3. Who is LOGA?
LOGA (known before 2006 as LIOGA) was organized in 1992 to
represent the independent and service sectors of the oil and
natural gas industry in Louisiana; this representation includes
exploration, production and oilfield services.
Our primary goal is to provide our industry with a fair and
equitable working environment that will enhance the industry.
LOGA is made up of over 1400 individuals and companies operating
in Louisiana
Thursday, January 12, 12
4. The LOGA Team
Don Briggs Lauren Estopinal
President Government Affairs
Gifford Briggs Ragan Dickens
Vice-President Assist Director of North La
CeCe Richter - Ben Brousard
Assistant to the President Director of Marketing and
Membership
Jodee Bruyninckx
Director of North La
Thursday, January 12, 12
5. LOGA Members at the Capital
Apache - Chesapeake -
Matt Thompson Kevin McCotter
Ginger Adam (Contract)
BG Group -
Jim Wiggins (Contract) El Paso -
Celeste Hood (Contract)
BHP / Petrohawk -
Tommy Foltz EnCana -
Chris Coulon (Contract) Kevin Bruce
Jim Harris (Contract)
Cheniere -
Jason French Spectra -
Tyron Picard (Contract) Brian Fahrenthold
Questar - Luke Letlow
Thursday, January 12, 12
6. Associations &
Integrated Companies
Thursday, January 12, 12
7. Trades and Integrated Cos.
LABI / Energy Council Conoco - Dave Cagnolotti
Ginger Sawyer Celeste Hood (Contract)
LMOGA Exxon - Jeff Copesky
Chris John, Brent Golleher Liz Mangham (Contract)
BP - Karl Connor Shell - Neil Buckingham
CJ Blanche (Contract)
Chevron - Brent Wood
CJ Blanche (Contract)
Thursday, January 12, 12
8. Oil & Natural Gas in
Louisiana
Thursday, January 12, 12
9. A Century of History
Jennings Louisiana - The birthplace of
Louisiana’s Oil Industry
First well was drilled in 1901 by Scott Heywood
In the 1930s companies began drilling in
Louisiana “Marshy” areas
1937 - First Offshore Gulf Platform - 14’ water
Thursday, January 12, 12
10. History cont..
1940s the offshore movement began -
mostly because of a lack of onshore
availability
20 years industry survived in the Gulf
without hurricanes
in the 1960s, 3 major storms hit the
Gulf and the industry survived the test
Thursday, January 12, 12
11. History cont..
Today we have completed thousands of
wells onshore and offshore
Technology has allowed the development of
resource plays such as the Haynesville
Shale and Deep-Water fields in the Gulf of
Mexico
Thursday, January 12, 12
12. What does this mean to La.?
Revenues and tax receipts from the oil & natural gas
industry today represents approximately 15% of
Louisiana’s general fund dollars
Over 60,000 direct jobs in the state in 2010
Economic impact in all 64 parishes
Millions paid in Ad Valorem taxes directly to
parishes around the state
Thursday, January 12, 12
13. Oil & Gas
Nuts & Bolts
Thursday, January 12, 12
14. “Conventional Play”
Risk level high - as much as 50 -90%
1. Find Zone
2. Reservoir Quality Characteristics
3.Trapping Mechanism
4. Source for Oil and Natural Gas to
Migrate into the Trap
5. If just one of these
Characteristics is missing you have
just drilled a dry hole.
Thursday, January 12, 12
15. “Un-Conventional Play”
“Resource Play”
The “low to zero risk”
and the size is what
allows a company to
pay high bonuses/acre
and 25% royalty
compared to
conventional play lease
terms of $100/acre and
18.75% royalty.
Thursday, January 12, 12
18. Taxe Rates...
Severance Tax on oil is 12.5% of revenue generated
Severance Tax on natural gas is flat rate X amount
of production
rate determined by prior year average price of
natural gas
Ad valorem is the property tax paid on equipment
LA Constitution states that no other tax shall be
levied on oil/natural gas other than severance
Thursday, January 12, 12
19. Incentives
Inactive Well (expired) Stripper Well
Deep Well Tertiary Recovery
Horizontal Well
New Discovery Well
(expired)
Incapable Well
Thursday, January 12, 12
21. Department of Natural Resources
Secretary Scott Angelle
Appointed by the Governor
preserve and enhance the
nonrenewable natural resources of
the state, consisting of land, water,
oil, gas, and other minerals,
through conservation, regulation,
management and development
Divisions - Secretary, Conservation,
Mineral Resources, Coastal
Management
Thursday, January 12, 12
22. Office of Conservation
Department of Natural Resources
Commissioner of Conservation - Jim Welsh
Appointed by the Governor
Sole regulatory authority over the oil and natural gas industry
Issues permits, monitors drilling activities, inspects sites, and handles
remediation and site closure
29B - regulatory remediation standard
Also responsible for the management of the state’s groundwater and surface
water resources
Thursday, January 12, 12
23. Coastal Management
Department of Natural Resources
Stephen Chustz - Acting Assistant Secretary
Responsible for the maintenance and protection
of the coastal wetlands
Mitigation and planning is a major function
of this division
Thursday, January 12, 12
24. Department of Environmental Quality
Secretary, Peggy Hatch
Appointed by the Governor
Regulates air emissions/quality, hazardous
waste and water quality
Oil spills that fall outside of a drill site, will
fall under the DEQ
RECAP - Remediation standard
Thursday, January 12, 12
25. Areas of
Intense
Activity
Thursday, January 12, 12
27. Haynesville Shale
#1 Producing Natural Gas Field in the US
#4 Largest natural gas field in the world
$17 billion - estimated economic impact to local and
state in 2010
$4 billion - estimated household earnings attributed
to the shale in 2010
110,000+ jobs supported by the shale in 2010
Thursday, January 12, 12
28. Continued..
Wells drilled to a depth of 10,000’ +
Horizontal completion of 3,000’+
Average cost is $10,000,000 per well
Estimated break-even cost is natural
gas @ $3.85/mcf (2010 Credit Suisse report)
174 Units as of 10/30/08
2207 Units as of 12/15/11
Thursday, January 12, 12
29. CLAIBORNE
CADDOCaddo-Pine Island Field
Haynesville Shale Gas Play
Well Activity Map
Producing Well (13)
Dixie Field Bellevue Field Permitted Well WOC*/Fracturing/
Sentell Field Testing/Other Operations (47)
BOSSIER
Permitted Well
Drilling in Progress (35)
Permitted Well
Not Drilling (65)
Longwood Field 160 Total Wells Permitted
to Haynesville Shale
* Waiting on Completion
220 20
Adopted Haynesville
Shale Unit (174)
Bossier City
20 Shreveport
Sligo Field
WEBSTER
Greenwood-Waskom
Field Cedar Grove Field
Metcalf Field
BIENVILLE
Elm Grove Field
Johnson Branch Field
Caspiana Field Swan Lake
Field
49
Woodardville Field
Thorn Lake Field
Bethany-Longstreet Field
Kingston Field
Holly Field Martin Field
Belle Bower Field
RED
Red River - Bull Bayou Field
North Grand Cane Field
Coushatta
RIVER
Logansport Field Mansfield
Grand Cane Field
Trenton Field
Spider Field
Benson Field
DE SOTO King Hill Field
Pleasant Hill Field
NATCHITOCHES
Well data as of 10/30/08.
NOTE: Data from this map are
not to be used for legal purposes.
SABINE 0 5
Miles
10
Thursday, January 12, 12
30. Companies in the shale
BEUSA Energy Fossil Operating
BP Indigo Minerals
Camterra Resources JW Operating
Chesapeake Matador Production
Comstock Oil & Gas Petrohawk-BHP Billinton
Devon QEP Energy
Eagle Oil & Gas Samson
ElPaso E & P Shell E & P
EnCana SM Energy
EOG Resources Stroud Petroleum
EXCO Tellus OPerating
Forest Oil XTO (Exxon)
Thursday, January 12, 12
31. Central
Louisiana
Oil Plays
Thursday, January 12, 12
32. Central Louisiana
Tuscaloosa Marine Shale / Louisiana Eagle
Ford Shale
Austin Chalk
Very early stages of development
First results are positive
Indigo Minerals well producing 500 barrels/
day out of initial well
Thursday, January 12, 12
33. Will the Tuscaloosa Marine Shale Play
be the Next Boom Play in Louisiana?
Thursday, January 12, 12
34. Companies in Central La
Anadarko Goodrich
El Paso Indigo Minerals
EnCana Mid-State Petroleum
Devon Swift
Denbury
Thursday, January 12, 12
39. Ultra-Deep
South Louisiana Oil Play - Onshore
and Offshore
Wells will mostly be drilled onshore
Wells to be drilled to depths greater than
22,000’
Well costs are estimated at $100
million/well
Thursday, January 12, 12
40. Ultra Deep
22 -30,000 Feet
Will require different
leasing rules to
incentivize companies
to drill $100 million
wells.
Thursday, January 12, 12
41. Companies in the Ultra-
Deep Frontier
Freeport McMoran
Plains Exploration & Production
Conoco
Chevron
Thursday, January 12, 12
43. Gulf Of Mexico
Gulf is divided into different sections
The Shelf
The Outer Continental Shelf
Eastern OCS (off-limits)
Central OCS
Western OCS
Thursday, January 12, 12
44. M
South
Atlantic
Western Central Eastern
Gulf Gulf Gulf of
of of Mexico
Mexico Mexico
Straits
of Florida
Thursday, January 12, 12
45. GoM Facts
161 Active Operators
2,374 Qualified to operate in the Gulf
81% of producing leases - Independents
46% of producing deepwater leases -
independents
1,298 deepwater wells drilled - Independents
Independents accounted for 200,000 jobs
related to GoM in 2009
Thursday, January 12, 12
47. Horizontal Drilling
Benefits
30 % reduction in pad site impact
access 60 times more below ground area
makes resource play economics possible
Thursday, January 12, 12
48. Hydraulic Fracturing
First commercial “FRAC” job was
conducted in 1947
States Regulate Hydraulic Fracturing
More than 1 million wells had been
completed using this method by 1988
Estimated that nearly 85% of wells
drilled today are completed using
hydraulic fracturing.
Multiple federally funded studies have
shown that there is no risk associated
with Hydraulic Fracturing
Thursday, January 12, 12
49. Water Use & Sourcing
Wells that are completed using Hydraulic
Fracturing use millions of gallons of water in the
process
Companies make every effort to use surface water
or non-potable sources when possible - including
expensive recycling methods
All water wells are permitted and registered
through the Office of Conservation to ensure the
protection of vital aquifers around Louisiana
Thursday, January 12, 12
50. Roads
LOGA member companies have a commitment to working with
local governments to ensure the safety of its roadways during the
development phase of our production.
In the Haynesville Shale, operators came together to work hand in
hand with local officials regarding road repairs, road department
procedures and safety standards for roadways and truck traffic.
LOGA can offer industry coordination for workable solution to
local road issues & concerns.
Thursday, January 12, 12
51. CNG & LNG- Bridge Fuel
CNG - Compressed Natural Gas
remains in gas form
fleet vehicles, medium duty, short ranged
heavy duty vehicles
LNG - Liquified Natural Gas
compressed under high pressure and low
temp into a liquid form
long ranged, heavy duty vehicles
Thursday, January 12, 12
52. L/CNG Cont...
2009 - Jane Smith passed legislation to increase the individual
and corporate income tax credit for the purchase of qualified
clean-burning motor vehicle fuel property and for the purchase
of a motor vehicle with qualified clean-burning motor vehicle
property installed by the vehicle's manufacturer
Refundable income tax credit increased from 20% to 50%
for the conversion costs of a vehicle
Refundable income tax credit of 50% for the cost of the
equipment for fueling infrastructure
Thursday, January 12, 12
54. L/CNG The Blue Boot
Where we are today
Existing / Under construction
CNG - 9 stations
LNG - 1 station
Planned
CNG - 7 stations
Thursday, January 12, 12
56. Horizontal Severance Tax
Investment Incentive
Qualified wells receive a suspension of severance tax for
2 years or until payout is reached (whichever is the
lessor)
Enacted in 1994
Estimated in 2010 that the state gave up $125.3 million
with the incentive, but gained #367.7 million in
revenue generated from the associated drilling
Simply put - the state gains $2.94 for every dollar of
incentive granted
Thursday, January 12, 12
57. Legacy Lawsuits
What is a “Legacy Lawsuit”
Lawsuit alleging contamination from
oilfield operations - usually from older
fields
Legacy is derived because all historical
operators are named as defendants in the
suit - in some cases over 30 defendants
Thursday, January 12, 12
58. Legacy cont.
Over 250 suits currently filed
Original suit was “Corbello”
Landowner awarded $33 Million without a
requirement to clean up
120 acres valued at $108,000
Penalties and interest raised total award to
over $70 million
Thursday, January 12, 12
59. Legacy Cont.
In 2006 the Legislature passed ACT 312 in attempt
to handle lawsuits and move remediation forward
Since 2006 no remediation plans have been adopted
by the court
District courts have implemented ACT 312
differently than was intended by the Legislature
Insurance companies are now denying insurance to
companies in Louisiana - but not in Texas and
Mississippi
Thursday, January 12, 12
60. Non-Consent / Risk Charge
When a unit is formed there are often
companies and individuals that hold leases
from royalty owners
Existing owners have options on how to move
forward
Negotiate with operator
Participate in the well (statutory)
Go non-consent (statutory)
Thursday, January 12, 12
61. Non-Consent / Risk Charge
If they elect to participate in the well they
will pay their proportionate share of the
well costs and will receive their share of
the well profits equal to their ownership
If they elect to go non-consent, they will
be subject to a risk charge of 200%
once the risk charge has been assessed,
they will receive their share of the well
profits equal to their ownership
Thursday, January 12, 12
62. Non-Consent / Risk Charge
Issues
Smaller operators are being squeezed
because they cannot afford to
participate or pay the royalty
Royalty owners are not being paid
timely
Risk charge is not consistent across
all wells in a unit affecting the
economics for those drilling the wells
Thursday, January 12, 12
63. Non-Consent / Risk Charge
Legislation
Must be able to first protect the royalty
owners and ensure they are getting paid
Must allow the smaller operators with an
opportunity to have some “skin in the game”
Must create level playing field for all wells
in a unit
Thursday, January 12, 12
64. Ultra-Deep Unitization
Legislation
Defines Ultra-Deep as structures
encountered below 22,000’
Allows units to be formed based from
seismic data before a well is drilled
Allow for the orderly and ecnonomic
development of the play
Thursday, January 12, 12
65. Ultra-Deep Unitization
Investment in Ultra-Deep wells, such as the
Davy Jones discovery, is incredible
Current regulations did not contemplate wells
of this magnitude in scope and cost
in order for the play to develop, rules must be
updated to address circumstances around new
technology and plays
Thursday, January 12, 12
66. Water
2 different water types
Groundwater - water below the surface of the earth
Surface water - water that is either running or not that is contained above
ground
Groundwater - managed by the Office of Conservation -
ownership is determined by the
“rule of capture”
Water wells are to be permitted by OOC
Surface Water -
Not under anyones direct ownership and is the property of the state in trust
for the people of Louisiana
Any citizen of Louisiana has the right to use of the water
Thursday, January 12, 12
67. Water cont...
Historically, the state has never charged
for use of surface waters (i.e. the
Mississippi River) see R.S. 9:1101
Until recently, there was no mechanism
for the state to charge, even if it would
have wanted to
Thursday, January 12, 12
68. Water cont...
Early 2010 the Attorney General issued 4 opinions
that claimed the State of Louisiana OWNED the
running waters of the state
if the state OWNED the running waters, they then
must charge FAIR MARKET VALUE for the water
(Louisiana Constitution Art. VII, Sec 14)
However, the state had no mechanism by which to
charge or to receive revenue related from the sale
Thursday, January 12, 12
69. Water cont...
2010 Legislative Session Responses to AG
Department of Agriculture EXEMPTED agriculture
and aquaculture requirement to purchase water
DNR passed legislation that allowed for companies to
participate in a Cooperative Endeavor Agreement
(Expiring June 2012)
Resolution directed the Groundwater Resource
Commission to study state groundwater &
surfacewater resources and develop a statewide plan
Thursday, January 12, 12
70. Water cont...!
2012 Legislative Session
Issues
expiring CEA for oil and natural gas industry
results and corresponding legislation from the
GWRC
oil & natural gas industry sole participant in
requirement to purchase water
Thursday, January 12, 12
71. What this
means to you
and your
district
Thursday, January 12, 12