President Biden Should Work with Louisiana Energy Sector, Not Lead to its Demise
BATON ROUGE, La -- President Biden’s moratorium on offshore leasing and his determination to end onshore exploration and production of fossil fuels is a colossal mistake. Production from the Gulf of Mexico (GOM) has fueled our nation’s energy security and independence.
Since the first offshore well was drilled 70 years ago, 90% of the crude oil produced in the United States has been produced from the GOM. Today, the GOM accounts for 17% of the crude produced in the U.S. As the number one oil producer and the number two gas producer in the OCS, Louisiana delivers more revenue from offshore production to the federal treasury than any other state, in excess of $7 billion per year. In addition to its contribution to the U.S. economy, the oil and gas industry, including pipeline and refining activities, has a $70B annual impact on the Louisiana economy and pays $2 billion per year in taxes and fees (Dr. Loren C Scott, 2014 and 2018 studies).
Furthermore, not only is Louisiana an Energy State, but we are known as the Sportsman’s Paradise largely because of our relentless effort to balance offshore oil and gas operations with environmental stewardship. A prime example of the symbiotic relationship between the oil and gas industry and the sports fishermen is the Louisiana Artificial Reef Program. In this program, oil and gas platforms with no future utility are decommissioned and converted into artificial reefs to provide new habitats for fish and marine life. Oil and gas companies donate one-half of the realized savings over the cost of a traditional platform removal into the Trust Fund, which is used to build and monitor the inshore, nearshore, and offshore artificial reefs.
Thirdly, energy production in the Gulf of Mexico is critical to saving Louisiana’s coast and our coastal communities through revenue-sharing programs like the 2006 Gulf of Mexico Energy Security Act (GOMESA). In this program, a portion of the federal royalties paid by oil and gas operators on offshore production is shared with the coastal states, in recognition of their contributions to the nation’s energy security and independence. In Louisiana, funding from GOMESA is dedicated to coastal restoration and protection projects at the state and local level and is expected to be $118 million in FY2020.
The Land & Water Conservation Fund (LWCF) was established by Congress in 1964 to fulfill a bipartisan commitment to safeguard our natural areas, water resources, and cultural heritage, and to provide recreation opportunities to all Americans. This fund invests earnings from offshore oil and gas leases and has funded over $4.2 billion for more than 43,000 conservation projects throughout the nation since its inception.
Looking ahead, while multiple sources of energy will continue to be needed to advance the world’s growing energy demands, the demand for oil and gas is projected to still constitute more than 50% of the world’s energy needs in 2040, according to the International Energy Agency’s (IEA) New Policies Scenario. Without an additional investment of roughly $10 trillion, the IEA forecasts that there will be an 88 MBOPD shortfall in 2040 due to the expected decline of the existing well production. This would be the long-term impact of an offshore leasing moratorium. Conversely, expanding the current federal leasing program will allow the United States to meet this growing demand for not just power and fuel, but for consumer goods such as electronics, medicines, plastics, and clothing that are manufactured from fossil fuels.
Onshore Louisiana operators are contributing to our nation’s energy security as well by providing significant volumes of clean, natural gas from the Haynesville shale for developing liquefied natural gas (LNG) export businesses in south Louisiana.
In addition, the Louisiana legislature this past session continued work on a framework for the solar and carbon capture industries to establish businesses in our state that are environmentally responsible and meet the growing demand for clean energy in our country. I am proud to have funded in this year’s budget a $1 million study for LSU and the Louisiana Geologic Survey to map geologic formations that are prime candidates for carbon capture and underground storage (CCUS).
It is my hope that the Biden administration will recognize and respect Louisiana’s critical role in meeting the energy and manufacturing needs of our country and in the rebuilding of our coastline. Furthermore, I am confident that Louisiana energy companies will lead the way, as we have always done in the past, to develop the technologies needed to make alternative forms of energy economical, predictable, and environmentally responsible. President Biden and his administration should collaborate with energy companies, not proclaim us the enemy.
Aug 1, 2021 - SOURCE: LOGA Industry Report - Summer 2021