By Don Briggs
President, Louisiana Oil and Gas Association

President Obama released his budget this week for 2013. With high hopes that the energy sector might receive support, reality says different. The President has clearly stated that he would like to “eliminate unwarranted tax breaks for oil companies, while extending key tax incentives to spur investment in clean energy manufacturing and renewable energy production”. Therefore, he is making good on his plan to “double down” and kill the incentives of the oil and gas industry, while continually promoting green energy and tax cuts for wind and solar power. We are seeing natural gas prices at an all-time low in the United States, while wind and solar power continue to be exponentially more costly per unit to produce. Not only is the production of natural gas more cost efficient than wind and solar, but the oil and gas industry has also created thousands of jobs for a hurting U.S. economy. American Petroleum Institute President Jack Gerard stated, “Frankly, the administration should be trying to replicate the success America’s oil and natural gas industry has had in creating jobs and growing the economy primarily through development on private and state lands. The evidence clearly shows that what we’re doing is working.”

With the vast amount of shale oil and gas available, America has the potential to become less dependent on foreign resources in the coming years. But, we have an administration that is trying to slash investment incentives and in turn, give government dollars to the clean energy sector – wind and solar. The oil and gas industry currently invests its dollars, and then receives credit; The Obama plan would give out hundreds of millions of dollars before the wind and solar companies have invested their first dollar. Again, the Federal Government is cutting investment incentives to the very industry that has created thousands of jobs for the United States.

President Obama also included in his budget $45 million in funding to the U.S. Department of Energy, the Environment Protection Agency (EPA), and the U.S. Geological Survey to further research “reducing the potential health, safety and environmental risks of hydraulic fracturing”. While no government or private organization has any concrete evidence that hydraulic fracturing causes environmental or health-related problems, this $45 million funding is yet another avenue for the Federal Government to take oil and gas regulations from the states’ jurisdiction. Deputy Interior Secretary David Hayes stated, “We have no interest in creating conflict with state regulation.” In direct contradiction to Deputy Secretary Hayes, Interior Secretary Ken Salazar says that due to companies not liking patchwork regulations from state to state, Interior will be creating a template to be used across the country. This countrywide template idea rings of federal regulation and is not acceptable to the oil and gas industry.

The President has attempted to persuade the general public that his intent is to develop and assist America’s energy industry. However, it is clear that his plan diminishes a thriving oil and gas industry and he clearly does not desire to see America become truly energy independent.

By Don Briggs

President, Louisiana Oil and Gas Association

This week, the president laid out an energy plan in the State of the Union Address touching on the success of the current shale oil and gas plays, his new regulatory plans for hydraulic fracturing, and also opening up additional space for drilling offshore. There was no mention that the productive shale plays have found the majority of success on private lands, and not on their counter-part federally controlled lands. The president, did however, press hard for Congress to pass “clean energy tax credits” that would in turn create jobs. His plan to double down and kill the incentives of the oil and gas industry only promotes green energy and tax cuts for wind, offshore wind, and solar power. These green sources of power simply can’t compete with natural gas due to their prices being exponentially more costly to produce.

The American Petroleum Institute, the top oil and gas-lobbying group, said the policies Obama promoted in his speech are at odds with expanding energy output. “It’s a contradiction because he calls for further regulation that will slow down the production of energy and then increasing costs by raising taxes,” said the institute’s president, Jack Gerard.

Another debate centers on the use of hydraulic fracturing, also known as “fracking”. The president’s new plan demands that all companies disclose to their state government what chemicals are being used in the operation of fracking. Louisiana leads the pack in this reporting process with the Department of Conservation having full oversight of the oil and gas industry. There is absolutely no need for the EPA or the federal government at large to be involved in the states daily operations of oil and gas exploration and production. In the past four years, the Haynesville Shale has become the largest natural gas field in the U.S., using safe technology and community awareness.

The State Department’s announcement last week that the Keystone XL pipeline permit would be denied comes as a blow, not only to the oil and gas industry as a whole, but to the economy and the jobs market. With the potential of adding 20,000 jobs to an already flailing economy, it makes little sense to shut the project down. The president has stated over and over that the United States needs to become less dependent on foreign oil. This project alone would transport more than 70,000 barrels of synthetic crude oil per day into the U.S. from the Athabasca Oil Sands in northwestern Canada. The potential of this Keystone project and the Obama administration’s rhetoric on their energy policy, simply doesn’t match up.

The president plans to open up an additional 75% of offshore resources to which the oil and gas industry obviously supports. What and where these areas will be located is yet to be determined. On Thursday, BOEM announced a planned lease sale to be held this coming summer for the central Gulf of Mexico. The lease sale is actually part of the 2007-2012 plan put in place by the Regan Administration. The lease sale is combining lease sale 216, which was scheduled for last spring and canceled by President Obama, with lease sale 222 which is scheduled for next March.

“Announcing a scheduled lease sale that doesn’t open any new areas for energy production and that should have happened a year ago shouldn’t be a `major announcement,’ ” said Republican Representative Doc Hastings, chairman of the House Natural Resources Committee.

“The industry that you’re in today is being revolutionized like you’ve never seen before,” said Don Briggs, president of the Louisiana Oil and Gas Association.

Speaking during LOGA’s annual State of the Industry meeting, Briggs credited the industry’s revolution to hydraulic fracturing, commonly referred to as “fracking,” which he said could help make the country less dependent on foreign resources.

More than 1 million wells have been hydraulically fractured, Briggs said, and about 85 percent of all the wells in use were completed using the technology. It involves injecting chemicals, water and sand into the ground under enormous pressure to crack open and prop up the rocks, thereby releasing the oil or natural gas.

Briggs said the EPA is studying the issue and getting “closer and closer” to controlling regulations, which are currently overseen by each state.

If the EPA were to gain control of that process, Briggs said, the country could one day see a repeat of what happened in the aftermath of the April 20, 2010, Deepwater Horizon oil spill in the Gulf of Mexico.

“They could shut the domestic industry down if some company somewhere makes a mistake,” Briggs said, adding that such mistakes are possible.

Wilma Subra, technical adviser to the Louisiana Environmental Action Network and an expert on “fracking,” disputed those statements.

The EPA is studying what effects “fracking” has on water supplies, Subra said.

“What will come out of it may be federal guidelines or federal regulations, but it will not shut the industry down,” Subra said.

The EPA already has some oversight over the issue, and should it assume complete authority, it would still delegate much of that responsibility to the states, Subra said.

Briggs also singled out U.S. Rep. Jeff Landry for his Coast Guard Reauthorization bill, which, if passed, would require operators to have standby vessels near their offshore facilities.

The additional costs to the industry would be huge as the legislation would put more than 200 large vessels out in the Gulf each day of the year, Briggs said.

A single company, which Briggs did not name, could face increased costs of $50 million, he said.

With all the challenges the industry is facing, “for one of our own congressmen to put something like this out there is absolutely absurd,” Briggs said.

In response to Briggs’ comments, Landry, R-New Iberia, said he represents everyone in south Louisiana — both the people who own the oil and gas companies and their employees.

“This is a life-saving piece of legislation,” Landry said, adding that it is one that the men and women who work on those platforms have asked for.

Prior to bringing the legislation before the House of Representatives, Landry said, his office reached out to industry officials and to Briggs, whom he said did not respond until after the legislation was presented to the House.

Landry said he has since spoken to Briggs and others in the industry in the hopes of reaching an agreement that would protect lives in a cost-effective manner.

The congressman also disagreed with Briggs’ calculations, which he said do not “accurately reflect the agreements that we’ve made so far.”

“Again, I’m not going to risk the lives of the people that I’m bound to protect simply because Mr. Briggs believes that those lives are not worth a certain dollar figure,” Landry said.

Tuesday’s meeting was the second in a series of regional luncheons.

Briggs also shared the latest updates on the status of U.S. offshore oil drilling, shale gas exploration and development and the effects Louisiana’s legal environment is having on the industry.

The number of rigs in the Gulf has fallen from about 60 before the oil spill to about 40 today, Briggs said.

Meanwhile, the time it takes to get a permit for deepwater drilling has also increased from about 36 days to about 131 days, Briggs said.

Having said that, “the Gulf is still going to be a very viable part of our energy infrastructure for years to come,” Briggs said.

Currently, the United States produces 9.6 million barrels of oil per day, putting it behind only Russia and Saudi Arabia, and consumes about 19 million barrels per day, which represents about 22 percent of the world’s consumption, according to figures in Briggs’ presentation.

Briggs said some estimates have the United States surpassing Russia for the top-producing spot by 2020. The country could also see its dependence on foreign oil fall from 49 percent in 2010 to 36 percent by 2035, Briggs said.

While the average price for a barrel of oil hovers around $100, the price of natural gas is much lower — about $2.45 per 1,000 cubic feet, Briggs said.

Low natural gas prices have led to declining natural gas rig numbers from 82 percent of the total number of rigs drilling in the United States in 2008 to 42 percent today, Briggs said.

Still, the Haynesville Shale site, located partially in northwest Louisiana, remains the largest in the country and the fourth largest in the world, Briggs said.

Since October 2008, about 1,700 wells have been drilled in the Haynesville site, he said.

The Haynesville site has generated tens of thousands of jobs and is expected to have an estimated impact of $14 billion this year alone, Briggs said.

The Tuscaloosa Marine Shale, which cuts through the center of Louisiana, has shown lots of promise and will likely help to bring balance as companies pull out of Haynesville, Briggs said.

Briggs also spoke at length about “legacy lawsuits,” which allow landowners to sue oil companies for the environmental messes left behind on their land from old oil fields that were drilled by major oil companies with technology that has since been discarded.

Briggs said the lawsuits allow the landowner to make claims against anyone who has had any contact with the oil lease, from those who drilled the land to those who have assumed the oil leases years later.

More than 800 of LOGA’s 1,400 members are involved in legacy lawsuits, Briggs said.

“It’s pure unadulterated extortion,” Briggs said, adding that he believes these lawsuits discourage drilling in the state.

Baton Rouge, LA- Today, The Obama administration will announce they will be rejecting the Keystone XL pipeline project, a proposed 1,700-mile pipeline system that would transport more than 70,000 barrels of synthetic crude oil per day into the U.S. from the Athabasca Oil Sands in northwestern Canada. The administration is slated to reject the permit application needed by TransCanada Corporation that would enable them to begin the project.

The TransCanada Corporation proposed the Keystone pipeline in 2005.  It was only until 2010 that the U.S. Department of State extended the deadline for federal agencies to determine if the pipeline was in the country’s national interest. After a lengthy wait, the State Department will announce today the administrations decision to deny the permit.

Don Briggs, President of the Louisiana Oil and Gas Association said this morning, “This announcement comes as a huge disappointment, not only for the state of Louisiana, but for the entire country. This project has the potential to generate over 20,000 jobs for our national economy, in a time where unemployment numbers have reached record levels. Briggs continued by saying, “The Obama administration touts the importance of becoming less dependent on foreign oil, so a decision such as denying the Keystone XL project completely contradicts their stated position.”

A newly drilled well in northwest Rapides Parish that’s producing hundreds of barrels of oil and liquid natural gas a day could be the first of many in Louisiana’s central parish that uses horizontal drilling and hydraulic fracturing, or “fracking.”

That is a controversial technique that some environmentalists say pollutes underground water supplies.

The well — named Bentley Lumber 34H #1 and operated by Indigo Minerals — bores thousands of feet down in land owned by third-generation forester Roy O. Martin III and his family, who own hundreds of thousands acres of Louisiana forestland. Most of the Martin land is pristine timber acreage, which supplies the family’s many wood-products businesses.

But about two miles under much of that land, trapped in dense shale rock, rests rich deposits of oil and other fuels that America runs on. A swath of oil-rich land, which cuts across Central Louisiana, through some of Mississippi and includes fields north of Baton Rouge, is called the Tuscaloosa Marine Shale.

Martin, whose family owns half of Indigo Minerals, and other owners of the company that drilled the Bentley well call it Louisiana Eagle Ford, a continuation of the oil- and natural gas-rich Texas Eagle Ford to the southwest.

“We’re excited about (the drilling),” Martin said. “We’re also creating jobs.”

Martin in 2006 formed Indigo Minerals with Yorktown Investors and longtime friend Bill Pritchard, who heads Indigo out of the company’s downtown Houston office. The business marriage wedded the Martin family’s abundant acreage and mineral rights with Yorktown’s money and Indigo management’s expertise.

To buy into Indigo, the Martin Cos. put up the mineral rights on a few hundred thousand acres for half of the oil company, which has since bought natural gas and oil fields in other parts of the state. Bentley Lumber 34 was the first the company has drilled in Rapides Parish.

Martin said about 200,000 acres of Martin family land from Vernon Parish to Rapides Parish is in Indigo’s portfolio of drilling acreage, part of the company’s more than 460,000 acres it has the rights to drill on in Central Louisiana.

Geologists have known about the deposits in the Tuscaloosa Shale for decades, but only in the last few years have drillers figured out how to unleash it through horizontal drilling and hydraulic fracturing, a controversial method of cracking the shale.

The practice — high-pressure injection of millions of gallons of water with chemicals and sand into a well — puts a gold gleam in the eyes of oilmen while environmentalists warn of ecological disasters.

Much of Louisiana drinks from the Chico Aquifer, an underground water table that sits thousands of feet above the oil deposits. Aquifers with other names provide water in other parts of the state, including the northeast where the famous Haynesville Shale play is.

“I truly believe that everything we’re doing is environmentally sound,” said Martin, who runs RoyOMartin Co., which was started by his grandfather. “We’re a forest company. We’re not going to knowingly go out and do something that will pollute the groundwater. This is proven technology.”

He said the Bentley Lumber well cost just over $11 million to drill and complete.

“We really don’t know the limits of the field,” Martin said.

Moving fast

Drillers and the billions of dollars that drive exploration move at the speed of capitalism, fast and lean. Government, which regulates industry, moves not so fast, said Wilma Subra, a New Iberia chemist who consults for the Louisiana Environmental Action Network and sits on U.S. Environmental Protection Agency panels studying the effects of fracking in New York, Montana, Texas and elsewhere.

“That’s the issue,” Subra said, “government’s not keeping up with the shale (developers).”

According to Louisiana’s Department of Natural Resources, whose Office of Conservation regulates drilling in the state, there were three permits to drill issued in 2011 in Rapides Parish. In other Central Louisiana parishes, such as LaSalle where there were 118 OKs to drill, permit approval is more robust though drilling remains slow.

Indigo and other companies in the Tuscaloosa Shale are trying to figure out how best to get the fuel to the surface. Geological variances make extraction an art, and every well is in unique. Companies such as Indigo use data from other successful — and unsuccessful — wells as they proceed, taking notes on what works and what does not as they explore new geologic territory.

“As more wells are drilled, exploration companies will learn more about formation and better understand how to most economically develop the play and maximize their production, potentially creating greater interest in investing there and expanding exploration,” DNR Secretary Scott Angelle said in December after Indigo tested the Bentley Lumber well.

Martin said Indigo this year will continue to drill in oil and gas formations here and in North Louisiana, where the company is extracting natural gas and other, rarer fuels such as butane and propane.

Pritchard in Houston recently said the company, like many others, is seeking investment partners for cash to drill the many properties Indigo has.

Other companies have inked deals with foreign companies. Chinese state companies are investing in U.S. shale developments with Chesapeake Energy Corp., which has a heavy presence in the Haynesville Shale, and Devon Energy Corp., an Oklahoma company whose properties include sites in East Feliciana Parish on the east end of the Tuscaloosa Shale, according to Bloomberg News.

French oil giant Total also is making investments in the U.S., and BHP Billiton Ltd., based in Melbourne, Australia, last year bought U.S producer Petrohawk Energy Corp. for $12.1 billion.

The companies are investing partly to gain expertise in how to develop extensive shale formations in their own countries.

Martin said Indigo has not been offered money from foreign companies “that I know of.”

U.S. energy companies have jumped to oil shale plays because their natural gas holdings are fetching low prices. On Wednesday, gas traded at $2.77 a thousand cubic feet, the lowest in years as shale production has produced a glut of natural gas.

Oil, on the other hand, is trading at around $100 a barrel.

EPA

Though states regulate drilling, the U.S. Environmental Protection Agency is taking a long — years long — look at hydraulic fracturing. Initial reports of the study are due this year. A comprehensive report is scheduled to be released in 2014.

Don Briggs, president of the Louisiana Oil & Gas Association, fears the EPA will grab control of drilling in states.

“If EPA would get control of hydraulic fracturing … and some guy somewhere does something stupid in Wyoming or Montana, you would see exactly what happened in the Gulf of Mexico happen across the country and literally shut down the oil and gas industry,” Briggs said.

The BP deepwater spill in 2010 killed 11 rig workers and released millions of gallons of crude oil. President Barrack Obama and the federal government, which regulates oil and gas activity in federal waters, just about shut down Gulf of Mexico activity by ordering a moratorium on drilling. Almost two years later, oil and gas companies operating in the Gulf are still having a hard time getting permits of all stripes — drilling, pipeline construction, platform maintenance — even in shallow waters.

“Until you have a different culture (in Washington), that’s not going to change, no matter what you do,” Briggs said.

Subra, the New Iberia environmentalist, said that fracking operations in Louisiana have polluted water sources and affected people’s health, and that federal oversight is needed. State regulators, she said, cannot keep up. She said she’s conducted surveys of residents living near drilling operations and found that many got sick after drilling started.

Water

Subra said it takes 3 million to 8 million gallons of water to drill one well using the hydraulic fracturing technique. She also said the wastewater that comes back to the surface is trucked to Texas and deposited in injection wells there.

Louisiana drillers using the fracking method have siphoned water from aquifers to supply their needs. But low water tables due to drought prompted DNR Secretary Angelle in August to issue a recommendation that companies drilling in the Tuscaloosa Shale “choose their water sources wisely” by using surface water from rivers or lakes.

If that’s not possible, Angelle said, then it’s preferable that water from the Red River and Mississippi River alluvial systems be tapped “in lieu of the Chicot, Evangeline, Jasper, Catahoula and Southern Hills aquifer systems.”

“Most of the wells we’re (operating) use surface water,” Martin said, adding that Indigo drew water from a nearby lake when it drilled the well in northwest Rapides.

Economic development

In arguing for less government regulations, oil men like LOGA’s Briggs tout the technology that has freed up minerals trapped in once-impervious shale rock and point to America’s need for and reliance on foreign oil when there is plenty here.

Briggs said free-market principles don’t align with government-backed renewable fuel initiatives, and that the current administration could use the EPA to halt drilling on land.

“The thing that is driving the Obama administration, and really the renewable fuels people — wind, solar, ethanol — is the fact that all this drilling is producing such cheap natural gas and oil that none of the renewables can begin to compete,” Briggs said.

Martin said Indigo’s successes are putting people in Central and North Louisiana to work. He pointed to wells that Indigo has in northern DeSoto and southern Caddo parishes, where gas liquids such as butane and propane are being captured.

“What’s overlooked is the natural gas liquids,” Martin said. “Those chemicals can produce a lot of jobs in Louisiana because our chemical industry uses that and imports that from other areas.

“If we can produce that in Louisiana, then a lot of spinoff jobs can occur,” he said.

Subra, the environmentalist, said more study and oversight are needed.

“We’ve demonstrated these huge health impacts and these huge environmental damages as a result of (drilling), and we’re just trying to get that reduced as much as possible,” Subra said.

President, Louisiana Oil & Gas Association

When you turn on the television or open the paper, it’s hard to avoid the non-stop coverage and buzz over the upcoming presidential election.  Americans everywhere are vetting the positions of Republican primary candidates and sizing them up against President Obama’s track record over the past four years.  Most of the political debate and discussion has centered on issues like taxes, Washington’s spending habits, Social Security, Medicare and Medicaid, and the wars in Iraq and Afghanistan.  And like any presidential election in the past, energy policy will play a huge role in influencing voter’s decision on a candidate.

One energy topic that seems to fly under the radar and has potential to become a massive political issue in 2012 is the Keystone XL Pipeline.  The Keystone XL Pipeline is a proposed 1,700-mile pipeline system project that would transport more than 70,000 barrels of synthetic crude oil per day into the U.S. from the Athabasca Oil Sands in northwestern Canada.  On top of the much-needed surge in crude production, it is projected that the pipeline project would cost over $7 billion and will generate over 20,000 jobs during its construction phase and nearly 600,000 jobs by 2035.

At a time when energy prices are climbing, unemployment remains in the tank, and America continues its struggle to rebound from the Great Recession, approving a project like this should make common sense.  Unfortunately though, discussions over the project have little to do with job creation and the importance of buying crude oil from allies.  The Keystone project has become politically charged and has encountered much opposition from environmental groups.  Additionally, President Obama has done everything he can to delay the project until after the 2012 election.

The Transcanada Corporation proposed the Keystone pipeline in 2005.  It was only until 2010 that the U.S. Department of State extended the deadline for federal agencies to determine if the pipeline was in our national interest.  In November 2011, President Obama decided to postpone his decision to deny or approve the project until 2013.  Senate Republicans, however, decided to introduce legislation in late November to force the Administration to approve the pipeline project within 60 days, unless the president determined that the project is not in the best interest of the U.S.  The deadline for the President ends on February 21, 2012.

The Keystone project has garnered support from a wide variety of groups that usually do not see eye to eye.  The business community supports the project, as well as labor groups like the Teamsters and the AFL-CIO’s Building and Construction Trades Department.  So the question still remains as to why the President wants to delay the project. Either a minute group of environmentalists have hijacked the project or it’s just a continuation of President Obama’s assault on the fossil fuel industry.

Most candidates running for public office mention the importance of decreasing our dependency on foreign oil.  Somehow, it always seems to make its way into the political discussion.  Even local candidates use the energy independence topic in their campaigns because it’s such a powerful message that resonates with every American.  Don’t be surprised if it becomes a major topic in the upcoming election.  As well, the Keystone pipeline will in no doubt become a central part of that discussion.

In 1956, M. King Hubbert established the first scientific model behind peak oil to accurately predict the height of U.S. oil production.
Hubbert, a well-known geologist, theorized that oil production would peak between 1965 and 1970.

In 1971, oil production did indeed peak. And, for the last fifty years, Hubbert’s theory has held true as global oil production has been in
gradual decline since that time. However, new discoveries in the Gulf and the rise of unconventional resource plays across the nation are
drilling a metaphorical hole in the peak oil argument. America’s newfound resources are not only challenging peak oil, they are also
building the case for U.S. energy independence.

According to data from the U.S. Energy Information Agency (EIA), U.S. oil production peaked at 9.6 million barrels, and despite shortterm
reversals, has been in constant decline to 4.95 million barrels per day by 2008. But, today we see oil production on the rise.
U.S. oil production has seen a gradual increase to approximately 5.5 million barrels per day. A large portion of this increase has come
from oil shale plays like the Bakken in North Dakota and the Eagleford in south Texas. On top of that, we are producing more natural gas
than ever in history. In this year alone, we will have produced nearly 30 trillion cubic feet of natural gas from offshore and onshore
resources.

Without question, the use of horizontal drilling and hydraulic fracturing has unleashed these vast reserves and led to the inevitable
lowering of US dependence on imported oil by a quarter from 60% of overall oil consumption a few years ago to about 46% currently.

On December 6th, the Institute for Energy Research released a groundbreaking report claiming that the amount of oil that is technically
recoverable in the U.S. is more than 1.4 trillion barrels, with the largest deposits located offshore, in portions of Alaska, and in shale
deposits throughout the country. The report estimates that when combined with resources from Canada and Mexico, total recoverable oil
in North America exceeds nearly 1.7 trillion barrels.

To put this into perspective, the largest producer in the world, Saudi Arabia, has about 260 billion barrels of oil in proved reserves. It’s
suggested that the technically recoverable oil in North America could fuel the U.S. with seven billion barrels per year for almost 250 years.

So, what does this mean for our energy future? For starters, it could mean the end of our reliance on imported oil from unfriendly nations.
In April 2006, Saudi Aramco admitted that it’s facing a national composite oil production decline of 2% per year, and its mature fields are
declining at a rate of 8% per year. Additionally, OPEC has estimated that the world’s production of nonconventional oil will reach 8.4
million barrels a day by 2035. By then, they estimate that 6.6 million (or nearly 80 percent) of that will be produced in North America.

The global energy balance is shifting and the U.S. could soon find itself at the top of list of the world’s oil and gas producing countries.
While primary global sources of energy are in decline, the U.S. is experiencing a renaissance in fossil fuel production.

In Louisiana, we as a community have been blessed with a bounty of good fortune and opportunity. Through much hard work and labor over
the last 110 years, our people have offered up the gift and annual harvest of precious natural resources. Our contribution of viable and
affordable energy to society has played an integral role in our development and rise as the most powerful nation in the world. The energy we
supply has been and continues to be the most important foundation for economic and cultural growth in the modern industrial era.

There is much for Louisianans to be thankful for during these difficult economic times. The resurgence of the oil and gas industry in recent
years has breathed life into the dilapidated U.S. economy. While other industrial sectors remain stagnant, our industry is one of the few that is
making strides to alleviate our trade deficit, create jobs, and give our communities the economic jolt they desperately need.

For the past year, the national unemployment average has hovered around 10% and signs indicate that number could continue to increase. The
state of Nevada suffers from the highest rate of 13.4%. California trails that number at 11.7%.

However, areas heavily influenced by oil and gas activity have maintained significantly lower numbers compared to the national average. For
instance, North Dakota’s unemployment rate is the lowest in the country at 3.5%. The contributing factor to this employment success is the
unprecedented discovery and development of the Bakken Shale.

Louisiana shares a similar story. Because of the positive impacts that developments like the Haynesville Shale, Gulf of Mexico, and other
emerging resource plays have offered, the unemployment rate in Louisiana is currently at 6.9% and dropping.

Property and housing values are withstanding the economic downturn as well. According to the recent Louisiana Realtors Real Estate Trends
report, we are experiencing a stable residential real estate market. The report found that the number of home sales and total residential sales
volume was up 20.2 percent over the third quarter of 2010 for a total increase of 2.7 percent of the year.

The Haynesville Shale has also helped create historic supplies of cheap and dependable natural gas. Chemical companies and other industries
that rely on natural gas as a primary feedstock see this as a great market opportunity and are returning to the U.S. Because of low energy
costs, companies like DOW Chemical and Sundrop Fuels are expanding their operations into Louisiana and providing jobs to our citizens.

Thanksgiving is about showing thanks for God, family, good fortune, and success. This season let’s include thanks for our state’s plentiful
resources, but most importantly, let’s celebrate the men and women who make energy production their job and passion. Through their
harvest, we are able to contribute and appreciate so much.