Center for Energy Studies releases report on oil and gas legacy lawsuits

While Louisiana has benefitted from the considerable development of unconventional natural gas activity in the Haynesville shale, conventional drilling activity in South Louisiana has languished. The state’s conventional oil and gas drilling activity, largely concentrated in South Louisiana, is well below levels experienced in other states, due in part to the negative perceptions associated with the filing of numerous “legacy lawsuits,” environmental cases based on claims occurring, in some instances, several decades in the past. These suits have contributed to a significant decrease in conventional Louisiana drilling activity that has resulted in near term economic losses, and could have longer term implications for the state’s mineral revenue collections.

According to a report by David Dismukes, professor and associate executive director of the Center for Energy Studies at Louisiana State University, legacy lawsuits have led to a significant reduction in state conventional drilling activity. The study updates work originally included in a 2005 report produced for the Louisiana Department of Natural Resources and the Louisiana Department of Economic Development examining decreasing Louisiana drilling activity and the economic impacts of that decreased activity.

The new report estimates that over the past eight years, legacy lawsuits have led to a loss of some 1,200 new wells, translating into a total statewide reduction of about $6.7 billion dollars in lost Louisiana drilling investment. The estimate is likely conservative since it excludes the impacts these reduced drilling activities would have on oil and natural gas production, and the mineral revenues generated by this foregone production.

Cumulative legacy-induced economic impacts are estimated to have led to the reduction of

• Approximately $6.7 billion (in 2010 dollars) in decreased drilling expenditures;
• Close to $10.5 billion in Louisiana economic output;
• Over 30,000 employment opportunities in oil and gas activities and supporting jobs; and
• More than $1.5 billion in wages for those employed directly and indirectly in the oil and gas business

Click here to view or download the report.