located 15,000 feet or below in the coastal zone. That, he said, could bring new life to a dying tradition.

“I just want to create an opportunity to get more dollars into the state of Louisiana,” explained Angelle.

The measure would also require companies that take advantage of the incentives to compensate for impacts to the environment, creating a symphonic relationship between energy exploration and coastal preservation.

Lately, investment dollars have been flooding the north, primarily backing natural gas exploration in the Haynesville Shale field, an area that harnesses 9 percent of the nation’s drilling activity. In the past year, similar ventures have spiked in places like Texas and Pennsylvania, which both have fairly large natural gas shale plays and have evolved into major competitors.

About 90 percent of rigs drilling in Louisiana today are searching for natural gas, not oil. “Things are changing. The winds are blowing in another direction and we are going to have to adjust our sails,” said Angelle. “There are two Louisianas.”

To the south, companies are looking to drill at greater depths in offshore waters, something that takes more time and carries higher costs. In the north, quick dollars are being made from shale plays that produce nearly 100 percent of the time. For the crowd on Wall Street, these plays are seen as a sure-fire investment.

The Mineral and Energy Board said a decision on the new proposal could be made at their next meeting.

“I feel the incentive of a reduced royalty rate would encourage additional drilling in the coastal zone,” said Louisiana Oil and Gas Association President Don Briggs. “Any support to and for the industry at this time is important.”

The recent oil spill in the Gulf of Mexico, however, could change the way things are done forever. “I am very concerned for over reaction by state and federal regulators as a result of the BP spill,” noted Briggs.

On April 20, a blowout preventer on the Deepwater Horizon rig located about 52 miles southeast of Venice, La., failed to activate. This incident has caused millions of barrels of oil to gush into the surrounding waters, threatening the coastlines of Louisiana, Mississippi, Alabama and Florida.

Although working feverishly, BP has yet to come up with a permanent solution to stop the flow of crude.

Officials from the oil and gas industry fear the situation could ultimately tarnish the state’s image, hindering tourism and turning away investors.

Bill Croft (left), director of government services for Shaw Environmental and Infrastructure, talks with newly-appointed Lt. Gov. Scott Angelle (center) about the BP oil spill and drilling operations in the Gulf of Mexico. * Photo by MICHAEL DAVIS