Recent editorials from Louisiana newspapers:
The American Press on abandoned oil wells.
Declining oil prices have drastically affected the state’s efforts to handle the orphaned well problem that has been ongoing for years. The legislative auditor’s office said the Department of Natural Resources (DNR) Office of Conservation has made dramatic improvements since a 2014 audit, but the state is still falling short of what needs to be done.
Legislative Auditor Daryl Purpera in a letter to state legislators said the office’s improved regulatory practices actually resulted in a 50% increase in the number of orphaned wells. The Advocate reported that as of Jan. 1 the state had 4,295 orphaned wells, which the conservation office estimates will take $128 million and nearly 20 years to properly plug.
The audit said the office is behind in forcing operators to plug disused wells that are yet to be abandoned and has failed to conduct required re-inspections of hundreds of out-of-compliance wells.
It added that a dozen financial institutions that were supposed to back company financial security instruments had not paid $5 million owed the state for well closures.
The newspaper said Patrick Courreges, a spokesman for the DNR, blamed regulatory problems in part for the state’s large inventory of inactive or marginally producing wells. He said some are dating back a century and many are owned by anemic companies.
Courreges said with oil prices hovering below $30 a barrel it is difficult to press companies to do something when they may be forced to go out of business. That produces even more orphaned wells, which he said happened when oil prices cratered in 2008, 2015 and 2016.
A survey of oil and gas firms released recently by the Federal Reserve Bank of Kansas City found that only 61% of oil and gas firms believed they would remain solvent during the next year if the price of oil stays at $30 per barrel. That number went up to just 64 percent if the price went to $40 per barrel.
The audit said while the state has made it harder for well operators to avoid providing financial security guarantees, only two-thirds of the state’s 52,826 regulated wells had any such guarantees. It recommended that the Legislature make all of its regulatory fees high enough to cover plugging wells and suggested increasing production fees for natural gas wells.
Orphaned wells can cause costly environmental and other problems, and a solution needs to be found. Unfortunately, this isn’t the best of economic times to give the oil and gas industry any additional problems.
The Advocate on publicly disciplining judges:
The state Supreme Court, with a long history of protecting misbehaving judges instead of guarding the public, seems to finally be feeling the heat.
Before the coronavirus crisis sent them home, legislators were gearing up to force the court to open up its secret process for disciplining judges.
One productive idea is a constitutional amendment from state Rep. Jerome “Zee” Zeringue, a Houma Republican, that would give the Legislature, rather than the court, power over confidentiality rules for the Judiciary Commission, which handles discipline cases.
Last week, the court offered a menu of reforms, some of which move in the right direction. But the measures were tepid, and the court does not seem to appreciate how much reform voters expect if confidence in our justice system is to be restored.
That confidence was shaken by reports last year that one of the justices, Jefferson Hughes III, was the subject of a secret five-year probe into allegations that he issued biased rulings while a district judge in Livingston Parish, in one case favoring the client of an attorney he was dating. The court swept the whole mess under the rug and Hughes wrote secret apology letters to three litigants. Voters later elevated him to the high court, without ever knowing.
The Supreme Court’s proposed reforms offer at least one sound idea: The public will now be able to attend hearings against judges accused of misconduct, a major change to a secretive process.
Under the new rules, judicial misconduct investigations will become public once the Judiciary Commission schedules a hearing against a judge and the judge has had the chance to file a response.
But the Supreme Court could have gone further, and it should have.
The Judiciary Commission will continue to privately dole out chastisements for judges in the form of reminders, cautions and admonishments.
Would you want your case adjudicated by a judge who received a secret admonishment? The Supreme Court seems to think you wouldn’t mind.
The Supreme Court also offered no change in its rule that bars people who file complaints against judges from discussing their grievances until a “notice of hearing” has been filed in an investigation, or once a file has been closed.
The gag order is probably unconstitutional, since the First Amendment protects the rights of Americans to complain about their politicians, or anyone else. When litigants file a complaint against a judge, the Judiciary Commission sends them an intimidating letter. But there have been no indications that the commission and the court are enforcing the gag rule and one lawyer is suing them over it anyhow.
The coronavirus crisis won’t be with us forever. The public is losing patience, and the justices missed a chance to rebuild the reputation of Louisiana’s court system, before legislators and voters take the matter out of their hands.
The Houma Courier on helping the oil industry:
Local and state oilfield interests have made a compelling case that government aid is necessary to help companies weather a double-whammy that threatens thousands of jobs as well as America’s energy security.
A global crude oil price war along with decreased demand amid the coronavirus pandemic have sparked layoffs and furloughs locally and throughout the U.S. oil patch, and more are expected.
The Houma-based South Central Industrial Association, in a March 27 letter to President Donald Trump and Interior Secretary David Bernhardt, calls the developments an “existential threat to America’s ability to continue to produce energy in the Gulf of Mexico and beyond.”
“As producers in the U.S. cut spending to adjust to lower prices and suppressed demand, we face a devastating domino effect throughout the supporting service and supply chain industry,” wrote the SCIA, which claims a membership of 250 companies that employ about 250,000 people combined. “Painful work stoppages and cuts to staff are beginning to ripple through the Gulf Coast and across the nation as capital spending among producers of all sizes evaporates.”
About a week ago, the Louisiana Oil and Gas Association released results of a member survey it says show that without aid, more than 23,000 jobs, which generate $2.2 billion in earnings annually, are at immediate risk.
Both groups have proposed a long list of aid requests, including tax breaks, actions to increase government and private oil storage capacity and loosening some of the regulations they say drive up drilling and production costs.
Those actions are likely to get the consideration they deserve by a state task force formed Friday to plan the reopening of Louisiana’s economy as the health crisis allows. Leaders from both the SCIA and the Louisiana Oil and Gas Association, and many others from the oil industry, are members of the panel, which will make recommendations to the Legislature.
At the federal level, one thing the Trump administration can and should do immediately is grant the industry’s request to temporarily cut the amount the federal government charges companies to drill in the Gulf of Mexico.
Louisiana oil interests expressed disappointment after the Interior Department rejected a proposal in 2018 to lower royalty rates for deepwater Gulf drilling from a longstanding 18.7% to 12.5%, the same as shallow waters. Then-Interior Secretary Ryan Zinke said at the time that an improving economy, federal tax reforms, higher energy prices and greater regulatory certainty had led to “positive market conditions,” negating the need for royalty relief, at least for the time being.
Those “positive market conditions” no longer exist. The Interior Department can cut rates now -- the action does not require congressional approval -- and make a major step toward ensuring the oil industry is ready to respond once the economy ramps up again. And it will go a long way toward showing Trump means what he says when he claims to preside over a “golden era of American energy.”
One thing any aid package should do is ensure the money doesn’t all end up in the coffers of giant oil companies or the pockets of their CEOs and investors. Provisions should ensure the aid reaches the smaller service companies and the oilfield workers whose jobs and livelihoods are on the line.
And any local or state recovery plan should include provisions that will help Houma-Thibodaux and Louisiana deliver on the longstanding promise of many public officials and economic-development groups. Oil and gas will remain an economic mainstay, but it’s long past time to diversify the state and local economies so they are less reliant on a single industry for jobs, government tax money and prosperity.
The coronavirus pandemic is the latest crisis to show why that is the case.