Political News Archives - Clean Water, Land & CoastClean Water, Land & Coast

‘Without a coast, there is no city’: Landrieu calls for deal with energy companies on coastal restoration

Posted on: June 10th, 2016 by restoreit

The Advocate. Click for story.

In a speech to environmental scientists that described the rapid erosion of the state’s marshes as a threat to the city’s continued existence, New Orleans Mayor Mitch Landrieu called Friday for a negotiated settlement — backed by threats of higher taxes or lawsuits — with the oil and gas industry to pay for nearly a century of damage to coastal wetlands.

“I’ll give you the short version of the speech,” Landrieu said as he began. “Without a coast, there is no city.”

In his remarks at the State of the Coast conference in New Orleans, Landrieu both criticized the environmental damage he said the energy industry has wrought and hailed its importance to the state’s economy.

In doing so, he called for an end to the “uneasy bargain” he said has governed the state’s relationship with oil and gas companies since the 1930s — a deference to the industry that he said has contributed to the erosion of about 1,900 square miles of coastal wetlands through policies that are “penny-wise and pound-foolish.”

“I don’t believe we should or we must abandon the industry that has provided us with so much opportunity. We can drill, but we must restore,” Landrieu said.

He endorsed an effort by the state to bring oil and gas companies to the negotiating table, a process tied to coastal damage suits filed by individual parishes. That effort is aimed at working out a deal with the companies to cover the cost of the damage caused by drilling and dredging in coastal areas.

The effort, however, has been rejected by industry groups, which responded to Landrieu on Friday by arguing they already are doing their share for coastal restoration.

“A sincere discussion about addressing Louisiana’s coast doesn’t single out the state’s largest industry,” the Grow Louisiana Coalition, an industry group, said in a news release. “We are working on the coast, not talking about it. As we continue to move forward in that work, federal authorities, including and especially the U.S. Army Corps of Engineers, as well as the commercial and scientific interests who operate in coastal parishes and the parishes themselves, must play a significant role whenever we talk about big issues, including funding.”

Landrieu also floated another idea that could lead to a similar result: imposing higher taxes on oil and gas companies, with that money funneled toward coastal restoration efforts, in exchange for releasing them from liability for past damage. That proposal echoes a failed plan backed by Republican Gov. David Treen in the early 1980s.

“We can come to a negotiated agreement with the industry. We can come up with a way to fairly tax the industry and put that money to the coast. Or we can engage in a standoff and litigation,” Landrieu said.

Louisiana has been grappling with how to fund coastal restoration efforts, a matter made more urgent as estimates of the cost of its plan have ballooned from $50 billion to $100 billion. Some of that additional money will come from an increased share of federal revenue from drilling activities the state is set to receive. The state also will use money from a legal settlement stemming from the BP oil spill.

Landrieu acknowledged that the industry is not alone in its culpability for coastal erosion. Building of levees along the Mississippi River, subsidence and sea-level rise also have taken a toll.

In calling for a “new covenant” with the industry, Landrieu also suggested a shift to restoration and alternative energy could lead to an economic boom for both energy companies and the state as a whole.

Likening the massive restoration efforts envisioned by the state’s coastal master plan to the Depression-era Works Progress Administration, he said, “I believe there is a great opportunity that can be born from this tragedy we’re now suffering under.”

The Grow Louisiana Coalition, however, pointed to local environmental projects that companies already are engaged in, such as building an artificial reef in Lake Pontchartrain near West End, as well as the money they pay to the federal government to lease drilling sites in the Gulf of Mexico — which will be shared with the state starting next year — as signs the industry “is already doing its part to fund coastal restoration.”

Follow Jeff Adelson on Twitter, @jadelson.

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Stillborn, dead young dolphins along the Gulf Coast died in areas damaged by Deepwater Horizon disaster, study concludes

Posted on: May 28th, 2016 by restoreit

The Advocate. Click for story.

Exposure to Deepwater Horizon oil caused illnesses that resulted in the early deaths of baby dolphins from 2010 into 2014 and possibly beyond, a new study finds.

Published in the journal Diseases of Aquatic Organisms, the study is a continuation of a number of research projects into the high number of dolphin deaths along the northern Gulf of Mexico in the wake of the 2010 oil spill. In this newest study, the researchers found that 88 percent of the stillborn and dead young dolphins found in areas impacted by the oil had abnormal lungs compared to 15 percent of young dolphins found in other areas.

The collapsed lungs of these young dolphins show they either died in the womb or shortly after being born, according to the report by the National Oceanic and Atmospheric Administration and a number of research partners.

The latest report builds on a body of research that has gone on since the 2010 oil Deepwater Horizon disaster.

A 2015 study showed stranded dolphins in the oiled area had a much greater chance of lung and adrenal gland damage than other dolphins. A 2013 study found dolphins in Barataria Bay, one of the more heavily oiled areas in Louisiana, were seriously ill. Almost half of the 32 dolphins sampled in that study were found to be in bad health, with almost 17 percent not expected to live much longer.

In the most recent study, researchers determined that the highest number of the dead, young dolphins were found in 2011, a year after the oil spill. Because bottlenose dolphins carry their young for an average 380 days, the young dolphins could have been exposed to oil during the previous year while in the womb. Although 2011 was the peak, the higher than normal death rates of young dolphins continued after that, said Jenny Litz, biologist with NOAA’s Marine Mammal Program.

“Reproductive success has been damaged, and it’s not clear how long those effects will go on,” Litz said. “It’s how long it will last that’s in question.”

A study on live dolphins in Barataria Bay released in November, showed that dolphins were having problems having calves. The study found about 20 percent of the dolphins sampled produced a viable calf compared to an 83 percent success rate reported previously in areas without oil damage.

Stephanie Venn-Watson, director of the Translational Medicine and Research Program with the National Marine Mammal Foundation, said the type of adrenal gland disease found in the adult dolphins fits with the number of young dolphins they found dead.

“Animals that have this type of adrenal disease run the risk of late term pregnancy problems,” Venn-Watson said. “It begs the question of other long-term impacts on other species.”

Litz said the studies focused on dolphins living near shore or in estuaries and it’s likely offshore dolphins experienced similar problems.

“It will be important to monitor these populations long term,” Litz said.

All the researchers agreed that it’s likely that other marine animals have had similar problems.

“It’s a species (dolphins) we can most easily study,” Kathleen Colegrove, the study’s lead author and veterinary pathology professor at the University of Illinois Chicago-based Zoological Pathology Program. “What we may be looking at is the tip of the iceberg.”

It’s too early to say how the dolphin deaths and problems reproducing will have on the long-term population of the animal, but researchers said they will continue monitoring.

“Dolphins are a long-lived species, so it could be years before we know the full impact,” Colegrove said.

An Unusual Mortality Event of dolphins in the northern Gulf of Mexico has been running since 2010, although there are investigations on whether it’s time to close that, Litz said.

The peak mortality was between 2010 and 2014; however there was a more recent uptick in deaths along the coast of Mississippi and the panhandle of Florida.

There was a red tide in the area during that time, so researchers are looking into that as well, Litz said.

The study is the result of teamwork of researchers from the University of Illinois, National Marine Mammal Foundation, NOAA, the Dauphin Island Sea Lab and University of South Alabama, the Institute for Marine Mammal Studies in Mississippi, the Louisiana Department of Wildlife and Fisheries, Animal Health Center in British Columbia, the Mote Marine Laboratory in Florida, the University of Georgia and the University of North Carolina.

Follow Amy Wold on Twitter, @awold10.

 

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Gov. Edwards instructs administration to intervene in parish coastal suits against oil and gas companies

Posted on: May 27th, 2016 by restoreit

Gov. Edwards Instructs Administration to Intervene in Parish Coastal Suits Against Oil and Gas Companies

The Advocate. Click here for story
 
Gov. John Bel Edwards is intervening in a slew of lawsuits filed by three parishes alleging that oil and gas companies have violated their permits and damaged coastal properties over a period of decades — a move that further establishes the state as a major player in the ongoing litigation.

The Edwards administration’s announcement Thursday that it would get involved in the cases comes just weeks after Attorney General Jeff Landry filed similar motions.

While Edwards and Landry have traditionally been seen as on opposite sides when it comes to the oil and gas industry in Louisiana, Thursday’s announcement appears to suggest a new effort on the part of both officials to bring some kind of final resolution to the issue.

What that new cooperation means for the cases filed by Jefferson, Plaquemines and Cameron parishes — or larger efforts to hold the energy industry accountable for coastal erosion caused by nearly a century of drilling and dredging — remains unclear. But it could signal a more unified effort to handle coastal issues and could open the door to a global settlement with the oil and gas companies, something Edwards previously has indicated he would be seeking early in his term.

Edwards said Thursday he had instructed the Department of Natural Resources, which oversees the energy industry, to file a petition involving state government in the cases because they represent a concern that goes beyond the boundaries of the parishes that filed the suits.

“What we know is that the parishes filed lawsuits not just in their name but in the name of Louisiana,” he said. “Our one shot to make sure this is done right and our interests are adequately served by these lawsuits is in intervening.

“I don’t believe we have a choice other than to intervene.”

The suits were filed in recent years by parishes acting on their own behalf, under state laws that allow them to sue for damage in coastal areas. The decision by Edwards and Landry to intervene could potentially move those cases into the state’s hands, putting state officials in charge of how the cases proceed and how any money that is recovered is spent.

“This intervention would ensure that the interests of the state of Louisiana are fully protected and that any money recovered in these suits will be spent on coastal restoration,” Edwards said.

While the state’s involvement — which Edwards said Thursday would bring “all coastal stakeholders to the table” — could cut the parishes that filed the suits and the private attorneys pursuing the cases out of the loop, it also could presage a more concerted effort to bring the industry as a whole to the negotiating table.

Before his inauguration, Edwards said he was hoping to begin negotiating with companies in hopes of reaching a settlement along the state’s entire coast.

“One of the things I said over and over during the campaign is that I, as governor, will convene a meeting of the oil and gas company executives, and we’re going to have a discussion,” Edwards said at the time. “If they don’t want litigation, then they ought to voluntarily step up and do some meaningful restoration, and if they are amenable to that, we can do some wonderful things.”

But, he added, litigation would always be an option if negotiations did not work.

“I firmly believe that if there isn’t at least some implicit understanding that litigation follows an unsuccessful negotiation, there is not going to be a successful negotiation,” he said.

Edwards and Landry are unlikely allies in a suit against oil and gas companies.

While in the Legislature, Edwards was a reliable defender of both the parish lawsuits and a more expansive case by the Southeast Louisiana Flood Protection Authority-East that targeted dozens of oil and gas companies for contributing to erosion through drilling and dredging in coastal marshes.

The energy industry sided with Republican U.S. Sen. David Vitter in last year’s gubernatorial election, but there’s apparently been something of a thaw in Edwards’ relationship with oil and gas since his inauguration, as evidenced by two fundraisers industry associations have held for him this year.

Landry, by contrast, has been an ally of the energy industry who, as a congressman, criticized President Barack Obama for instituting a moratorium on drilling in the Gulf of Mexico following the BP oil spill.

But in a statement released Thursday, he said he “welcomed the administration’s intervention” and referred to a need to balance the economic benefits provided by the energy industry with an “ongoing coastal crisis that threatens our very existence.”

Staff writer Elizabeth Crisp contributed to this report. Follow Jeff Adelson on Twitter, @jadelson.

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Louisiana Coastal Cleanup

Posted on: October 30th, 2015 by restoreit

Louisiana Coastal Cleanup

The Importance of the Louisiana Coast

The Louisiana wetlands are a unique ecosystem that is home to many valuable plants and animals, In addition to being a wildlife haven and tourist destination, the Louisiana coast is also valuable for protecting inner land from natural disasters.

The BP Oil Spill

The BP oil spill of 2010 was perhaps the most well-known and tragic oil spills to-date. In 2014, BP announced that their active coastal cleanup has come to an end. This cleanup began in 2010 after millions of barrels of oil were spilled into Louisiana’s coastal waters. Because of the natural movement of the coastal waters, oil and oil byproducts were being brought to shore daily for years. These contaminants were introduced to local plants and animals, causing further coastal erosion and threatening already endangered species. Although BP is scheduled to monitor the Louisiana coast where oil has been previously found and removed, their daily coastline patrol and cleanup has ended.

 

beach cleanup louisiana coastal cleanup efforts

Additional Coastal Pollutants

In addition to oil byproducts, human proximity has caused further pollution. Cigarette butts, plastic bottles, aluminum cans, glass, straws, cups, plastic utensils, and other miscellaneous garbage has further polluted our coast. Each year, millions of pounds of human waste are collected from the coast.

 

louisiana coastal cleanup

International Programs, National Agencies, and Louisiana Coastal Cleanup Groups

International groups such as the Ocean Conservancy and the International Coastal Cleanup offer many opportunities to clean up coasts all over the world. National organizations like the U.S. Coast Guard also share responsibility for tidying up coastal land. In addition to these national and international agencies, many states also have their own cleanup programs in place to preserve local coastlines. Organizations like California Coastal Commission and Alabama Coastal Cleanup work to promote clean beaches and coastal cleanup volunteer programs within their state.

Cleaning the Louisiana Coast

Since pollution and debris arrive on Louisiana shores every day, constant cleaning methods are necessary to preserve the beauty and wildlife found here. Since this land is so crucial to our existing food supply and recreational uses, everyone should do their part to contribute to the vitality of the coastal land we share and rely so heavily upon. Louisiana residents should enforce that big oil companies and other industrial companies should lead Louisiana coastal cleanup efforts and accept responsibility for the coastal pollution that they cause. Alternatively, anyone living in a coastal state should take time to assist in the various local volunteer programs dedicated to beautification of the coast. When everyone works towards the same objective, such as Louisiana coastal cleanup, many amazing things can happen!

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Louisiana Oil Lawsuits Filed by Landowners, Environmental Groups, and Parishes

Posted on: September 15th, 2015 by restoreit

Louisiana Oil Lawsuits

Oil and gas companies are becoming the recipient of Louisiana oil lawsuits from many different parties across the state. The plantiffs are Louisiana parishes, Louisiana individual landowners, environmental groups, and more. The basis for suit is the contamination of land and water, and the violation of existing land protection laws.

Plaquemines and Jefferson Parish

There are over 70 oil and gas companies that operate in Louisiana. In Plaquemines Parish, 66% of tax revenue comes from oil and gas operations, making these companies a huge influence in the area, for better or for worse. Plaquemines Parish is one of the most fragile coastal environments and one that is also subjected to the oil and gas companies’ exploitation of land. Plaquemines Parish recently filed 21 lawsuits against some of these companies, congruent with the number of oil fields that were left in disrepair after oil company operations. Despite attempts from LOGA to end the Louisiana oil lawsuits, the parishes hold the legal authority to file such suits due to the pre-existing mandated coastal regulations and the 1978 law that outlines the responsibilities oil and gas companies have to restore the leased land.

oil sludge left on Louisiana residential property

Jefferson Parish filed an additional seven lawsuits, hoping to recover damages done to coastal land in their jurisdiction. If the lawsuits are successful, the oil and gas companies would have to repair the damages done or reimburse the state to fix the damages.

Because the oil and gas companies were historically left to self-report to the state and federal agencies, many environmental laws were broken or overlooked. In some cases, pipes were laid without permission, and wells were drilled without permits. Out of the 70-plus oil companies leasing land in Louisiana, not a single one has ever filed permits saying that the land was restored or in the process of being restored.

Environmental Groups File Suit Against Oil Companies

In 2014, Environmental groups Gulf Restoration Network, Louisiana Environmental Action Network and the Sierra Club filed a lawsuit against United Bulk for contaminating the Mississippi River with toxic petroleum coke and coal runoff. Coal runoff can result in chemicals like lead and arsenic migrating into the Mississippi. The basis for the lawsuit filed was unpermitted chemical discharges for the past five years. This runoff is the obvious violation of the federal Clean Water Act.

Landowners and Legacy Lawsuits

Legacy lawsuits are suits filed by Louisiana landowners who allowed oil and gas companies to lease their property for oil excavation on the terms that they would repair the site afterwards. Residents and landowners who state that the oil companies did not respect written agreements have filed lawsuits. Others have filed Louisiana oil lawsuits in response to groundwater and land contamination. Those opposing the legacy lawsuits say that is it hard to find fault on companies that were complying with the environmental laws at the time, regardless of current damages. Additional opposition comes from fear of job loss and costly litigation with no real state monetary gain.

leftover oil equipment results in louisiana oil lawsuit

Awaiting Resolve

Despite the several parties mentioned are in agreement about the responsibility of coastal damages, our state is still faces a lengthy process of coastal restoration and recovery. Quizzically, Louisiana’s multi-billion dollar Coastal Master Plan leaves most of the responsibility for restoration upon the state-funded systems, not the oil and gas companies that promised to fix them in their initial lease contracts. It is clear that we have reached the limits of pumping our fragile ecosystem for profit.

Tags: jefferson parish, legacy lawsuits, mississippi river, oil and gas companies, oil lawsuits, plaquemines parish, pollution
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Louisiana Coastal Restoration

Posted on: July 30th, 2015 by restoreit

Louisiana Coastal Restoration

Louisiana coastlines are deteriorating faster in this century than in the past 700 centuries. Each day, the Louisiana coastline shrinks by over 300 feet. There is currently no system in place that works rapidly enough to offset this loss. The coast is disappearing eighty-two percent faster than it was created.

This tragic disappearing act is due to numerous factors, including the inevitable three: relative sea level rise, natural disasters like hurricanes, and the levees blocking the natural flow of sediment that is needed to replenish the land.

Sadly, the oil and gas companies who dominate these waters have unnecessarily expedited this erosion process. Channels and canals dug by oil and gas companies quicken the loss of the coastline innumerably. This path creation is a process that allows further saltwater infiltration into the coast’s freshwater haven. Dredging more pathways through the coast allows for more vulnerable areas of coastline deterioration. Salt-water infiltration is quickly consuming the marsh by killing the flora holding the last remnants of sediment together along the coastline.

oil and gas companies cause coastal damage

The coastline is beneficial to local residents by providing a food source, a place for tourism, and most importantly, a buffer zone for hurricanes that hit along the coastline.

John Barry, dedicated coastal researcher, concluded that in the tragic event of Hurricane Katrina, people ultimately died as a result of quick decisions made by shortsighted and careless politicians. A little-known fact is that any oil and gas company present in the coast since the early 1920s holds permits making them obligated to minimize and repair any environmental damage done by their practices.

Unsurprisingly, coastal restoration has been swept under the rug in many cases. This is a direct cause of visible, measurable coastal erosion. The general consensus is that this restoration is not done because of the negligence of lawmakers to reinforce these policies and the unwillingness of oil and gas companies to pay the additional cost required to restore the coastline.

Further damage was inflicted on this delicate area by the numerous oil spills and explosions that have occurred in the past decade. The most noteworthy one being the BP oil spill, caused by the Deepwater Horizon explosion in 2010. Oil spewed into the Gulf of Mexico for 87 days. An estimated 4.9 million barrels were released into this fragile coastal environment. More than three years later, effects are still exorbitant, despite being minimized by the responsible party. 4.6 million pounds of oil-related material was extracted from the coastline in 2013.

In 2014, United States District Court Judge Carl J. Barber fined B.P. an additional $18 million in new civil penalties, the result of B.P. being “grossly negligent” regarding the incident. B.P. representatives state that they “strongly disagree with the decision.”

This example is another sad example of oil and gas companies refusing to take full accountability for the damage to the dilapidating coast.

restore the Louisiana coast

Although Judge Carl J. Barber set a precedent for holding these companies accountable, it is our responsibility to further educate citizens on the damage and urge lawmakers to conclude that these companies should be taking full responsibility for the restoration of our coastline. Neither the government nor the citizens should be held responsible to pay for these inflictions on the coast. It should be seen that the oil and gas companies should be held liable for their damages and be held accountable to remedy their destruction.  After all, this is what they have promised in their permits.

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Taylor Energy Company Oil Spill

Posted on: July 20th, 2015 by restoreit

Taylor Energy Company Oil Spill

At least four Louisiana legislature members have pushed a settlement proposal by Taylor Energy Company of New Orleans. The subject of the bill is related to an ongoing Gulf of Mexico oil leak from a Hurricane Ivan-induced mudslide. More than eleven years later, the oil continues to spill.

Unfortunately, data collected by Associated Press concludes that this Gulf of Mexico oil spill is also 20% greater than originally estimated. The data shows that with no current sign of resolve, the Gulf of Mexico oil leak will easily continue for a century or longer. Taylor Energy claims that expert research proves additional work done to this site will cause more risk than benefits, despite the fact that more oil continues to leak every day. The Federal Government has alternatively ordered Taylor Energy to devise and install a solution for this Gulf of Mexico oil spill containment and collection. Concurrently, the Federal Government is withholding money paid into a trust account by Taylor Energy for situational response work.

Gulf of Mexico oil spill

Four Louisiana legislature members have pressed the Federal Government for leniency on Taylor Energy for this Gulf of Mexico oil leak. These lobbyists include Bill Cassidy, former Sen. Mary Landrieu and Reps. Cedric Richmond and Steve Scalise. Concerns about the Federal Government’s perceived lack of action are prevalent. Is there a conflict of interest present?  Finance records show the Taylor family has donated over 1 million dollars to several Louisiana political campaigns since the early 90’s, including some of the individuals pushing the settlement proposal. In addition, the Taylor family funds a publicly acclaimed statewide tuition scholarship charity. However, not everyone seems convinced.  A few legislators and researchers from other states have shown no mercy in regards to the Gulf of Mexico oil leak. U.S. Sen. Bill Nelson states that he will “keep doing everything I can to make sure the Interior Department holds this company accountable.”

Although the monetary amount being held by the Federal Government is undisclosed, letters to the government on behalf of Louisiana lawmakers may give an idea. According to letters sent to the Federal government by Senator Mary Landrieu and Steve Scalise, the Gulf of Mexico oil spill has cost Taylor Energy upwards of $469 million dollars. Although in 2008, Taylor Energy sold all offshore leases and oil and gas interests, the company plan was to set aside an additional $55 million for future work related to this leak. Taylor Energy has been lobbying at Washington for refund since 2013.

Gulf of Mexico oil leak

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The Advocate: Louisiana Lawmakers Intervene on Behalf of Taylor Energy Responsible for Decade-Old Oil Leak

Posted on: July 17th, 2015 by restoreit

Read more about how Louisiana senators stepped in to help a New Orleans company that has failed to do anything about a oil leak in the Gulf of Mexico for over a decade. Taylor Energy Company has allowed a leak caused by an underwater mudslide during Hurricane Ivan in 2004 to go unresolved to present day. Senator Bill Cassidy, Senator Mary Landrieu, and Representatives Cedric Richmond and Steve Scalise have all written letters on behalf of Taylor Energy this year requesting that they accept the company’s proposal.

Click Here for the Full Article on The Advocate

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Giving Away Louisiana- Fracking Tax Incentives

Posted on: December 4th, 2014 by restoreit

Giving Away Louisiana- Fracking Tax Incentives

Little-noticed program criticized as rebates could reach $1 billion per year

The Advocate By MARK BALLARD | Staff Writer | mballard@theadvocate.com

Six months ago, oil — and money — began to gush out of a well called Blades 33 H-1, drilled by a Houston energy company in a Tangipahoa Parish pasture about seven miles from the Mississippi border. The well bores two miles into the Earth’s crust, and then runs horizontally for another mile. It cost about $15 million to drill — money that Goodrich Petroleum Corp. can expect to recoup within two years, depending on the rate of production and the price of oil.

Under Louisiana law, Goodrich must pay the state a “severance tax,” 12.5 percent of the value of all of the oil it extracts. But under an incentive program passed with little debate two decades ago, the state will refund all of that tax to Goodrich — at least until the company has paid off the well. As a result, Louisiana taxpayers will cut Goodrich a check for nearly $2 million, even though the firm, in calls with investors before a recent drop in the price of oil, has boasted expectations of profit margins ranging from 29 to 53 percent. When the break was conceived two decades ago by then-Gov. Edwin Edwards, horizontal drilling was still in the experimental stage, and the hope was that a tax break would spur more of it. Analysts predicted the measure wouldn’t hurt Louisiana’s finances, and they were mostly right: For roughly 15 years, the break had little impact on tax receipts — or on oil and gas production. But everything changed when energy companies in the last decade figured out how to combine horizontal drilling with hydraulic fracturing, or fracking, making gas and oil reserves locked in shale rock deposits accessible.

 ENLARGE

112614-Hydraulic-Fracturing_webedit

Suddenly, as the natural gas-rich Haynesville Shale in the northwest part of the state was tapped, an exemption that had cost Louisiana less than $1 million in lost taxes in 2008 had ballooned to $239 million two years later. Since then, the state has given back $1.2 billion in tax receipts due to the horizontal-drilling exemption. (The tax rebate applies to both oil and gas wells; the severance tax rate for gas is reset each year and is typically lower than the rate for oil.) The money lost to rebates could soon spike much higher: If the much larger Tuscaloosa Marine Shale, where the Blades well is located, lives up to geologists’ expectations, Louisiana could soon be returning $1 billion or more in tax revenue to drillers every year. The shale has an estimated 9 billion barrels of oil reserves, enough to satisfy America’s oil demands for more than a year.

[Above interactive: Hover over the bar chart for more details. Mobile/tablet users: Swipe left to view entire graphic.]

With Louisiana’s Legislature struggling to stay in the black each year, the tax break for fracking has taken some flak in Baton Rouge, but for the most part has not been a part of the debate over how to balance Louisiana’s books. “The usefulness of this credit is long gone,” said Jan Moller, executive director of the Louisiana Budget Project, a Baton Rouge-based group that looks at how state fiscal policy affects low- and middle-income taxpayers. “We’re giving them an incentive to do what they would do without an incentive.” Defenders of the severance tax rebate — led by Louisiana’s powerful energy industry — say it makes Louisiana competitive with other states, including Mississippi, which has a similar program and also sits over a portion of the Tuscaloosa Shale. Take the break away, they say, and drillers will go elsewhere. Critics say the fear producers would flee makes little sense. Unlike, say, filmmakers, who can shop around to see which state gives them the best incentive, drillers ultimately have to go where the resources are. At most, they say, the break might affect which deposits get tapped first. Even some industry boosters doubt Louisiana’s breaks for horizontal drilling are much of a factor. “I don’t see the reasoning behind those exemptions as strongly as some of my friends do,” said state Sen. Robert Adley, a former natural gas buyer and reliable energy industry ally who led the legislative effort this year to shield oil companies from lawsuits over damage to Louisiana’s coastline. “I truly think that exploration is tied, more than anything, to geology — which means where the oil and gas play is — and to price.”

Political boundaries

In a September speech at an energy forum, Chris John, who heads the Louisiana Mid-Continent Oil and Gas Association, warned the audience that underground shale rock knows no political boundaries.

 ENLARGE

Haynesville-Tuscaloosa-shale_webedit

The Tuscaloosa Marine Shale is about 500 to 800 feet thick and about 10,000 to 15,000 feet underground, running in an arc from south Texas, past the western and northern suburbs of Houston into central Louisiana, and then along both sides of the Mississippi state line, including Louisiana’s Florida parishes. So a company could choose to drill into the shale from Wilkinson County, Mississippi, rather than from a few miles farther south in West Feliciana Parish, John said. A less-friendly tax regime here would swing the decision in Mississippi’s favor, he argued. But skeptics say that if the energy companies want Louisiana’s oil, eventually they’ll have to come here to get it. “The oil is in the Tuscaloosa Shale. It’s not going to be moved,” said LSU economics professor Jim Richardson, an expert on Louisiana taxes who is leading a study of the state’s tax system. “If the price of oil stays in that $80-$100 (per barrel) range, I think they’ll figure out how to get there, with or without an exemption. Now it may slow them down a little bit, but that may be good too. At some point, they will do it because you are talking about a finite resource.” “It’s a timing issue. Certainly, at the margins, a tax can cause some people to rethink a major investment. But for the most part, I think the real element is going to be the overall price.” In moments of candor, the oil companies themselves say the severance tax is but one of many factors they consider before drilling. Other major variables include royalties paid to landowners, labor and transportation costs, the quality of the oil, its current price and the cost of accessing it.

 ENLARGE

FRIVSUITS004.031414_23208885_webedit

Advocate staff photo by BRAD BOWIE — Gifford Briggs, vice president of the Louisiana Oil and Gas Association, said the price of drilling a horizontal well in the Tuscaloosa Marine Shale is about double that of a vertical well or of a fracking well in Pennsylvania’s much shallower Marcellus Shale. That can make the tax exemption a bigger enticement, he said.

Gifford Briggs, of the Louisiana Oil and Gas Association, which represents about 1,700 small and midsized firms, notes that the cost of drilling a horizontal well in the Tuscaloosa Marine Shale is about double that of a vertical well or of a fracking well in Pennsylvania’s much shallower Marcellus Shale. That can make the tax exemption a bigger enticement, he said. So far, most of the drilling in the Tuscaloosa has happened in Mississippi rather than in Louisiana, but the decision appears to have had little, if anything, to do with the tax climate. At a recent conference in Denver, Robert Turnham Jr., Goodrich’s president and CEO, told investors that the preference for Mississippi has mainly owed to the kind of rock found there. Otherwise, he said, the states are similar, with easy accessibility to barges and pipelines, plenty of experienced workers nearby and low royalties — and, of course, tax rebates. Those factors give Louisiana and Mississippi an edge over some other oil- and gas-rich states. “The reason you can spend more money in this play is exactly what I said earlier: lower royalties, no severance tax and better pricing,” Turnham told investors. Charles Cusack, executive vice president and chief operating officer of Halcon Resources, another big player in the Tuscaloosa, was likewise bullish in an address to investors in August. When Halcon — which also has large-scale drilling rights in North Dakota and Texas — started moving into the Tuscaloosa, Cusack said the company’s scientists realized that the rock here has more oil reserves. “We got more comfortable as we started seeing some good well results, and then realized there was an entry fee that was still very reasonable,” he said. “So when we jumped in — Halcon-style — we jumped in with both feet,” he said. Officials from Goodrich and Halcon, as well as three other drilling companies active in the Tuscaloosa play, did not respond to requests to be interviewed for this article.

A game-changer?

The larger tax becomes more of a factor in a company’s decision-making process. But Louisiana’s 12.5 percent severance tax may not be a game-changer with a commodity whose prices are as volatile as oil.

And, of course, there’s no reason the state could not simply tinker with the rate instead of refunding the tax outright.

Mississippi, for instance, changed its law earlier this year to recognize that collecting a smaller portion of the severance tax during a time of higher production would bring in more revenues, while extending the time period of the suspension would keep the industry happy. The Magnolia State now forgives a portion of its severance, effectively charging 1.3 percent severance tax for 30 months or until the rig is paid.

Generally, it’s hard to draw a close connection between any state’s severance tax structure and the health of its energy sector.

A detailed survey of 11 gas-producing states by Pennsylvania’s Independent Fiscal Office released in March noted that Texas was the nation’s biggest producer of natural gas, despite having the fourth-highest effective tax rate among the states examined.

Louisiana, the No. 2 gas producer, had the fourth-lowest tax rate. Pennsylvania, which is No. 3, had the lowest.

The report was prepared as Pennsylvania lawmakers launched a discussion of whether to impose a severance tax on gas. It is the only state among those studied that does not, instead imposing an “impact fee” on drillers.

A recent report by the Pennsylvania Budget and Policy Center concluded that Pennsylvania could impose a modest severance tax on gas without dampening activity, though the proposal is being fought strenuously by the energy industry. Whether or not to have a tax was a major issue in the recent governor’s race in Pennsylvania, in which Democrat Tom Wolf defeated Republican incumbent Tom Corbett. Wolf supports a 5 percent severance tax.

Ohio, which had the second-lowest gas taxes among the 11 states in the Pennsylvania study, voted to increase its severance tax earlier this year.

But some states are looking to move in the other direction. In Arkansas, for instance, energy lobbyists are grousing that the severance tax — 1.5 percent for up to 36 months — is not competitive with neighboring states. That’s one reason, they say, that the number of rigs in the Fayetteville Shale play has fallen from 60 to 15.

 

 ENLARGE

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But many experts say a much bigger factor for drillers than the severance tax is the current price of oil or gas.

When natural gas prices bottomed out as shale plays across the country were tapped, many energy firms left northwest Louisiana’s Haynesville, figuring they’d come back when prices got better.

“It’s all fundamentally driven by the price of oil, and the price of gas, because that pays for everything,” said Greg Albrecht, chief economist for the Legislative Fiscal Office. “That’s why Haynesville was a big explosion when gas prices were going up to $10 a mcf (thousand cubic feet), and then as they collapsed, new activity has fallen off dramatically.”

In Albrecht’s view, “price is 90-plus percent” of what drives drilling.

That explains why a recent drop of about 20 percent in the per-barrel price of oil is cooling things off for now in the Tuscaloosa.

Oil is expected to remain in the range of $76 during the first quarter of 2015, experts believe. That’s very close to the current breakeven price for Tuscaloosa, although that number is predicted to fall as energy firms become more familiar with the shale’s intricacies.

As oil prices have sunk, Goodrich and Halcon have seen their stock prices tumble by almost 40 percent.

But just a few months ago, when oil prices were higher, the companies were flying high. Goodrich’s Turnham told investors in August that he expected returns on investment of between 29 and 53 percent, depending on the price of oil and the cost of the wells.

Were profits to remain in that range, a 12.5 percent tax would be unlikely to dim interest in drilling, experts say.

Benefits of drilling

Defenders of the break say that Louisiana’s ongoing industrial boom might not have been possible without the break for horizontal drilling.

“There’s been a lot of talk about how the state has lost a lot of money because of that tax credit, and that’s true, but in the big scheme of things, you built that pipeline, you built that plant because of that action caused by the tax incentive,” said Richard Metcalf, director of environmental affairs at Louisiana Mid-Continent Oil and Gas Association. “You take one domino and you may lose the whole thing.”

 

 ENLARGE

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Advocate Staff Photo by ARTHUR D. LAUCK — Public Service Commission member Scott Angelle said he’s “convinced” the incentive for horizontal drilling will be “one of the best investments” Louisiana has made. Angelle recently announced he is running for governor.

 

Public Service Commission member Scott Angelle, who as secretary of the state Department of Natural Resources from 2004 to 2012 was in charge of overseeing drilling activity in Louisiana, agrees with that assessment.

“I’m convinced, at least from what I’m seeing happening in Louisiana: The cost-benefit ratio of the incentive for horizontal drilling is going to prove one of the best investments this state has ever made,” said Angelle, who is one of four announced candidates for governor next year.

Angelle says the cheap natural gas extracted nearby, with the help of the exemption, has helped spur industrial investments of about $70 billion in Louisiana. Low-priced natural gas not only provides fuel for the newly announced plants, but it also is used as an ingredient in manufacturing processes.

Advocate staff photo by ARTHUR D. LAUCK — In the past 10 years, Gov. Bobby Jindal’s campaigns received just over $1 million from energy-related companies. Only the construction industry gave Jindal more contributions.

A powerful lobby

Oil and gas interests have for decades cast a long shadow over Louisiana politics.

The industry has donated about $6 million — usually in increments of $500 to $1,000 — to all manner of politicians in Louisiana, from House members to commissioners of insurance, since 2010.

Over the past decade, Gov. Bobby Jindal’s campaigns received just over $1 million, according to a coalition of environmental groups, or about 1/20th of the money he raised during that period, making that sector the second-highest contributor to his campaigns behind the construction industry.

In addition to significant political contributions, politicians see job creation as a potent campaign issue. The energy industry frequently reminds the public that it is one of this state’s leading employers; a study funded by LMOGA earlier this year boasted that oil and gas companies provided about 287,000 jobs and about $20 billion in household earnings in 2011.

Given the clout the oil and gas industry has traditionally wielded in Louisiana, it qualified as a victory when the Legislature voted earlier this year to change a law that had allowed oil and gas companies to collect above-market interest on tardy severance-tax rebates — even when it was the companies’ fault the rebates were late. A February report by the state legislative auditor said the interest payments alone had cost Louisiana taxpayers $8.1 million in the most recent year for which data was available.

The trick in coming months will be balancing the powerful industry’s interests with the needs of state government. Right now, the two sides are circling each other.

 

Walt Handelsman: A special Giving Away Louisiana animation from The Advocate’s two-time Pulitzer Prize-winning cartoonist and animator.

 

Having trouble viewing Walt’s animation? Click here to view the video in another browser.

The combination of active political lobbying and the employment numbers gives oil and gas significant sway over how government operates — and who holds the levers of power — in Louisiana, said G. Pearson Cross, a political scientist at the University of Louisiana at Lafayette. He suspects that however the horizontal well exemption sorts out, in the end it will be a repair that the oil and gas industry can live with.

“I’d be very surprised if more than a few elected officials pushed back,” Cross said.

Tim Barfield, who heads the state Department of Revenue, said industry officials were open to scaling back the exemption a couple of years ago. But he thinks his boss, Jindal, would be reluctant to back any change that could potentially result in higher natural gas or oil prices. Jindal has been leery of doing anything that could be construed as a tax increase, as a potential 2016 presidential candidate who signed a pledge promulgated by the group Americans for Tax Reform in which he promised never to raise taxes.

“They were willing to look at — in principle they were willing — not necessarily getting rid of the horizontal wells exemption, but they were open to changing how it worked,” Barfield said. “I haven’t talked to the administration to get the OK to say this, but I think the administration would be very reticent to do anything that would impact that manufacturing renaissance.”

Staff writer Gordon Russell contributed to this report.

Little-noticed program criticized as rebates could reach $1 billion per year

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New Storm Surge Map Predicts Worst-Case Scenarios for South La.

Posted on: November 12th, 2014 by restoreit

New storm surge map predicts worst-case scenarios for south La.

Amy Wold The Advocate A new storm surge prediction map estimates that a large, very slow moving hurricane could push more than 9 feet of water onto LSU’s campus. n fact, all of southern Louisiana as far north as Pointe Coupee Parish could face such a storm surge if the conditions are just right,according to a new worst case scenario map released Thursday by the National Hurricane Center Office for Coastal Management. But before people in Baton Rouge start hiring contractors to elevate their homes, it’s important to know that the chance of that level of flooding happening in Baton Rouge is low. For areas south of interstates 10 and 12, the chance of significant flooding increases, but that depends on the proximity to the Gulf of Mexico and the elevation of the land. Although alarming at first glance, the map doesn’t reflect the effects of a single storm across the coast of Louisiana. Instead, it shows the worst-case scenario for any particular area along the coast, said Barry Keim, state climatologist. “That map can never happen (in total),” agreed Ken Graham, meteorologist in charge with the National Weather Service in Slidell. The scenario in which storm surge could make its way into Baton Rouge would involve storm surge running through Lake Pontchartrain, into Lake Maurepas, up Bayou Manchac and then into low-lying areas of the parish. Although Lake Pontchartrain is miles from Baton Rouge, it’s not that far away in terms of elevation. “All of that area is pretty low-lying,” Keim said. It may seem far-fetched that a Category 3 storm could push that much water that far inland, but just because it hasn’t happened doesn’t mean it couldn’t, Keim said. “It is conceivable that something like that could happen,” he said. Graham added that, out of thousands of scenarios run by the map’s creators, there may have been only a handful that showed storm surge getting as far inland as LSU. “The risk isn’t zero. There is some risk,” Graham said. The newly released map also shows worst case storm surge scenarios for different categories of storms. The calculations within the map also goes beyond just wind speed. The map based its finding on thousands of hypothetical storms. In some parts of the country, as many as 60,000 varying storm conditions were used to come up with a map. The variations took into consideration forward speed, direction, size of storm and wind speeds. “This is the worst case scenario of a number of different storm events,” Keim said. For example, under a Category 3, there is extensive flooding up through the Atchafalaya River basin that could bring storm surge into parts of Iberville, West Baton Rouge and even Pointe Coupee parishes. That type of storm would be a very large, very slow moving hurricane, Graham said. “It’s your Isaac on steroids,” Graham said. “Most hurricanes aren’t going to do that.” The new storm surge map is intended to provide a much clearer picture for coastal residents in Louisiana and around the country to understand the potential flooding risk. While having the new maps to show potential risk is exciting, it’s what will be done during a storm that could really save lives, Graham said. When a storm watch is issued — 48 hours before landfall — meteorologists will run the computer model with numerous variations of the storm’s path, size, direction, wide speed and other characteristics. About an hour after the storm watch is issued, the National Weather Service will be able to put out a worst case scenario map for the particular storm’s surge. So many variables will be put into that computer map that there will be only a 10 percent chance that the water levels portrayed will be exceeded, Graham said. While it will look similar to the other worst case scenario maps, this one will be specific to the current storm, he said. In addition, water levels will be portrayed as actual water above ground, unlike previous storm surge maps that used sea level elevations, which at times were hard to translate into actual flooding. “It’s a huge step forward,” Graham said. This storm-based mapping was available to forecasters this year, but it hasn’t been needed because Louisiana hasn’t been threatened by a storm. One drawback to the maps is that it’s difficult to predict what will happen in areas surrounded by levees. Currently, there is no reliable way to estimate flooding potential within the levee systems like those that surround New Orleans or parts of Lafourche Parish, if those levees are overtopped, Graham said. NOAA is currently working on how to color code those areas because there is still flooding risk within those levees. “We don’t want to cause a false sense of security,” Graham said.

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