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Oil/gas experts advise: Landowners be smart, cautious

Written by Jana Ryan

Friday, 05 September 2008

Part one of a two-part series.

The message was clear Thursday night at the Haynesville Shale public meeting — get your facts straight, know who you are dealing with and act with caution.

These words of advice were spoken during the first Minden public forum addressing the Haynesville Shale natural gas play and the affects it could have on local land/mineral rights owners. Part one of a two-part series.

The message was clear Thursday night at the Haynesville Shale public meeting — get your facts straight, know who you are dealing with and act with caution.

These words of advice were spoken during the first Minden public forum addressing the Haynesville Shale natural gas play and the affects it could have on local land/mineral rights owners.

Ray Lasseigne, president of TMR Exploration and a chairman on the Louisiana Oil and Gas Association Board, began the forum with an insightful overview of the oil and gas industry, as well as other energy sources, including nuclear and hydro energy.

Lasseigne, speaking to a full-to-capacity crowd, said there are several factors causing the current rise in energy costs, including speculators who trade in the oil and gas market.

“They are very prone to react to their emotions,” said Lasseigne. “If there is an oil platform in Nigeria that is being taken over by rebels, prices go up. If there is a pipeline being blown up in Iraq, prices go up. It’s not a willful attempt by the speculator to rise prices, but it’s their reaction to their emotions that cause that.”

According to Lasseigne, other issues adding to the spike in fuel costs include today’s supply and demand, the decline of the U.S. dollar and actions taken by former U.S. President Jimmy Carter.

“In the mid 70s and 80s, President Carter placed a windfall profit tax on oil production, causing the dismantling of the oil industry,” said Lasseigne. “As a result, our oil continued to decline. There was no production fee added and today we have a shortage of oil, not only in the United States but in the world.”

Supply & Demand

Lasseigne provided statistics regarding supply and demand.

“The demand in the world, right now, the consumption is equal to the supply — we can’t supply any more oil than we are making right now,” he said. “ There are 86 million barrels a day being consumed worldwide. The U.S.
demand is 21 million barrels a day, so the United States consumes about 25-percent of the world’s production.”
The oil and gas man said what is alarming about the U.S.’s consumption rate is that only 5 million barrels are produced stateside.

“We are only producing 25-percent of the oil we consume, which means we are not doing ourselves a favor,” said Lasseigne. “We need to have more oil in this country.”

To make his point, Lasseigne displayed a slide depicting the gulf coast — the only area where offshore drilling is allowed in the U.S. He also addressed the decline in drilling in the U.S., made obvious by today’s number of drilling rigs in operation — 1,854 compared to 4,700 in the 1980s.

Lasseigne said oil reserves have been further depleted as foreign countries, such as India and Japan, have progressed from two-wheeled, man powered transportation (bicycles) to motor scooters and cars.

“That spare capacity is gone,” said Lasseigne. “The United States is addicted and we have to change that.”

He added that the biggest impact on energy costs will come through conservation.

Haynesville Shale

Lasseigne said Louisiana is the “Energy State,” where the U.S.’s oil and gas infrastructure starts.

“The majority of hydrocarbons used in the United States is either produced here in Louisiana or found here in Louisiana,” said Lasseigne. “Twenty-five-percent of the oil and 25-percent of the natural gas passes through the state of Louisiana.”

That includes gas produced in federal waters and oil imported from the Middle East into Louisiana.

“Fifty-percent of the gasoline and the diesel that is consumed in the United States is refined right here in Louisiana,” said Lasseigne. “So, Louisiana is probably the most important state when it comes to energy for the United States.”

He said it is speculated that due to the Haynesville Shale play, Louisiana may become an exporter of gas.

Where Is It?

Lasseigne said the Haynesville Shale play is in the south, three quarters of Caddo and Bossier Parishes, probably in the edge of Webster Parish, encompasses all of Desoto Parish, goes halfway into Sabine and Natchitoches Parishes and crosses the state line into Panola, Harrison, Shelby and Rusk Counties in Texas.

“It could go further than this — we don’t know,” said Lasseigne. “There is a lot of exploration yet to be done on the Haynesville Shale play.”

He next addressed the differences between conventional drilling, where land/mineral rights owners aren’t paid much by oil/gas companies. He described conventional drilling as an “educated guess” in which the oil/gas company has a one in 20 chance in finding oil.

Lasseigne said a resource play, such as the Haynesville Shale, involves virtually no risk.

According to Lasseigne, horizontal lateral wells are being drilled in the Haynesville Shale. Currently, several million acres within the Haynesville Shale play have been leased. Chesapeake Oil has leased the most acreage in the new play.
He said there are approximately 74 rigs with permits to drill in the Haynesville Shale. That number is expected to expand to 100 by the end of this year and reach 200 by the close of 2009.

Wells drilled and producing out of the Haynesville Shale are said to produce 10 to 15 times better than typical wells.

“What we are seeing are phenomenal wells,” said Lasseigne. “The economic impact will blow your mind.”
Issues At Hand

Lasseigne said several issues are currently being addressed in connection to drilling in the new play, including water usage and disposal (so as not to deplete the Sparta Aquifer); destruction to roads made by heavy trucks and field equipment; and noise levels.

Lasseigne advised land/mineral rights owners to watch out for those who have come to this new “gold rush” type of opportunity.

“Those type of folks will be out there,” said Lasseigne. “Before you sign, talk with an attorney and make sure you are dealing with a reputable company.”

Lasseigne said when selecting an attorney, choose one who will represent you for an hourly fee — don’t agree to pay them a percentage.

He urged land/mineral rights owners to be extremely cautious and to ask questions.

“We do not want anyone to take advantage of you, so be aware,” said Lasseigne.
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