The Importance of Energy Production and Infrastructure in Plaquemines Parish

Center for Energy Studies

Prepared for the Office of the Parish President and Project Rebuild Plaquemines with Assistance from the Plaquemines Association of Business & Industry

June 14, 2006

David E. Dismukes, Seth Cureington & Elizabeth Oleks

Center for Energy Studies Center for Energy Studies Louisiana State University 1

Center for Energy Studies

The Center for Energy Studies would like to thank Parish President Benny Rousselle and Leonard Mistich, Executive Director of the Plaquemines Association of Business and Industry, for their support and input on this project. Funding support for this study was provided by Project Rebuild Plaquemines.

CES appreciates the support of the Louisiana Department of Natural Resources, particularly Secretary Scott Angelle, for support and assistance during the course of this research. DNR provided a host of materials from a similar study it was conducting prior to the CES initiative. Further, DNR was instrumental in providing the royalty revenue information used in this report.

CES would also like to thank the Louisiana Department of Revenue for their assistance in providing important severance tax information for this project.

The helpful comments of many regional business and industries in Plaquemines Parish are also appreciated.

Center for Energy Studies

• Overview of Plaquemines Energy Production and Infrastructure

• Overview of the Plaquemines Energy Economy

• Katrina Impacts on Plaquemines Energy Economy

• Ongoing Energy Production and Infrastructure Importance

• Conclusions

Center for Energy Studies Production and Infrastructure

• Plaquemines energy economy is unique since it includes most ALL types of energy production, support and infrastructure. (Production, support, storage, transportation, refining, petrochemical)

• Plaquemines is an energy “golden goose” for the state. It contributes the largest share of state production and mineral revenues – over $2.1 billion in total mineral revenues over the past decade.

• There are close to 11,000 active producing oil and gas wells in the Parish.

• Energy is estimated to be a $1.2 billion industry in Plaquemines and accounts for over 8,000 direct, indirect, and induced employment opportunities in the parish.

• Failure to support production, storage, transportation, and processing infrastructure in the area can have important impacts on national energy markets during a critical period of industry constraints.

• The region is also an important part of the Louisiana economy. Facilitating speedy recovery in the parish is an important part of Louisiana’s overall recovery. This recovery will pay dividends over time to the state and the nation in terms of ongoing and future energy production, processing, and deliverability. 4

Overview of Plaquemines Energy Production and Infrastructure

Center for Energy Studies There are a large number of active state-jurisdictional oil and gas wells onshore and offshore in Plaquemines

Center for Energy Studies

Oil production from the parish has been declining, but has remained stable and even increased as a share of total state production over the past several years (prior to Katrina). Prior to hurricane, Plaquemines was producing close to 18 million barrels per year. 5 25% ) %

5 ( n on i o t i

4 20% t c

4 uc ) odu od s r l Pr b 3 15% l P i l i b

n 3 e O illio nes O at i

2 10% t m ( S

em 2 of aqu

l 1 5% ent P c r

1 e P 0 0% 4 0 0 4 6 0 2 6 9 0 0 8 8 8 9 9 98 02 88 92 84 ------n n n n n n n n Ja Jan- Ja Jan- Ja Ja Ja Jan Ja Jan- Ja Jan- Ja

Plaquemines Oil Production Percent of State Oil Production 7

Source: Louisiana Department of Natural Resources © LSU Center for Energy Studies Plaquemines Natural Gas Production (Onshore and Offshore)

Center for Energy Studies

Natural gas production from Plaquemines has been declining, however, as a percent of total state production, it has remained stable. Prior to the hurricanes, the Parish was producing over 105 billion cubic feet per year.

30 20% ) % (

n 18% o i on t 25 i t

c 16% c

odu 14% r 20 odu P 12% s s Pr ) a f a c 15 10% (b e G

nes G 8% at i t

10 S

em 6% 4% of aqu l

5 ent P c 2% r e 0 0% P 8 4 2 0 6 2 9 0 0 8 8 9 96 00 82 84 88 90 94 ------n n n n n n Jan- Ja Jan- Ja Ja Ja Jan- Jan- Ja Jan- Jan- Ja Jan-

Plaquemines Gas Production Percent of State Gas Production 8

Source: Louisiana Department of Natural Resources © LSU Center for Energy Studies OCS Oil & Gas Platforms New Orleans District

Center for Energy Studies There are a considerable number of highly prolific oil and gas production assets off the Plaquemines coast on the Outer Continental Shelf. There are some 1,102 active structures off the Parish coast.

Center for Energy Studies

OCS oil production located offshore of Plaquemines, has been increasing significantly, as has its share of total federal OCS production. Prior to the hurricane, the offshore area accounted for half of the total oil production in the Gulf. 300 60% ) ) s 250 50% l b % (

b S n

200 40% C illio O l m a ( 150 30% t on i To of

100 20% oduct ent r c r P e l i P O 50 10%

0 0% 0 2 8 4 98 04 84 92 96 02 90 19 19 200 20 20 1980 198 19 1986 198 19 19 199

New Orleans District Federal OCS Oil Production New Orleans District Production as a Percent of Total GOM 10

Source: Minerals Management Services, US Department of the Interior © LSU Center for Energy Studies OCS Natural Gas Production New Orleans District

Center for Energy Studies

OCS natural gas production offshore of Plaquemines has been increasing significantly, as has its share of total federal OCS production. Prior to the hurricane, the offshore area accounted for one-third of the total natural production in the Gulf. 1,400 35%

1,200 30% ) % ) (

1,000 25% S b C ( n O o l i

800 20% a t duct To o

r 600 15% of

P s ent a

400 10% c r G e P 200 5%

0 0% 0 0 0 04 84 88 94 998 982 992 1996 1 200 2002 20 198 1 19 1986 19 199 1 19

New Orleans District Federal OCS Gas Production New Orleans District Production as a Percent of Total GOM 11

Source: Minerals Management Services, US Department of the Interior © LSU Center for Energy Studies Plaquemines Parish Refining Capacity

Center for Energy Studies

ConocoPhillips Alliance Refinery

• Located in Belle Chasse, Louisiana, on the Mississippi River, about 25 miles south of New Orleans and 63 miles north of the Gulf of Mexico.

• Began operations in 1971, one of the last grassroots refineries built in the US.

• Crude oil processing capacity of 247,000 barrels per day.

• Receives domestic crude oil by pipeline and international crude oil via the Louisiana Offshore Oil Port (“LOOP”).

• Most refined products are distributed to customers through the Colonial and Plantation pipeline systems.

• Facilities include a coking unit, which upgrades bottom of the barrel products into light oils and high-value anode petroleum coke.

Center for Energy Studies

Chevron Oronite Oak Point Plant

• Located in Belle Chasse, Louisiana, on the Mississippi River.

• The plant occupies 100 acres in the parish and has more than 410 employees.

• One of the largest and most advanced producers of high-quality blended fuel and lubricant additives in the world.

• Manufactures more than 30 unique additive components and intermediates, and blends more than 300 packages to specific customer requirements.

Center for Energy Studies

Venice Gas Processing

• Located in Venice, Louisiana.

• Owned by a number of partners including Chevron, Targa Resources, Enterprise Product Partners and Oneok.

• Gas processing capacity of 1.3 bcf of natural gas per day.

• Receives natural gas by from offshore pipelines: Mississippi Canyon, Texas Eastern, Venice Gathering System. • • Delivers natural gas to onshore pipelines: Texas Eastern, Columbia Gulf, Gulf South

Center for Energy Studies

Empire Petroleum Storage

• Located in Buras, Louisiana.

• Primary delivery point for Heavy Louisiana Sweet Crude produced in the GOM.

• Handles 400,000 - 500,000 barrels per day.

• Receives crude produced in Gulf from pipelines: Cypress, Breton Sound, MP 69, Delta System and Grand Bay.

• Crude is delivered via outbound pipelines to Chalmette refinery, St. James Terminal, and Mars Blend tanks at LOOP.

Overview of the Plaquemines Energy Economy

Center for Energy Studies

Over the past 14 years, Plaquemines has contributed over $932 million in severance revenues to the state. Prior to Katrina, the parish accounted for roughly 20 percent of the state’s severance revenues. s 18 30% ne i m %) e 16 ( u

q 25% nce a 14 ra Pl

e 12 20% om ) fr e Sev t

n $ 10 ed a t

c 15% illio e l l St l 8 a o (m t C

x 6 10%

4 t of To e Ta 5% n nc 2 rce ra e Pe 0 0% Sev 2 3 4 6 0 1 8 9 9 0 9 9 9 9 0 0 03 04 05 95 97 ------l l l l l l l Ju Jul Jul Jul Ju Ju Jul Ju Jul Jul Ju Ju Ju

Oil Gas % of Total State 17

Source: Louisiana Department of Revenue © LSU Center for Energy Studies Top Ten Parishes for Severance Revenue Contribution

Center for Energy Studies

Plaquemines contributes more severance revenues ($100 million) than any other parish in the state. $120 on i $100 t

u $100 rib nt $80 $71 n $) nce Co

lio $60 $43

(mil $39 $40 $29 $27 $27 Severa l $25 $24 $23 a

u $20 Ann $0 r y u e n e n a r i e on h o n r i ie a io r nes c s n e i il s e s o a M Ib m m cks . b r our lc Bo e St a Ja rre Cam V que C Laf e a T Pl

18 Note: Severance contribution is total for oil and gas from April 2005 through March 2006. Source: Louisiana Department of Revenue © LSU Center for Energy Studies Louisiana Royalty Revenue Collected in Plaquemines Parish

Center for Energy Studies

Over the past 15 years, Plaquemines has contributed over $1.4 billion in royalty revenues to the state. Prior to Katrina, the parish accounted for over 30 percent of the state’s royalty revenues. 160 50%

140 45% d $) 40% e 120 t a illion (%) llecte 35% (m l St Co

100 a s nue

30% t e e u ve n i n

80 25% e e m e t of To

u 20% n lty R

q 60 ya rce lty Rev 15% o Pla 40 R ya Pe

o 10% om R fr 20 5% 0 0% * 04 05 93 94 99 02 03 92 95 96 97 98 00 01 06 20 20 20 20 19 19 19 19 19 19 19 19 20 20 D 20 T Royalty from Parish % of Total State Y

19 Note: * YTD 2006 is through May. Source: Louisiana Department of Revenue © LSU Center for Energy Studies Louisiana Total Mineral Revenue Collected in Plaquemines Parish

Center for Energy Studies

From 1994 through 2005, Plaquemines has contributed over $2.1 billion in mineral revenues to the state. Prior to Katrina, the parish accounted for 25 percent of the state’s mineral revenues. 300 30%

250 25% d $) e

t ec ate l l

200 20% (%) o e (million l St C u

a s n t e e e o u n v i n T

150 15% e f e m v R e l t o u a r q Re en l c ne 100 10% r ra e Pla Mi P ne om Mi fr 50 5%

0 0% 02 05 94 97 98 01 03 04 95 96 99 00 20 20 20 20 19 19 19 19 19 19 20 20

Royalty from Parish Severance from Parish % of Total State

20 Note: * YTD 2006 is through May. Source: Louisiana Department of Revenue © LSU Center for Energy Studies Oil and Gas Extraction Employment in Plaquemines Parish

Center for Energy Studies

Plaquemines’ oil and gas employment accounts for approximately 10 to 12 percent of total parish employment. Significantly higher than the state average of 3 percent. 2,500 25% t n s e a 2,000 20% m y o pl bs) and G o m l i

j 1,500 15% E l of a r t be nes O i 1,000 10% To of

em num ( ent aqu c l 500 5% r P e P

0 0% 4 5 3 1 2 3 1 2 3 4 5 2 3 4 0 0 01 02 0 04 05 0 0 0 01 0 0 0 0 0 0 0 0 ------l l l l l t t t r r r r r n n n Ju Ju Ju Ju Ju Ja Ap Oc Ja Ap Jan- Ap Oct Jan- Ap Oc Ja Ap Oc Plaquemines Oil and Gas Employment Plaquemines Oil and Gas as a Percent of Plaquemines Total Louisiana Mining as a Percent of Louisiana Total 21

Source: Bureau of Labor Statistics, US Department of Labor © LSU Center for Energy Studies Oil and Gas Extraction Wages in Plaquemines Parish

Center for Energy Studies

Plaquemines’ oil and gas wages account for approximately 10 percent of total parish wages. This is significantly higher that the statewide average of 5 percent. $35,000 25%

s $30,000 20% s age

$25,000 age ng W W l a ni 15% i $20,000 t To

ousand $) $15,000 of nes M 10% i h t ( ent em $10,000 c r e P aqu 5% l

P $5,000

$0 0% 2 03 04 04 05 01 01 02 03 004 001 002 20 20 20 20 20 20 200 20 20 2004 2 2005 2005 2 2001 2002 2 2003 2003 4 2 3 4 2 1 2 4 2 3 4 2 1 1 3 3 1 1 3 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q

Plaquemines Oil and Gas Wages Plaquemines Oil and Gas Wages as a Percent of Plaquemines Total Wages Louisiana Oil and Gas as a Percent of Louisiana Total 22

Source: Bureau of Labor Statistics, US Department of Labor © LSU Center for Energy Studies Oil and Gas Extraction Average Weekly Wages in Plaquemines Parish

Center for Energy Studies

Average weekly wages for Plaquemines’ oil and gas sector are significantly higher than average weekly wages for both the parish and the state. $1,400

) $1,200 $ (

ge $1,000 a W

y l $800 ek e $600 W e g

a $400 er

Av $200

$0 3 5 2 3 4 1 04 04 01 02 02 005 001 002 003 200 20 20 200 20 20 200 20 200 2003 200 2004 2005 2 200 2 2001 2 2 3 1 4 2 3 2 3 1 2 3 4 1 2 4 2 3 1 1 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q

Plaquemines Oil and Gas Plaquemines Total Louisiana Total 23

Source: Bureau of Labor Statistics, US Department of Labor © LSU Center for Energy Studies Jobs Supported by Oil and Gas in Plaquemines Parish

Center for Energy Studies

The oil and gas sector in the parish creates significant “multiplier” impacts. Some 2.1 additional jobs are created for every one job created in the oil and gas sector. 6,000

5,000

4,000 Jobs

of 3,000 ber m u

N 2,000

1,000

0 2001 2002 2003 2004 2005

Direct Indirect & Induced 24

Source: Bureau of Labor Statistics, US Department of Labor; and CES Estimate © LSU Center for Energy Studies Wages Supported by Oil and Gas in Plaquemines Parish

Center for Energy Studies

Some $1.70 of additional wages are also created for every one direct dollar of direct wages created in the oil and gas sector. 350 ) $

n 300 illio

(m 250 n tio a

s 200 n e p

m 150 o C e

e 100 y o l p

m 50 E 0 2001 2002 2003 2004 2005

Direct Indirect & Induced 25

Source: Bureau of Labor Statistics, US Department of Labor; and CES Estimate © LSU Center for Energy Studies Estimated Oil and Gas Employment Created Outside the Parish

Center for Energy Studies

Since 1997, Plaquemines oil and gas activity is estimated to supported between 200 and 500 Louisiana-specific jobs outside of the parish. 600

500

bs 400 o J f

o 300 er b m u

N 200

100

0 1997 1998 1999 2000 2001 2002 2003

26 Note: Includes oil and gas extraction as well as support activities for oil and gas operations. Source: Bureau of Labor Statistics, US Department of Labor; and CES Estimate © LSU Center for Energy Studies Estimated Oil and Gas Wages Created Outside the Parish

Center for Energy Studies

Since 1997, Plaquemines oil and gas activity has supported between $9 and $19 million in Louisiana wages outside of the parish.

$20 ) $

$18 n

illio $16 (m $14 n o i t

a $12 s n

e $10 p m

o $8 C

e $6 e y o l $4 p m

E $2 $0 1997 1998 1999 2000 2001 2002 2003 27 Note: Includes oil and gas extraction as well as support activities for oil and gas operations. Source: Bureau of Labor Statistics, US Department of Labor; and CES Estimate © LSU Center for Energy Studies Refinery Infrastructure

Center for Energy Studies

Plaquemine Parish’s refining capacity is Plaquemine Parish’s refining capacity is 247,000 barrels per day, or 247,000 barrels per day, or 9 percent of total Louisiana capacity of 3 percent of total GOM capacity of 2,773 thousand barrels per day 7,341 thousand barrels per day

Plaquemines Plaquemines Plaquemines Plaquemines 8.9% 3.4% 8.9% 3.4%

Rest of Louisiana Rest of GOM Rest of Louisiana Rest of GOM 91.1% 96.6% 91.1% 96.6%

Source: Energy Information Administration, US Department of Energy © LSU Center for Energy Studies Post-Katrina Gasoline Price Increases August 30, 2005 to September 6, 2005

Center for Energy Studies South Louisiana refinery outages felt throughout the U.S. 18 particularly on the eastern seaboard 55 33 49 20 35 58 38 45 35 56 52 32 36 54 42 49 61 52 60 25 40 35 36 42 42 42 61 20 50 58 20 46 61 45 38 56 58 45 44 66 Regional Changes in Gasoline Prices 24 (cents per gallon) 70 42 60.1 44 < 25 60 54.9 24 51 46.9 40 50 44.7 25-50 39.5 38.5 40 35 > 50

30 n 25.3 t

s Colonial / Plantation

20 e h h Atlantic Pipeline Systems 10 ut Northeast Sout So US Mid-Atlantic Midw Mountai West 0 29

Source: American Petroleum Institute © LSULSU CenterCenter for EEnergynergy StudiStudieses Estimated Refinery Employment and Wages Plaquemines Parish

Center for Energy Studies

Plaquemines is estimated to support 450 direct refinery jobs as well as an additional 1,020 in indirect and induced employment supporting these operations. Likewise, refinery positions account for an estimated $35.3 million in direct wages with another $39.9 million in indirect and induced wages. 1,200 $41

$40 1,000 $39 800 $38 s on $) b i

600 l $37 l i jo m ( $36 400 $35 200 $34

0 $33 Employment Wages

Direct Indirect & Induced Direct Indirect & Induced

Source: Major Industrial Plant Database; and CES Estimate © LSU Center for Energy Studies Estimated Chemical Employment and Wages Plaquemines Parish

Center for Energy Studies

Plaquemines is estimated to support 410 chemical jobs as well as an additional 929 in indirect and induced employment opportunities. In addition, chemical activities are estimated to created $30.0 million in direct wages with another $34.0 million in indirect and induced wages.

1,000 $35 900 $34 800 700 $33

600 ) ) $ $32 s n b 500 o illio (j

m $31

400 (

300 $30 200 $29 100

0 $28 Employment Wages

Direct Indirect & Induced Direct Indirect & Induced

Source: Chevron Company website; and CES Estimate © LSU Center for Energy Studies Estimated Total Energy Employment and Wages (Oil and Gas Extraction, Refining, Petrochemical)

Center for Energy Studies Plaquemines Parish

Plaquemines is estimated to support 2,667 energy-affiliated jobs as well as an additional 5,514 in indirect and induced support jobs. In addition, the total energy industry sector in the parish is estimated to contribute $170 million in direct wages with another $289 million in indirect and induced wages. 6,000 $350

5,000 $300

$250 4,000 ) $ ) $200 s n

b 3,000 o illio (j

m $150 ( 2,000 $100

1,000 $50

0 $0 Employment Wages

Direct Indirect & Induced Direct Indirect & Induced

32 Source: Bureau of Labor Statistics, US Department of Labor; Major Industrial Plant Database; Chevron Company website; and CES Estimate © LSU Center for Energy Studies Plaquemines Estimated Contribution to Louisiana Oil and Gas GSP

Center for Energy Studies

Plaquemines’ estimated “gross parish product” from the oil and gas sector is over $200 million per year. )

$500 5.0% % (

$450 4.5% P S t

$400 4.0% s G uc a od G r $350 3.5% and

sh P

$300 3.0% l i i r O on $) i e l $250 2.5% l i s Pa at t a m ( $200 2.0% S l a t

nd G $150 1.5% a

l To i f

O $100 1.0% o t n

$50 0.5% e c r e

$0 0.0% P 1997 1998 1999 2000 2001 2002 2003

33 Note: Includes oil and gas extraction as well as support activities for oil and gas operations. Source: CES Estimate © LSU Center for Energy Studies Plaquemines Oil and Gas Value Added Relative to State Oil and Gas Sector Center for Energy Studies

Plaquemines’ estimated value added (wages, other income, and indirect business taxes) from the oil and gas sector is estimated to be over $200 million per year.

$350 5.0% 4.5% $300

4.0% ) on $) i % l ( l

$250 e t m 3.5% a ( t s

3.0% S $200 l a pact 2.5% m $150 Tot

2.0% of t ded I en

1.5% c

$100 r e e Ad u P l 1.0% a

V $50 0.5% $0 0.0% 1997 1998 1999 2000 2001 2002 2003

Value Added Impacts for Plaquemines Parish Percent of Total State 34 Note: Includes impacts from oil and gas extraction as well as support activities for oil and gas operations. Source: CES Estimate © LSU Center for Energy Studies Plaquemines Parish Pipelines

Center for Energy Studies

Plaquemines is a central point for natural gas and crude oil pipelines in the Gulf of Mexico

Center for Energy Studies

The parish is also an important port and supply base for the offshore industry

Ports Owner Plaquemines Parish Port, Harbor & Port of Plaquemines Terminal District Supply Bases Venice DOCT ASCO Fuel & Lubricant Elder Offshore Leasing Elder Offshore Leasing Energy Logistics Venice Energy Logistics/Liberty Services Inc John W. Stone-Venice John W. Stone Oil Distributor LLC Heliports Amax Metals Recovery Inc. Amax Metals Recovery Inc. Panther Helicopters Inc Lance Panepinto Air Logistics (Belle Chasse) Air Logistics Compressor Station 527 Tennessee Gas Pipeline Shell Pipeline Nairn Shell Pipeline Corp Batian Bay Texas Eatern Transmission Corp Air Logistics (Venice) N Air Logistics ERA Helicopters Venice Base ERA Helicopters Inc Marathon Venice Marathon Oil Company Shell Venice Terminal Shell Offshore Inc Conoco Inc. Venice Conoco, Inc DGS Chevron USA West Delta Receiving Station Marathon Oil Company Chevron Southpass Tank Battery W-2 Chevron USA Inc. Venice Helipads NAIRN Venice

Hurricane Katrina Impacts on Plaquemines Energy Economy

Center for Energy Studies

• Production • Gas processing •Refining Targa Venice Facility • Petroleum storage and transport • Offshore support interruption

Chevron Pipeline at Empire Facility

Center for Energy Studies

Shell Mars Tension Leg Platform Semi-submersible damage

Center for Energy Studies

New Orleans district shut-in crude production is around 20 percent of it total typical annual production. 900 100%

800 90% ) d / l 700 80% bb 70% (M 600 (%) e g

60% tal ta 500 o T 50% f Ou

400 t o on i

t 40% en c uc 300 30% od Per

Pr 200

l 20% i O 100 10% 0 0% l l 6 0 5 5 5 6 6 6 6 5 6 6 a 05 05 05 06 0 0 06 05 05 05 05 05 f 06 06 0 -0 -0 - - - - -0 -0 -0 -0 - - t t d t r-0 r-0 r r-0 r r v- v- v- c c c p b- p p b- b- c c c n p p p o o o e e e e e e e e e O O O A A Jan- Jan- Jan- Ma N N N F F F S D -A - La -Ma -Ma - -S -S -D -D 8- 6- 6 6 7 7- 7 7 5- 8 7 7 8- 7- 8 18- 28- 16- 26- 1 26- 17- 27- 1 2 15- 25- 1 2 1 2

New Orleans District Oil Production Outages Percent of Total GOM OCS Production 41

Source: Minerals Management Service, US Department of the Interior © LSU Center for Energy Studies Production Impacts: OCS Natural Gas Production Outages

Center for Energy Studies

New Orleans district shut-in natural gas production is around 10 percent of it total typical annual production. 4.0 100% 90%

) 3.5

f/d 80% 3.0 (Bc 70% e (%) g 2.5 ta 60% tal u o T O 2.0 50% f t o tion 40% en uc 1.5 c

od 30% 1.0 Per s Pr 20% Ga 0.5 10% 0.0 0% l l 6 0 6 6 6 6 6 5 5 6 6 a 05 05 05 06 0 05 0 06 0 05 05 05 05 05 05 06 0 0 -0 -0 ------0 -0 -0 -0 - - - - - t t t r r r r r v- v- v- n n c c- c- p- p p b b c c c ndf a ar a p p p o o o a a e e e e e e e e O O O Jan- A A A M M M N N N Feb S D D D - -J -J La - -F -F -S -S 8- 6 6 6 6- 7- 7- 5- 5 5 8- 7- 8 8 18- 28- 1 2 16- 26- 17- 27- 17 27- 1 2 1 2 17- 27-

New Orleans District Gas Production Outages Percent of Total GOM OCS Production 42

Source: Minerals Management Service, US Department of the Interior © LSU Center for Energy Studies Natural Gas Pipeline Systems Impacted by Katrina

Center for Energy Studies

A significant number of crude and natural gas pipelines suffered damage during the storm interrupting production and delivery of energy commodities to market.

Operator Diameter Product Operator Diameter Product (inches) (inches) Tennessee Gas Pipeline Co 26 Gas Southern Natural Gas Co 12-24 Gas Tennessee Gas Pipeline Co 26 Gas Equilon Pipeline Company LLC 12 Gas Venice Gathering System LLC 26 Gas Gulf South Pipeline Co LP 12 Gas Venice Gathering System LLC 26 Gas Apache Corporation 12 Bulk Oil Southern Natural Gas Co 26 Gas Equilon Pipeline Company LLC 12 Oil Trunkline Gas Company LLC 24 Gas Southern Natural Gas Co 12 Gas Gulfterra Field Services LLC 20 Gas Chevron Pipeline Co 12 Gas Tennessee Gas Pipeline Co 20 Gas Tennessee Gas Pipeline Co 12 Gas Southern Natural Gas Co 20 Gas Chandeleur Pipeline Co 12 Gas Tennessee Gas Pipeline Co 20 Gas Southern Natural Gas Co 12 Gas Southern Natural Gas Co 18 Gas SPN Resources LLC 10 Gas Equilon Pipeline Company LLC 18 Oil Transcontinental Gas Pipeline 10 Gas Equilon Pipeline Company LLC 18 Oil Total E&P USA Inc 10 Gas Equilon Pipeline Company LLC 18 Gas Apache Corporation 10 Gas Chandeleur Pipeline Co 16 Gas Apache Corporation 10 Gas Marlin Energy Offshore LLC 14 Gas Apache Corporation 10 Lift Enbridge Offshore (Gas Gathering) 14 Gas Apache Corporation 10 Gas Southern Natural Gas Co 14 Gas Exxon Mobil Corporation 10 Gas

Source: Minerals Management Service, US Department of the Interior © LSU Center for Energy Studies Refinery Impacts: Cumulative Lost Production - Total

Center for Energy Studies

By the end of May 2006, shut-in production from the Alliance Refinery is estimated to be about 54 million barrels. This estimated lost production is equivalent to approximately 58 percent of Alliance’s annual total production.

Plaquemines Percent of Lost Refining Total Lost Production Production Product (million bbls) (%) 60,000 Gasoline 21.0 39.2% Other Jet Fuel 8.4 15.7% Distillate 15.8 29.4% 50,000 Distillate Other 8.4 15.7% Jet Fuel Total 53.6 100.0% 40,000 Gasoline

30,000

20,000

10,000

0 Landfall 30 60 90 120 150 180 210 240 270 44

Source: Energy Information Administration, US Department of Energy; and various tradepress and company news releases. © LSU Center for Energy Studies Refinery Impacts: Lost Production Relative to Typical Fuel Uses Center for Energy Studies

Lost production from Alliance refinery would have….

… fueled all the cars in Rhode Island for over 2 years … delivered over 3.5 billion pizzas in the US … fueled the over 100,000 commercial airline trips from New York to Los Angeles

… heat 10 percent of New England homes for a month

Source: Energy Information Administration, US Department of Energy; and various tradepress and company news releases. © LSU Center for Energy Studies Shore Bases, Supply Bases and Helicopter Bases

Center for Energy Studies

Venice Support, Supply and Crew Bases Petroleum Helicopter Inc. – Boothville

Center for Energy Studies

Over $65 million in lost mineral revenues was associated with shut-in oil and gas production in Plaquemines. $18,000

$16,000

$14,000 ousand $ h

t $12,000 ue (

n $10,000 e v

e $8,000 R

al $6,000 ner i $4,000 M t s o

L $2,000

$0 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06

Lost Royalty Lost Severance 47

Ongoing Energy Production and Infrastructure Importance of the Parish

Center for Energy Studies

• Plaquemines has played an important role in the region’s energy economy and has the opportunity to continue to play an important role in future energy production and infrastructure development.

• The Parish helps to support an important region for OSC production.

• The parish is an exceptionally important area for state oil and gas production and mineral revenues.

• Plaquemines is one of the most important gas processing hubs along the Gulf Coast.

• Plaquemines is home to an important petroleum refinery.

• A major crude oil storage terminal and pipeline system is located in the Parish which ties to a facility responsible for 18 percent of all U.S. crude oil imports.

• The parish is home to an important petrochemical facility.

Center for Energy Studies

• Plaquemines establishes Louisiana proximity to OSC production.

• OCS production is important to the state’s energy economy as well as our energy supplies to critical industry.

• Plaquemines is poised to continue support of ongoing OCS activities.

• Plaquemines is poised to continue support of growing deepwater opportunities.

• Plaquemines could support future activity in restricted areas in the eastern Gulf.

Center for Energy Studies

• There is no place in the state that has as concentrated an area of state jurisdictional oil and gas production as in Plaquemines parish.

• The parish accounts for over 20 percent and about 10 percent of total state oil and gas production, respectively.

• Plaquemines accounts for about 20 percent of total state mineral revenues.

• The Parish contributes over $230 million per year in mineral revenue.

• This production accounts for approximately 1,800 direct jobs and almost 3,600 indirect and induced jobs. About $80 million in total direct wages were paid for 2004, and $136 million in indirect and induced wages.

Center for Energy Studies

• Katrina showed that Plaquemines is an important area for processing natural gas from the Gulf.

• The parish accounts for over 1.3 billion cubic feet per day of capacity, accounting for 7 percent of Louisiana capacity, and 6 percent of total coastal GOM gas processing capacity.

• Liquids separated from these facilities are important feedstocks for other Louisiana chemical facilities that employ as many as 23,500 workers.

Center for Energy Studies

• The U.S. needs petroleum refining capacity and the Alliance refinery in Plaquemines parish is an important part of the country’s refining capacity.

• The Alliance refinery is an important regional producer of gasoline, diesel, jet fuel, and home heating oil.

• Refinery losses after Katrina pushed prices well over 50 cents per gallon for customers all along the eastern U.S. Current refinery outages have kept increased pressure on gasoline prices that are currently at record levels.

• As a regional manufacturing center, the Alliance refinery is an important employer and tax revenue contributor.

Center for Energy Studies

• The Chevron Oronite Oak Point Plant in Belle Chasse, Louisiana, U.S.A. is one of the largest and most advanced producers of high-quality blended fuel and lubricant additives in the world.

• Chevron Oronite develops, manufactures and markets fuel and lubricant additives and specialty chemicals. It specializes in technically advanced additives that improve the performance of fuels, lubricating oils, fluids and greases.

• Oronite manufactures over 250 lubricant and fuel additives for all types of diesel, gasoline and natural gas engines as well as additives for other lubricants such as gear oils and hydraulic oils.

Center for Energy Studies

• Chevron’s Empire Terminal serves as a primary delivery point for Heavy Louisiana Sweet Crude produced in the GOM

• The terminal can handle 400,000 - 500,000 barrels per day

• Receives crude produced in Gulf from pipelines: Cypress, Breton Sound, MP 69, Delta System and Grand Bay

• Crude is delivered via outbound pipelines to Chalmette refinery, St. James Terminal, and Mars Blend tanks at LOOP

• Delivery to LOOP is at Clovelly, which is a eight cavern underground salt storage facility with a total capacity of 40 million barrels, a pump station with four 6,000-hp pumps, meters to measure the crude oil receipts and deliveries, and a 25 million barrel Brine Storage Reservoir.

• LOOP handles 12 to 15 percent of total US crude oil imports

Conclusions

Center for Energy Studies

• Ongoing support for the parish is important for national and regional energy markets.

• The parish’s energy economy is a reflection of the diversity and importance of the whole Louisiana energy economy having production, refining, gas processing, petrochemical, logistic and transportation support, and storage/transportation infrastructure. There is probably no parish in the state that has most ALL of these aspects of the energy industry included in their boundaries.

• Failure to support this production and infrastructure could have important impacts on national energy markets at a critical time.

Center for Energy Studies

The following facts highlight the importance of the energy industry in Plaquemines and prior to the hurricanes, the Parish was responsible for:

• 17 million barrels of oil each year; • 105 billion cubic feet of gas each year; • Close to 11,000 active state oil and gas wells; • Over 750 miles of onshore pipelines; • 1,102 active structures in federal offshore waters off the parish coast accounting for roughly half of the total oil production in the Gulf and one-third of the natural gas production; • 247,000 barrels per day of refining capacity; • 1.3 billion cubic feet per day of gas processing capacity; • $100 million per year in severance revenues and over $140 million per year in royalty revenues – for a total of $240 million in total mineral revenues which accounts for roughly 25 percent of state totals. • Over the past decade, the Parish has contributed $2.1 billion in mineral revenues. • Direct employment of close to 1,800 people in oil and gas extraction accounting for $80 million in annual wages. • A total energy industry estimated to be $1.2 billion per year, accounting for over 8,000 direct, indirect, and induced employment opportunities. 58