Industry looking up, but threats remain
January 10, 2010

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Twitter As we close the door on 2009, the new year is looking brighter for Louisiana's oil and gas community. After a year plagued with uncertainty and price instability, 2010 may prove to be a more promising year.




Here's the good and the bad. Oil and natural gas prices are steadily improving, climbing from the record declines of 2009. Oil at $35 and natural gas at $2.80 certainly does not work for the industry. With oil prices near $80 and natural gas climbing to $6, the industry's near future is looking more encouraging.

Drilling activity in South Louisiana crashed to record lows in 2009. However, with the recovery of oil and natural gas prices, the industry is gearing up for what looks like a significantly more productive year. In 2009, only five inland water drilling rigs were in operation in South Louisiana. Today, that number has more than doubled to 11. Additionally, South Louisiana land rigs were at a record low of nine in 2009. Today, that number stands at 12. The Gulf of Mexico rig count was down to a record low of 25, and today remains at 39. And of course, the "diamond in the rough" has been the sustained growth and activity of the Haynesville Shale in North Louisiana. Currently, rigs in operation in the Haynesville have reached a staggering 126. That's the good.

As we look toward 2010, there are three major obstacles that will make it more difficult for oil and gas companies to explore in the U.S.

First, Interior Secretary of Ken Salazar last week announced his new reform program for federal oil and gas leasing requiring more detailed environmental review, more public input and less use of streamlined leasing.

Secondly, on Dec. 7, President Barack Obama unveiled to the world that the U.S. Environmental Protection Agency will regulate greenhouse gases.

Finally, the Interstate Natural Gas Association of America estimates that nearly 300,000 natural gas wells will be drilled and completed using the technology of hydraulic fracturing by 2030. The oil and gas industry has utilized this technology for nearly 50 years without a single environmental incident. A liberal Democratic majority in Congress and an anti-oil-and-gas administration are pushing for the EPA to regulate hydraulic fracturing.

It's my hope that 2010 will be a brighter year. As prices become more stabilized, oil and gas companies in Louisiana are gearing up.

However, with the incessant tampering with private industry by the Obama administration and bureaucrats in Washington, our potentially brighter year could quickly darken.

Don Briggs is president of the Louisiana Oil and Gas Association and lives in Lafayette. He can be reached at don@loga.la.


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