Louisiana looking to rise in rankings

09 20, 2012 by Daily Advertiser

A survey by the Fraser Institute has ranked Louisiana as the 15th-best place in the world and 10th-best place in the United States to make oil and gas investments among 147 jurisdictions evaluated.

Experts said Louisiana can do better.

"We have to continue creating a positive atmosphere that will attract the oil and gas industry and not deter it," Louisiana Oil and Gas Association President Don Briggs said. "This happens when individual parishes on up to the federal government realize that increasing government oversight is not the answer."

The Fraser Institute's sixth annual survey studied investment barriers, including higher taxes, the cost of regulatory compliance, uncertainty over environmental regulations and other existing regulations, quality of infrastructure, labor availability and skills, disputed land claims and the legal system.

Oklahoma, Mississippi and Texas were named the top three places, not only in this country, but in the world, to make oil investments. Their taxation regime, environmental regulations, clarity over protected areas, cost of regulatory compliance and legal system were more attractive than Louisiana's, according to the survey.

"So many factors fall into play when looking at the overall picture of an industry like oil and gas," Briggs said. "However, the litigious climate in Louisiana is stifling to the industry."

According to a recent survey from the U.S. Chamber of Commerce, Louisiana is ranked 49 out of 50 for its legal climate. That same survey ranked Louisiana second out of 50 for tax climate for new firms — a picture different from the one painted by Fraser.

"The industry has been faced with these so called 'legacy lawsuits' where the idea is to litigate first, then regulate," Briggs said. "This is a direct hindrance to those wanting to invest in the industry. Other factors such as taxes, regulations and politics also play a role in effecting the oil and gas industry."

The survey noted that Louisiana's labor availability and skills are the most attractive in the world. It also placed the state's political stability and fiscal terms as encouragements to investment. Infrastructure, labor regulations and trade barriers were in the middle of the pack.

Louisiana has hovered around No. 15 in the survey over the past four years, but the state and area has continued to attract oil and gas companies. Lafayette Economic Development Authority Director Gregg Gothreaux used Halliburton's new manufacturing facility as an example of growth.

"It was a competition to bring Halliburton here, and the competition was against other communities in Texas and in other places and that competition was won by Lafayette and the state of Louisiana," Gothreaux said. "And a great part of it was that they knew that doing business in Lafayette, La., from the experience from other divisions, is beneficial to their bottom line."

Briggs pointed to Haynesville Shale as an indicator of Louisiana's prosperity. Haynesville Shale has been the No. 1 producing natural gas field in America for the last four years.

"Around 80 percent of the nation's offshore oil and gas resources come from or through Louisiana. This is equal to nearly 30 percent of the entire energy consumption for the United States moving along the highways of Louisiana," Briggs said.

"Looking at these statistics alone, Louisiana is the key player in oil and gas for our country."