One of the oldest state trade associations in the United States — Louisiana Mid-Continent Oil and Gas Association (LMOGA) — is celebrating 90 years at a time when the industry stands stronger than ever. The association is marking the milestone with a “Fueling Our Future” campaign highlighting the expansive history of LMOGA, industry in Louisiana and the industry’s role in driving the economies of the Gulf Coast and fueling the future of America.
Chris John has served as president of LMOGA since 2007 and has seen a grand shift in the energy discussion since he took the helm. BIC Magazine recently visited with John to discuss LMOGA, the Louisiana oil and gas industry and the legacy of both.
Q: How has LMOGA evolved over its 90-year history?
A: In 1919 in Oklahoma, a group of oil men decided an advocacy group was needed in the United States to represent the facts and interests of the industry. The movement quickly spread to Texas, then Louisiana/Arkansas and to Mississippi/Alabama. Eventually it was decided separate state associations were needed to better represent the needs of the industry, which led to the development of the Louisiana division that became LMOGA as it stands now. Today, LMOGA is the only association in the state exclusively representing all segments of the industry, majors and independents, pipelines, refineries and marketing sectors.
LMOGA has been working for the industry through many challenging and exciting times. The industry was instrumental in World Wars I and II, providing fuel to allied troops. It was decisive in the Great Depression, bringing oil and gas states growth and economic development, when the nation was suffering economic collapse. The industry created the single largest economic engine in Louisiana history. At one time, it accounted for more than 50 percent of state revenues. LMOGA has been around through all these milestones evolving with the changing industry.
Q: What have been LMOGA’s greatest achievements?
A: LMOGA helped develop some of the earliest oil and gas conservation laws in the country early in the 20th century. Its members drilled some of the earliest wells in Louisiana, built some of the largest refineries in the world in Louisiana, built the pipelines to market Louisiana energy and energy products, drilled the first wells in the Gulf of Mexico, and today are still setting records in the deepwater Gulf of Mexico and with the deepest wells ever drilled in Louisiana. The taxes and revenues the industry generated built roads, schools and hospitals in Louisiana. The economic benefit from the oil and gas industry to the state and local government has amounted to trillions of dollars to the state economy over the years. As a major trade association representing the oil and gas industry in one of the nation’s largest oil and gas producing states, the activities of LMOGA continue to be vital in the promotion of our industry in Louisiana.
Q: What have been LMOGA’s greatest challenges?
A: The industry has faced excessive regulation at times, punitive legislation, tax proposals like the Coastal Wetlands Environmental Levy and processing tax, price fluctuations and now huge litigation initiatives. The recent Southeast Louisiana Flood Protection Authority-East wetlands lawsuit is one example. Legacy lawsuits continue to plague the industry. Hurricanes Katrina and Rita, Gustav, Ike and others have changed the industry, as they changed the state. The industry helped New Orleans return from the tragedy of Hurricane Katrina. It has survived many challenges in its 100-plus year history and continues to power Louisiana’s economy.
Q: How has Louisiana’s energy role changed since you took your post at LMOGA?
A: We are now much more oil focused. Natural gas was in high demand and the price at Henry Hub doubled from $6 per million Btus in the fall of 2007 to more than $12 in the summer of 2008. More than 80 percent of the wells being drilled in the United States were drilling for natural gas. The U.S. energy supply was vulnerable to weather disruptions in the Gulf of Mexico. Natural gas import facilities were being planned. Shale play development was just starting to show its potential.
Six years later, due to the shale plays, the United States has a natural gas glut. Prices are below $4. Drilling for natural gas has slowed. Natural gas import terminals are being converted to export terminals. Eighty percent of the rigs are now drilling for oil. U.S. crude oil production is at a 24-year high and growing. Gulf of Mexico oil production is expected to increase by 50 percent by 2020.
One may initially think the slowdown in natural gas activity would hurt Louisiana. However, to the contrary, natural gas is now transitioning from an energy resource to a chemical feedstock resource. Louisiana is seeing a petrochemical renaissance with more than $75 billion of investment being announced for the state with more announcements seemingly every week.
When I came to LMOGA, all the discussion was the world was at “peak oil.” In a few short years, the industry has demolished the “peak oil” theory and North America is now within reach of “energy independence” and, more importantly, “energy security.” The deepwater Gulf of Mexico investments now grow every year. Industry achievements ensure American citizens will now have a secure energy supply at reasonable pricing for the next decade. This activity has opened up options for the industry to greatly increase exports of hydrocarbon and chemical products thereby reducing the national trade deficit. These are boom times.
Q: What is on the horizon for LMOGA and the Louisiana oil and gas industry in the next 10 years?
A: The industry in Louisiana is facing massive growth and changes in every sector of oil and gas right now. As always, the association will continue to evolve and grow with the industry focusing on lessons learned in safety, monitoring new technology developments and implementing work force development programs to help meet industry growth.
We will continue to see the economic benefits and the effects on manufacturing in the state from the natural gas revolution. Unconventional natural gas reserve development has been revolutionary for Louisiana and a significant player in the North American and global energy markets. The deepwater Gulf of Mexico will also be a big player over the next few years, as evidenced by the results of the most recent Gulf lease sale in August. Louisiana’s superior oil and gas infrastructure, established and emerging shale deposits, thriving chemical sector, and intermodal transportation network that can reach national and global markets will all keep Louisiana positioned as an energy leader as our industry continues to fuel the future for America.
For more information, visit www.lmoga.com or call (225) 387-3205.