Business Cover

The Russians Are Coming

Wednesday, October 19, 2011

LAGCOE welcomes its first-ever delegation from Russia. By Erin Z. Bass

Every other year, Lafayette hosts the country's second-largest energy exposition. In 2009, LAGCOE featured more than 400 exhibiting companies and welcomed over 15,000 attendees. This year's show, set for Oct. 25-27 at the Cajundome, has 394 companies scheduled to exhibit and is expecting visitors from 39 states and more than 20 countries.

Wednesday, October 19, 2011

LAGCOE welcomes its first-ever delegation from Russia. By Erin Z. Bass

Every other year, Lafayette hosts the country's second-largest energy exposition. In 2009, LAGCOE featured more than 400 exhibiting companies and welcomed over 15,000 attendees. This year's show, set for Oct. 25-27 at the Cajundome, has 394 companies scheduled to exhibit and is expecting visitors from 39 states and more than 20 countries.

While the Louisiana Gulf Coast Oil Exposition is a great way for local and domestic oil and gas companies to see the latest in both offshore and on-shore drilling technology, it's also an opportunity to attract buyers from around the globe.

Formed in 2001, LAGCOE's International Committee has worked to recruit international oil industry buyers and welcome them to Lafayette. In 2003, LAGCOE became part of the U.S. Department of Commerce's International Buyer Program, which works to bring foreign delegations to the show. This year, all the stars aligned and representatives of the program in Moscow are bringing the first-ever Russian delegation of 18 people, representing six companies.

Chairman of LAGCOE's International Committee and retired manager of Chevron's oil and gas operations in the western Gulf of Mexico, Tony Brown says Russia is currently the largest exporter of oil and natural gas in the world. Their status, coupled with Lafayette's reputation as an entrepreneurial oil town, are an obvious match.

"The buyer program has brought attention to Russia and the potential for them to view the latest in equipment and services," he says. "The Russian economy is frankly based a lot on the oil and gas industry, and the industry is going out looking for technology and services that the U.S. might have to offer."

Brown adds that Houston's Offshore Technology Conference, LAGCOE's biggest competitor, isn't necessarily the best fit for them. "Russia is not a big offshore producer," he explains. "They have more of a land, ice and snow environment. LAGCOE offers more of the basic onshore technology, while OTC in Houston is more offshore, deepwater. Our show may be more suited to their needs."

Ken Walsh, commercial officer with the International Buyer Program in Moscow, says his office has attended industry events, monitored developments in the press and conducted outreach to potential buyers of oil and gas equipment in order to attract Russia's oil and gas sector to Lafayette. It helps that Russia ranks among the top 10 countries in proven oil reserves and is focusing on improving its refining capacity.

"Because of the huge amount of reserves, there are opportunities in this market for both upstream and downstream equipment and service providers," Walsh says. "Russia has always been a strong market for oil and gas equipment, but the combination of an improving oil environment in terms of pricing, strong demand for new equipment in Russia and LAGCOE's participation in the CS International Buyer Program make this the perfect time to attend the show."

In addition to Moscow, Russian visitors are also coming from Perm and Tyuman. According to Walsh, delegation participants include distributors of oil and gas equipment, engineering service providers and after-market service providers. "These individuals are all decision-makers for their companies and are looking for new U.S. products and services that they can offer in the Russian market or purchase directly," he adds.

LAGCOE's had plenty of international guests over the years. This year, delegations are also coming from Nigeria, Canada and Mexico. (A delegation from Iraq was scheduled to attend but fell through.) Brown says that about 125 international attendees are registered from 25 countries, around the same amount as 2009. The show also gets a few international exhibitors. Although none of the Russian companies are exhibiting, Canada, France and the UK will all have exhibit booths.

LAGCOE's International Committee includes members like Gregg Gothreaux from Lafayette Economic Development Authority and Gerald Breaux from Lafayette Convention & Visitors Commission to ensure that international visitors enjoy not only their time at the show, but also their stay in Lafayette. Brown says that upon arrival, guests from other countries will be treated to a reception at the UL Alumni Center and have the opportunity to visit the University Art Museum. When they enter the show the next day, delegations will receive a welcome bag from LCVC and have access to an international visitors center and lounge in the Cajundome.

"One of the things we try to do is not only provide the show venue, but make their visit enjoyable and memorable by exposing them to the culture of South Louisiana," says Brown.

LAGCOE staff are also working to secure interpreters for the Russian visitors, who will be accompanied by Walsh and commercial specialist Gulnara Kenzhebulatova, also based out of Moscow. Walsh says he and Kenzhebulatova are looking forward to matching up U.S. equipment and service providers with delegates in the mission to ultimately close sales during or shortly after the show, as well as counseling U.S. companies that are interested in the Russian market.

Walsh also hopes to take advantage of Brown and the International Committee's offer to experience the culture of Acadiana. "We look forward to enjoying the heart of Louisiana and its Cajun heritage," he says. "From the wonderful food to its outstanding music and dance, it will be a real treat for us personally and for our delegates to get a feel for this very unique section of America."

Oil, Oil Everywhere

The 2011 LAGCOE will infuse millions into Lafayette's economy.

If you're in the oilfield, it's the greatest show on earth - one of the largest petroleum industry conferences in the country. But more important, it's a huge economic shot in the arm for Lafayette's economy.

And, it's been sold out since August - some 755 exhibit spaces inside the Cajundome and Convention Center and the outside area surrounding the Cajundome snapped up despite the tax and regulatory uncertainty that hovers over the oil and gas industry. More than 390 companies are exhibiting at the Louisiana Gulf Coast Oil Exposition Tuesday-Thursday, Oct. 25-27. Registrants will come to Lafayette from 40 states and 25 countries (the general public is invited Thursday from noon to 2 p.m.)

A highlight of this year's event is keynote speaker Robert Bryce, author and senior fellow at the Manhattan Institute Center for Energy and the Environment. Bryce, author of the recent books Gusher of Lies and Power Hungry, will discuss the U.S.'s energy future and worldwide energy issues Tuesday, Oct. 25, from 1 p.m.-2 p.m.

The Lafayette Convention and Visitors Commission estimates that the show will have an immediate economic impact of $10.5 million over the 10-day period - the time frame that includes set up, three show days and tear down. That estimate does not account for the much bigger impact of future business generated by the contacts made during the show.

Squeeze Play

New regulatory hurdles are pushing some smaller independents out of the Gulf, but the deepwater indies are
holding their own. By Jeremy Alford

Federal regulations meant to improve the safety of oil and gas activities in the Gulf of Mexico are forcing Louisiana operators to reshape their business plans and look elsewhere for opportunities, according to industry supporters.

Steve Maley, operations manager for Lafayette-based Badger Oil Corporation, says things have changed "drastically" since last year's oil spill.

BP's deepwater drilling rig exploded in April 2010, and the administration of President Barack Obama was swift to react - first with a ban on activity and then through a slew of new federal regulations.

The end result, some argue, has been increased operational costs for the industry.

"The last new [shallow water] well we drilled as an operator was in February 2010, and we participated in the drilling of a well with another operator in July 2010," Maley says. "We have refocused our exploration effort back onshore, where we have drilled two wells so far this year and have plans for four more."

Chris John, president of the Louisiana Mid-Continent Oil and Gas Association, said smaller, independent companies are getting squeezed out by the majors in some instances.

"What a lot of these regulations have done was really narrow the scope of who can operate out in the Gulf," John maintains, "who has the resources and the expertise to be able to go through and get through all of the regulatory hurdles today to get a permit."

Don Briggs, president of the Louisiana Oil and Gas Association, says there's little to celebrate when comparing the Gulf's economic landscape these days versus pre-spill condition, but he notes that independents operating in deeper waters are for now sticking it out.

"The independents playing in the deepwater are holding their own," he says. "Independents own 52 percent of the deepwater leases."

The key to success, however, is turning those leases into profits, which is where the federal government comes into play - chiefly because that's where the permitting takes place.

For example, energy exploration and production operators in federal Outer Continental Shelf are nearing a Nov. 15 deadline for meeting new federal rules that standardize safety practices.

State Natural Resources Secretary Scott Angelle is currently urging companies to "move quickly to comply and assess and correct weaknesses in their programs and documentation."

If they don't, Angelle says their business models will soon falter.

"As we simultaneously work to get permits issued, it is important that companies be aware of this upcoming deadline and not miss the boat on any opportunities for current and future work due to noncompliance," continues Angelle.

The workplace safety rules require that a formal Safety and Environmental Management System, or SEMS, be established.

Such a system is supposed to focus on best practices for workers and for operating and maintaining equipment.

The Bureau of Ocean Energy Management, Regulation and Enforcement, or BOEMRE, also released a set of related requirements recently, including:

New directions for conducting a "job safety analysis"
Procedures to authorize any and all employees to stop work when witnessing an activity that creates a threat of danger
Clearly defined requirements establishing who has the ultimate authority to stop work at any given time
Employee participation programs
Guidelines for reporting unsafe work conditions
Allowing third part auditors to conduct safety audits
"The protection of human life and the environment are top priorities for BOEMRE," says Director Michael Bromwich. "Implementing a comprehensive program with these additional features will further our goal of avoiding accidents that may result in injuries, fatalities and serious environmental damage."

Most big companies with deepwater operations already have some kind of similar system in place, notes Maley, but it's beginning to take a toll on independents.

"The paperwork and auditing requirements of SEMS are daunting, so most small companies have had to turn to consultants for help," he says. "Ironically, the largest burden may fall on small- to medium-sized (OCS) operators and service companies, whose business activities have almost nothing in common with the deepwater oil accident that caused all this scrutiny in the first place."

Another guideline worrying the industry involves a calculation called "worst case discharge," which must be provided to the federal government before a new well permit is issued.

"Remember when no one was sure exactly how much oil the BP well was spilling?" asks Maley. "Worst case discharge calculations attempt to forecast how bad a spill might be, supposedly to ensure that the operator has resources to handle it. The problem is that the calculation is made before the well is drilled, with educated guesses taking the place of hard data in complicated computer models."

Jeremy Alford can be reached at [email protected]

Last summer, the federal government issued a number of new guidelines for operating in the Gulf of Mexico. Here's a look at a few numbers that offer a brief snapshot of how oil and gas activity has been faring.

New shallow water wells approved since the end of last year's moratorium: 81, of which 13 are pending and 11 have been returned to the operator for more information

New deepwater wells approved since the end of last year's moratorium: 24, of which 22 are pending and 16 have been returned to the operator for more information

Rigs operating in the Gulf of Mexico 10 years ago: 148

SOURCE: Bureau of Ocean Energy Management, Regulation and Enforcement;

BOEMRE's "Public Engagement" Web page can be found at