While the national political climate is unsteady and the entire country is nervous about how a government shutdown might affect us at home, Louisiana is experiencing an unprecedented economic development boom.
A study conducted in February by Dr. David Dismukes of the LSU Center for Energy Studies showed that over $62 billion in economic development investments have been committed to the state of Louisiana over the next eight years.
This past week, Shell announced a potential gas to liquids project that could bring an additional $12.5 billion economic impact to the state of Louisiana. This recent announcement pushes the investments committed to Louisiana well over the $75 billion range.
According to LSU’s study, over 214,000 high paying jobs will be created and a $9.3 billion increase in wages through the end of this decade will result from these investments. So what is the common denominator for the likes of Shell, Cheniere, Sasol and Methanex? These companies see an opportunity to make financial investments in Louisiana due to our vast and cheap supply of natural resources.
Particularly, Louisiana has an abundant supply of natural gas thanks to the development of the Haynesville Shale play of Northwest Louisiana. As the price of natural gas now sits in the $3 per mcf range thanks to an overabundant supply of natural gas, the companies can see the writing on the wall. Louisiana is the place to be for manufacturing operations. Remember, natural gas is to the petro-chemical industry as flour is to the baker.
While these economic development announcements, dollar amounts and job numbers sound very positive, one factor is holding the Louisiana economy back from its full potential. The legal climate of Louisiana is the second worst climate in the nation to conduct business.
Recently, the South Louisiana Flood Protection Authority East (SLFPAE) confirmed this statistic as they filed suit against 97 oil and gas companies. Their suit alleges that the oil and gas industry has been the chief contributor to the erosion that is taking place on our Louisiana coast. While the chief coastal authority for the state of Louisiana, who spends all its time and efforts studying the coast of our state, has said this is simply not the case, one small flood board thinks they know better.
While the SLFPAE continues to say this suit is not about money, when pressed on the matter, the SLFPAE’s chief litigator for the suit said in the New York Times, “The plaintiffs were seeking damages equal to many billions of dollars. Many, many billions of dollars.”
The supporting cast for the SLFPAE, the environmental groups like the Bucket Brigade, recently ran a full page ad in the Advocate, again, accusing the oil and gas industry as being THE reason for the coast “vanishing.” This advertisement they sponsored would have been most suitable on the cartoon page of the paper, because the environmental group’s predictability on slamming the oil and gas industry is outright comical.
At a time when Louisiana should be rejoicing over its coming achievements, we are successfully driving away all exploration and production investment dollars that are needed to continue producing this new demand for natural gas. Again, if Louisiana is to remain an economically competitive state, then a sue-happy business climate for our companies to operate within is certainly not the answer.