Investment swells in industries using natural gas, town hall speakers say
16th September 2014 · 0 Comments
By Susan Buchanan
Contributing Writer
Louisiana’s abundant natural gas has attracted huge new investments, adding to revenue from fracking and offshore drilling, speakers said at “An American Town Hall: Energy and the Midterm Elections,” held last Wednesday in the French Quarter. The event was sponsored by chooseenergy.org, a project of the American Petroleum Institute, and was moderated by editor-at-large Steve Clemons of The Atlantic magazine in Washington, D.C.
The API’s 550 members produce, refine and transport oil and gas. The trade group supports opening more land to drilling, sending liquefied natural gas overseas and ending the nation’s ban on crude oil exports.
Louisiana Lieutenant Governor Jay Dardenne, a panel member and gubernatorial candidate, said $80 billion has been committed to new industrial projects in Louisiana. Money is pouring into the state’s southwest because of inexpensive natural gas from the Haynesville shale play in the Shreveport area. Giant projects include Sasol’s $21 billion gas-to-liquids plant and Cheniere Energy’s more than $10 billion liquefaction plant. Haynesville fracking has contributed to growth in gas production nationally, and natural gas is supplanting coal as an energy source for U.S. power plants and other industries.
Because of fracking, the United States is now the world’s top natural gas producer and could be the leading oil producer soon, speakers said. ”I find it fascinating that as the dialogue shifts to one of abundance, we’re having a conversation about exports,“ panelist Chris John, president of the Louisiana Mid-Continent Oil and Gas Association, said.
Panelist Eric Smith, associate director of Tulane Energy Institute, said North America’s power plants are moving away from coal to natural gas and other energy sources, but he noted that several big Caribbean power providers remain dependent on coal.
If natural gas prices were to rise from their currently weak $4 per million British thermal units, “we would see Haynesville rev up again,” Chris John said. Speakers noted that while Haynesville operators have been extracting dry gas, companies drilling the Tuscaloosa Marine Shale deposit, running through central Louisiana to the state’s boot and into Mississippi, are seeking more lucrative wet gas.
Asked about lost revenues to the state from severance tax exemptions to oil and gas operators, Dardenne said if it weren’t for gas extraction in northwest Louisiana, we wouldn’t have the current spate of investment in the state’s southwest.
Regarding renewable energy, Smith said alternatives to fossil fuels are important but we need to support our dependence on oil and gas. “We don’t want to shut down capacity the way Germany did in favor of solar and wind,” and be left with limited back-up power production, he said.
Dardenne said that energy sources need to be diversified in Louisiana and renewables with potential are being developed. With trees covering over half of the state, supporting a huge timber industry, demand for Louisiana’s wood chips has grown, particularly overseas, he said. Robert Thomas, director of Loyola University’s Center for Environmental Communication, said he hopes Louisiana can move to a balance of producing both fossil and renewable fuels in a sustainable way.
In the offshore Gulf, a nearly six-month drilling ban, imposed by the feds during the 2010 BP spill, created uncertainty for companies operating expensive rigs, Chris John said. But with 45 rigs in the Gulf now versus 33 at the time of the spill, the offshore sector has more than bounced back. “We could have 70 rigs in the Gulf by 2017,” he said.
Regarding a possible $18 billion in new spill penalties against BP for gross negligence, Dardenne said Louisiana will get part of it under federal RESTORE Act revenue sharing. That, along with GOMESA funds, will help finance the state’s $15 billion, 50-year coastal master plan. Under GOMESA, or the Gulf of Mexico Energy Security Act, Louisiana in 2017 will start to receive a larger share of offshore oil and gas revenue.
The spill was four years ago but the lawsuits won’t be over for 20 years, Smith said. ”The next time around—and hopefully there won’t be one—protections put in place by industry under new post-spill, federal regulations will work,” he said.
Panelist Walt Leger, speaker pro tempore in Louisiana’s House of Representatives, said the state’s $80 billion to $90 billion in new investment projects will create tens of thousands of jobs between New Orleans and Baton Rouge, in addition to southwest Louisiana. “These are opportunities for people in New Orleans if they can get to the jobs,” he said. A light rail line between the Crescent City and Baton Rouge has the support of business people and local politicians and is eligible for U.S. Department of Transportation funds. “But Governor Jindal didn’t want it,” Leger said. Five years ago, the Jindal Administration told the feds it wouldn’t seek light rail funding, saying the service could cost the state $18 million a year to run.
Mayor Mitch Landrieu, a panel member, said as the state’s petrochemical investments swell, 52 percent of working age African American men are unemployed in New Orleans. “It’s a long walk from here to Baton Rouge and Lake Charles,” he said. “We have to figure out a way to put people to work.”
As for his older sister Mary, “her position as chair of the Senate Committee on Energy and Natural Resources helps Louisiana and helps New Orleans,” Mayor Landrieu said. U.S. Senator Landrieu, along with other local representatives in Washington, procured funds for the city’s post-Katrina rebuild and levee improvements. The Mayor said he’s thrilled that Louisiana Republican Congressman Steve Scalise was elected the new U.S. House Majority Whip in June.
Louisiana’s voting in U.S. Senate races is often about 50 percent Democrat to 50 percent Republican, Mayor Landrieu said. He expects the Nov. 4 election between Mary Landrieu and Republican Bill Cassidy to be close but believes she’ll win based on her Senate record and tenure.
Meanwhile, Democrat Senator Landrieu has been the top individual recipient of the American Petroleum Institute’s Political Action Committee campaign contributions, even though the group mostly gives to Republicans.
This article originally published in the September 15, 2014 print edition of The Louisiana Weekly newspaper.
