THE BIG SHIFT: In Louisiana, natural gas production jumps over oil

THERE’S LITTLE DOUBT that Louisiana is now primarily a natural gas, not oil, producer, according to speakers at the Louisiana Oil & Gas Association’s annual meeting earlier this spring. The proliferation of wells in the Haynesville Shale play, prompted by the growing need for natural gas by LNG export facilities, is the reason.

Speaking at the Lake Charles event, Tom Harris, secretary of the Louisiana Department of Natural Resources, says the Office of Conservation issued 807 drilling permits in 2022, an increase of 44% over 2021. And the number continued to accelerate throughout the year. “This marks the first time since 2014 the state has issued more than 800 permits,” Harris says. “It’s certainly the most encouraging news I’ve been able to share in some time.”

In 2022, Louisiana produced more than 3.7 trillion cubic feet of natural gas, the highest volume since 1975 and double what was produced six years. Harris says recent global events, such as the Russian invasion of Ukraine, have served as a reminder that oil and gas “remains the lifeblood of the global economy, despite advancements in renewables,” he adds. “There’s nothing out there right now that’s ready to take its place, and that’s lead to an increase in oil and gas exploration here in Louisiana.”

Nick Dell’Osso, president & CEO of Chesapeake Energy Corp. in Oklahoma City, told attendees that the close proximity of Haynesville Shale to

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He predicts that by 2025 a fundamental step change will occur in demand for natural gas. “I expect 6 percent growth in demand for a commodity that historically doesn’t see growth of that magnitude,” he adds. “It’s a huge number.”

DNR’s Harris also briefed attendees on the status of state Carbon Capture & Sequestration initiatives, adding that the growing backlog of permits for Class 6 sequestration wells is hindering investment. Nationally, the EPA has issued only six Class 6 permits in six years’ time, none of which are in Louisiana. “That’s not a time frame where businesses can make final investment decisions with any confidence,” he adds. “Companies deserve a faster turnaround.”

Harris hopes that DNR will soon be given regulatory primacy, which could help free up the backlog. “We submitted that application in 2021 and we’re still waiting on word from the EPA,” he adds. “I can tell you that it’s definitely high on the governor’s priority list. State agencies will be better able to streamline processes and get permit applications turned around quickly.”

Harris says once that happens Louisiana will likely become a regional leader in CCS given its existing pipeline infrastructure, petrochemicals industry concentration and geological storage locations. “It seems like a custom built opportunity with immediately recognizable benefits,” he adds. “Over the past several years, we’ve seen stepped up interest in the concept of CCS, with companies making real investment decisions toward turning carbon management into reality. Market forces and policies are driving the industrial sector to do something with waste carbon.”