June 5, 2014 01:47 PM
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LOGA President Don Briggs' relationship with The Daily Advertiser's editorial board (until recently he was a citizen member) has always been questionable, but even more suspect is his new claim before the board that the industry is ready and willing to tackle the problem caused by the thousands of abandoned oil and gas wells littering our state.

 
LOGA President Don Briggs 

Louisiana Oil and Gas Association President Don Briggs' relationship with The Daily Advertiser's editorial board has always been questionable (the head of the state's oil lobbying group serving as a citizen member of the paper's editorial board raised lots of eyebrows), but even more suspect is his new claim before the board that the industry is ready and willing to tackle the problem caused by the thousands of abandoned oil and gas wells in the state.

This is the same Don Briggs who rallied the troops earlier this year in an effort to kill the New Orleans levee board's lawsuit against 97 oil and gas companies for damages to the coastline with a claim that it would result in a massive hemorrhaging of jobs. Yet when deposed and under oath, he couldn't back up his central argument by naming a single company that had left Louisiana or refused to do business here as a result of the state's legal climate.
 
As the guest speaker at the Advertiser's editorial board meeting Wednesday, Briggs - who just rolled off as a citizen member after two years of "service" - made the claim that the industry is now ready to pay higher fees so the state can start plugging the more than 2,800 orphaned wells and clean up the polluted sites. Yet there's one catch according to Briggs: "We're not the ones saying 'No, we won't pay more.' We have a state political administration that opposes raising fees or taxes."

He makes a somewhat valid point: Gov. Bobby Jindal is by no means an enemy to oil and gas, and it's very likely he would oppose any kind of a fee increase being imposed on the industry (or any fee increase that anyone anywhere might view as a tax).

But here's why Briggs' new revelation is circumspect: Not only does it come as an effort to salvage his image following that embarrassing deposition incident, but it also conveniently comes on the heels of Louisiana Legislative Auditor Daryl Pupera's report released Monday showing how big a problem the orphaned well issue has become. (Read the full report here.)

The state only charges production fees of $0.015/barrel of oil produced and $0.003/thousand feet of produced natural gas. That netted the state $4.8 million in the 2013 fiscal year, which, according to the audit report, is nowhere near enough money to begin addressing the orphan-well problem.

"For example, an operator with a land well with a depth of 1,700 feet would only be required to provide $1,700 in financial security," the report states. "However, actual plugging costs would be approximately $11,900, a difference of $10,200."

Here's where it gets worse: "Not having sufficient financial security to cover the cost to plug wells may provide an incentive for operators to orphan wells instead of plugging. For example, if the financial security amount is too low, operators may abandon the well and forfeit the financial security because it is cheaper to abandon the well than to pay the actual cost to plug the well."

So, what's the incentive for the industry to start being responsible? According to the audit report, there is none, largely because of a lack of enforcement by the state Office of Conservation, a division of the oil-friendly Louisiana Department of Natural Resources.

"Although the agency has the authority to impose civil penalties for violations, it does so infrequently," the report reads.

Since 2008, the state opted against levying $471,000 worth of penalties against companies for inspection violations.

The state is definitely at fault for much of the problem, largely due to its lack of enforcement, but it's not alone.

And as far as Briggs' claim that the industry will gladly pay higher fees, let's just say the jury's still out on that one.

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