Opting instead to chase the natural gas play in north Louisiana, oilmen and private investors showed very little interest in coastal properties this week when the state Mineral and Energy Board conducted its monthly sale.
Opting instead to chase the natural gas play in north Louisiana, oilmen and private investors showed very little interest in coastal properties this week when the state Mineral and Energy Board conducted its monthly sale. Of the 13 oil and gas leases sold Wednesday, 10 were located in northern parishes while only three were located near the Gulf of Mexico. The lucky few from south Louisiana that garnered bids included the parishes of Calcasieu, Jefferson and Terrebonne.
All 10 of the north Louisiana leases were sold in the area of the Haynesville Shale natural gas formation - in Caddo, DeSoto and Red River parishes. Lease sale prices remain strong in the region, with leases averaging about $9,200 an acre; more than half actually went for better than $12,000 an acre. The success of the north Louisiana leases also underscores the struggles in the south.
Just consider that the activity of six Louisiana parishes - Bienville, Bossier, Caddo, DeSoto, Red River and Sabine - collectively represent 10 percent of the nation's drilling activity. Meanwhile, offshore activity has been all but dormant in recent months. "We seem to have two Louisianas when it comes to drilling activity, with south Louisiana and the federal waters off Louisiana's coast being flat," says Natural Resources Secretary Scott Angelle. "As shale plays become more in vogue, the drilling investment dollars are flowing disproportionately to these unconventional resources."
For example, there are currently 35 producing wells tapping into Louisiana's coal resources for coalbed methane, an alternative source of natural gas, in north Louisiana. These wells are chiefly spread throughout Caldwell, LaSalle, Richland and Winn parishes. Coalbed methane is an established source of natural gas in other states, but has only relatively recently been explored in Louisiana.
As for south Louisiana, Angelle says he believes the current low rig numbers in the Gulf of Mexico do not represent a long-term future pattern. He says that potentially-rich and newly-developed fields, such as the Tiber and Thunder Horse, have been discovered in the Gulf of Mexico.
Additionally, McMoRan Exploration recently announced an ultra-deep find in shallow Gulf waters off the coast of Iberia and Vermilion parishes, which could possibly be the beginning of a new frontier. "Developments such as the McMoRan find and ongoing investment in deepwater Gulf exploration are a positive indicator for continued economic stability and growth of our state and the Acadiana region," says state Sen. Nick Gautreaux, D-Abbeville, chairman of the Senate Natural Resources Committee.
Overall, the state Mineral and Energy Board collected more than $6.3 million in bonuses during its February sale, bringing the total collected for the fiscal year (since July 1) to roughly $45 million. It was the most successful February sale on record since 2007, when the board collected $11 million.