LOUISIANA - Oil and Gas Investor

LOUISIANA 

Proud Past, Promising Future 

A supplement to

L O U I S I A N A 

the gateway to north america 

Louisiana long ago established itself as a major gateway for commerce to and from 

the United States. Over 30 years ago the state solidified its role as a major energy 

gateway to the United States with such important projects as the LOOP (Louisiana 

Offshore Oil Port), the Trunkline LNG terminal, and numerous large diameter 

pipelines which have delivered over 180 Tcf of natural gas from the Gulf of Mexico. 

Today Louisiana is host to the construction of the largest LNG terminal in the country. 

Cheniere Energy’s Sabine Pass LNG terminal at 2.6 Bcf per day (expansion filing to 4 

Bcf per day) and Cheniere’s Creole Trail facility at 3.3 Bcf/d will see Cameron Parish, 

Louisiana rise as the definitive U.S. entry point for the world’s LNG. Together, the 

Cheniere terminals and companion pipelines will offer an unprecedented level of 

flexibility, reliability, and downstream optionality all in a safe and environmentally 

friendly manner. 

Recently Louisiana suffered the devastating destruction of two major hurricanes.The 

personal loss to the people and the impact on the economic infrastructure has been 

significant. The recovery efforts however are well underway. Cheniere is proud to be 

contributing to the relief efforts and in helping to rebuild the Louisiana coast to an 

even greater level of economic prosperity and fortitude. 

Cheniere Energy, Inc. 717 Texas Avenue Suite 3100 Houston,Texas 77002 713.659.1361 www.cheniere.com

A supplement to 

4545 Post Oak Place, Ste. 210 

Houston, Texas 77027 

Tel: (713) 993-9320 

Fax: (713) 840-0923 

E&Pnet.com 

oilandgasinvestor.com 

Editors in Chief 

BILL PIKE, E&P 

LESLIE HAINES, Oil and Gas Investor 

Director of Custom Publishing 

MONIQUE A. BARBEE 

Executive Editors 

DON LYLE, E&P 

NISSA DARBONNE, OIL AND GAS INVESTOR 

Editors 

BRUCE BEAUBOUEF 

RHONDA DUEY 

BERTIE TAYLOR 

PEGGY WILLIAMS 

Contributing Editors 

JIM BRADSHAW 

JOEL PARSHALL 

MJ SELLE 

F. JAY SCHEMPF 

Art Director 

ALEXA SANDERS 

Graphic Designer 

MELISSA RITCHIE 

Production Manager 

JO LYNNE POOL 

For additional copies of this publication, 

contact Marcos Alviar at ext. 150. 

Group Publisher, Electronic Content 

CLIFF JOHNSON 

Director of Business Development 

& Custom Communications 

PAUL HELTON 

Group Publishers 

RUSSELL LAAS, E&P 

BOB JARVIS, Oil and Gas Investor 

Sr. Vice President and 

Chief Financial Officer 

KEVIN F. HIGGINS 

Executive Vice President 

FREDERICK L. POTTER 

President and 

Chief Executive Officer 

RICHARD A. EICHLER 

LOUISIANA 

Proud Past, Promising Future 

Introduction 

America’s Natural Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 

Interview 

One-on-One with Sec. Scott Angelle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 

Chapter 1 

Prolific and Proud: A Century of E&P in Louisiana . . . . . . . . . . . . . . . . . . . . . . . .8 

Chapter 2 

The Louisiana Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 

Chapter 3 

Deepwater Development in the Gulf of Mexico . . . . . . . . . . . . . . . . . . . . . . . .20 

Chapter 4 

Exploring the Deep Shelf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 

Chapter 5 

Success under Pressure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 

Chapter 6 

Gas Country makes Louisiana History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 

Chapter 7 

Building a Gas Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 

Chapter 8 

A Century of Pioneers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 

Chapter 9 

The Road Ahead: The Outlook for Louisiana Energy . . . . . . . . . . . . . . . . . . .68 

ABOUT THE COVER: (main photo, by Lowell Georgia) An Acadian geophysical crew uses a 

custom built “pull boat drill” for its shotholes in the heavily treed transition zone near Morgan City, 

La. Inset photos (courtesy of the Louisiana Department of Natural Resources) show life in the industry 

during the early 20th century.

Wetlands embrace much of South Louisiana’s onshore regions, and 

stiff regulations protect them from degradation. 

(Photo courtesy of Lowell Georgia) 

America’s Natural Gas 

By Nissa Darbonne, Executive Editor, Oil and Gas Investor 

At press time, hurricanes Katrina and Rita – 

words Louisianans in all industries have come to 

abhor – had shown both cruelty and to-be-harnessed 

generosity. The unkindness has been 

apparent on television and in newspapers for 

the whole world to witness and regret. 

The generosity was unintended: energy consumers 

across America have come to learn of the importance 

of Louisiana to the nation’s energy security. With 

Katrina, Americans discovered that a great deal of natural 

gas arrives onshore the United States in southeastern 

Louisiana, while Nymex traders pushed product prices higher. 

With Rita, Americans learned that yet more natural gas 

arrives ashore along the entire Louisiana coastline, that the 

important Henry Hub gas-gathering center is in South 

Louisiana, and that a wounded Louisiana natural gas industry 

hurts everyone. At press time, natural gas for November 

delivery at Henry Hub was trading at about $13/MMBtu on 

Nymex. Gas for winter-month delivery was more than $14. 

Across the country, general business reporters began to 

learn that throwing U.S. strategic reserves and imported 

crude oil at Katrina or Rita doesn’t answer all of America’s 

energy needs. They learned that no amount of oil supply matters 

without refining capacity. They also were beginning to 

learn that natural gas doesn’t come from crude oil, and that 

the supply of natural gas has its own dynamics. 

In these pages, industry and lay readers alike will discover 

or rediscover the momentum of Louisiana’s natural gas business, 

which began some 100 years ago when the state’s population 

was just more than 1 million people. 

That number has grown to total roughly 4.5 million residents, 

many of whom can say “natural gas” in both English 

and French and all of whom can say it with a Southern or 

French accent. 

There is practically nowhere in Louisiana that gas has been 

sought and not found. Natural gas is prolific underneath 

Protestant and Catholic churches; near magnolia and bald 

cypress trees; under forested hills and grassy prairies; along 

iris-lined waterways; and under the watch of brown pelicans, 

2 

2005 • LOUISIANA: PROUD PAST, PROMISING FUTURE

Introduction 

crawfish, sac-au-lait, black bears, Catahoula Leopard dogs, 

alligators and Blue Dog. 

It is found before and after servings of gumbo, and during 

accordion-accompanied whirls to “You are My Sunshine.” For 

decades, it has been brought to the Louisiana surface by 

descendents of French, Spanish, African, Native American, 

northern European and Vietnamese ancestors alike. 

The “Mighty Mississippi” may seem cliché, except that its 

might is irrefutable, and is apparent across Louisiana, where it 

has swung wildly throughout time to make the easiest distance 

into the Gulf of Mexico, and built much of the Louisiana 

coast. The part-land/part-water coastline that has resulted 

from the Mississippi’s myriad whims in time – and in part due 

to subsidence – makes the Louisiana energy-extraction industry 

unique, as evidenced by the barge-mounted drilling rig 

found in few other places in the world. 

The state is a subsurface aficionado’s dream. Salt domes 

and other traps and faults make a fascinating confluence of 

ocean subsurface – onshore. Here is where energy-extraction 

careers are made that can work in nearly any geologic formation 

in the world, and there have been many celebrated energy 

careers founded in Louisiana. 

In these pages, Bertie Taylor, associate editor, Oil and Gas 

Investor This Week, tells the stories of the Louisiana gas industry’s 

pioneers. “These people, who built the industry up and 

dedicated their lives to working in it, had no means of 

…knowing how important their contributions would become 

to the state of Louisiana and the energy business,” she writes. 

The story of the early days of natural gas commercialization 

in Caddo Parish is told by Don Lyle, executive editor of 

E&P magazine and a recipient of the Independent Petroleum 

Association of America’s (IPAA) Lloyd Unsell Award for 

Excellence in Petroleum Journalism. 

Joel Parshall, a contributing editor, focuses on Louisiana’s 

onshore deep gas production and potential. He writes, “Deep 

wells, notwithstanding their problems, had been drilled in at 

least limited numbers for years in Louisiana by the late 

1950s…The terminology requires some historical perspective. 

In the first couple of decades of the Louisiana oil and gas 

boom, a well of 5,000ft (1,525m) would have been rare….” 

Wells are more than 25,000ft (7,625m) deep at times now. 

Some of these are offshore, and Houston-based journalist 

MJ Selle describes the potential for deep-shelf gas in the 

Gulf of Mexico. 

Peggy Williams, exploration editor for Oil and Gas Investor 

magazine, describes the movement of gas exploration from 

northern Louisiana into the Gulf of Mexico. 

Jay Schempf, a Houston-based energy writer, discusses the 

industry’s movement into deeper water. “Even then [in the 

1940s], it was plainly evident to oilmen that attractive geological 

formations existed beneath deeper water beyond the 

state’s marshy underbelly,” he writes. 

Bruce Beaubouef, senior editor of PipeLine and Gas 

Technology magazine, describes the state’s extensive and 

impressive gas-gathering and -processing infrastructure. 

“That infrastructure has followed the industry from its 

beginnings onshore into lakes, marshes and other bodies of 

water, and finally, offshore and into deep water,” he reports. 

“Each move into a new geographic province required considerable 

change in operational philosophy…As technology 

changed, or was developed to meet the industry’s needs, new 

frontiers were explored.” 

David E. Dismukes, associate professor and associate director, 

Center for Energy Studies, Louisiana State University, 

gives his outlook. 

“The challenge for Louisiana’s energy mix in the future is 

how to sustain its energy triangle (producers, users, shippers) in 

the face of declining production,” he writes. 

Jim Bradshaw, the celebrated, long-time (Lafayette) Daily 

Advertiser editor and author of Our Acadiana, discusses the current 

Louisiana natural gas business climate. “Louisiana has seen 

the engine of its state economy brought to a standstill,” he quotes 

Gov. Kathleen Blanco from her testimony to members of 

Congress after Hurricane Katrina. “Our loss is the nation’s loss. 

This region is the centerpoint of the nation’s energy industry.” 

Katrina and Rita also called attention to the fact that the 

Louisiana energy industry has a stellar record of good facility 

construction and maintenance, said John Walker, chairman of 

the IPAA and president and chief executive of long-time 

Louisiana operator EnerVest Management Partners Ltd. 

“Hurricane Ivan came through last year. It was a very 

destructive hurricane and it came across platforms at 140 

miles per hour. There wasn’t a single leak from a wellbore…,” 

he said. “Hurricane Katrina came in and devastated the infrastructure 

in Louisiana, and there wasn’t a single major leak 

from a wellbore. The technology works….” 

A portion of the proceeds from this supplement will be donated to 

Spindletop Charities Inc., Spindletop Katrina Relief Fund, P.O. Box 

1212, Houston, TX 77251. Please visit www.spindletopcharities.org 

for more information. 

LOUISIANA: PROUD PAST, PROMISING FUTURE • 2005 3

One-on-One with 

Sec. Scott Angelle 

By Bill Pike, Editor-in-Chief, E&P 

Louisiana Department of Natural Resources Sec. 

Scott Angelle addresses the aftermath of hurricanes 

Katrina and Rita, and later discusses with 

Hart Energy Publishing the state’s proud past 

and promising future. 

More critical now, than ever before, is that everyone 

understand the value of the oil and gas industry in 

Louisiana to all Americans. Louisiana has a long 

and distinguished history and continues to soundly 

support energy production, refining and distribution. Nearly 30% 

of oil and gas consumed in America is produced onshore Louisiana, 

produced offshore Louisiana, or flows through our coastal wetlands. 

Geographically, the eastern part of the state is more of an oil 

province while the western part is more of a gas producing area. 

With the ravages and destruction of Hurricane Katrina on the east 

and Hurricane Rita on the west, these regions have experienced 

severe impacts to these valuable hydrocarbons. 

Katrina and Rita’s one-two punch to the industry hurt three 

strategic areas: production (at the well head), transportation (the 

pipelines), and onshore refining and processing. 

Following the storms, I began a close working relationship with 

Don Briggs, president of the Louisiana Independent Oil and Gas 

Association, and Jim Porter, executive director of Mid-Continent 

Oil and Gas Association. By contacting these organizations and, 

with the Department of Natural Resources (DNR), forging 

alliances with the Public Service Commission, the Louisiana state 

police and the U.S. Coast Guard, a number of obstacles were averted 

that could have curtailed energy delivery even more severely. 

It was also crucial that our agency work with the leadership of 

the Louisiana Chemical Association, so that natural gas for 

human consumption was not acutely impeded, in addition to keeping 

our vital petrochemical industry up and running during the 

throes of these disasters. 

As the department proceeded to waive permitting requirements, 

offer assistance on contractual obligations, or whatever the immediate 

need, common sense relief was paramount. 

I was proud to represent Louisiana by testifying before Congress in 

early September (after Katrina’s wake) on the energy infrastructure 

in Louisiana and the need for America to invest in its protection. I 

reminded Congress that 

91% of the wells drilled 

last year in Louisiana were Angelle 

drilled by independents. 

In direct testimony, once again, Louisiana urged Congress to 

share 50% of the Offshore Continental Shelf proceeds as a means 

of funding hurricane protection, coastal restoration and (what we 

proudly call) America’s Energy Corridor to the nation. 

What is most apparent now is that failing to invest before the 

crisis means extreme escalated expenditures after the crisis. 

While the industry quickly rebounds from all of this, Louisiana 

is faced with and committed to long-term planning and rebuilding. 

Indeed, we are well on our way. Gov. Kathleen Blanco’s administration 

will remain steadfast in keeping our great state open for 

business, and in moving quickly and wisely toward rebuilding and 

revitalization efforts. The opportunity is before us at this juncture 

to strengthen and fortify a genuine federal/state partnership to 

ensure national energy security and a brighter economic future. 

Bill Pike, Editor in Chief, E&P: Louisiana has a long and 

proud history of oil and gas development. How important 

has that been for the development of the business, governmental 

and social infrastructure of the state? 

Sec. Scott Angelle: As a mature producing province, oil and 

gas drilling and production do not generate the proportion of 

state revenue or excitement they once did but, given existing 

reserves and the fact that production is well into decline, it 

should provide a stable economic and resource base for many 

years, albeit at a lower percent of GSP (Gross State Product) 

than in the 60s and 70s. 

At the peak in Fiscal Year 1981/82, oil and gas revenues 

from severance, royalties and bonuses amounted to $1.6 billion, 

or 41% of total state taxes, licenses, and fees. For Fiscal 

Year 2003/04, these revenues were $927 million, or about 

11.2 % of total estimated taxes, licenses and fees. 

The oil and gas industry in Louisiana, though, is far more 

than exploration, drilling and production. Petroleum refining 

and petrochemical manufacturing, both of which get fuel and 

feedstock from oil and natural gas, are major industries and 

components of GSP in the state. 

4 


One-on-One 

Pike: How has that development placed Louisiana in terms 

of the larger national economy and governmental structure? 

Angelle: While most of the country opposes oil and gas 

exploration, particularly offshore of their coasts, Louisiana 

proudly serves as America’s Energy Corridor…with a direct 

link to Wall Street via the Henry Hub, Louisiana Offshore 

Oil Port, Mars crude oil contract, St. James terminal 

Louisiana Light Crude spot market reference (and Capline 

pipeline to the Midwest and Upper Midwest). 

This is a mixed blessing in some ways. Louisiana bears the 

economic burden of building and maintaining the onshore and 

coastal infrastructure that makes offshore production possible. 

Louisiana also bears the economic and social costs of losing 

more than 24 sq miles of coastal territory each year – precious 

land and marshes on which infrastructure is built and which 

protects oil and gas producing infrastructure from storm damage. 

Some of this land loss is exacerbated by oil and gas activity. 

Yet, Louisiana receives no revenue from the average of $5 billion 

per year of offshore revenue the production off our coast 

supplies to the federal treasury each year. Not only does 

Louisiana require more funding to support the roads, bridges, 

highways, ports and other public works facilities needed to support 

this offshore development, but by not having this funding 

our parishes are further curtailed in their sources of revenue. It 

is only fair and appropriate for the federal government to start 

sharing offshore revenue with the few coastal producing states 

such as Louisiana, as it does with revenue from production from 

federal lands in interior states, which get 50% of the revenue. 

With the federal Minerals Management Service offering 

added drilling incentives for royalty suspension volumes in 

the federal offshore, these drilling incentives siphon further 

investment from Louisiana parishes. With a decline in ad valorem 

taxes from new drilling more pressure is placed on local 

assessors to raise property taxes to support schools, hospitals, 

courts, etc. 

This then results in increased property taxes on our local 

homeowners – all because we are not currently receiving what 

other states receive from royalty sharing from the federal government 

within their states. 

Pike: With regard to continuing onshore and offshore oil 

and gas development, how important is the industry to the 

state today? 

Angelle: When talking about the importance of the oil and 

gas industry to the economy of the state, there are two distinct 

regions – within state boundaries and in the OCS 

(federal Outer Continental Shelf waters). The predominant 

economic contribution comes from that activity from within 

the boundaries of the state, not that in the federal waters 

beyond the state’s 3-mile (5-km) offshore boundary. 

Federal offshore 

To a large extent the infrastructure burdens placed on Louisiana 

by the OCS are practically unrecoverable from a taxation perspective 

since a huge portion of the workers and most of the companies 

operating in the OCS are beyond the state’s taxing authority. 

Although they work in federal OCS area, many OCS workers 

live and pay taxes in areas far remote from Louisiana’s taxing 

authority. Past efforts to find out where OCS workers live 

revealed that huge numbers (more than 60% by some estimates) 

commute from Texas, Arkansas, Mississippi, Alabama, 

Georgia, Tennessee, Florida and other states, as well as foreign 

countries such as Venezuela and Mexico. The 7-day-on, 7-dayoff, 

14-day-on, 14-day-off and similar schedules for offshore 

workers facilitate long distance commuting. Workers mostly 

pay taxes where they live, buy homes and cars, shop, etc. For 

large numbers of OCS workers, that is not Louisiana. 

Additionally, the production, equipment, property, profits, 

etc. of OCS companies and operations are in federal waters, 

beyond the taxing jurisdiction of the state of Louisiana, other 

than the incomes of employees and the few small companies 

headquartered in Louisiana. 

State boundaries 

The oil and gas extraction and petrochemical manufacturing sectors 

are the largest of our economic sectors in relation to GSP 

(see graph).They will provide nearly 15.6% of the revenue to the 

state general fund for 2004/05 and 2005/06. 

With more than 50% of industry investment in the state 

related to oil and gas, it is an indication of how important this 

sector is to the economy of the state. Three percent of the state 

workforce is employed directly in the extraction and transportation 

of oil and gas. An additional 5% of the state workforce 

is employed in processing oil and gas into useful products. 

If econometric multipliers are correct, this employment generates 

jobs for about 32% of the state workforce. This means that 

40% of the state workforce is dependent of the oil and gas 

development, production, or consumption (fuel and feedstock). 

Pike: What activities are the state engaged in to bolster continuing 

and/or increased oil and gas exploration and production? 

Angelle: Louisiana has a large portfolio of tax incentives for 


One-on-One 

Even though oil and gas extraction and petrochemical manufacturing (petroleum refining, chemicals, paper, and plastic) are declining 

as a share of the Gross State Product, they remain the backbone of the Louisiana economy today. 

drilling and is considering more effective incentives to possibly 

offer, such as the dry hole royalty relief credit for deep 

wells drilled on state owned property that is under consideration 

in the legislature (Senate Bill 182). The state is taking 

steps to limit the liability chilling impact of legacy lawsuits 

spawned by the Corbello decision of the State Supreme 

Court, such as legislation passed last year to make the state 

(through the Department of Environmental Quality and the 

DNR) parties to these actions. The recent Castex court case 

decision further helped rein in unmerited lawsuits. The state 

is pursuing Congress to enact federal tax credits in the federal 

energy bill being debated in Congress to provide the same 

kind of tax credits to deep drilling that the federal government 

offers coal bed methane producers through Section 29 

of the IRS Code. 

The DNR has taken great strides to streamline permitting 

and reduce the time required to issue permits. The DNR has 

also extended the streamlining beyond the DNR by signing a 

new cooperative agreement with the Department of Wildlife 

and Fisheries. 

Pike: Looking forward, what is the size of the remaining oil 

and gas resource base in Louisiana, both on and offshore? 

Angelle: Louisiana is a mature producing basin which means 

that peak production happened a long time ago (1972), but 

there are enough reserves in the ground to sustain significant 

production (more than most states ever had to begin with) for 

some time to come. It should be noted that this production has 

come from the relatively shallow, and with today’s technology, 

relatively easy to find and drill, hydrocarbon resource base. 

There is a new frontier, though, that new exploration and 

drilling technology is just now opening up, and that is the deep 

(15,000ft or 4,575m, to 25,000ft or 7,625m) and ultra-deep 

(greater than 25,000ft) resource domain. It is still technologically 

a challenge and extremely expensive to drill to these depths. 

Drilling costs, for example, rise exponentially at these depths. 

The proposed Dry Hole Royalty Relief Credit is intended 

to provide incentives for deep and ultra-deep drilling into 

this resource base – starting out in the South Louisiana 

coastal zone. 

Louisiana has a huge resource base left to develop, but most 

of this is in the expensive, deep resource base that has hardly 

been explored or tapped. 

This new capacity should restore a suitable surplus capacity 

margin to nationwide natural gas deliverability by 2008-09. 

At that time, natural gas prices should come under some 

degree of downward pressure. If this happens, some degree of 

downward pressure will likely be felt by oil prices. We can be 

expected to achieve some degree of price stability by that 

time. That may encourage some restoration of petrochemical 

manufacturing capacity in the state and perhaps the nation. 

We feel the price stabilizing mechanisms for strong job 

growth in Louisiana and the nation are being put in place, 

and Louisiana is doing more than its share as the Energy 

Corridor to the nation to see that this happens to the benefit 

of the entire nation. 

6 


One-on-One 

Even though oil and gas extraction and petrochemical manufacturing (petroleum refining, chemicals, paper, and plastic) are declining 

as a share of the Gross State Product, they remain the backbone of the Louisiana economy today. 

drilling and is considering more effective incentives to possibly 

offer, such as the dry hole royalty relief credit for deep 

wells drilled on state owned property that is under consideration 

in the legislature (Senate Bill 182). The state is taking 

steps to limit the liability chilling impact of legacy lawsuits 

spawned by the Corbello decision of the State Supreme 

Court, such as legislation passed last year to make the state 

(through the Department of Environmental Quality and the 

DNR) parties to these actions. The recent Castex court case 

decision further helped rein in unmerited lawsuits. The state 

is pursuing Congress to enact federal tax credits in the federal 

energy bill being debated in Congress to provide the same 

kind of tax credits to deep drilling that the federal government 

offers coal bed methane producers through Section 29 

of the IRS Code. 

The DNR has taken great strides to streamline permitting 

and reduce the time required to issue permits. The DNR has 

also extended the streamlining beyond the DNR by signing a 

new cooperative agreement with the Department of Wildlife 

and Fisheries. 

Pike: Looking forward, what is the size of the remaining oil 

and gas resource base in Louisiana, both on and offshore? 

Angelle: Louisiana is a mature producing basin which means 

that peak production happened a long time ago (1972), but 

there are enough reserves in the ground to sustain significant 

production (more than most states ever had to begin with) for 

some time to come. It should be noted that this production has 

come from the relatively shallow, and with today’s technology, 

relatively easy to find and drill, hydrocarbon resource base. 

There is a new frontier, though, that new exploration and 

drilling technology is just now opening up, and that is the deep 

(15,000ft or 4,575m, to 25,000ft or 7,625m) and ultra-deep 

(greater than 25,000ft) resource domain. It is still technologically 

a challenge and extremely expensive to drill to these depths. 

Drilling costs, for example, rise exponentially at these depths. 

The proposed Dry Hole Royalty Relief Credit is intended 

to provide incentives for deep and ultra-deep drilling into 

this resource base – starting out in the South Louisiana 

coastal zone. 

Louisiana has a huge resource base left to develop, but most 

of this is in the expensive, deep resource base that has hardly 

been explored or tapped. 

This new capacity should restore a suitable surplus capacity 

margin to nationwide natural gas deliverability by 2008-09. 

At that time, natural gas prices should come under some 

degree of downward pressure. If this happens, some degree of 

downward pressure will likely be felt by oil prices. We can be 

expected to achieve some degree of price stability by that 

time. That may encourage some restoration of petrochemical 

manufacturing capacity in the state and perhaps the nation. 

We feel the price stabilizing mechanisms for strong job 

growth in Louisiana and the nation are being put in place, 

and Louisiana is doing more than its share as the Energy 

Corridor to the nation to see that this happens to the benefit 

of the entire nation. 

6 


Chapter 1 • History 

(Photo courtesy of Louisiana Department of Natural Resources) 

A cable-tool drilling rig, crew and investors pose for a photograph in the early days of Louisiana’s petroleum 

industry. The knee-high boots were popular footwear in the muddy oilfields of the day. 

Louisiana operators were an inventive group, 

“ responsible for many industry firsts.” 

8 


Prolific and Proud: A 

Century of E&P in Louisiana 

By Peggy Williams, Exploration Editor, Oil and Gas Investor 

Rotary drilling rigs 

offered dramatic 

new efficiencies to the 

drilling process and 

quickly replaced cabletool 

technology. 

Louisiana’s rich oil and natural gas 

deposits have a long and storied history, 

contributing to economic 

growth in the Pelican State and the 

nation as well as providing many 

firsts for the industry. 

In January 1901, the Lucas No. 1 well 

gushed oil from Spindletop field near 

Beaumont, Texas, and started the spread of 

oil fever across the Gulf Coast. 

Several entrepreneurs from the South 

Louisiana town of Jennings, in Jefferson Davis 

Parish, thought their state also might hold potential 

for oil. They become interested in the property 

of a farmer in neighboring Acadia Parish 

after hearing talk of how he had seen gas bubbles 

in the waters covering his rice fields. Farmer 

Clement had even shoved an old stovepipe into 

the ground and lit the gas. The businessmen 

formed a company and hired the Heywood 

Brothers, drillers fresh from the rollicking boom 

at Spindletop, to drill a well on Clement’s farm. 

The Jules Clement No.1 was originally planned 

to reach a depth of 1,000ft (305m), but after nothing 

turned up at that point, the Heywoods convinced 

the other partners to continue drilling. The 


well blew out at 1,882ft (574m), gushing a 4-in. 

stream of oil that spewed more than 100ft (31m) 

high. The well flowed for 7 hours and covered 

Clement’s rice field with a lake of oil and sand 

before sanding off. It was eventually abandoned 

after continual problems with sand production. 

This was Louisiana’s first oil discovery, made in 

September 1901, just 9 months after Spindletop, 

and it was quickly offset. 

Jennings field was found on a shallow salt 

dome that produced from Miocene through 

Oligocene sands on its cap and flanks. It suffered 

the fate of many early oilfields, with wells drilled 

nearly on top of each other, gas vented to the 

atmosphere and reservoirs produced at the highest 

possible rates. Within the next few years, oil 

volumes declined, wells had to be placed on 

pumps, and salt-water production rose rapidly. 

At the same time, the flood of oil from the giant 

Humble field in Harris County, Texas, caused 

oil prices drop to as low as $0.16/bbl. 

Jennings field and oil prospects in South 

Louisiana in general had only a brief stay in 

the limelight, however. Happenings in the 

northern part of the state would soon overshadow 

their fame. 

Northern parishes 

take center stage 

For generations, the Caddo Indians who 

lived along the Red River in northwestern 

Louisiana were familiar with the 

area’s hydrocarbon seeps. As news of 

Spindletop spread excitement through 

the region, residents of the up-andcoming 

town of Shreveport became 

interested in the seeps. The activity to 

the south at Jennings added to their 

enthusiasm. Shreveport locals also had 

heard of the problems faced by farmers 



in northern Caddo Parish, who would drill water wells contaminated 

by oil and gas. 

Shreveport businessmen Judge S.C. Fullilove, D.C. 

Richardson and Ira Hedrick began leasing land in Caddo 

Parish in the early 1900s. They persuaded two brothers, originally 

from West Virginia, to come to Louisiana from 

Spindletop to drill a well. J.S. and W.A. Savage used oxen 

teams to haul timbers for a derrick into a location in Caddo 

Parish. Dr. Frank Morrical also joined the intrepid group. 

In March 1905, the No. 1 Offenhauser struck oil at 1,556ft 

(475m). In May, the No. 2 well hit the shallower Nacatoch gas 

reservoir at such pressures that a crater blew out and swallowed 

the derrick, a steam engine, two pumps and 3,500ft (1,068m) 

of pipe. Louisiana’s first natural gas find had been made in 

spectacular fashion. 

Caddo field was a major discovery, extending across 180 sq 

miles on the northern end of the Sabine Uplift, a huge regional 

structure that rolled from Louisiana’s Caddo, Bossier, De 

Soto and Red River parishes into the Marion, Harrison, 

Panola and Shelby counties in Texas. The field’s Upper 

Cretaceous reservoirs yielded tremendous volumes of oil and 

gas at depths to nearly 4,000ft (1,220m). 

A boom engulfed the area. Natural gas was essentially 

worthless at the time, so oil was the target of choice. The 

usual production practice was to vent natural gas to the 

atmosphere, but by 1906, the tremendous waste of gas at 

Caddo field spurred Louisiana to pass its first conservation 

law. Gas was so abundant that Louisiana’s first pipeline system 

was built to move gas from Caddo field to Shreveport. 


Wild wells, explosions and fires were commonplace throughout 

Louisiana’s oilpatch at the turn of the 20th century, as incredible 

flow of oil and gas overwhelmed the technologies of the time. 

The first interstate line in the United States was laid to carry 

Caddo gas into Marshall, Texas. 

By 1910, Caddo Parish was producing 75% of Louisiana’s 

oil and a great deal of gas. Its oil production peaked in 1918 

at nearly 11 million bbl. Firm statistics for gas volumes were 

not available, but billions of cubic feet were produced. 

Louisiana operators were an inventive group responsible for 

many industry firsts. Within a few years of the discovery of Caddo 

field, production ringed Caddo Lake, and Gulf Refining Co. 

decided to lease 12 sections of bottomland in the lake. In May 

1911, the company drilled its Ferry No. 1 to a total depth of 2,185 

(666m) ft and completed it for 450 b/d of oil. The well was the 

first over-water well drilled in the United States, and it was sited 

on a permanent drilling platform built on the lakebed. Gulf drilled 

eight wells during its first year of lake operations, and before long, 

hundreds of oil platforms had been installed in Caddo Lake. 

Initially, drillers looking for another Caddo field struck out 

along the length of the Sabine Uplift. Discoveries soon followed, 

with such fields as Shreveport, Cedar Grove and Elm 

Grove found in 1912. 

A new area was opened in 1917, when oil and gas was discovered 

on the Ouachita Uplift, about 75 miles (121 km) east of the 

Sabine Uplift in northeastern Louisiana’s Morehouse, Union 

and Ouachita parishes. Monroe field covered about 365 sq 

miles and produced from an Upper Cretaceous chalk reservoir 

and a deeper Woodbine sand. In its first 15 years on production, 

Monroe field produced 1.3 Tcf of gas that was metered: to date, 

some 7.3 Tcf of gas has been produced from Monroe, which 

remains Louisiana’s largest gas field. 

The abundance of natural gas at Monroe overwhelmed the tiny 

markets available at the time. The great field easily supplied the 

needs of the communities and towns that developed in its vicinity. 

Carbon black manufacturers soon saw the opportunity for 

cheap and plentiful feedstock and moved into the area, becoming 

the main consumer of gas. By 1924, Monroe field alone supplied 

more than 75% of the carbon black output of the world. 

The next wave of exploration centered in the North 

Louisiana salt dome basin, kicked off by the discoveries of 

Homer and Haynesville domes in Claiborne Parish. Homer 

field was found in 1919 to the east of the Sabine Uplift. 

Haynesville field was a companion dome to the north of 

Homer, found in 1921. Deeper drilling in 1926 encountered 

gas in the Trinity sand at about 4,300ft (1,312m). 

Cotton Valley production was added to the mix in 1922 

when Cotton Valley field was found in Webster Parish. The 

first few wells made gas, but the oil leg was encountered in 

10 



1923. Some of the early Cotton Valley wells could flow oil at 

rates of 10,000 b/d, although the uncontrolled production rates 

usually coned water into the reservoirs within a short time. 

During the late 1920s, long-distance pipelines began to be laid 

in North Louisiana, moving gas from the producing areas to larger 

cities such as New Orleans and across state lines into Texas and 

Arkansas. The 1926 discovery of extensive Glen Rose gas production 

in Richland field, in Richland County, about 10 miles 

(16 km) northwest of Monroe field, spurred the expansion of the 

pipeline system to cities as distant as Atlanta and St. Louis. 

North Louisiana’s oil production surged to nearly 35 million bbl 

in 1922, but momentum soon began to shift to South Louisiana. 

The rise of the south 

Attention had turned away from South Louisiana’s prospects 

after Caddo field was discover. At the beginning of the 1920s, 

South Louisiana posted only modest production of less than 2 

million bbl of oil a year. 

Although northwestern Louisiana was far and away the site 

of most of the state’s drilling during the 1920s, a wave of 

prospecting for large, shallow salt domes was paying off in 

South Louisiana. The torsion balance and refraction seismograph 

– industry’s new prospecting tools – could locate these 

domes, and they were found throughout the southern tier of 

the state and into Timbalier Bay, West Cote Blanche Bay, 

Vermilion Bay and Sabine Lake. The production was from 

Tertiary reservoirs, and the wells had high flow capabilities. 

The development of reflection seismographs in the early 

1930s, coupled with an increasing ability to drill deeper wells, 

kicked off a prospecting boom for more deeply buried salt 

domes. As the industry worked its way from prospecting for 

shallow salt domes to deeper salt domes to fault closures, 

excellent discoveries continued. 

In 1927, Gulf Refining Co. established the first commercial 

production in the state east of the Mississippi River at 

McElroy Dome. The company’s United Lands No. 1 blew 

out at 1,618ft (493m), and the crater swallowed the rig and 

derrick. Gas flow was estimated at 20 MMcf/d. 

A crucial breakthrough was the development of bargemounted 

rigs that allowed exploration in Louisiana’s vast 

maze of coastal wetlands. In 1928, Louis Giliasso developed 

the first semisubmersible, portable drilling barge, and the 

Texas Co. quickly saw the advantage of the design. It started 

using the rig in its Lake Barre operation, and by 1935, the 

field had produced some 12 million bbl of oil. 

Barge drilling exploded: by the late 1930s, dozens of barge rigs 

were at work in South Louisiana, and networks of canals were rapidly 

expanded to aid their movements. Simultaneously, dramatic 

improvements in drilling and completion methods were being 

made. Operators were embracing such state-of-the-art technologies 

as electric logging, perforating guns and cement squeezing. 

By the close of the 1930s, operators were regularly making 

discoveries in about 10,000-ft (3,050-m) depths, and the push 

was on to look at ever-deeper targets. The discovery of gas and 

condensate in Lower Miocene sands at DeLarge field in 

Terrebonne Parish in 1938 at a depth of 13,200ft (4,026m) 

pushed South Louisiana into another surge of deep discoveries. 

By the mid-1940s, almost half of the wells drilled in South 

Louisiana reached depths of more than 10,000ft. Shell Oil set 

the record for deepest production in 1945 at 13,520ft (4,124m) 

at Weeks Island field in Iberia Parish. The company broke that 

record the following year and set a new one in the same field 

with a well producing from perforations between 13,762ft 

(4,197m) and 13,778ft (4,202m). 

The percentage of dry holes remained high in this part of 

the state, though, thanks to intricate faulting, rapidly changing 

stratigraphy and steep dips on the salt structures. The 

drilling was challenging as well, with heaving shales and salt 

water flows bedeviling operators. 

Movement to the offshore 

The next grand shift in Louisiana’s industry was the move to 

offshore drilling. In the 1930s, geologists realized the prolific 

salt dome trends of South Louisiana extended into the shallow 

waters of the Gulf of Mexico. 

In 1936, Pure Oil and Superior Oil joined to take 40,000 acres 

of leases from the state, 33,000 acres of which were offshore, near 

the town of Creole in Cameron Parish.The partners built a giant 

platform supported by 300 treated yellow pine poles driven 14ft 

(4m) into the sandy bottom, according to the U.S. Minerals 

Management Service (MMS). The platform was 1 1 ⁄2 miles 

(almost 2 1 ⁄2 km) from shore in 14ft of water. In March 1938, the 

Superior-Pure State No. 1 was completed in Creole field as the 

first successful offshore well. The companies found a 4-millionbbl 

field and proved money could be made in the offshore. 

The industry rapidly gained confidence in the potential of the 

offshore. In November 1947, operator Kerr-McGee and its partners 

Phillips Petroleum and Stanolind Oil & Gas in Ship Shoal 

Block 32, offshore Terrebonne Parish, brought in the first successful 

well drilled out of sight of land. The Kermac 16 platform sat in 

20ft (6m) of water and was supported by 16 piles driven more than 

100ft into the ocean bottom. The initial well found productive 



(Photo courtesy of Kerr-McGee Corp.) 

(12m); it revolutionized offshore drilling. The pioneering 

rig drilled more than 2.3 million ft (701,500 m) of hole 

during a four-decade career. 

The drilling hiatus was over, at least within the 3-mile 

limit, and 34 exploratory tests were drilled offshore 

Louisiana in 1953. Activity surged the following year 

with 83 exploratory tests completed. The main targets 

were the Miocene producing trends that were so prolific 

in the marshlands and continued into the offshore. 

In 1960, the title controversy between the federal government 

and Louisiana was finally solved. The U.S. 

Supreme Court limited Louisiana’s claims to lands within 

3 miles from its coastline; lands beyond that belonged to 

the federal government. 

Drillers breached water depths of 225ft (69m) in 

1965. By the mid-1960s, the MMS reported that more 

than 1,000 platforms had been built in the Gulf of 

Mexico. Offshore production reached 2 million b/d of 

oil in the late 1960s, and it skyrocketed from there. By 

1980, some 7,320 wells were producing from federal and 

state leases offshore Louisiana, and that year they produced 

284 million bbl of oil and condensate. 

Kerr-McGee Corp. and its partners Stanolind Oil & Gas and Phillips 

Petroleum Co. drilled the first successful well out of sight of land in 1947. 

Pliocene reservoirs at 1,734ft (528m) on a shallow piercementtype 

salt dome.The discovery had an initial production rate of 600 

b/d of oil, and it eventually produced 1.4 million bbl and 307 

MMcf of natural gas before it was abandoned in 1984. 

The offshore door was cracked open. Ten offshore tests were 

drilled in 1948 of which seven were successful, including discoveries 

on blocks in the Breton Sound, Main Pass, Grand Isle, Ship 

Shoal, Eugene Island and Vermilion areas. 

However, activity soon stalled over the contentious issue of 

where the dividing line between state and federal acreage 

should be drawn in the offshore. It took several years of 

intensive negotiation and litigation before the question was 

finally settled; in the meantime, operators were restricted to 

areas that had indisputable title. 

In 1953, federal and state boundaries in the offshore were 

partially resolved by the U.S. Submerged Lands Acts, although 

the area between 3 miles (5 km) and 10 1 ⁄2 miles (17 km) offshore 

was still in dispute offshore Louisiana.That same year, the 

first transportable, semisubmersible offshore rig, Mr. Charlie, 

was built and put to work in East Bay by Shell Oil Co. Mr. 

Charlie was capable of drilling wells in water depths up to 40ft 

Rejuvenation and revival 

Production in the Pelican State peaked in 1970 at 566 

million bbl of oil and 5.6 Tcf of gas, excluding the federal 

Offshore Continental Shelf. Industry attention had shifted to 

the rich prospects in the federal offshore, but South 

Louisiana continued to hold some surprises. 

The 1975 discovery of False River field in Pointe Coupe 

Parish launched the dazzling deep Upper Cretaceous 

Tuscaloosa trend. Chevron tested 20 MMcf/d of gas from a 

Tuscaloosa sand at 19,800ft (6,039m) in its Alma Plantation 

No. 1. This was followed by the discovery of Moncrief, Judge 

Digby and Moore-Sams fields in Pointe Coupee Parish; Port 

Hudson, Irene and Profit Island fields in East Baton Rouge 

Parish; and Lockhart Crossing field in Livingston Parish. By 

the late 1970s, South Louisiana was the site of some of the 

deepest and most prolific wells in the country, thanks to 

Tuscaloosa sands sporting reservoir porosities of more than 25% 

and permeabilities in the hundreds of millidarcies. 

Rigs were everywhere in Louisiana in the early 1980s, with 

more than 380 rotaries working in the state in 1981. In South 

Louisiana, exploration was in full swing in the Miocene trend; in 

the Oligocene Frio, Bolivina mexicana, Nodosaria blanpiedi and 

Hackberry reservoirs; in the Eocene Wilcox; and Cretaceous 

12 



Tuscaloosa and Austin Chalk formations. In North Louisiana, 

operators continued to drill wells targeting delataic deposits in the 

Tertiary Wilcox, and in the Cretaceous and Jurassic sandstones 

and limestones of the Tuscaloosa, Smackover, Hosston, Cotton 

Valley, James and Glen Rose formations. 

Like other mature areas, Louisiana suffered greatly when 

commodity prices plunged in the mid-1980s. Activity slowed 

to a crawl, with stacked rigs and bankrupt companies making 

the news instead of discoveries. 

More recently, activities in the Frio, Hackberry, Wilcox and 

Austin Chalk trends have brought new life to onshore 

Louisiana. Some of these revivals are tied to improved seismic 

imaging, particularly seismic attribute analysis techniques, 

and others to improved drilling technologies such as horizontal 

drilling. Deeper trends also are enjoying fresh interest, 

with significant potential remaining in the onshore Miocene 

trend at depths below 15,000ft (4,575m). 

Also, recent successes in deep shelf prospects in Louisiana 

state waters indicate these reservoirs offer outstanding potential. 

Louisiana may even have a future in coalbed methane production 

– the Louisiana Geological Survey has identified a 

prospective coalbed methane area in central Louisiana’s 

Caldwell and LaSalle parishes in the Tertiary Russell coal. 

The state remains a formidable producer: its current annual 

production is about 82 million bbl of oil and condensate and 

1.3 Tcf of gas from nearly 33,500 producing wells. Louisiana 

ranks fifth in natural gas production and fourth in crude oil 

production in the nation. 

Today’s robust oil and gas prices have contributed to a 

strong upswing. During 2002, the average weekly rig count 

was 77 for onshore parishes and state waters, and the state 

issued permits for 1,025 wells. During 2004, the average rig 

count rose to 91, and 1,633 wells were permitted. For the first 

5 months of this year, the weekly rig count was 105, and 784 

permits had already been issued. 

The future is looking good. 


Chapter 2 • Business Climate 

Southwestern Energy drilled its State Lease 16625 No. 1, in Lake 

Verret, Assumption Parish, La., to further develop its discovery on 

its Malone prospect. 

14 


The Louisiana Economy 

By Jim Bradshaw, Contributing Editor 

(Photo by Lowell Georgia) 

Whatever the promise of the Louisiana 

economy Aug. 28, the day before 

Hurricane Katrina slammed into New 

Orleans, it changed drastically in the 

next 24 hours, and that change was 

made even more pervasive when 

Hurricane Rita ripped across the western 

edge of the state 2 weeks later. 

It likely will be months before anyone knows 

for certain how big, how bad or how permanent 

the changes will be from the two 

hurricanes. The storms affected everything 

from petrochemicals to the pecan crop, leaving 

virtually no part of the state’s economy intact. 

The immediate aftermath of the storm presented 

a gloomy picture, but some analysts say 

the storms also present a unique opportunity to 

rebuild a stronger, more efficient economy, but 

one that will likely be much leaner in the foreseeable 

future. 

Of particular interest to the oil and gas industry, 

the parishes (counties) hardest hit by the 

storms are those that have been the stepping-off 

points for drilling and production in the Gulf of 

Mexico. It appears that recovery will come slowly 

in these coastal parishes and the Gulf itself. It 

also is apparent that recovery will and must 

eventually be realized, because much of the 

promise of tomorrow is still to be found in the 

web of pipelines that carry oil, gas and wealth 

across the Louisiana coastline. 

Energy, particularly that offshore, is still far 

and away the state’s economic mainstay. 

U.S. Interior Sec. Gale Norton said Oct. 6, 

nearly 2 weeks after Rita and a month after 

Katrina, that it may be well into next year before 

some heavily damaged oil and gas platforms can 

be repaired. As she spoke, nearly 90% of the 

Gulf ’s daily oil production (about 1.5 million 

b/d) was shut in, as was more than 70% of the 

daily gas production (10 Bcf/d) from the Gulf. If 

there was any good news, Johnny Burton, director 

of the U.S. Minerals Management Service, 

said it appears that the two hurricanes of this year 

did less damage to underwater gas pipelines than 

Hurricane Ivan did when it swept across the Gulf 

last September. 

Katrina wiped out much of New Orleans and 

the southeastern Louisiana wetland parishes 

below the city as it clipped the edge of the state 

before demolishing much of the Mississippi 

Gulf Coast. Rita struck in southwest Louisiana 

and southeast Texas in mid-September. Both 

were powerful storms that destroyed homes, 

businesses and important infrastructure, laying 

waste to whole towns along the coast. 

Even before the hurricanes brought havoc 

from Houston to Mobile, the Louisiana economy 

was not the nation’s most robust. At the 

end of last year, it received low marks in an 

annual report by the Washington-based Corp. 

for Enterprise Development, which reported 

that Louisiana had – before the storm damage 

– lost ground in its ability to get small businesses 

to start and grow in the state. 

The state received the grade of F in economic 

performance, which included such measures as 

employment growth, the unemployment rate, 

mass layoffs, pay, health coverage, poverty and 

crime rates, and environmental measurements. 

It received another F in development capacity, 

which measures the quality of workers through 

education, financial resources available for businesses, 

and such things as the number of doctoral 

scientists and engineers, households with 

computers, university research and patents 

issued to inventors in the state. 

Some people in Louisiana, most vocally Dan 

Juneau, chief executive officer (CEO) of the 

Louisiana Association of Business and Industry, 

the equivalent of a state chamber of commerce, 

questioned the methodology of the 2004 report, 

saying things weren’t as bleak as that report 



seemed to indicate. After the storms, however, there was little 

question about the state of Louisiana. Gov. Kathleen Blanco told 

the U.S. Senate Finance committee in late September that the 

state’s economy is in shambles. 

“Louisiana has seen the engine of its state economy brought to 

a standstill,” the governor testified. “Our loss is the nation’s loss.” 

Some 81,000 businesses were closed or at least displaced 

by the hurricanes of 2005, representing 41% of Louisiana’s 

companies, Blanco said. She testified that the Federal 

Emergency Management Agency declared 23 Louisiana 

parishes as major disaster areas after Katrina and five more 

following Rita’s landing. 

“Of these, the state of Louisiana considers 10 parishes in 

the Katrina zone and three in the Rita zone to be so severely 

affected that they require substantial, sustained investment by 

federal, state, and local governments and the private sector,” 

Blanco said. “According to our internal research, in the 13 

parishes severely impacted 

“ 

by Katrina and Rita, there 

were 80,850 businesses prior 

to the storms. By comparison, 

the entire state economy 

has a total of 197,446 firms. 

Although only 13 of our 64 

parishes were severely impacted, 

they represent 41% of the state’s total business.” 

“It has not hit people what we are facing,” said C.R. 

(Rusty) Cloutier, president and CEO of MidSouth Bank, 

which operates branches throughout south Louisiana, shortly 

after Rita piled its damage atop Katrina’s. 

Cloutier, who is a director of the Federal Reserve branch in 

New Orleans and past president of the Independent 

Community Bankers of America, thinks a substantial number 

of those businesses are gone forever. 

“The governor says that we have lost about 40% of our 

businesses,” he said. “I think about half of them will come 

back and the other half will be lost permanently. 

“We’re never again going to have a 15,000-person convention 

in New Orleans during August or September – peak 

hurricane months. People aren’t going to put themselves in 

harm’s way. Besides that, there were a lot of people who were 

looking for an excuse to leave. Some of the big corporations 

are going to quietly consolidate in Houston or Atlanta or 

Dallas. They’re not going to come back to New Orleans with 

the presence they once had.” 

But C. Paul Hilliard, chairman of Lafayette-based Badger 

Oil Co. and a former president of the Independent Petroleum 

Association of America, suggests that the hurricanes of 2005 

pose questions for the Gulf Coast petroleum industry as a 

whole, and that they also offer a rationale for keeping a 

healthy part of it in Louisiana. 

“The experience from Katrina and Rita casts doubt on the 

wisdom of concentrating the overwhelming majority of the oil 

and gas industry’s geoscience, engineering and administrative 

effort in Houston and its suburbs,” he said. “There is no single 

location on the Gulf Coast that is immune from the threat posed 

by a major hurricane. … Intelligent use of teleconferencing and 

high-speed computer networks will make it easier to conduct 

business from diverse, unconcentrated locations, such as 

Lafayette, New Orleans, Lake Charles, Corpus Christi, but also 

Midland, Denver, Tulsa, and Oklahoma City. It falls to 

Louisiana to sell this idea to industry.” 

He and others noted some preliminary data that begins to 

show the scope and severity of 

There is no single location on the 

Gulf Coast that is immune from the 

threat posed by a major hurricane.” 

the storm damage: 

• Katrina alone caused $100 

billion in uninsured losses, 

according to the U.S. 

Commerce Department. 

• Louisiana is expected to 

lose $1 billion in tax dollars 

this year because of Katrina and Rita, and that is only part 

of the budget deficit state government agencies are facing. 

• Louisiana paid 224,200 new claims for jobless benefits in 

September, more than the entire amount of new unemployment 

claims paid in 2004. The dramatic increase in 

unemployment payments is depleting the state’s unemployment 

trust fund. 

• Greg Albrecht, an economist for the Louisiana Legislative 

Fiscal Office, said Louisiana’s budget will shrink for several 

years and may never entirely rebound to its pre-hurricane 

levels because people who were forced to other states 

by the storms won’t all return. He said the state is forecast 

to permanently lose as many as 125,000 jobs. 

• Damage from Rita that included saltwater flooding from 

the storm surge appears to have set back the state’s farmers 

by more than $500 million, bringing the state total 

from two hurricanes to about $1.5 billion. 

“There is really no precedent in our history for the scale or 

type of economic challenge presented by Katrina and Rita,” 

Gov. Blanco testified. “Like the movie of the same name, it is 

a ‘perfect storm’ of factors leading to direct damage to 

—C. Paul Hilliard, Chairman, Badger Oil Co. 

16 



businesses, long-term displacement of the work force and 

businesses, critical damage of ... transportation infrastructure 

including shipping, rail, and interstate access, the uncertainty 

of [New Orleans’] safety from additional flooding and hurricane 

damage, and loss of production time [and] natural assets 

and products.” 

The yet to be fully assessed damages to the state’s ports and 

to its petroleum and petrochemical industries will determine 

in large measure how quickly the state can bounce back. The 

damage may be more than appears at first glance. 

Norton said that 108 older, smaller drilling platforms had 

been destroyed – most of them built before tougher construction 

standards went into effect in 1988 – and that these would 

probably not be rebuilt. These platforms accounted for about 

1.5% of the Gulf production. 

Each of Louisiana’s five deepwater ports was affected by 

the storm, particularly the ports of New Orleans and Lake 

Charles. Together the state’s ports handle nearly 500 million 

tons of U.S. waterborne commerce each year, including 

almost half of American grain exports. 

Louisiana is the second largest refiner of petroleum in the 

United States. Nineteen refineries are located along the 

Mississippi and Calcasieu rivers and in southeast Texas, the areas 

that were hardest hit by the storms. The state holds 11% of U.S. 

petroleum reserves and 19% of the country’s natural gas reserves. 

Louisiana’s petrochemical industry manufactures onefourth 

of America’s petrochemicals in nearly 100 plants lining 

the Mississippi and Calcasieu, including basic chemicals 

such as plastics and fertilizers. Last year, those products were 

valued at nearly $20 billion. Because they are interdependent, 

supplying feedstock to one another, damage to one of these 

plants means reduced capacity in another. 

Biologists were still assessing the impact on the state’s seafood 

industry, which accounted for 20% of seafood landings in the 

United States last year (second only to Alaska). More certain is 

the damage to fishing boats that are suddenly perched on dry 

land and to the icehouses and processors that received the fish. 

Perhaps less speculative will be the fate of industries based 

on other natural resources. Louisiana is the largest producer of 

salt in America and a major producer of sulphur, lime and silica 

sands – all of which help bring the total value of mineral 

production in the state to the second highest in the United 

States. Those underground assets were untouched by storm 

winds and hold their value. 

Hilliard thinks Louisiana’s natural resources will continue to be 

one of its economic strengths, and sees some other things that will 

A porch swing offers a lakeside view for any hands with a little 

free time. 

continue to hold promise for the state, including an established 

support infrastructure for oil and gas from the Gulf of Mexico 

and for imports through the deepwater Louisiana Offshore Oil 

Port and liquefied natural gas (LNG) facilities. 

“The local culture and labor force could easily accommodate 

new refineries or chemical plants,” he said, and also 

points out that Louisiana still has the advantage of location – 

strategically situated at the mouth of the Mississippi River 

and in an ideal position for international trade with Central 

and South America, the Caribbean and Cuba. 

Robert Baumann, executive director of the LSU Center of 

Energy Studies, seconds that assessment. 

“The river is still in place as the gateway to the U.S. heartland,” 

he said. “While the oil and gas infrastructure has been damaged, 

the oil and gas have not. The fertile alluvial plain remains.” 

Indeed, Hilliard said, Louisiana’s geography may be the 

state’s biggest asset. 

“Oil and gas are very mature; drilling and severance taxes 

will not carry the state long. Neither [will] casinos. We need 

a strategy to exploit our geography. It’s about our only unique 

marketable asset,” he said. 

The question will be whether the workers who made this 

geography profitable – mined the minerals and worked in the 

important tourism, transportation and services industries – 

will come back to the state after fleeing to faraway places in 

the face of the storm. 




General Overview 

• Population—4,515,770 (2004) ranked 24th 

• Per Capita Income—$27,581 (2004) ranked 43rd 

• Total Energy Consumption—3.5 quadrillion Btu (2001), ranked 8th 

• Per Capita Energy Consumption—784 million Btu (2001), ranked 3rd 

• Total Petroleum Consumption—33.2 million gal/day (2001), 

ranked 5th 

• Gasoline Consumption—6.2 million gal/day (2001), ranked 24th 

• Distillate Fuel Consumption—4.9 million gal/day (2001), ranked 8th 

• Liquefied Petroleum Gas Consumption—8.7 million gal/day 

(2001), ranked 2nd 

• Jet Fuel Consumption—4.0 million gal/day (2001), ranked 3rd 

Upstream Petroleum Supply 

• Crude Oil Proved Reserves—452 million bbl (2003), ranked 7th 

(8th including Federal Offshore). Accounts for 2% of U.S. crude oil 

proved reserves 

• Crude Oil Production—228,000 bbl/day (2004), ranked 4th (5th including 

Federal Offshore). Accounts for 4% of U.S. crude oil production 

• Total Producing Oil Wells—19,970 (2004) 

• Rotary Rigs in Operation—167 (2004) 

Source: A “Petroleum Profile: Louisiana,” prepared by the Energy Information 

Administration. www.eia.doe.gov 

More than a third of the state’s residents live in areas hit by 

the two hurricanes and 37% of the state’s jobs are located there. 

Sales, income, business and gambling taxes will shrink, 

Albrecht said. State agencies also will lose revenue from fees and 

other sources that can’t yet be calculated, such as tuition that won’t 

be collected at closed universities and hunting licenses that won’t 

be purchased for the battered coastal areas that have been favorite 

haunts for duck and goose hunters from across the nation. 

Worsening the problem, some of the tax dollars that will be lost 

were used to match federal cash, so the loss has a ripple effect. 

Blanco ordered a hiring and spending freeze in certain areas, 

but how much Louisiana will have to slice into its alreadystretched 

budget depends on whether the federal government 

provides bailout dollars for state services that aren’t usually eligible 

for regular, federal disaster aid. 

The state’s congressional delegation began pushing immediately 

after Katrina for more than $200 billion in federal 

money to build new levees in New Orleans and for a host of 

other projects in coastal Louisiana, but it was expected to find 

tough going in a Congress skeptical of giving the state such a 

huge blank check. 

Meanwhile, Blanco said she is working with McKinsey & 

Co., an international consulting firm, to help the state’s economy 

and businesses recover from the storms. She also proposed 

a package of federal income tax breaks to lure people 

and businesses back to the state. 

The hardest hit segments of the farm economy include 

forestry, which analysts say will lose $226 million; sugarcane, 

$68 million; and cotton, with losses of $38 million. Cattle 

losses are projected to be $33 million, rice at $9 million, hay 

at nearly $10 million, soybeans at nearly $4 million and 

pecans at more than $5 million. 

Farmers will have to consider the high cost of fuel vs. the 

anticipated production decreases caused by the storm when they 

decide whether to harvest some of this year’s crop, they say. 

Wilson Viator, a fourth-generation sugarcane farmer near 

Youngsville in Lafayette Parish, said that he would pay 100% 

to 150% more for fuel this year than he did last year. 

“We’ve … Hurricane Katrina, then Hurricane Rita, then 

Hurricane Fuel Cost,” he said. 

“It’s a tough situation for all producers,” said Kurt Guidry, a 

specialist with the LSU AgCenter. “We had concerns about producers 

in southwest Louisiana even before the first hurricane.” 

Many farmers had diversified with crawfish and cattle to 

provide additional cash flow, he said, “but now what do they 

do? ... It’s going to be a tough fall and winter for these guys.” 

Viator said, “Before the hurricanes, we thought that as 

many as half of the rice producers in southwest Louisiana 

might be out of business without a very good year this year.” 

“It’s not going to be a very good year, and it’s going to be 

more than half of them that are gone.” 

On the positive side, the Louisiana government has a bit of 

a financial cushion. The state administration used conservative 

income estimates to develop its budget and has a “rainy day” 

fund expected to near a half billion dollars. 

Oil and gas price estimates used to develop the budget also 

are well below the actual selling prices. But nearly all the oil 

and natural gas production for the state’s mineral leases were 

on property affected by the hurricanes, said David 

Hoppenstedt with the state Office of Planning and Budget. 

The rebuilding of New Orleans – or lack of it – will be 

another key to the recovery of the rest of the state. Economist 

Tim Ryan said he would not be surprised if New Orleans-area 

business failures caused by Hurricane Katrina run much higher 

than the national average for disaster-related failures of 25%. 

“Losing half of the existing businesses is not out of the 

question,” said Ryan, who also is chancellor of the University 

of New Orleans. 

Nonetheless, Hilliard sees opportunity among the chaos. 

“I am hopeful that visionary people will seize on the aftermath 

18 


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of Katrina as the excuse needed to reinvent public housing in 

New Orleans,” he said. “This effort started well before the storm 

with the redevelopment of the St. Thomas Housing Project in 

the Lower Garden District. This one-time hellhole of a human 

warehouse has been razed and thoughtfully redeveloped by a private-public 

partnership. On the site of the former tenement, 

beautiful new homes have been built, some owned and some 

leased by former St. Thomas residents. There is a brand new 

Wal-Mart where no retailers would have dared open a location. 

As a result, the neighborhood surrounding this redevelopment 

project is experiencing a rebirth, with lower crime, new businesses, 

and even upscale private residential construction and renovation. 

This plan could be a model to redevelop the entire city.” 

In the short term, construction and related jobs may fill the 

gap for more permanent ones. 

This isn’t going to be enough in the short or long term, in 

Cloutier’s view. It’s going to require cash, lots of it – and it 

may not be forthcoming. 

“Everyone thinks the federal government is going to bail 

everyone out. It’s not going to happen,” he said. “Most people 

I’ve talked to are still optimistic: ‘Let’s have a drink and 

wait for the government check,’ they say. But the government 

check is going to be a lot smaller than people think, and it’s 

not all going to Louisiana.” 

He points out that Texas and Mississippi also took hits 

from Rita and Katrina respectively, and will claim some of the 

federal money designated for cleanup after those two storms; 

and that Alabama and Florida have been hit hard in recent 

years and will lay claim to a portion of any money made available 

for longer-term projects. 

All that amounts to a big pile of uncertainty, in Cloutier’s view. 

“We’re going to see a much, much, much different economy 

than we all knew,” he predicts, but said neither he nor anyone 

else knows its precise shape. 

“We haven’t begun to assess all of the damage,” he said. “We 

don’t know how badly the crops are damaged and won’t until 

after the harvest is in. We haven’t made a full assessment of the 

platforms offshore and found out how fully that infrastructure 

is damaged. We’re just clearing away rubble to see what problems 

are beneath it. It will be at least the end of the year before 

we have a better idea of what’s really going to happen. 

“It’s hard for me to picture what the state is going to look 

like in 5 years, and if anybody tells you they know, I want to 

talk to them.” 


Chapter 3 • Deep Water 

Transocean Inc.’s dynamically positioned drillship Discoverer Seven Seas is 

capable of operating in moderate environments at water depths of up to 

7,000ft (2,135m). Though now at work off India, the rig has drilled a number 

of ultra-deepwater wells in the Gulf of Mexico off Louisiana. 

20 


Deepwater Development 

in the Gulf of Mexico 

By F. Jay Schempf, Contributing Editor 

(Photo courtesy of Transocean) 

Although it’s been regulated under 

federal jurisdiction, deepwater development 

continues to provide significant 

benefits to The Pelican State. 

Probably the layman definition of “deep 

water” is that point in the wet beyond 

that someone can no longer stand on 

tiptoes and keep his or her nose dry. 

Drilling in Louisiana’s slice of Gulf of 

Mexico offshore acreage actually began in 

water just about that deep – amid the state’s 

jumble of inland lakes, bays and artificial canals 

gouged out of the primordial coastline mud. 

Drilling with land-type rigs installed atop 

barges that could be flooded and then re-floated 

began in the early 1930s in such areas where locals 

likened physical composition to “either thin mud 

or thick water.” Offshore drilling in those days 

was limited to a maximum of about 10ft (3m). 

Barge-type rigs were commonplace along the 

coast by the 1940s. Drillers also placed rigs 

atop individual, fixed wooden platforms. Most 

of these structures, however, could be seen 

clearly from shore. 

The main challenge to producers was coming 

up with the equipment necessary to extend 

drilling into the open sea. 

While the barges were adequate for wells in 

the shallow “transition zone” between dry land 

and open ocean, their water depth capability was 

limited, primarily because of potential damage 

from wind and wave forces they faced in less 

protected waters. Their raised drilling decks and 

tall, cumbersome derricks made them top-heavy 

and unstable in water depths greater than 

between 10ft and 12ft (4m). 

Operators employed fixed, pile-supported 

wooden and steel platforms from which they 

drilled exploration wells. If discoveries were made, 

the platforms were turned into production facilities 

with which wellheads and oil storage were 

supported or hooked up with seafloor pipelines to 

shore. The Creole field wooden platform, for 

instance, erected in 1937 by Pure Oil (now 

Unocal) and Superior (ExxonMobil) off Calcasieu 

Parish, was such a structure. The treated wooden 

platform and its raised work deck, which measured 

100ft by 300ft (31m by 92m), was planted in 

14ft (4m) of water about a mile from “the beach.” 

The open Gulf ’s bottom deepened only gradually 

as it stretched out to the edge of the Outer 

Continental Shelf (OCS), whose 600-ft (180-m) 

depth contour was sometimes hundreds of miles 

offshore. That left thousands of square miles of 

shallower water in which producers could erect 

bottom-supported structures to wrest oil and gas 

from beneath the silted bottom. 

Using sketchy wind/wave criteria, operators 

reinforced basic wooden structural elements 

with metal cross-members and strapping to 

help the platforms survive winter gales and 

hurricanes that visited the Gulf during the 

summer and early fall. 

Building platforms, moving rigs onto them, 

drilling and completing wells, and then moving 

the rigs to new platforms – or back to shore – 

involved inordinate amounts of costly, nonproductive 

time. Oilmen felt there had to be a better way. 

State sees windfall 

offshore revenues 

Since the early 1930s, the state of Louisiana had 

claimed jurisdiction over all offshore lands 27 

miles (44 km) seaward from the low-tide shoreline. 

These extended across a wide expanse of 

watery acreage that swept into water depths of 

100ft or more. The potential revenues to state 

coffers from Louisiana’s share of offshore oil 

and gas production seemed limitless. 



Development, however, got off to a slow start. Oil companies 

halted most open-water drilling mainly because of the 

ominous threat of German submarines during World War II. 

In June 1945, responding to producers’ eager post-war 

requests, the Louisiana State Minerals Board held an auction 

of offshore acreage “blocks” on which interested operators 

could bid for oil and gas leases. Most blocks drew multiple bids, 

all payable to the state treasury. But the state had other provisions 

for raising lease revenues. It required winning bidders to 

pay annual rental fees and, if commercial discoveries were 

made, production royalties. 

Kerr-McGee’s Kermac Rig 16, a tender-platform rig, was used in 

1947 to drill the first producing oil well located out of sight of land. 

A number of companies acquired leases in that initial sale, 

as well as in several subsequent sales, and most conducted 

marine seismic surveys in advance of installing fixed platforms, 

which were now constructed mostly of steel, to drill 

exploratory wells and serve as production facilities. 

One company, however, Kerr-McGee Oil Industries Inc. 

(Kerr-McGee Corp.), with headquarters in far-away Oklahoma 

City, eschewed the platform “island” concept for a more portable 

offshore exploration tool. This tool comprised a compact steel 

platform equipped with a substructure and derrick, draw works, 

rotary table, engines and other drilling gear, with everything else 

placed aboard a separate, floating “tender,” which it anchored and 

snugged up to the platform. 

Kerr-McGee’s tender was a 260-ft-long, 45-ft-wide (78-mlong, 

13.5-m-wide) converted war surplus U.S. Navy yard freight 

barge, many of which were available at bargain prices from fleets 

of “mothballed” naval vessels stowed at various U.S. ports. Kerr- 

McGee acquired its barge for $75,000 and spent an additional 

$155,000 equipping it for drilling. It christened the barge Frank 

Phillips after the president at the time of Phillips Petroleum Co. 

(ConocoPhillips), which had joined Stanolind Oil & Gas (BP) 

and Kerr-McGee in financing the well. 

Offshore well ‘outa sighta land’ 

In September 1947, Kerr-McGee employed this combination, 

called Kermac Rig 16, to drill a well – permitted to a 12,000-ft 

(3,660-m) total depth (TD) – in Ship Shoal Block 32 about 10 1 ⁄2 

miles (17 km) off Terrebonne Parish in the open Gulf. Water 

depth at the location was about 18ft (5m). The group, with Kerr- 

McGee as operator, had leased it for a bonus bid of $15,000.They 

drilled the well into the flank of a subsurface salt dome, having 

used seismic and geological data to pick the spud point. 

The well never reached TD since after only a week or two 

of drilling, it yielded a shallow oil discovery that tested at a 

rate of about 960 b/d from perforations at a depth of only 

between 1,730ft and 1,750ft (519m and 525m). Though at 

first nobody recognized it as such, the well ultimately was 

acclaimed as having been the world’s first offshore oil discovery 

made out of sight of land. 

The Kermac Rig 16 setup was, at best, only semi-mobile, since 

if oil were discovered, the platform remained in place as the production 

center. But the tender could be towed to a different well 

site to service another pre-installed drilling platform without having 

to remove and transport an entire rig to each new location. 

By doing so, however, Kerr-McGee confirmed the technical 

feasibility of extending mobile drilling into the open sea. 

Consequently, during the next few years, offshore operators 

built their own versions of the tender-platform rig combination, 

all the while edging farther offshore. 

Feds take over deepwater acreage 

To the industry and the state of Louisiana, it represented a 

rosy picture. However, by 1951, continued squabbling among 

coastal states and the federal government over ownership of 

offshore areas – inaccurately called “tidelands” – resulted in an 

unofficial 3-year moratorium on lease sales as lawsuits resulted 

in still more lawsuits. In the end, the federal case prevailed. 

As formalized by the U.S. Submerged Lands Act of 1953 

and a sister bill that same year, the OCS Lands Act, Louisiana’s 

seaward jurisdiction was reduced to 3 miles (5 km) from the 

low-tide shoreline, with much of the state’s previously anticipated 

offshore revenue now going to the federal treasury. Even 

after becoming laws, the two bills remained contentious, and 

additional lawsuits were filed during the ensuing 20 years. 

Nevertheless, beginning in late 1953, the U.S. Interior 

22 


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water by placing the drilling rig higher above the barge hull. 

Built in 1949 for about $1 million and christened Breton 

Rig 20, Hayward’s rig was described by J.E. Brantly in his 

epic History of Oil Well Drilling as “a platform supported by 

piles on top of a submerged barge hull.” 

Its drilling water depth capability topped out at 20ft (6m), 

but it nonetheless established the “submersible” class of 

MODU for open-sea drilling. 

Before moving into the open Gulf of Mexico, producing companies 

drilled wells with barge rigs towed to wellsites down a maze 

of canals in Louisiana’s ‘transition zone.’ 

Department, through its Bureau of Land Management (BLM), 

organized and conducted its first federal OCS lease sale off 

Louisiana in October 1954. Department records show 199 tracts, 

each about 2,500 sq acres in size, were offered and 90 received 

bids. Combined, operators produced $116.4 million in high bids. 

Water in the leased blocks averaged less than 100ft in depth. 

The sale apparently was a productive one for the companies 

who managed to capture leases. As of January – more than 58 

years later – 26 of the 90 blocks leased at that first sale were still 

marked “active” by the U.S. Minerals Management Service 

(MMS), successor since 1982 to the BLM for offshore leasing. 

Rigs become more mobile 

The federal-state leasing interruption indirectly benefited the 

budding offshore industry, since it allowed drilling technology 

to catch up with producers’ aspirations to test productivity in 

deeper water farther offshore. 

Earlier, in 1948, while most operators were relying on tender-platform 

combos or fixed structures to drill offshore 

wells, a marine engineer working for Tulsa, Okla.-based 

Barnsdall Oil & Gas (Kerr-McGee), John Hayward, looked 

back at earlier technology as the inspiration for a new type of 

mobile offshore drilling unit (MODU) – one that could double 

the water depths to which producers were limited by 

existing equipment. 

Barnsdall asked Hayward to investigate how they could best 

develop several state leases in Breton Sound, just east of the 

Mississippi River’s claw-like delta fan.The water depth averaged 

20ft (6m) or more, far beyond barge rigs’ capabilities. Hayward’s 

solution was to beef up the barge rig design to drill in deeper 

Submersibles step out 

The Breton Rig 20’s submersible barge supported a drilling 

substructure that rested atop a series of steel “posts.” This 

allowed wave forces to pass through the open interval between 

the barge and the substructure without adversely affecting the 

unit’s stability as it rested on the bottom for drilling. 

For several years afterward, some operating companies, 

including Humble Oil & Refining (ExxonMobil), stayed 

with the tender-platform rig configuration. But others, 

impressed by Breton Rig 20’s performance, built various submersibles, 

all based on Hayward’s design. 

Successful application of the Breton Rig 20 as a bottomsupported 

submersible marked two key achievements: 

• it added increased rig mobility between wells, compared 

with erecting self-contained or tender-assisted platforms 

for exploratory drilling; and 

• it demonstrated that not only could the submersible rig 

operate reliably in open water, but it also could be 

expanded in size, with a higher substructure, as drilling 

extended farther offshore. 

New ideas for submersibles came with their use. Starting in 

1952, using expanded Breton Rig 20 design criteria, Alden J. 

Laborde, a former Kerr-McGee employee, designed and built 

the Mr. Charlie submersible. This rig had a higher, wider and 

longer hull to give it deeper water-depth capability than other 

posted barge-type rigs. At the same time, Laborde founded 

Ocean Drilling & Exploration Co., or Odeco (now 

Transocean Inc.) as an independent contract-drilling company 

to lease the rig out to offshore operators. Although this was 

not new, it was a popular concept since at the time, most producing 

companies decided there was little reason to own their 

own rigs and were selling them off as quickly as possible. 

The Mr. Charlie, built from the keel up for about $2 million, 

had longer, larger-diameter posts connected to a higher 

drilling superstructure. It also featured pontoons outboard of 

each of the barge hull’s long sides to lend more stability while 

it was lowered to or raised from the bottom. Total height 

24 



from the barge bottom to the rotary table was 60ft (18m), 

allowing an above-water drilling clearance of 20ft when 

working in up to 40ft (12m) of water, which was twice the 

water depth capability of conventional posted barges. 

Odeco took delivery of the Mr. Charlie in June 1954. Still 

untested, the rig drew sardonic comment from some corners 

of the offshore community. A native from Louisiana, Laborde 

recalls that the head of a major offshore platform builder 

advised him to put large pad-eyes on the rig so one of his 

company’s crane barges could hook onto them when – not if 

– Mr. Charlie capsized. 

Nonetheless, the rig went to work for Shell Oil Co. off the 

Mississippi River delta, working at its full, 40-ft water depth 

limit. Despite a glitch or two subsequently corrected, the rig 

performed as designed. Shell kept it under contract for several 

years, using it to discover the South Pass Block 27 field, 

which was the company’s biggest producer in the Gulf to that 

time. It remained unsurpassed by subsequent Shell discoveries 

in the Gulf until the 1970s. 

‘Bottle,’ jackup rigs up water depths 

As drillers gained more offshore experience, barge-type submersible 

rig designs gave way to the column-stabilized, or 

“bottle”-type submersible. This design abandoned the rectangular 

barge with small-diameter posts for large-diameter, 

floodable columns connected in a square, or in some cases, 

triangular configuration. 

The bottle rig’s long base columns supported the work deck, 

extending its overall height, therefore increasing the unit’s 

drilling water depth capability when resting on the bottom. 

The bottles could be deballasted for moving the rig between 

drilling locations. The design became so popular that during 

the 1950s and 1960s, contractors built some 30 of them, all 

designed to drill in increasingly deeper water as new OCS lease 

offerings pushed out beyond the 100-ft water depth contour. 

Ultimately, however, the bottle rig’s upper water depth limit 

came to be about 175ft (53m). Beyond that point, stormy 

winds, swells and currents could easily overpower its ability to 

stay firmly on location. 

By the early 1950s, precursors of another bottom-supported 

MODU design arrived on the scene. Drawing from marine construction 

technology, this rig type used the idea behind the 

portable, self-elevating construction dock to produce a rig whose 

drilling barge could be raised above-water on retractable “legs.” 

This rig type, which soon came to be called the “jackup,” gradually 

demonstrated a drilling water depth capability far beyond 

that of the submersible, since the length of its multiple legs could 

be extended to match water depths over drilling locations. 

The first jackup built – based on a self-elevating construction 

dock design by Leon B. Delong – was The Offshore 

Co.’s (now Transocean Inc.) Barge No. 1, which went into 

service in 1954. It was capable of working in up to 40ft of 

water, using pneumatic rubber tubes to grip the legs as they 

were lowered to the bottom. The leg grips then raised the 

barge hull itself to a point above the air-water interface. 

Other offshore contractors embraced the jackup design, 

equipping them with improved jacking systems. Employing first 

cylindrical and then open truss legs, jackup owners soon could 

drill in water beyond 200ft (60m). Eventually, jackups were built 

to work in up to 450ft (135m) of water, as many do today. 

Working ‘the float’ 

While submersibles and jackups sufficed for drilling across a 

huge stretch of the Gulf OCS during the early to late-1950s, 

equipment for drilling in another attractive marine area 

where onshore production extended offshore – namely along 

the U.S. West Coast – required new thinking. 

It became evident that oil companies needed to abandon 

bottom-supported rigs in favor of some type of floating 

equipment because the outer edge of the OCS off California 

and the other West Coast states is significantly closer to shore 

John Hayward designed the first ‘submersible’ mobile offshore rig, the 

Breton Rig 20, to drill in 40-ft waters in Breton Sound off Louisiana. 



Later submersible rigs were built around floodable ‘bottle’ columns, 

which could be deballasted for moving the rig to new well sites. 

than that in the Gulf – sometimes reaching 500ft (150m) of 

water only a short distance offshore. 

During the late 1940s, a group made up of Conoco, Union Oil 

of California, Superior and Shell had established a working relationship 

called the CUSS Group (from the first initials of each 

company). Based in Los Angeles, the group’s main goal was to 

find ways to drill in such deepwater areas as the Santa Barbara 

Channel and other promising Pacific Coast offshore areas. 

Some jackups and submersibles could work in the shallower 

water relatively near shore, but at the time, only fixed platforms 

sufficed for drilling farther out. The CUSS group experimented 

with a number of small, ship-shaped U.S. Navy surplus vessels, 

which it converted into deepwater (more than 400ft or 122m) 

coring ships. The group eventually elected to equip a surplus yard 

freight barge with a six-point anchor-based mooring system, 

which would allow it to drill cased holes in up to 600ft (180m) of 

water. The group installed a low superstructure amidships, upon 

which rested a self-contained drilling rig that worked through an 

open space built into the hull, which they called the “glory hole.” 

Christened the Cuss 1, this ship-shaped MODU paved the way 

for development of a series of other vessel-shaped drilling rigs 

that eventually culminated in the self-propelled, deepwater drillship 

of today. 

The effectiveness of drillships was subsequently heightened, 

thanks mainly to improved anchor-mooring layouts as 

well as to development of anchorless station-keeping systems 

– so-called “dynamic positioning” (DP) – that employed 

thrusters to keep the hull stationary over the well center, 

regardless of wind and wave forces. 

Meanwhile Shell, whose chief goal at the time was to 

acquire significant offshore leaseholds to book larger U.S. oil 

reserves, worked in secret to develop other floating drilling 

capabilities to match its significant work in underwater production 

equipment that included: 

• seafloor-based wellheads; 

• Christmas trees; and 

• underwater robotics and systems for pumping downhole 

tools into wells from surface locations. 

In 1961, to drill in deep water and serve as a well-completion 

center, Shell converted a bottle-type, bottom-supported 

submersible, the Bluewater 1, into a floating “semisubmersible” 

MODU. It could work while resting on the bottom, 

yet the column-type hull also could be partially ballasted to 

lower its profile in the water. Held in place by anchors, this 

provided a more stable platform than barge- or ship-shaped 

floaters for drilling in deep water. Because it rested lower in 

the water column, the Bluewater 1 also demonstrated less vulnerability 

to the effects of winds and waves. 

The Bluewater 1 proved to be so effective that naval architects 

and floating rig designers subsequently turned out a number of 

“semi” variations, all of which allowed drillers to challenge water 

depths beyond 600ft, though at first few drilled in such depths. 

The Bluewater 1 was first used in the Gulf of Mexico before 

it was moved to the West Coast, where it stayed for only a relatively 

short time. It returned to the Gulf, where it drilled successfully 

for several years, but was lost to Hurricane Hilda in 1964 – 

fortunately, after all crewmembers had been evacuated safely. 

Rigs for deep, ultra-deep work 

In the 1970s and 1980s, the offshore search spread rapidly 

around the globe. Activity in the Gulf, while less frantic than 

before, benefited by the industry’s extension of the sensitivity and 

sophistication of subsea drilling and production technology. The 

The first ‘semisubmersible’ rig, the Bluewater 1, was a modified 

bottle rig designed to work on bottom as well as afloat, extending 

mobile rig water depth capabilities to 600ft or more. 

26 



Gulf was often referred to as a “dead” sea by dint of the apparent 

slowdown in OCS activity. Nevertheless, it continued to 

attract oil company interest, particularly to geological 

prospects that lay beneath ever-deeper water. 

Meanwhile, thanks in part to development of more efficient 

and powerful DP systems, offshore contract drillers placed 

orders in Gulf Coast and overseas shipyards for drillships and 

semisubmersibles with anchorless drilling capabilities far 

beyond the 600-ft water depth point. These were followed by 

rigs with greater water-depth clout, increasing to 800ft (244m), 

1,500ft (450m), and by the 1980s, to 5,000ft (1,500m). 

Today, floaters are far larger than their earlier counterparts, 

with some even equipped with twin-derrick, dual-well centers 

for drilling and completing separate wells simultaneously. 

Many are rated for drilling 30,000-ft (9,000-m) wells in water 

depths to 10,000ft (3,000m). Several are working almost continuously 

in the Gulf, drilling in deep water – 1,000ft or more 

– and ultra-deep water – 5,000ft or more. 

While operators drill fewer such wells today than in shallower 

water back on the Shelf, leases beyond the 600-ft depth 

contour have continued to produce big. 

During the late 1980s and 1990s, some individual companies 

continued to expand their deepwater portfolios and invest in 

deepwater technology. Shell, for example, was rewarded in 

1987 by the Auger field discovery in 2,860ft (86m) of water, 

with reserves of about 220 million bbl of oil, significantly larger 

than those being found by that time back on the Shelf. Finds 

like Auger and others gave rise to the view that the deepwater 

Gulf of Mexico contained great unrealized potential. 

Not only was the size of the fields conspicuous, but high 

flow rates of individual wells also drew keen operator interest. 

While in 1987 typical shallow-water Gulf gas wells flowed 

less than 2 MMcf/d, a single well at Shell’s Mensa field, discovered 

that same year in ultra-deep water (5,300ft or 

1,590m), flowed at some 100 MMcf/d. Similarly, in 1991 an 

average shallow-water oil well flowed at about 100 b/d, while 



An early model of the self-elevating or ‘jackup’ rig, which gave 

drillers stable bottom support for drilling in up to 450ft of water. 

wells at Shell’s 1991 Ursa field discovery in deep water 

(4,000ft or 120m) flowed at about 30,000 b/d. 

While deep water for a time remained the exclusive bailiwick 

of major companies like Shell, Exxon, Mobil, Amoco, Arco, BP 

and a few others, the concept of completing deepwater wells on 

the seafloor and then tying them to existing fixed platform and 

pipeline facilities back on the Shelf allowed large and midsized 

independents like Anadarko, Kerr-McGee, Oryx and 

others to play the deepwater game. 

Production setups lag the rigs 

Through the years, the technology for producing oil and gas 

from Louisiana’s chunk of the Gulf of Mexico OCS has undergone 

a measured pace, changing during a long period from 

conventional fixed structures to semi-buoyant compliant towers 

to similarly buoyant tension-leg platforms tethered to the 

bottom. Beginning with a significant spurt in the advancement 

of subsea production technology in the late 1980s, a proliferation 

of seafloor wells producing to the surface spawned spar 

platforms and semisubmersible-based floating production 

facilities, particularly for use in the deepwater Gulf. 

Thanks to oil and gas development in the remote 

reaches of the North Sea and the infrastructure-poor area 

off West Africa, operators embraced new tanker-based 

floating production, storage and offloading (FPSO) systems, 

devised in the 1980s and 1990s to allow whole fields 

to be developed independent of connections to shore. 

While FPSOs have yet to be installed in the Gulf, government 

regulators have given operators the go-ahead to make 

proposals. These have not been made, mainly because of the 

high costs involved and relatively little need for offshore storage 

because of the proximity in even ultra-deep water to 

existing pipelines. 

In the wake of Hurricane Katrina, however, there may 

be renewed interest in FPSOs. The storm caused an 

indefinite shutdown of many of the fixed platforms and 

some of the tethered floating production systems in the 

central and eastern Gulf. The ability of an FPSO’s storage/offloading 

vessel to quickly disconnect from subsea 

systems and move out of harm’s way, however, perhaps 

adds a new dimension to the suitability of FPSOs for 

deepwater Gulf operations. 

Independents renew shelf drilling 

Smaller independent operators originally gained an offshore 

toehold – mostly since the 1970s – by reworking 

passed-over acreage in shallow-water areas abandoned by 

major companies under the economies of scale. Since that 

time, independents – and more recently, even some major 

companies who have paid a return visit to the shelf – have 

employed posted barge and jackup-type rigs with beefed-up 

drilling capabilities to develop smaller, secondary oil and gas 

reservoirs, using existing platform and pipeline infrastructure 

to move production to shore. 

Thanks to improvements in seismic data acquisition and 

processing, producers have gained more accurate imaging of 

deeper geological horizons, particularly beneath the shelf 

area. The result has been a brisk campaign during the past 4 

to 5 years of drilling “Deep Shelf ” gas wells to drilled depths 

of 10,000ft or more. 

The MMS in 2000 estimated that the shallow-water Gulf 

holds total undiscovered reserves of 15.2 billion bbl of oil, with 

undiscovered natural gas estimated to be some 55 Tcf. In deep 

water, the total estimated undiscovered reserves are 56.2 billion bbl 

of oil with undiscovered natural gas estimated to be about 55 Tcf. 

Because drilling costs for deep shelf and deepwater reserves are 

so high – with ultra-deepwater wells costing as much as $1 billion 

28 



apiece – the Interior Department has created drilling incentives 

for operators by suspending payment of federal royalties on gas 

production from wells drilled to 15,000ft (450m) or greater on 

the shelf as well as for oil and gas wells drilled and completed in 

water depths of 2,625ft (788m) or more.These incentives are said 

to be stimulating additional drilling in both areas. 

Louisiana’s offshore stake 

While operators’ activities in federal deepwater areas continue to 

advance, development of smaller oilfields and deep gas reservoirs 

beneath acreage within Louisiana’s 3-mile offshore jurisdiction 

has provided renewed benefits to a state whose offshore production 

– excluding those in federal waters – peaked in 1970 at 566 

million boe and in 2003 totaled only about 96 million boe. 

The federal government’s 1953 legal claim to all offshore territory 

beyond the 3-mile limit has always stuck in Louisiana’s 

collective craw. Since then, Congressional delegations not only 

from Louisiana, but also from Mississippi and Alabama, have 

argued in favor of changing the law to expand their respective 

offshore jurisdictional areas to at least equal those of Florida and 

Texas. In 1953, those two states had argued successfully that in 

the 19th century, when invited to become part of the United 

States, each had specified state jurisdiction over three leagues 

(about 9 miles – 14 km) offshore as part of their official statehood 

treaties. The other Gulf States had not included such 

claims as part of their conditions for entering the Union. 

Today, all lease bonuses, rentals and mineral royalties from federal 

waters of the Gulf go to the U.S. Treasury. The government 

does, however, issue a small percentage – about 1% – of royalties 

from federal offshore oil and gas production to Gulf states. In 

2004, the MMS disbursed $41.4 million to Louisiana as its share 

of more than $1.325 billion in revenue from mineral production 

on all U.S. federal lands on the continent and offshore. 

Louisiana considers such revenue shares to be far too small, 

though, given the tens of billions of dollars in federal revenues 

created by oil and gas production off its shores since 1953. They 

point to inland states, such as New Mexico and Colorado where 

public lands dominate, that receive much larger shares because 

their oil and gas royalties are amplified by those obtained from 

the mining of coal and other hard minerals. In 2004, for 

instance, New Mexico’s share of federal minerals royalty revenues 

was $382.8 million and Colorado’s was $89.4 million. 

Additionally, as the immediate aftermath of Hurricane 

Katrina so aptly demonstrated, several Gulf states – particularly 

Louisiana – have lost and continue to lose huge expanses of 

coastal wetlands that are natural barriers to the storm surges 

spawned by hurricanes. During the past 20 years, changing 

Gulf tides, hurricanes, continued river-control measures and 

subsidence stemming from oil and gas development as well as 

the leaching effect of barge-canals production have eroded 

Mississippi and Atchafalaya river deltaic marshes at the rate of 

“a football field every 38 minutes,” say state politicians. Experts 

already have attested it was the loss of these wetlands and 

coastal sand barrier islands that served to intensify Katrina’s 

disastrous effects on the Mississippi coast and in several 

Louisiana parishes located either side of the Mississippi River 

below New Orleans. Louisiana government leaders and U.S. 

senators and congressmen have called for federal funding of 

massive wetlands restoration projects along the state’s coastline. 

And they did so long before Katrina arrived. 

Earlier this year, key members of Louisiana’s congressional 

delegation sponsored a bill – the Offshore Fairness Act of 

2005 – that would extend the seaward lateral boundaries of 

the states of Louisiana, Mississippi and Alabama to a more 

equitable three leagues, or 9 miles. By increasing these seaward 

boundaries, say the bill’s sponsors, the three states’ royalty 

revenues would be significantly increased. In Louisiana, 

they noted, the increased revenue would go a long way in 

helping to help pay for coastal restoration programs and 

repair of river-control infrastructure, which would include the 

outdated dike system surrounding the city of New Orleans. 

Other state offshore benefits 

Offshore oil and gas, whether produced from state or federal 

waters are no doubt major sources of industrial wealth in 

Louisiana. Recently, Gov. Kathleen Blanco noted that the 

petroleum industry as a whole has a $93-billion impact on the 

state. In addition to oil company personnel, petroleum equipment 

manufacturing and oilfield services provide thousands 

of jobs in the state, she told an audience in May at the 

Offshore Technology Conference in Houston. 

“We rank No. 1 in oil production and second in natural gas 

when you count the OCS, and 45% of companies in this industry 

get more than one-half of their income from the OCS and 

activities in the Gulf,” she said. “We have over 46,000 miles 

(14,030m) of pipelines, and the nation depends on us for 34% 

of its natural gas supply and about 30% of U.S. crude oil.” 

The dampening effects of Hurricane Katrina notwithstanding, 

Louisiana – along with Texas, Mississippi and Alabama – will 

continue to provide the lion’s share of domestic oil and gas production 

for years to come. And much of any future increase will 

come from deepwater and ultra-deepwater areas of the Gulf. 


Chapter 4 • Deep Shelf 


This 2,800-ton production module awaits 

deployment. The Deep Shelf gas play is 

spurring activity in the shallow waters offshore 

Louisiana. 

30 


Exploring the Deep Shelf 

By MJ Selle, Contributing Editor 

Record energy prices have spurred 

global exploration with Louisiana’s 

Deep Shelf area becoming an increasingly 

attractive prospect for development 

of new natural gas wells. 

The term “Deep Shelf ” seems to be a bit 

of a misnomer since water depths are 

less than 600ft (183m). However, the 

definition becomes evident when one 

considers that well depths could reach 15,000ft 

(4,575m) and beyond. The U.S. Minerals 

Management Service (MMS) classifies deep 

gas wells as those drilled to at least 15,000ft 

(4,575m) true vertical depth (TVD) below 

mean sea level in shallow water (less than 600- 

ft water depth) on the Outer Continental Shelf 

(OCS). Correspondingly, the term “ultra-deep” 

goes beyond that – gas wells that are slated for 

20,000ft (6,100m) TVD and higher. 

Gulf of Mexico gas production has declined 

annually since 1996, and now companies are going 

back over areas that have already been explored, 

trying to find new prospects by drilling deeper. 

Relatively few wells have explored depths 

beyond 15,000ft. 

“We’ve drilled about 55,000 wells as an 

industry between 10,000ft (3,050m) and 

15,000ft,” said Steve Campbell, investor relations 

manager for Newfield Exploration Co. 

“We have a tremendous library of well logs 

and can map the entire geologic system 

through well logs. However, you don’t have 

that in the Deep Shelf because the industry’s 

only drilled about 3,000 wells over time. 

Every time we drill a well we achieve two 

things: we learn mechanically how to drill better, 

and we get the well log data that helps us 

to understand the system and map regionally. 

The Deep Shelf is all wide open. It’s frontier.” 

That lure of discovery is pushing the industry 

onward. 

Gas estimates spur development 

According to the MMS research, up to 55 Tcf of 

undiscovered gas resources may underlie the 

untapped deep reaches of the shallow waters of 

the Gulf of Mexico. Already 10 Tcf of gas has 

been discovered in exploration deeper than 

15,000ft. Original estimates had operators 

expecting tremendous gas finds in the Deep 

Shelf area; however, those hopes have been mostly 

dashed, with the average find being between 5 

Bcf and 15 Bcf. However, at the ultra-deep 

depths, the MMS believes those huge fields still 

may be waiting to be discovered. 

There are some severe impediments to 

drilling so deep. 

“The wells are extremely expensive and technically 

challenging to drill, with high pressures 

and temperatures providing the main obstacles,” 

said Valerie Brett, lead analyst of North 

America Energy for Wood Mackenzie. 

Adding to this is the time it takes to drill 

such a deep well. Estimates range from 6 

months of drilling for a 20,000-ft well to a year 

for a 35,000-ft (10,675m) well, and the day 

rates of drilling rigs continue to climb. 

Another challenge is finding the plays at 

such depths. 

“On the seismic side, these are very subtle 

amplitudes, so we are taking existing seismic 

that we have and reprocessing it to pick up different 

attributes,” Campbell. “The key to success 

is good people, the best data and proprietary 

processing techniques.” 

Independents lead the way 

One of the unique aspects of the Deep Shelf 

development is that independents are at the forefront 

of development. While some operators 

rushed to the Deep Shelf in 2000 and 2001, most 

early efforts found positive drilling results harder 

to come by and costs higher than expected. 

The “elephant-size” fields originally predicted 


Chapter 4 • Deep Shelf 

did not materialize, so the larger operators turned their attention 

elsewhere. However, with an average field size of 30 Bcf, 

the Deep Shelf area proved to be attractive to independents 

such as Newfield, McMoRan Exploration and Millennium 

Offshore Group. 

“The original Deep Shelf proved to be much more complex 

geologically,” Campbell said. “You can easily spend $25 million 

on a 20,000-ft well with rig rates where they are. So, if 

the average prospect size is 30 Bcf, you have to be really careful 

before you bite off a $25 million well.” 

Newfield recently announced it would commence production 

from seven different shallow-water projects during the 

second half of this year. 

As far as the ultra-deep wells go, this is where the major 

operators seem to be focusing their efforts, many in partnership 

with independents. 

“We’re drilling a well with ChevronTexaco to 25,000ft 

(7,625m) called Cadillac on Viosca Knoll,” Campbell said. 

“We only have a small percentage of it, but it’s great to have 

access to the data since we’re trying to learn about the play. 

We’re watching these key events to see what we can learn, 

both mechanically and geologically.” 

Other current wells of interest include Shell’s Joseph prospect, 

scheduled to reach total depth (TD) at close to 25,000ft, and 

ExxonMobil’s Blackbeard, permitted to TD at 32,000ft 

(9,760m). Current estimates forecast a year’s drilling time at 

Blackbeard. And more large companies have expressed interest 

in deep and ultra-deep wells including BP, BHP and El Paso. 

Infrastructure is key 

Another key element in developing the Deep Shelf is its 

proximity to existing infrastructure, which lowers the cost of 

development. 

(Photo courtesy of Rowan Cos.) 

Scooter Yeargin is drilling on ExxonMobil’s Blackbeard well. 

“A 30-Bcf Deep Shelf play has two things going for it: It’s 

near infrastructure, and you’re in shallow waters, so if you find 

hydrocarbons, you’ve got a very low economic threshold to 

hook it up and get your money back,” Campbell said. 

Joe Slattery, vice president of operations for W&T Offshore 

concurred, saying that acreage is “king” and the best prospects are 

those held by production. However, this existing production system 

is only one step in the right direction. The wells require special 

tubulars and attention to safe production, leading Slattery to 

conclude that Deep Shelf is “not a play for the faint of heart.” 

Even though the ultra-deep wells enjoy the same access to 

existing infrastructure as the Deep Shelf wells, that infrastructure 

may not be up to the task of producing at these extreme 

depths. Campbell believes production facilities might limit 

flow once in awhile, but it’s a relatively easy problem to fix. 

Keeping a watchful eye on development 

As economic pressures increase on operators to expand 

reserves, the Deep Shelf could play an important role in the 

United States’ energy strategy. 

“The country needs the Deep Shelf,” said Marc Lawrence, 

senior vice president of oil-service Fairfield Industries. “But the 

model is going to be totally different. It’s very expensive, and 

many of these guys will sit back, watch the other guys and learn 

from their mistakes. The Shelf shouldn’t be ignored. As each 

new wave of technology has come along, we found a lot of lowhanging 

fruit. The early adopters really reaped the benefits.” 

“Our prospect size of 30 Bcf is not what the industry set 

out to find back in 2000,” Campbell said. “We’ve approached 

the ultra-deep as a real estate play and have gone out and 

leased 80 lease blocks associated with it, recognizing that 

we’re not a large enough company to go out and drill a $70- 

million well, but if we control the acreage, that means that the 

larger companies would have to come to us and partner up 

with us. It’s a way for us to get exposure without risking a 

great deal of capital.” 

Added Paul Kelly, senior vice president of driller Rowan Cos. 

Inc., “Chris Oynes, MMS regional director of the Gulf of 

Mexico OCS region, has told me they see a string of discoveries 

across the ultra-deep part of the Gulf like a string of pearls. 

There are some very significant discoveries, and they think that 

it may be different geology from 1,000ft to 5,000ft (1,525m) – 

this could be something totally new. That’s MMS’s take on it. 

The companies are all minding their own business, but sometimes 

it’s useful to have an objective observer like MMS, which 

gets all the data and can tell you what the trends are.” 

32 


The Genesis of a Hot Play 

By Rhonda Duey, Exploration Editor, E&P 

If you enact it, they will come – how royalty relief helped kick off the Deep Shelf play. 

New plays often are in previously unexplored areas. But Louisiana, 

with an oil industry dating back to the early 1900s, found a hot 

new play in its own backyard. Beneath the shallow wells that peppered 

the landscape were deeper horizons that had barely been 

tapped. The lure of gas reserves was tempting, but with natural 

gas selling at bargain basement prices in the late 1990s, only the 

largest finds would be economical. That’s when the federal government 

stepped in. 

The beginning of the play was really a confluence of a number 

of forces. First were the seismic companies that had data over the 

area noticing large and interesting structures below 15,000ft 

(4,575m). Second was a National Petroleum Council (NPC) report 

outlining in detail the expectation of a demand growth and a supply 

shortage. With a potentially large source of natural gas sitting 

untapped in the Gulf of Mexico, the U.S. Minerals Management 

Service (MMS) decided it was time to act. 

Two of the most instrumental players in this drama were Walt 

Rosenbusch, then head of the MMS, and Marc Lawrence, senior 

vice president and division manager of data licensing for Fairfield Industries. 

They recently reminisced about the events that kicked off a lasting friendship 

as well as an exciting new play. 

Lawrence recalled that a lull in activity gave him the time to study some 

of the data Fairfield was acquiring. 

“Being a geologist, I’ve always been enamored with the deeper sections 

of the Gulf, figuring there’s got to be more there,” he said. “We don’t even 

worry about the source rocks in the Gulf – they’re there.” 

As more data was acquired, he said, structures were becoming evident 

at depth. “Our processing system guys dubbed them ‘El Diablo’ – deep as 

the devil,” he said. “But I knew no one would drill there unless something 

happened – the economics just weren’t there at that time.” 

Lawrence examined the options. Tax relief would have enticed operators 

into the area, but that required an act of Congress. On the other hand, the 

director of the MMS could offer royalty relief, and in fact the Deepwater 

Royalty Relief offering earlier in the 1990s had resulted in a migration of 

companies to deeper water. 

Lawrence and Rosenbusch had never met, so Lawrence set out on almost 

a stealth campaign to show the director that the need was there. 

“I started finding social occasions,” he said. “I’d be sitting in one of these 

places with Walt, and I’d grab clients or guys I know from oil companies. I’d 

say, ‘If you were to have some form of royalty relief for deep drilling on the 

continental shelf, what would it do for your company?’ None of this was 

prepared; I had no idea what they were going to say. I was just hoping 

they’d come out with the right answers.” 

Apparently they did – Rosenbusch was intrigued enough to set up a 

meeting at Anadarko’s headquarters to discuss the pros and cons of the 

play. With the findings of the NPC report fresh in his mind, he realized that 

now was the time to get the ball rolling. 

“When I heard from Marc and from industry about the potential, I 

thought it was an opportunity,” Rosenbusch said. “I had to have the secretary 

[of the Interior] sign off on it. But I felt it was the right thing to do – 

Marc Lawrence (forefront) and Walt Rosenbusch reminisce about the 

enactment of deep shelf royalty relief and its impact on the Gulf of 

Mexico’s deep shelf play. 

that’s what government should be doing in terms of managing its acreage 

and mineral resources.” 

But he couldn’t afford to work at the almost geologic speed that it often 

takes to get new rules put into effect – the Clinton administration’s time 

was almost up and so, most likely, was his directorship. 

“When we first had talks with Walt, he said it might take 4 or 5 years to get 

deep shelf royalty relief in place,” Lawrence said. “Then at that meeting at 

Anadarko, which was in October 2000, he made the announcement that the 

MMS would offer some form of royalty relief at the next Central Lease Sale in 

March 2001. It was lightning speed for the government to work that fast.” 

The initiative was not without its challenges, primarily from the agencies 

that count on revenue from oil and gas leasing activities. 

“These agencies scrutinize the need for royalty relief and why it’s needed,” 

Rosenbusch said. “And they’re not big fans of dynamic modeling.” 

But he had a great deal of support within the Department of the Interior, 

and the proposed notice came out in January 2001, just before he left his 

post. The initiative has continued to evolve since royalty relief is usually 

offered on new leases and much of the acreage on the Continental Shelf is 

already leased up. 

The play has proved to be every bit as challenging as anticipated, but 

many companies, including some modest-sized independents, continue to 

pursue opportunities there. 

“In my mind, there’s no doubt that throwing in royalty relief was what 

spurred this play on,” Lawrence said. “The independents are the major market 

in the Gulf of Mexico, and this encouraged them to explore the Deep Shelf.” 

High prices in the past couple of years have relieved the need for deep 

shelf royalty relief. But it served its purpose at a time when new reserves 

were badly needed. 

“I thoroughly enjoyed pursuing that initiative, and I would also say it was 

an exercise in good government,” Rosenbusch said. “It’s an example of 

government listening to stakeholders. That’s being a manager of an asset as 

opposed to a regulator.” ● 


Success under Pressure 

By Joel Parshall, Contributing Editor 

Thinking unconventionally unlocks significant 

onshore deep gas resources. 

It remains a clear memory for Bob Sprehe. It was 1956, 

and he was on a rig in south Louisiana’s Lake Salvador. 

He was a junior drilling engineer for Chevron (Standard 

Oil of California at the time) just 90 days with the company 

on his first job after college. Pipe had been set at 

11,000ft (3,355m), and the rig team followed the customary 

procedure. Mud weight was boosted to 15 lb, and the drillbit 

churned downward toward its target. 

“We drilled 1,000ft (305m) below the protective casing 

string, and that’s where the drill collars got stuck,” said 

Sprehe, now 72 years old and an energy economist with the 

Louisiana Department of Natural Resources (DNR) 

Technology Assessment Division. 

It was an all-too-common occurrence – the bane of existence 

for Louisiana drillers as wells became deeper. Fishing to 

dislodge and remove wall-stuck pipe was time-consuming, 

often difficult and expensive. Sometimes it was unsuccessful. 

The cost risk was a substantial disincentive for spudding deep 

wells; abandoned holes meant major losses. 

As most of the state’s shallower gas reservoirs had already been 

found and producing for years, drillers increasingly were probing 

zones between 10,000ft (3,050m) and 15,000ft (4,575m) and 

frequently deeper. In Louisiana’s subsurface, these are especially 

high-pressure environments. For the industry, incidents like that 

at Lake Salvador were a problem begging for a solution – not 

merely one focused on fishing, but also on prevention. 

One individual interested in finding a solution as soon as 

possible was D. D. (Delbert) Jackson, a Chevron vice president. 

Fortunately for Sprehe at Lake Salvador, Jackson’s 

doggedness was about to pay off. 

“Delbert Jackson probably was the best thinker about 

drilling in Louisiana, particularly in south Louisiana, at that 

time,” Sprehe recalled. “He was telling our personnel area that 

you’re hiring top-notch people from the top schools, but all 

the people we hire seem to be thinking alike. Everybody does 

the same thing, and it’s costing us too much money. We have 

to find professors and schools who are thinking differently.” 

Following Jackson’s advice, the company had begun to speak 

with experts at Colorado School of Mines, Texas A&M, 

Oklahoma, Penn State and other top 

petroleum schools. From these contacts, 

Jackson learned of some innovative 

research by Rudolf Wuerker, a professor 

in what was then the department 

of mining and metallurgical engineering 

at the University of Illinois. A 

German-educated mining engineer, 

Wuerker was an expert in rock drillability. 

With the decline in the coal 

industry, he began to shift some of his 

research focus toward the oil and gas 

industry’s problems with drilling at 

higher mud weights. 

“In Wuerker’s mind, any solution 

needed to reflect the fact that rocks are 

strongest in compression and weakest 

in tension,” Sprehe said. “He undertook 

some important experiments on differential pressures, 

which pointed to an alternative strategy for both increasing 

rates of penetration (ROP) and subsequently dislodging stuck 

pipe – reducing mud weight to lower bottomhole pressure until 

it approached the pressure level in the formation.” 

If such a method were successful in deep-well fishing, it 

would suggest the heavier muds had been applied too soon. 

Until that point, Louisiana deep drilling had relied on a 

part empirical, part “on the fly” method to determine where 

these deep, high-pressure zones began. 

“It was based somewhat on experience, and almost seemed to 

go by geography,” Sprehe said. “In the Hackberry field, you 

might set pipe at 9,000ft (2,745m), then weight up and drill 

out; in Lake Salvador, you would do that at 11,000ft (3,355m).” 

Indeed, on the Lake Salvador well that Sprehe was drilling, 

he remembers Jackson giving the order to lower the bottomhole 

pressure by 3,000 lb. 

“This was brand new, but as soon as we did it, that pipe 

jumped loose,” Sprehe said. 

Sprehe has spent most of his career in Louisiana oil and gas. 

After his Chevron days, he worked for Odeco and Quintana 

Petroleum and then started a drilling company later sold to 

Triton Energy. He also established another company in a joint 

venture with Halliburton, prior to joining the DNR staff. 

(Photo courtesy of Newpark Resources) 

34 


Chapter 5 • Deep Drilling Onshore 

At the deep Broussard gas field in 

Lafayette Parish, a composite mat system 

beneath the rig site protects the soil. 

Drawing on these years of experience, he said the breakthrough 

stemming from Wuerker’s research and Jackson’s advocacy was 

“one of the most significant events in deep drilling probably for 

the 20th century. It certainly was important for Louisiana. People 

came from all over wanting to know what we did, how we did it. 

The knowledge spread, but I don’t think Delbert Jackson got the 

credit he deserved because he was not one for writing papers.” 

As a result of the breakthrough, the industry began to fine-tune 

its mud-weight programs in deep wells to avoid wall sticking. 

“It was the first step in opening the science of petrophysics 

as a key tool in drilling operations,” Sprehe said. 

Increasingly, the industry focused on analyzing conductivity 

curves from electric logs for the earliest indicators needed to 

calculate bottomhole pressure and identify precisely where 

transition zones began. 

“We learned that we could often drill deeper at normal 

pressures, before boosting mud weight and setting pipe,” 

Sprehe said. “This meant a higher ROP overall for drilling 

the well. You had a revolution that brought a step change in 

the productivity curve for deep drilling.” 

That step change resulted not only from higher ROP, fewer 

fishing expeditions and lower abandonment risk but from less 

casing, less mud and more successful high-pressure reservoirs 

discovered and completed. 

The long-accepted definition 

of a deep well is one drilled to 

15,000ft or more, with the term 

ultra-deep applying to wells of 

25,000ft (7,625m). Still, the terminology 

requires some historical 

perspective. In the early days of 

the Louisiana oil and gas boom, a 

5,000-ft (1,525-m) well would 

have been among the deepest. 

In 1930, the O. J. Hill No. 1 

well drilled by D. L. Perkins of 

Shreveport and R. W. Norton 

of San Antonio was completed 

in the Caddo Parish sector of 

the tri-state Rodessa field, 

reaching the Glen Rose formation 

at a depth of 5,509ft 

(1,680m). That made it the first 

successful “deep” gas completion 

in the Shreveport area, according 

to Early Louisiana and 

Arkansas Oil, by Kenny A. Franks and Paul F. Lambert. 

Completions by Marathon Oil Co. (then Ohio Oil) in 

1937 and 1938 expanded the Cotton Valley gas field in 

Webster Parish into sands at 8,300ft (2,532m) and 8,500ft 

(2,593m), and were considered deep development work. 

The Fohs Oil Co. No. 1 Buckley-Bourg well in Terrebonne 

Parish was the deepest gas producer as of June 1938 at 

13,266ft (4,046m), Franks and Lambert wrote. 

Reflecting the growing interest in deep drilling during the 

1940s, the state Department of Conservation (forerunner of 

the DNR) began to include a tabular column for deepest zone 

tested in its biennially published well statistics. By the late 

1950s, deep gas drilling had come into its own in Louisiana. 

The state’s largest and deepest gas reserves generally lie within 

the Gulf Coast Basin covering southern Louisiana and 

extending offshore into the deepwater Gulf of Mexico. 

Virtually all of the state’s deep gas discoveries have been in this 

basin. A small number of other deep gas discoveries have 

occurred in the Arkla Basin near Louisiana’s Arkansas and 

Texas borders. There also has been minor deep gas activity in 

the Mid-Gulf Coast Basin near the Louisiana/Mississippi line. 

More than 150 onshore gas fields where wells average total 

depths (TDs) of at least 10,000ft were discovered or experienced 

major development during the 1950s. The biggest was the 



Bastian Bay field in Plaquemines Parish, discovered by Louisiana 

Land & Exploration (LL&E). This ranks as the state’s largest 

deep gas field with cumulative gas production now totaling more 

than 2.4 Tcf. Hilcorp Energy is the principal field operator today. 

Also from that era, the Lake Arthur field in Cameron, 

Jefferson Davis, Acadia and Vermilion parishes have produced 

almost 2 Tcf of gas. Discovered by Union Texas 

Petroleum, this deep field has mainly been operated by 

Burlington Resources in recent years. 

Quintana’s Garden City deep discovery in St. Martin and 

St. Mary parishes grew into a field that now has produced 

about 1.9 Tcf from wells averaging more than 16,600 ft TD. 

Burlington has lately been the primary field operator. 

In the 1960s, new deep gas production grew to levels 

unmatched before or since. Just more than 300 onshore fields 

of 10,000ft or greater well TD came online. 

The largest was the Bateman Lake field in St. Mary and 

Terrebonne parishes, discovered by Texaco and now operated 

by Chevron. Cumulative production since the field’s startup 

in 1961 stands at more than 2.3 Tcf. The Pecan Island field 

in Vermilion Parish, discovered by Humble and now operated 

by ExxonMobil, went into production in 1968 and has produced 

more than 1.8 Tcf. 

This heyday for Louisiana deep gas in the 1960s unfolded 

at prices between U.S. $0.20/Mcf and $0.30/Mcf, maybe 

1/50th of today’s price level. 

This momentum, however, could not continue. Most of the 

state’s giant onshore deep gas fields had now been found. Gas 

drilling, because of gas price controls, remained a low priority for 

most exploration and production companies, whose primary 

focus continued to be oil. Despite the increasingly critical need 

for domestic oil during the Organization of Petroleum 

Exporting Countries-dominated 1970s, the government’s establishment 

of economy-wide wage and price controls in 1971 led 

to a disincentive for domestic oil drilling as crude oil price controls 

were maintained after the other controls were lifted in 1973. 

36 



The number of onshore gas fields brought into production 

statewide at 10,000-ft or greater depths during the 1970s fell 

to 150. Nonetheless, the 1970s and early 1980s were notable 

for some impressive discoveries in the deep Tuscaloosa Trend, 

which runs along a narrow band mainly north of Baton 

Rouge crossing southern Louisiana. 

The largest Tuscaloosa Trend discoveries were the Port 

Hudson (Amoco) and Judge Digby (Chevron) fields, both 

with BP as the primary operator today. Port Hudson in East 

Baton Rouge, West Baton Rouge and East Feliciana parishes, 

began producing in 1978 and has cumulatively produced 

about 775 Bcf of gas from wells averaging 15,000ft TD. Judge 

Digby in Pointe Coupee Parish, which went on stream a year 

earlier, and has produced more than 518 Bcf of gas from average 

well TDs of 21,600ft (6,588m). 

The Chevron False River discovery began field operations 

in 1977. Located in Pointe Coupee and West Baton Rouge 

parishes, False River is roughly one-third the size of the Judge 

Digby field in cumulative production but just about as deep, 

producing from Tuscaloosa Trend wells averaging almost 

21,400ft (6,527m) TD. 

One of the largest discoveries in the trend was Amoco’s 

Morganza field in Pointe Coupee Parish, which has produced 

more than 440 Bcf since startup in 1980. Amoco and BP have 

been the primary operators in the field, which produces from 

wells with average TDs of nearly 19,500ft (5,948m). 

The main force driving gas drilling continued to be the 

search for oil, but change was on the horizon. Natural gas 

supply shortages during the 1970s, resulting from federal 

price controls in interstate markets, produced a customer outcry 

that helped Congress recognize the need for long-term 

decontrol of the natural gas business. 

The Natural Gas Policy Act of 1978 began to move toward 

this, although decontrol did not fully occur until the late 1980s. 

While the more favorable regulatory climate did stimulate gas 

drilling and supplies, so eager were gas pipelines to prevent a 

recurrence of the recent shortages that they contracted for more 

gas than was needed in the near term. A supply bubble developed 

that curtailed interest in gas drilling for some years. 

This situation overlapped the freefall in world crude oil 

prices that brought depression to the oil industry. The move 

to a deregulated gas market did not deliver the immediate 

stimulus to gas exploration and production that policymakers 

had envisioned, and with oil exploration slowing to a snail’s 

pace, gas drilling became mostly dormant. 

The market eventually stabilized and moving into the 1990s, 

(Photo courtesy of Newpark Resources) 

Gas drilling at the Avery Island field in Iberia Parish. 

began a slow recovery. In 1994, Louisiana enacted tax relief 

designed to encourage deep drilling.The program exempts drillers 

from severance tax until payout (up to 2 years) on new wells drilled 

to 15,000 ft or greater depth onshore or in waters out to 3 miles 

(5 km) from the coastline.The initiative also reduces severance tax 

on these wells after their production peaks and begins to decline. 

The program recognizes the importance of deep production horizons 

to the future of the industry in the state and the particular 

impact of deep drilling – with its many locally sourced supply and 

support activities – has on the state’s economy. 

One such Louisiana-based company strongly focused on 

serving the industry’s deep drilling needs is Newpark 

Resources. The company is a leading manufacturer and supplier 

of drilling fluids, particularly water-based, oil-free and 

salt-free systems especially suited to the environmental 

requirements and operational needs of deep drilling. 

Newpark also is a major manufacturer and provider of temporary 

roads using the lightweight Dura-Base composite mat 

system that distributes load impacts over large areas to dissipate 

the effects on soils and subgrades. 

Access to south Louisiana’s marshland can be more difficult 

than to offshore sites drilled by jackup rigs. Drillers can use 

barge-mounted rigs where canal access exists, but the zerodischarge 

rules can make the use of barges and towboats for 



supplies and waste removal extremely expensive. The use of 

land rigs is an alternative, however, it can require establishing 

road access stretching over possibly several miles of marshland. 

The mat systems are protective of the environment and 

reusable. They can be used to design rig pads as well as roads 

and enable land rig use to be the most economic option. 

Newpark also makes and supplies interlocking wooden mat 

systems (under patent) needed under some conditions. 

Wetlands protection is a vital concern in Louisiana, and 

industry involvement in combating wetlands erosion goes 

back many years. Kermit Coulon, who directs Burlington’s 

wetlands management program out of the company’s Houma 

office, notes that LL&E, which was merged into Burlington 

in 1997, consulted with the USDA Soil Conservation Service 

and built water-control structures in the 1950s. These prevent 

erosion by controlling surging water velocities through wetlands 

areas, and many of these systems are still in operation. 

“We own more than 600,000 acres in the state, most of it 

PEL-TEX OIL COMPANY, L.L.C. 

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Pel-Tex is privately owned and welcomes interested partners 

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Glenn Burke, President 

Brian Burke, Vice President 

coastal wetlands,” Coulon said. “Being the caretaker of this 

property means protecting it as an asset and a valuable national 

resource. To safeguard these wetlands, we will work with any 

company or government entity that is conducting business on 

our property. Whether it’s oil and gas drilling, laying a 

pipeline, utility and highway construction or coastal restoration 

projects, we do our best to minimize or prevent erosion.” 

Examples of these protective efforts include building up 

soil levels as mitigation, to compensate directly for unavoidable 

soil removal, performing suction dredging to rebuild 

marshland height and conducting other specific wetlandrestoration 

projects. Participating in a public-private initiative 

on the Barataria Waterway from Lafitte to Grand Isle, 

Burlington’s provided a free right-of-way for construction of 

a rock revetment along the company’s acreage to protect the 

affected marshland. As part of the state’s Coastline Reference 

Monitoring System begun in 2004, Burlington’s has permitted 

the placement of numerous erosion-monitoring sites on 

its property to facilitate a coast-wide scientific study. 

At Little Carrion Crow Bayou in lower Terrebonne 

Parish, the company obtained a state permit to maintain 

the bayou bank that had been badly damaged by 

Hurricane Andrew in 1992. 

“We’ve just completed inspecting that area after 

Hurricanes Katrina and Rita and are encouraged to learn 

that there has been no major damage,” Coulon said. 

No one expects deep onshore gas-drilling activity in 

Louisiana to return to 1960s levels, yet Louisiana remains 

prospective for deep onshore gas. The state has an estimated 

9.3 Tcf of dry natural gas reserves in onshore and state offshore 

regions. Much of this gas is in deep reservoirs. 

Today, a lot of the big news in deep onshore gas 

involves new drilling in old fields. The Patterson field is 

an example. Discovered in 1951 by Sun, the once prolific 

producer in St. Mary Parish saw its production decline by 

1997 to less than 2 MMcf/d and 20 b/d of condensate. 

Devon Energy became a major player in the field 

through acquiring Pennzoil’s interests. Using 3-D seismic 

data previously acquired by Pennzoil and CNG Producing 

(now Dominion), Devon in 1999 drilled the Zenor A-16 

discovery well into the lower Miocene sands of the Marg A 

formation. Reaching a TD of 18,500ft (5,643m), the well 

was completed back to a major discovery zone between 

16,900ft and 17,000ft (5,155m and 51,85m). The well 

came on production in 2000 at more than 20 MMcf/d of 

gas and 365 b/d of condensate. It was still a strong producer 

38 



when Devon sold it in May of this year, having produced a 

cumulative 26 Bcf of gas and 340,000 bbl of condensate. 

By May 2004, field production rates had reached 46 

MMcf/d of gas and 1,110 b/d of condensate. Early this year, 

Devon completed its latest discovery, the Grazzaffi-Vial No. 1 

well. Drilled to more than 18,500ft and perforated between 

16,835ft and 16,902ft (5,135m and 5,155m), it came on stream 

in March this year and within 6 weeks was producing nearly 7 

MMcf/d and 4,290 b/d of gas and condensate, respectively. 

“We are very bullish on oil and gas opportunities in south 

Louisiana,” said Andy Bittson, senior geophysical advisor for 

Devon. “One could be intimidated by the sheer number of fields 

that have been found there and their size. But there haven’t been 

that many wells deeper than 17,000ft, and the good news is that 

the deep wells still encounter sands at the maximum depths 

with extraordinary reservoir quality, permeabilities and porosities 

– sands that hold large, sustainable sources of production.” 

Based on available nationwide industry data, Bittson noted, 37 

of the top 100 onshore gas wells in the lower 48 states with sustained 

production averaging 10 MMcf/d or more are in Louisiana. 

Burlington Resources has substantial involvement in south 

Louisiana deep gas production. The company operates more 

than 30 wells at 15,000ft or greater at Bay St. Elaine, Caillou 

Island, Four Isle Dome and Pass des Illettes, all in Terrebonne 

Parish; and Garden City, Lake Arthur and other fields. Its 

many non-operated deep gas wells include some at more than 

18,000ft (5,490m) at the Ramos field in Assumption Parish. In 

addition to its area production group, Burlington this year 

established an exploration unit to focus on south Louisiana. 

“We still see quality reservoir potential at these deeper 

depths,” said Steve Western, manager, U.S. Conventional 

Resource Exploration. “It’s attractive to us that of all the wells 

the industry has drilled in south Louisiana, only 3% have 

gone below 17,000ft and three-tenths of 1% below 20,000ft.” 

Large new gas sources may also be found in conjunction 

with major liquids discoveries also can be notable for their 

gas-producing capabilities. The much-discussed 1999 

Etouffe discovery south of Kent Bayou in western Terrebone 

Parish by Union Pacific Resources (later merged into 

Anadarko) found large condensate and gas reserves between 

about 18,650ft and 18,950ft (5,688m and 5,780m). Though 

liquids are dominant in the five-well field’s total production, 

it has now produced more than 90 Bcf of gas. 

Lafayette-based PetroQuest Energy is another company 

focusing on deep Louisiana gas sources. PetroQuest is participating 

in two deep tests this year – a company-operated well 

(Photo courtesy of PetroQuest Energy) 

A barge-mounted rig prepares to drill a well in south Louisiana 

marshland. 

at 18,500ft (5,643m) in Cameron Parish and a second well at 

19,500ft (5,948m) in Terrebonne Parish. These follow three 

successful producers between 12,500ft and 14,000ft (3,813m 

and 4,720m) brought on line during the year in Terrebonne 

Parish with two more wells planned in that depth range. 

“South Louisiana continues to be an attractive basin, and we 

continue to focus part of our capital budget there,” said Todd 

Zehnder, PetroQuest vice president of corporate communications. 

Deep gas drilling also is proceeding vigorously in the Arkla 

Basin, as confirmed by Anadarko’s successful development 

effort in the Vernon field (dating to the late 1960s) of Jackson 

Parish. The more than 250 wells the company has drilled since 

becoming operator in 1999 have been in the greater-than- 

15,000–ft range (see Gas Country makes Louisiana History, 

which discusses north Louisiana). 

Statewide, the broadest basis for optimism about onshore 

deep gas, as Sprehe notes, is probably this: “Our geologic column 

of sedimentary rock in north Louisiana is about 30,000ft 

(9,150m) thick, and in south Louisiana, it increases to 

50,000ft (1,5250m). In the north, we are just now drilling and 

making good production at 15,000ft, while in the south, we 

are doing it at 20,000ft (6,100m). That means half or more of 

the geologic column statewide has yet to be exploited.” 

Given this energy potential and the prospective benefits to the 

industry, including Louisiana’s workforce, to the state and consumers 

everywhere, the words “deep” and “gas” are likely to have a 

strong association in Louisiana onshore drilling for many years. 

The author wishes to thank Curtis Smith, senior geoscience consultant, 

IHS Energy, Houston, for valuable statistical assistance 

on this article. 


Chapter 6 • Gas Country 

(Photo courtesy of Louisiana State Oil & Gas Museum) 

At one time, 278 offshore wells dotted Caddo Lake. This photograph was taken around 1920. 

Natural gas made a name for itself in northern Louisiana 

“ even before the newcomers ‘found’ it.” 

40 


Gas Country makes 

Louisiana History 

By Don Lyle, Executive Editor, E&P 

Oil and gas operations 

provided steady work 

for the crews that built 

rigs and pipelines in 

northern Louisiana. 

Northern Louisiana’s rich reserves created 

a booming natural gas market. 

Oil City’s quiet streets and wellgroomed 

park along the railroad 

track mask the past of a wide-open 

boomtown with all the rags-to-riches-to-rags 

history of boomtowns from Sutter’s 

Mill, Calif., to Rhyolite, Nev., to Central City, 

Colo., to Nome, Alaska. 

Gold created the booms in those towns, just 

as oil made a boomtown of Beaumont, Texas, 

after the Spindletop discovery in 1901. In a 

way, Spindletop also gave birth to the oil play 

that created Oil City north of Mooringsport in 

northwestern Louisiana and started Louisiana’s 

prolific natural gas industry 100 years ago. 

First gas 

Natural gas made a name for itself in northern 

Louisiana even before the newcomers “found” 

it. Local Kadohadaccho Indian stories talked 

about fire on the water around Lake Caddo in 

Caddo Parish. 


The first commercial use of gas in Louisiana 

apparently occurred in Shreveport when a 

night watchman in an ice plant on North 

Market Street accidentally located a seep in a 

water well in 1870. The company later used the 

gas to light the plant. 

Local farmers considered the hydrocarbons a 

nuisance when they invaded and contaminated 

wells the farmers drilled to find fresh water. 

Then along came Spindletop with more production 

from a single field than the rest of the 

nation’s wells combined, and enterprising investors 

began to see potential rather than nuisance. 

A year later, Ellison M. Adger of Belcher, on 

the southeastern corner of what later became 

Caddo-Pine Island field, tried to drill wells to 

water his livestock and kept finding salt water 

at 400ft (122m). He sent soil samples from the 

wells to the U.S. Geological Survey (USGS), 

and experts told him he could expect to find oil 

or gas at 1,000ft (305m). Other farmers faced 

the same situation. 

It was up to Judge S.C. Fullilove, D.C. 

Richardson and Ira G. Hedrick of Shreveport 

to get the ball rolling. They leased land 

near the Surry and Ananias rail stops 

north of Caddo Lake, an area that later 

became Oil City. 

The No. 1 Offenhauser produced in 

1905, but the first big well didn’t come 

on stream until May, said Coe 

Haygood, curator of the Louisiana 

State Oil & Gas Museum in Oil City, 

referring to Early Louisiana & Arkansas 

Oil: 1901-1946 by Kenny Frank and 

Paul Lambert Jennings. 

Blowouts 

That well, the Producers No. 2, hit 

a shallower Nacatoch formation gas 




Rig construction crews were the busiest people in the state when 

Caddo-Pine Island was at its peak. 

pocket that created a mud volcano big enough to sink the 

derrick and everything else lying nearby. 

That’s the reason the oil industry almost didn’t get started in 

Caddo Parish, she said. The oil wells produced gas at huge 

volumes and pressures. Blowouts were frequent, and operators 

had to solve the gas problem before they could produce the oil. 

The Producers Oil Co. (later Texaco) Harrell No. 7 probably 

is the best known of the Caddo field blowouts. That well 

burned for several years, long enough to lower the pressure of 

many other wells in the Oil City District. The railroad 

brought passengers from Shreveport to the site near Oil City 

to view the blowout. Even when the fire was out, the pond of 

muddy water in Section 7-21n-16w continued to surge and 

churn with the strong gas flow. 

The company finally stopped it by drilling a parallel well to 

relieve the pressure and smothering the flow with mud. 

Early fire fighting efforts also took shape at the Star Oil 

Co. No. 3 blowout on the Loucks lease. Crews extinguished 

the fire by driving a truck into the flames, forcing the end of 

a pipe over the connection at the top of the casing and flowing 

the oil off to a bermed storage pit. 

Geology 

That first-humble, then-spectacular beginning led to exploration 

that resulted in a gas field some people called the 

largest in the world at one time. Forces working at right 

angles caused a series of anticlines and synclines that acted as 

efficient traps, according to the USGS Bulletin 619, The 

Caddo Oil and Gas Field, Louisiana and Texas, written by 

George Charlton Matson in 1916. 

The field included the Mooringsport, Oil City, Jeems Bayou, 

Monterrey, Hart’s Ferry, Vivian, Black Bayou and Pine Island 

districts in nearly all of Caddo Parish, and in eastern Marion 

County and northeastern Harrison County in Texas, although 

the Texas branch of the field was never a great production area. 

The primary producing formation, the Nacotoch, ranged 

from less than 100ft (30m) thick in the southern 

Mooringsport District to more than 200ft (61m) thick in 

some places toward the northern end. Nacotoch sand is found 

in every commercial well in the area. 

The boom wasn’t immediate. By 1907, only 23 wells had 

been drilled in Caddo field, eight were successful oil wells and 

11 were successful gas wells. Production jumped to 50,000 bbl 

of oil in 1907 from 3,358 bbl the previous year. 

The following year, Caddo field was flowing enough gas 

that operators built Louisiana’s first natural gas pipeline to 

move the gas to the nearest population center at Shreveport. 

Also in 1907, exploration took a more scientific approach as 

J. B. McCann, an employee of Guffy Oil Co. (later Gulf Oil 

Co.) tried to map the extent of potential pay in the area by 

tracing escaping gas across Lake Caddo by boat. Even today 

it’s possible to see gas bubbling up through the lake’s water. 

That was an important first step to a landmark event. 

Offshore wells 

By 1911, most of the countryside around Caddo Lake had 

been drilled or leased for drilling. Gulf Refining took the next 

step by drilling the world’s first offshore well – the Ferry No. 1 

– in Caddo Lake. It drilled seven more offshore wells that year. 

Operators in California had been drilling offshore wells from 

piers extended from the mainland for about 15 years by that time, 

but the Caddo Lake wells had no visible connection to the shore. 

H.A. Melat, drilling superintendent for Gulf, invented a 

rig set on pilings that could be floated to well sites by tugs and 

supported by barges. The offshore industry was born. 

Gulf began building platforms with a goal of installing a permanent 

platform every 600ft (183m) on 10-acre spacing 

throughout the lake. Most of the original wooden platforms are 

gone, but many production platforms still flow gas, and small 

pumpjacks on offshore platforms still move oil to shore around 

the lake. A tender dock where Jeems Bayou flows into the lake 

still takes care of maintenance work on the offshore wells. 

42 



Eventually, 278 wells dotted the lake, and they produced 

more than 13 million bbl of oil and associated gas during a 

40-year period. Producers dammed up the lake to keep the 

water level high enough to continue drilling. 

Boomtown 

In the early days of the Caddo Lake play, workers lived in 

Shreveport and commuted daily by train to the stop at Ananias, 

which later became Oil City. By 1910, Oil City had grown to a 

bustling boomtown of 25,000 people. It was the first boomtown 

in the Arkansas/Lousiana/Texas area, and it was a good one. 

Land prices had climbed from $0.50 to $500 an acre in a 

year, according to the Caddo-Pine Island Historical Society. 

It even had its own red light district called Reno Hill, just 

east of the railroad track. 

Reno Hill lasted until the 1920s when a group of men 

showed up in cars – two men to a car. They parked at the 

depot, walked across the tracks and started handing out pamphlets 

throughout Reno Hill, then they left. 

The next day, most of the population of Reno Hill stood on 

the platform at the train station waiting for the southbound 

train to take them away. 

The group of men was from the Ku Klux Klan, Haygood 

said, and they closed down Reno Hill. 

Trees City 

The Ku Klux Klan wasn’t the only group that didn’t approve of 

the killings, injuries and wide-open living in Oil City. Oilfield 

veterans Mike Benedum and Joe Trees had followed the growth 

of the oil industry through the eastern states and had moved in 

on the Caddo Lake-Pine Island boom in 1908. They had seen 

boomtowns before, and they didn’t like what they saw. 

They established Trees City (later shortened to Trees) a few 

miles from Oil City near the Texas border. The city grew 

from tents to wooden homes and businesses. It had at least 

one bar, but the two veterans banned prostitution. Most of 

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Trees City is gone, but it still claims a few residents, and the 

bank has been moved to Oil City where it is part of the 

Louisiana State Oil & Gas Museum. 

As part of their legacy to the area, the seasoned oilmen 

advanced local technology. They saw people killed by 

blowouts, and they started the practice of cementing wells to 

minimize gas leaks. 

Benedum and Trees made a good living by finding and 

developing production and then selling it to subsidiaries of the 

old Standard Oil monopoly. Caddo Lake was no exception. 

Before any pipelines were built from the Caddo Lake 

fields, operators had to ship their oil by rail or they couldn’t 

sell it, and Standard Oil owned the railroad. 

Shortly after the two men announced they planned to build 

their own refinery, a man came to Oil City on the train. 

Haygood said her mother told her the man traveled to Trees 

City, visited the bank and left a deposit of $1 million as a 

down payment on the Benedum-Trees properties. 

The two men reportedly sold the oil from their properties 

for $10 million, Haygood said, but they kept the natural gas 

for their Arkansas Fuel Oil Co. 

That didn’t seem like such a great deal at the time, since gas 

glutted the market. The price didn’t go over $0.25/Mcf until 

the 1970s, said Murray E. Moore, a veteran geologist in Oil 

City with his own company, Memco Exploration & 

Production LLC. 

2,350ft (717m), and the company used the water for the nation’s 

first natatorium, complete with an electric sign that announced, 

“The water is free.” 

Monroe field 

The successful well stirred the imagination of Louis Lock, a 

Russian immigrant who had opened a plumbing and heating 

business on South Grand Street in Monroe in 1910. Lock’s 

company was hired to build a pipeline to pipe fresh water into 

Corpus Christi, Texas, in 1915. He became interested in a 

drilling company there that was successfully drilling for gas. 

He hired J.H. Hampton to lease 13,500 acres of land in 

Morehouse Parish early in 1916. 

Lock, in need of money, sold half of his interest in the 

13,500 acres and a half-interest in any future land acquisitions 

to Casper for $500. 

After some starts and stops, they hired Lucky Bob Allison, 

a veteran of Red River oilfield, drilling near Caddo Lake. 

Allison said he would build a rig with a 112-ft (34-m) derrick 

and drill the well for $14,000, but he wanted to pick the 

spot at the chosen location. He flipped a half-dollar, watched 

it fall on what he called a gas bump and started building. 

Lock and Casper hastily formed Progressive Oil Co. with 

several residents to meet the first payment of $5,000. The 

remainder of the $14,000 was due when the well hit 3,000ft 

(915m) or when oil or commercial gas was found. 

Bumpy road 

The boom in and around Caddo Lake touched off 

more exploration in northern Louisiana, but Green 

B. Hayes Sr., who bought acreage near Cheniere in 

Ouachita Parish for his sawmill, had more foresight 

that even the Caddo Lake pioneers, according to an 

article by Louis Casper in The Monroyan newspaper 

called “The Romance of Gas.” 

He started drilling in Section 11-17n-2e. The 

hole caved in at 400ft (122m). He brought in a 

rotary rig and found a small gas pocket at 900ft 

(275m). The crew lost a fish in the hole at 1,300ft 

(397m) and had to abandon the well. 

Nine years later, A.A. Forsythe, mayor of 

Monroe, drilled a well at Forsythe Park. He found 

enough gas to light about 50 light posts in the park 

and heat water for showers in the bathhouse, and 

two nearby residents later tapped into the supply. 

The gas came from a salt-water formation at 


The need for northern Louisiana natural gas in surrounding cities and states 

created work for pipeline gangs like this one working for The Texas Co. 

44 



The company hosted a barbecue at the well site to try to 

raise the money. It rained that day, and they didn’t sell one 

share of stock. 

Allison continued drilling, and Sept. 3, 1916, at 2,275ft 

(694m), the Spyker No. 1 in Section 9-20n-5e hit a gas kick so 

strong it nearly blew the drillstring out of the hole, Casper wrote. 

They sold out all their stock at twice the pre-blowout price. 

Berney Oakland, in “Development of the Gas Industry,” 

also written for The Monroyan, estimated the open flow at 2.5 

MMcf/d. 

“It was but a short time before the woods were full of derricks,” 

Casper wrote. 

The industry drilled 13 more wells in 1917, and two companies 

produced gas for use in the city July 14 of that year. 

Oachita Parish had much more gas than it could use locally. 

The industry was able to attract the carbon black industry to 

the city, and that industry supplied much of the money for the 

further development of Monroe field. 

“Land values soared; royalties on land put ready cash into 

the landowners’ pockets; hundreds of men were given steady 

employment; and the parish and city tax collections mounted 

in proportion, thus enabling the parishes to construct good 

roads and affording the city the luxury of paved streets, better 

schools, etc.,” Oakland wrote. 

A movement against the use of natural gas to produce carbon 

led the state to reduce carbon production to 35% of premovement 

levels. Much of the produced gas had no place to 

go. Higher taxes on the remaining carbon black plants further 

lowered gas demand. 

By 1925, however, the Louisiana Power and Light Co. built 

a huge electricity generation plant at Sterlington, and 

Monroe gas fed the generators that provided electricity for 

parts of Louisiana, Arkansas and Mississippi. With all four 

generators on line, the plant used 30 MMcf/d of gas to supply 

electricity to 610,000 people in 442 cities and towns. 

At the same time gas pipeline systems through the South and 

Midwest took gas to St. Louis, Memphis, Atlanta, Birmingham, 

Dallas and Houston and New Orleans. 

The field spread into Union and Morehouse parishes. In 

1927, the field had an open-flow capacity of 3.48 Bcf/d, 

wrote William F. Chisholm, director of the Division of 

Minerals. In February 1928, it had 514 wells capable of producing 

and 426 actually producing. The field had produced 

132.9 Bcf of gas in 1927 for a cumulative total of 728.2 Bcf. 

Moving to more modern times, Louisiana’s largest gas field 

has produced more than 7.3 Tcf of gas. 

Rise and fall 

The Eighth Biennial Report of the Louisiana Department of 

Conservation for 1926 to 1928 offers some perspective on the 

peak years of the oil and gas boom in northern Louisiana. 

Chisholm wrote that Mexican oil imports were declining, 

but imports from Venezuela were climbing. Meanwhile new 

discoveries from Seminole field in Oklahoma and Yates field 

in West Texas were flooding the market. New fields in Baku, 

Azerbaijan, also were helping to push prices downward. 

Caddo Parish generated 2,694 permits to drill. The next closest 

competitor was Claiborne Parish with 2,341 permits, thanks 

to Haynesville field. 

Conservation 

Early attempts to conserve gas rather than venting it to produce oil 

took place in 1921 and 1922 in Monroe field. The state promoted 

repair of faulty wells and the elimination of fraudulent production 

records and gas metering in 1923. It fully applied the state law 

for recording and controlling gas production in 1925 and 1926. 

Once the state got Monroe field organized, it turned its 

attention to the older areas, particularly the Caddo Parish area. 

State inspectors gauged new wells when they came in and 

started sealing in orifice plates. The division started getting 

accurate measurements of gas production for the first time. 

Decline 

From 1924 through 1926, Louisiana ranked fourth in the nation 

among gas producing states, ahead of Texas but behind 

Oklahoma, California and West Virginia. Texas took over the 

fourth spot in 1926. For comparison, Louisiana produced 159 Bcf 

of gas in 1926, compared with 285 Bcf for Oklahoma, 205 Bcf for 

California, 180 Bcf for West Virginia and 175 Bcf for Texas. 

Northern Louisiana gas, however, was declining. 

“The northwest Louisiana gas fields, in Caddo, De Soto, 

Red River, Webster and Bossier parishes are showing the 

effects of heavy withdrawal. The large volume of gas already 

wasted (by flaring) in the Pine Island Trinity leaves little hope 

for relief from that source,” Chisholm wrote. 

Among other prominent gas fields in the area were Waskom 

gas field on the border with Texas in Caddo Parish and Harrison 

County, Texas; De Soto-Red River fields in Red River 

Parish; and Elm Grove field in Bossier and Caddo parishes. 

Cotton Valley field was discovered in 1923 with a central 

gas area surrounded by an oil ring. The only gas well completed 

in the 4,600-ft (1,403-m) Trinity by 1928 tested at 54.65 

MMcf/d of gas. 



Anadarko Petroleum Corp. found a winner in Vernon field as it chased 

the Bossier pay from Texas into northern Louisiana. 

(Photo courtesy of Anadarko Petroleum Corp.) 

Among other fields were Gleason in Webster Parish; 

Spring Hill in Bossier and Webster parishes; and Carterville 

and Sikes fields in Winn Parish. 

Richland field’s northern boundary is in Richland Parish 

about 10 miles (16 km) southeast of the southern edge of 

Monroe field. 

Caddo-Pine Island, Haynesville and most of the earlier 

fields produced casinghead gas along with oil, particularly in 

the early years. In more recent years, production leaned more 

toward dry gas. 

According to IHS Energy, Caddo-Pine Island produced 

6.55 Bcf of gas in 1965 with 5.55 Bcf of that being casinghead 

gas. By 2003, gas production had slipped to 950 MMcf 

with 235 MMcf casinghead gas. 

Monroe, however, was a pure gas play. It produced 93.99 

Bcf of dry gas in 1965 and still produced 7.91 Bcf of gas in 

2003 as it declined. 

Moving forward 

Northern Louisiana remained a major participant in the gas 

production roughly into the 1950s. Texaco, Amoco and Gulf 

still were big players in the Caddo-Pine Island area. 

By that time, however, southern Louisiana was going 

strong, and Kerr-McGee Corp. had drilled the first well out of 

sight of land offshore Louisiana in the Gulf of Mexico. The 

majors sold out to larger independents and went looking for 

bigger fields in other places, said geologist Murray Moore. 

Most of the production in the Caddo-Pine Island area 

comes from mom-and-pop operations run by operators with 

little geological exploration capability. 

New opportunities 

Anadarko Petroleum Corp. moved into northern Louisiana 

natural gas in a big way as it chased its highly successful 

Bossier play in Texas across the border. Existing Vernon field 

became a big addition to the company’s portfolio. 

“It was an acquisition opportunity, and Anadarko recognized 

that the area had the potential to be a Bossier-type 

play,” said Tom Rushing, production manager for East Gulf 

Coast/Vernon for Anadarko. 

Anadarko had drilled more than 700 wells and discovered 

Dew Mimms and Dowdy Ranch fields in Texas. Peak production 

reached 300 MMcf/d of gas. 

Vernon offered similar potential for the company. 

Since Anadarko bought the field in late 1999, it has drilled 

more than 250 wells. Production has increased from less than 

10 MMcf/d to more than 320 MMcf/d producing from more 

than 2 Tcf of gross gas reserves. 

The wells cost about $3.5 million to drill, but the learning 

curve has helped. 

The success rate doesn’t hurt the profit column, either. So 

far, Anadarko has posted a success rate greater than 95%. 

Northern Louisiana may not be the gas powerhouse it once 

was, but the potential for big gas plays remain and independents 

like Anadarko have the resources and determination to 

find and develop those plays. 

46 


Chapter 7 • Gas Infrastructure 

Pipe welder prepares to lay down finished welding passes on an 8-in. natural gas pipeline that ran from Lamken to 

Hodge, La., in 1927. It was believed to be the first major welded pipeline in the United States. 

“ 

Each move into a new geographic province required considerable 

change in operational philosophy as well as in the science 

supporting the exploration and development activity.” 

48 


(Photo courtesy of The Lincoln Electric Co.) 

The Brown & Root derrick 

barge L.T. Brolin lifts a 

deck section onto a platform 

jacket in Louisiana’s 

Grande Isle Block 43. 

Building a Gas Infrastructure 

By Bruce Beaubouef, Senior Editor, PipeLine and Gas Technology 

The industry has adapted its production 

and transportation facilities 

to operate in Louisiana’s challenging 

environments. 

Natural gas was first discovered in the 

state of Louisiana in 1870, when a 

night watchman at an ice plant in 

Shreveport accidentally discovered 

natural gas emanating from an artesian water 

well when he struck a match. Recognizing the 

opportunity the nearby fuel source provided, 

plant operators piped the gas to the plant for 

illumination. It was the first use in the state of 

the fuel that today heats the majority of 

Louisiana homes and places of business. 

As gas demand increased and new markets 

developed, operators recognized the need to 

build the necessary infrastructure to find, produce 

and deliver that gas. In Louisiana, that 

would mean building the necessary rigs, 

pipelines and ships needed to produce and 

transport the gas from the state’s wetland and 

offshore areas. 

That infrastructure has followed the industry 

from its beginnings onshore into lakes, marshes 

and other bodies of water, and finally offshore 

and into deep water. Each move into a 

new geographic province required considerable 

change in operational philosophy as well as in 

the science supporting the exploration and 

development activity. New frontiers were 

explored as technology changed or was developed 

to meet the industry’s needs. 

In 1908, gas was discovered at the Caddo 

field, and four companies began development 

there to deliver it to towns and cities throughout 

the region. They included: 

• Arkansas Natural Gas Co., which built a 

pipeline to Little Rock and also supplied 

23 other Arkansas communities; 

• Southwestern Gas & Electric Co., which 

transported gas to Mooringsport, Blanchard, 

Caddo, Rodessa, Oil City, Vivian, 

Bloomburg, Hosston, Ida, Dixie, Belcher 

and Shreveport; 

• The Marshall Gas Co., which provided 

gas to Marshall, Texas; and 

• The Louisiana Co., which built a pipeline 

to Shreveport. 

These companies pioneered the marketing of 

natural gas from the Caddo field. They were later 

joined by other pipeline firms, such as United Gas 

Public Service Co., Arkansas-Louisiana Natural 

Gas Co., Standard Pipe Line Co., and Dixie Oil, 

Gas and Pipe Line Co. 

An even larger find 

was made in 1916 at the 

Monroe gas field, which 

came to be called “the 

largest gas field in the 

world.” Some of the gas 

from the field was distributed 

to the communities 

of Monroe, West 

Monroe, Bastrop and 

Collinston, which was 

followed by the discovery 

of the prolific 

Haynesville gas field in 

(Photo courtesy of Halliburton/KBR) 



(Photo courtesy of Panhandle Energy Corp.) 

In July 1981, Panhandle Eastern Corp. (now Panhandle Energy Corp.) completed 

construction of a liquefied natural gas (LNG) terminal facility about 9 

miles southwest of Lake Charles, including a special dock for LNG tankers. 

1921. In subsequent years, the gas industry had begun to 

develop in Central Louisiana, with the discovery of the Olla 

field in LaSalle Parish. By 1926, Louisiana was the nation’s 

fifth-leading gas producer, at 159 Bcf/year. 

As northern Louisiana’s boom got under way, it was necessary 

to build more pipelines to carry the gas to market. Laying 

pipelines through the thick undergrowth was not easy. In 1918, 

the Terrebonne Gas Co. built a natural gas line consisting of 4- 

in. and 6-in. pipe from the Lirette gas field (completed in 1917 

and considered at the time the largest gas producer in the 

world) to Houma, and the five sugar mills surrounding the 

community. This was one of south Louisiana’s first pipelines. 

By the mid-1920s, it was possible to build long-distance 

pipelines that could carry gas from source to market, many 

miles away. During 1926 and 1927, two major natural gas 

pipelines were laid from Louisiana into Texas – one to the 

Houston district on the Gulf Coast, and one to Dallas and 

Forth Worth. One new line was laid to the El Dorado district 

in southern Arkansas with an extension to Camden. By 1928, 

there were more than 1,200 miles (1,931 km) of gas pipelines 

criss-crossing the state, usually ranging between 4-in. and 22-in. 

in diameter. Markets included carbon black plants, oil refineries, 

paper mills and gas and power utilities within the state as 

well as interstate markets, notably in Texas and Arkansas. 

By the 1930s, Louisiana had become the nation’s fourthlargest 

gas producer. Nearly 85% of this production came 

from the Monroe/Richland fields in the northern part of the 

state. With growing demand and advanced construction 

techniques and materials, the state’s pipeline network had 

grown considerably. The Caddo Lake field, along with 23 

other gas producing fields and associated pipeline system, had 

become the backbone of a system that served Vicksburg, 

Jackson, Meridian, Birmingham, Atlanta, El Dorado, 

Camden, Pine Bluff, Memphis, St. Louis, Dallas, 

Fort Worth, Houston, Beaumont and numerous 

other communities. These pipelines gave birth to 

the principal means of moving natural gas to market, 

guaranteeing a market and increasing the 

demand and price of the product. 

By the mid-1950s, gas from several fields 

throughout southern Louisiana was being moved 

across the United States to meet demand from 

Midwest and Northeast markets. In October 1951, 

Trunkline Gas Supply Co. completed work on a 

740-mile (1,191-km), 20-in. to 26-in. pipeline that 

moved natural gas from the Louisiana Gulf Coast 

to Tuscola, Ill. Trunkline was a subsidiary of Panhandle 

Eastern Pipe Line Co.; and by connecting with its system in 

at Tuscola, Trunkline was able to access markets in Indiana, 

Michigan and Ohio. In 1954, Gulf Interstate Gas Co. built a 

1,150-mile (1,850-km), 30-in. pipeline to carry gas from the 

Louisiana Gulf Coast to West Virginia, connecting it to the 

Columbia Gas Transmission Co. system. In 1956, the 

American Louisiana Pipe Line Co. completed a 1,073-mile 

(1,726-km), 30-in. pipeline that delivered gas to Detroit. This 

line later became part of the ANR Pipeline Co. system. These 

long-distance pipelines were key examples of the ways in 

which, in the post-World War II era, Louisiana helped meet 

the nation’s gas demand. 

As the state’s gas grid developed, operators became familiar 

with installing pipelines in wetlands and other water bodies. In 

1941, United Gas Pipe Line Co. pioneered laying a submersible 

line when they built their line from the Lirette field to 

Mobile – knowledge they later applied to the Gulf of Mexico. 

As early as 1951, it cost as much as $1 million per mile to 

build a pipeline across Louisiana’s wetland. The “Muskrat” 

line was one of the best examples of the challenges of laying 

pipelines in a wetland environment. This 355-mile (571-km) 

natural gas pipeline, owned by the Tennessee Gas 

Transmission Co., crossed 130 navigable bodies of water, 

including the Mississippi River, Atchafalaya River and Wax 

Lake outlet. Eighty percent of its right-of-way was under 

water, with the line extending from the Gulf of Mexico in the 

Mississippi River delta to a point near Crowley, La. 

Wetlands exploration 

In these early years, promising wetlands fields were often 

impossible to develop because of a lack of transportation 

infrastructure. There were no railroads or highways, and the 

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(Photo courtesy of the Louisiana Department of Natural Resources) 

With the state’s numerous bodies of water, companies that operated in 

Louisiana often had to develop unique ways of accessing the most prominent 

gas fields. 

land was so wet and soft that construction of an overland 

route was impossible. To get to promising sites, water-based 

transportation was critical. The Intracoastal Waterway and 

the region’s bayous became important transportation arteries 

to many south Louisiana gas fields; they were the companies’ 

lifeline and supply corridors. 

If natural waterways were not available, canals were excavated. 

Dredging, therefore, became an important factor in 

wetland exploration and development activity. Suction or 

bucket dredges were used to cut channels through the 

swamps and marshes. To build an interconnecting canal system, 

dredgers sometimes had to remove more than a million 

cubic feet of material per mile. The waste material was piled 

along the sides of the canals to form high levees. Pipeline corridors 

were also cut through the marsh peats. With time, 

canal and pipeline rights-of-way represented a maze of tributary 

routes that coalesced into an integrated, complex network 

of transport arteries. Canals provided access, and 

motorboats furnished the transportation. 

Boats and barges were essential for drilling activities. 

Barges were also needed for testing undeveloped areas, to 

house compressor units and as living quarters for roustabout 

crews. Companies also used barges as warehouse and wellservice 

facilities, and platforms for drilling support equipment. 

These barges were one element in a company’s flotilla 

of watercraft required to operate their wetland properties. 

Until the 1930s, however, the industry had not yet 

developed a practical wetlands drilling platform. 

Engineers had tried everything that might support 

the required load, but pilings sank out of sight in 

bottomless quagmires of quicksand known locally as 

“floatant.” To operate economically in Louisiana’s 

wetlands, companies needed a quick and easy way to 

move on site, rig-up and start drilling without going 

through the time-consuming process of erecting 

heavy and awkward wooden mats supported by pilings. 

Drilling contractors needed a portable, shallow-draft 

drilling platform, one that would be stable 

enough to hold a derrick, power supply and drilling 

equipment. The solution came in 1928, when Louis 

Giliasso patented a submersible drilling barge. The 

rig was divided into compartments that, when 

flooded, brought the unit to rest on the bottom of 

the lake or marsh. The barge could be refloated by 

pumping the water out again and moved to another 

site, in a relatively quick and easy process. The derrick 

and drilling outfit was permanently mounted on the 

barge, so it was no longer necessary to assemble and dismantle 

them for every boring. 

Officials of the Texas Co. (Texaco) considered the design 

perfect to explore their large lease holdings in southern 

Louisiana, and rights to the design. In 1933, the company 

used the barge in their Lake Barre operation, beginning a 

new era in petroleum exploration in wetland environments. 

The technique was a success. In the Lake Barre field, one well 

was completed in an afternoon, and the rig was moved to 

another location and spudded in the following day, at an estimated 

savings of $75,000 over the conventional piling foundation 

technique. Wells produced at Lake Barre by Texaco’s 

floating drilling barge Giliasso significantly added to the 

field’s production. 

Moving offshore 

The first attempt was made in 1933 to drill a well in the Gulf 

of Mexico. This endeavor from a platform on timber pilings 

was in 12ft (about 4m) of water, about 3,000ft (915m) off 

Creole in Cameron Parish. It was a dry hole, but nevertheless 

began interest in offshore drilling. Four years later, the Pure 

Oil and Superior Oil companies completed a well 6,000ft 

(1,830m) offshore from Creole, in 14ft (4m) of water. 

Supported by a wooden platform island, the offshore industry 

was born. 

52 



The following 9 years brought a series of steps into deeper 

water, further from the shoreline. It was not until 1947 that a 

consortium of Kerr-McGee, Phillips Petroleum Co., and the 

Stanolind Oil and Gas Co., successfully completed a well 

out-of-sight of land, about 10 miles (16 km) from shore, and 

about 45 miles (72 km) south of Morgan City. Civil engineers 

realized wood pilings were unacceptable, so this well was 

completed using a converted naval vessel. Within 7 years after 

Kerr-McGee’s initial discovery, operators had extended the 

offshore frontier to 50 miles (80 km) and were hitting hydrocarbons 

on 25% of the exploration wells drilled. By 1955, 

there were more than 40 offshore rigs operating in the Gulf. 

In the late 1940s and early 1950s, operators used converted 

conventional ships and barges, sometimes in conjunction with 

yard freighters and tenders. These vessels, however, were often 

constrained by limited water depths and other operational 

challenges, such as hurricanes, high winds, corrosion, anchor 

fatigue and lengthening supply lines, which pushed up costs. 

By the mid-1950s, the industry had developed several types of 

mobile drilling rigs to facilitate offshore exploration, notably the 

submersible, jackup and floating rig. These new offshore drilling 

rigs lowered the cost structure of exploratory marine drilling and 

extended water depth capabilities. They satisfied several criteria: 

no fixed structures, mobility under average weather conditions, 

short time horizons for rigging up and drilling, and the ability to 

withstand wind and wave forces and poor soil conditions. 

Submersibles of the 1950s era, however, soon began to 

reach their limits. They could not be used beyond 80-ft (24-m) 

water depths, and building them larger for deeper water was 

expensive. The number of regular submersibles in operation 

in the Gulf reached 30 by 1958 but began to decline thereafter. 

By the mid-to-late 1950s, the elevating deck or jackup 

rig emerged as the preferred design for drilling between 75-ft 

and 150-ft (23-m and 46-m) depths. About 30 jackups were 

in operation by 1960. New rigs were built at a fast pace in the 

1960s and were eventually modified with legs slanted outward 

for stability in rougher weather. 

By the early 1960s, the industry had developed the semisubmersible 

drilling rig, which consisted of a braced assembly 

of large cylinders that were connected to a drilling deck. The 

cylinders could be ballasted down far enough to minimize 

pitching and rolling, allowing the rigs to operate in rougher 

and deeper water. The old drillships were also replaced by 

purpose-built, self-propelled vessels with dynamic positioning. 

These and other technological advances enabled operators 

to venture further offshore and into greater depths. 

Moving into deep water 

By the mid-1990s, the lure of large finds, coupled with new 

incentives and rising prices, helped renew operator interest in the 

deepwater Gulf of Mexico. The move into deep water provided a 

considerable economic boost for the state, as long-term contracts 

for the rigs capable of drilling in these areas grew significantly. 

In 1993, the number of rotary rigs operating offshore 

Louisiana overtook the number of rigs operating onshore, a trend 

that continued until 2004, when the number of onshore rigs overtook 

those operating in Louisiana’s offshore waters. 

In 1996, there were nine rigs operating in the Gulf that were 

capable of drilling in 2,500-ft (763-m) waters, compared to five 

Crosstex Set to 

Become Major Player 

Dallas-based midstream energy services company Crosstex Energy has 

become a leading player in the U.S. natural gas industry; and, during 

the past 2 years, has increased its presence in Louisiana. 

Formed in 1996 by a management-led buyout of Comstock Natural 

Gas, Crosstex has operations in South and North Texas, and throughout 

Louisiana. Its assets include 50 gas pipeline systems comprising 

more than 4,500 miles (7,241 km) of pipelines, about 100 gas-treating 

plants, eight gas-processing plants, and more than 1.9 Bcf/d of 

facility throughput and marketed volumes. 

Last April, it acquired Louisiana Intrastate Gas (LIG) to develop its 

South Louisiana position. With the deal, Crosstex acquired LIG 

Pipeline Co. and its subsidiaries (LIG, Inc., Louisiana Intrastate Gas Co. 

LLC., LIG Chemical Co., LIG Liquids Co. LLC and Tuscaloosa Pipeline 

Co.) from American Electric Power. 

In May, Crosstex announced a significant expansion of the 

Crosstex/LIG pipeline in northwest Louisiana, which will allow it to 

receive up to 700 MMcf/d. This gas will be delivered by a new interstate 

pipeline, to be constructed by Kinder Morgan. In August, Crosstex 

announced its largest acquisition, agreeing to buy El Paso’s gas-processing 

and liquids businesses in South Louisiana for $500 million. 

This deal is expected to double the processing size of the company, 

as well as its cash flow, and make Crosstex one of the largest 

pipeline operators in Louisiana with the largest plant position in the 

state. Even more important, the El Paso assets provide Crosstex the 

opportunity to participate in handling growing production from the 

deepwater Gulf of Mexico and, longer term, the gas streams to come 

from expanding liquefied natural gas shipments along the Gulf Coast. 

The acquired assets include 2 Bcf/d of processing capacity; 66,000 

b/d of fractionating capacity; 2.4 million bbl of underground storage 

facilities; and 140 miles (225 km) of liquids transport lines. The largest 

asset is a gas-processing plant with capacity of 1.2 Bcf/d at Eunice, 

northwest of Lafayette. 



the previous year. Shipyards were upgrading other rigs for 

deepwater operation, and service companies were demanding 

the highest day rates seen in more than 20 years. The increase 

in deepwater drilling activities had created a short supply. 

Semisubmersibles and drillships were being contracted for 

extended terms. Offshore contractors were busily engaged in 

new construction and rig conversions to increase rig inventory. 

Entering the 21st century, nearly 100% of the usable rigs were 

in service. Other rigs, originally designed to work in waters no 

deeper than 800ft (80m), were converted to handle depths of 

down to 4,500ft (1,373m). Demand for drilling rigs began to 

outstrip available supply. As the year 2000 approached, contractors 

were busy building new mobile drilling units, and virtually 

every fabrication facility in Louisiana, and along the Gulf coast, 

was working at or near capacity. 

Offshore pipelines 

While offshore oil could be shipped to market by barge, as on 

land, natural gas produced offshore had to be transported via 

pipeline. In 1950, the first gas pipeline offshore Louisiana was 

built off Vermilion Parish, and in 1951, the United Gas Pipe 

Line Co. made history by completing a large-diameter (20-in.) 

line from the Eugene Island area to shore. The line was 25 

miles (40 km) in length, and designed to move 1 Bcf/d of gas. 

It was also the longest line of any size constructed offshore. A 

floating task force was required to build and lay the big submarine 

line under a minimum of 5ft (about 2m) of cover. Derrick 

barges, laying barges, winch barges, tugboats, speedboats, crewboats 

and airplanes were used in the installation process. 

In 1966, Shell laid what was then the world’s deepest 

pipeline, at a depth of 275ft (84m) in the Gulf of Mexico. In 

1974, the 228-mile (367-m) Stingray line – built at a cost of 

The world’s first LNG tanker, the Methane Pioneer, set sail from 

Lake Charles to deliver liquefied gas to Canvey Island, in the 

United Kingdom, in 1959. 

(Photo courtesy of Shell) 

$161 million, and designed to carry 1 Bcf/d of natural gas – 

was put into service, connecting 17 offshore blocks to a tie-in 

at Holly Beach, La. The offshore pipeline industry was born 

and served as the basis for an intricate pipeline web that connects 

these offshore supplies to the market. 

Louisiana now has a vast pipeline network, designed to 

move natural gas from offshore and onshore producing areas 

to various markets throughout the state and nation. This 

includes an estimated 25,000 miles (40,225 km) of pipe moving 

natural gas through interstate pipelines, and some 7,600 

miles (12,228 km) of pipelines that carry natural gas through 

intrastate pipelines to users within the state’s boundaries. 

Louisiana’s Henry Hub, near the town of Erath in Vermilion 

Parish, has become the largest centralized point for natural gas 

spot and futures trading in the United States. Owned and operated 

by Sabine Pipe Line LLC, the hub interconnects nine interstate 

and four intrastate pipelines, including Acadian, Columbia 

Gulf, Dow, Equitable (Jefferson Island), Koch Gateway, LRC, 

Natural Gas Pipe Line, Sea Robin, Southern Natural, Texas Gas, 

Transco, Trunkline and Sabine’s mainline. Collectively, these 

pipelines provide access to markets in the Midwest, Northeast, 

Southeast and Gulf Coast regions of the United States. About 

49% of U.S. wellhead production occurs near the Henry Hub or 

passes close to it as it moves to downstream consumption markets. 

LNG and marine transport 

From its beginning, Louisiana has been an important part of the 

international liquefied natural gas (LNG) trade. In 1959, the 

first LNG tanker set sail from Lake Charles to deliver liquefied 

gas to Canvey Island, in the United Kingdom. The vessel, the 

Methane Pioneer, was a converted World War II liberty freight 

which contained five 7,000-bbl aluminum prismatic tanks with 

balsa wood supports, insulated with plywood and urethane. The 

voyage demonstrated that large quantities of LNG could be 

transported safely across the ocean, as did seven additional cargoes 

carried by the Methane Pioneer to Canvey Island. 

In July 1981, anticipating LNG imports into the United 

States, Panhandle Eastern Corp. completed construction of an 

LNG terminal facility about 9 miles (14 km) southwest of Lake 

Charles. It included a special dock for LNG tankers, unloading 

equipment, a regasification facility and a pipeline connecting it 

to the Trunkline system as well as three storage tanks each capable 

of holding 600,000 bbl of LNG. 

Trunkline has recently announced plans to expand the 

facility, to almost double its send-out capacity and significantly 

increase its storage capability. 

54 


GLOBAL VIEW 

LOCAL INSIGHT 

LOCAL INSIGHT BACKED BY GLOBAL EXPERTISE 

In more than 75 years of working with clients around the world, Schlumberger 

has learned a lot about the importance of local insight and ingenuity. We live 

where we work, and as a result, have a vested interest in finding solutions to 

local challenges. 

Schlumberger has continuously operated in Louisiana since 1930, and today 

we’re one of the largest employers in the area’s offshore energy business. 

We’ll return to our regional headquarters in New Orleans as soon as possible, 

and we’ll continue to live and work here, hiring locally and developing local 

talent. 

It’s been a proud history. And we look forward to a bright future in Louisiana. 

www.slb.com 

05-OF-304

Chapter 8 • Industry Pioneers 


Mature production remains an important part of 

Louisiana’s oil and gas production. 

56 


A Century of Pioneers 

By Bertie Taylor, Associate Editor, Oil and Gas Investor This Week 

The story of Louisiana oil and gas is 

shaped by the efforts of hundreds of 

innovative, entrepreneurial people 

who, starting in the mid-1850s, decided 

they wanted careers in energy. 

The people of this era, who built the 

industry up and dedicated their lives to 

working in it, had no means of estimating 

their future successes or failures, 

just as they had no way of knowing how important 

their contributions would become to the 

state of Louisiana and the energy business. 

One of the definitions of a pioneer is “one 

who opens, or prepares for others to follow.” 

These pioneers of Louisiana oil and gas came 

into the business when, in its infancy, there 

wasn’t much money to be made, and there was 

often work to be done from sunrise to sunset. 

Though they fidget just a bit at being called 

pioneers, their achievements and perseverance 

say the title and its meanings are well deserved. 

Earl Burke, age 73 and a native of New 

Orleans, has been an independent producer for 

46 years. He went to Tulane University on a 

football scholarship, and after graduating as a 

geology major, he went on to work for F. A. 

Callery Inc., an independent oil and gas exploration 

company owned by Lehman Brothers, 

from 1954 to 1959. He then formed Pel-Tex Oil 

Co. with just $5,000 in 1959 and completed his 

first discovery in January 1960, the Trull field in 

Matagorda County, Texas. Burke’s career 

includes more than 500 drilled wells that have 

yielded 87 new discoveries onshore and offshore 

within the Gulf Coast of Texas and Louisiana. 

“When I first went to work as a geologist, I 

didn’t know anything about the business, but I 

soon learned. The oil business was moving and 

changing rapidly. Of course, the technology back 

then was inferior compared to what it is today, 

but the opportunities were wide open. Anyone 

who had good, sound geologic prospects and the 

knowledge to get things done had an open field. 

When I went [out] on my own in 1959, gas was 

selling for $0.14/MMBtu,” he said. 

When he graduated from St. Aloysius High 

School, Burke went to work for the California 

Oil Co. (now Chevron) as a roughneck at the 

newly discovered Bay Marchand field in the 

Gulf of Mexico southwest of Grand Isle, La. 

“It was June 2, 1950, when we arrived by crew 

boat at a newly constructed platform at Bay 

Marchand, and the rig builders were building two 

conventional derricks on this huge platform. I did 

not realize it, but I was looking at history unfolding 

because this was the first offshore platform in 

the world that would have two rigs drilling simultaneously 

on a single platform,” he said. 

In 1974, Burke made a significant discovery 

with The Superior Oil Co., the Kaplan field in 

Vermilion Parish, La. 

“We drilled the discovery well to 20,800ft 

(6,344m) and logged six productive horizons, 

the deepest of which was the Miogypsinoides 

sand at 19,400ft (5,917m). This was a big discovery 

for Pel-Tex. Gas was selling between 

$0.75 and $0.85/MMBtu at the time. Union 

Carbide was in need of gas (for feed stocks) for 

various chemical plants they were operating in 

the Gulf Coast, and I was able to make a deal 

to sell Union Carbide 50 Bcf for $1/MMBtu. 

This set a new world record, but it did not last 

very long,” he said. 

Burke has drilled 127 wells below 15,000ft 

(4,575m) and completed 63. He has drilled 17 

wells below 20,000ft and completed seven, and 

most were before 3-D seismic. 

He believes the deep section below 15,000ft 

onshore south Louisiana and the shelf of the 

Gulf of Mexico is in a very early stage of exploration 

and will eventually yield as much new gas 

to be discovered as that which has already been 

produced from the same areas above 15,000ft. 



“I have always been fascinated 

with the sciences, especially geology, 

and I know that I have been 

very fortunate to have had the 

opportunity to spend my life doing 

the work I love,” he said. 

Fellow pioneer Paul Hilliard 

agrees that the early years of oil 

and gas in Louisiana were exciting 

times. Born in 1925 in Sandburr 

Coulee, Buffalo County, Wis., his 

Burke 

foray into the business began as a 

landman with Chevron in 1951. 

“It was like being on a different planet,” Hilliard said. 

“The first gas I ever sold was probably for about $0.11. I got 

into a deal in the late 1950s, and by then it was up to $0.16. 

I believe I was an independent for 16 years before wellhead 

prices of natural gas ever hit $0.20 and oil hit $3, on average. 

This was driven to a great extent by percentage depletion, 

which was about 27.5%. We also had very high tax 

rates. So I think that a lot of the money that came into the 

exploration industry was not running toward profit but running 

from the IRS. 

“Anybody who says it wasn’t an 

exciting time must have been 

asleep. I’ve always found it to be an 

exciting, wonderful business. I can’t 

imagine what it would be like to get 

up in the morning and go sell shoes 

or something instead of looking for 

oil and gas. As an independent, you 

never really leave your office. 

Whether you’re behind the wheel 

of a car or on an airplane – whatever 

you’re doing you’re always 

Hilliard 

thinking about the business.” 

He added that the industry was much bigger in the 1950s. 

It went from 70 or 80 exploration companies in the 1950s and 

1960s in Lafayette to just six or seven today that drill two or 

three wells each year, thanks to consolidation and geological 

shifts. “Production in Louisiana now is a third of what it was 

then. The whole world has opened up to exploration now. 

Some of it’s politically volatile and hazardous but nevertheless, 

it’s open and it’s much more international. Back then 

‘internationally’ primarily meant the Middle East, but now 

it’s all over the world,” Hilliard said, adding that being an 

independent had its challenges. “Price was a huge issue and so 

was access. As a small independent, major landowners didn’t 

want anything to do with you – they wouldn’t even let you in 

the door. Now they come looking for you. South Louisiana 

was made up of some huge landowners and the bidding for 

state lands was very competitive. It was also challenging to 

find capital. Now, that’s reversed. There’s plenty of capital – 

you just have to find the prospects.” 

He said anybody who survives in this business qualifies as a 

pioneer. During his first full year of business, the rig count 

dropped and continued to fall for 16 years straight. 

“So, in effect, the industry started its decline the same year I 

became an independent – so how’s that for timing?” he asked. 

He later got involved with the Independent Petroleum 

Association of America and helped develop an independent 

association in Louisiana. At one point he was president of the 

Louisiana group and a national chairman. 

“I enjoyed that association work because you got to connect 

with your peers and you learned from them,” Hilliard said. “I 

fooled around a bit with other businesses, but I think that the 

integrity and the reliability of the people in the oil and gas 

exploration industry is the finest in the world. And how 

would you like to be drilling a well if your average service 

company acted like the local 

plumber or electrician? I have to 

take my hat off to the service and 

supply companies in this business, 

because when folks talk about us 

drilling wells, we don’t. The service 

and supply companies do.” 

The service and supply companies, 

along with technology innovations, 

have been key in helping 

Louisiana gas and oil continue its 

course of steady growth. Edward Horton 

Horton, president of Deepwater 

Technologies Inc., fondly known as the “Grandfather of Spar 

Technology,” is one of the many people whose contributions 

have allowed exploration activities to flourish in Louisiana 

and beyond. 

For the past 40 years, his professional career has centered on 

offshore drilling and production engineering. His most recent 

work involves developing new types of spar-surface platforms 

and related systems. He also focuses on hydrodynamics, structural 

engineering, economics and safety. Previously, he was 

president at Houston-based Deep Oil Technology Inc. and a 

58 



vice president at Global Marine Development Inc. While he 

does not consider himself to be a specialist, he says he knows 

“something about the technical problems involved in developing 

offshore fields in very deep water.” 

His career began as a field engineer with Standard Oil of 

California (Socal). Before that, he was in the U.S. Navy for 4 

years, and said anything was a challenge to somebody just 

getting out, including the oil and gas business. 

“But it was never boring,” Horton said. “It was definitely 

something new and different, but it wasn’t a business where a 

man like me was likely to rise to a higher station in life. I had 

no relative ability – the extent of my knowledge of oil and gas 

was looking at the movie “Boomtown” and seeing Clark 

Gable and Spencer Tracy drilling a gusher and making a bundle. 

All of my experience came hands on, and I think people 

miss a lot when they don’t do it that way.” 

Like others who worked offshore, it was something he 

wanted to do early on. 

“I was always interested in the offshore business, but at that 

time, the opportunities in Socal to go offshore were quite limited 

because they were just getting started. But after about 3 years, I 

had an opportunity to go to the National Academy of Sciences 

and get involved with the initial phase of the Mohole project.” 

In early 1960, he found himself in Washington D.C. 

working with a small group of engineers assessing the feasibility 

of drilling through the earth’s crust to reach the mantle. 

Drilling from a ship in the deep sea (15,000ft), the bit would 

have to penetrate 15,000ft into the seafloor. Drilling on land 

would require 50,000ft (15,250m). 

“We chose the sea knowing that the first 15,000ft would be 

easy. Two years later, we were testing the feasibility off the 

coast of Mexico in 13,000ft (3,965m) of water with Globals 

Manne’s drilling barge C.U.S.S. outfitted with dynamic positioning. 

It was pretty exciting then. Oil was $3/bbl, and offshore 

drilling was carried out in water depths up to a few 

hundred feet. Wooden derricks in Venice, Calif., were lined 

up right next to each other. We used to say ‘He who didn’t 

pump it all would lose it all,’” he laughed. 

The group he was working with eventually formed a new company 

called Ocean Science and Engineering, and its first contract 

was to evaluate the potential for diamonds off West Africa. 

“That was another adventure,” Horton said, “but I’d say 

there are definitely ways that I’ve helped move things forward 

in the business, mainly in technology and the offshore end of 

things. There was the work I did with Ocean Science, but 

later I also formed Deep Oil Technology. 

“My most significant accomplishment at Deep Oil was 

getting the companies to test a tension-leg platform. We built 

a 110-ft (34-m) model off the coast in California on the 

seaboard side of Catalina Island. We had 12 or 13 oil companies 

that were in support of it, and it was really the forerunner 

for the tension-leg that Conoco built. I feel like I was 

instrumental with moving that concept forward.” 

Since then, Horton has participated in developing subsea wells 

risers, and more recently deepwater drilling and production spars. 

While he says he’s had moments of career frustration 

throughout the years, he has never thought he was crazy for 

sticking with it. 

“I started off very early, and thought I knew all that I needed 

to know,” Horton said. “I was wrong of course. But for me, it 

was never about seeing how much money I could make. I also 

always knew that I wanted to work for a small group and do 

interesting things. I never wanted somebody to be able to 

walk up to me and say ‘find another job.’” 

He added that the business today is still definitely moving 

forward, and there are still better and more talented pioneers 

out there making it happen. 

“They’re just less visible because the industry has grown so 

big and so capital intensive. The penalty for a miscue is enormous. 

But the ‘boomtowns’ spirit lives on, hopefully without 

the gusher,” he said. 

John E. Chance grew up chopping 

wood in the back woods of 

East Texas. At 19, he was on the 

front lines during the Battle of the 

Bulge where he nearly lost his legs 

from mortar shrapnel. After an 11- 

month stay in the hospital, he 

returned to Texas and enrolled in 

the civil engineering program at the 

University of Texas, where he 

learned about surveying. 

After graduating, Chance landed Chance 

a job in Sun Oil Co.’s surveying 

department. 

“We did gravity surveys and staked locations for new drill 

sites. Then the oil companies started contracting out their 

survey work,” he recalled. 

In 1957, Chance left Sun Oil and started his own surveying 

company, John E. Chance & Associates. As the years 

went by, Chance was not only providing land oil and gas surveys, 

but also surveys in the developing Gulf of Mexico 

60 



market. He took advantage of newly developed electronic distance 

measurement equipment that allowed him to survey 

distances of up to 30 miles (48 km) in a single reading. 

“We ended up having survey points on platforms all over the 

Gulf. Then when someone needed survey work [there], we 

were ready because we had the survey control in place,” he said. 

Since the 1960s, Chance has been involved with the vast 

majority of surveys done in the Gulf of Mexico. His crews 

have positioned drill rigs, pipeline barges and dive boats for 

years. In the 1970s, he added high-resolution geophysical 

survey capability to his arsenal of services. Chance even built 

a fleet of vessels to support his survey operations. 

Apart from the company itself, Chance says his greatest 

achievement was the development of the Starfix satellite 

positioning system. While global positioning satellite (GPS) 

was still in its infancy providing satellite coverage a few hours 

a day, Starfix offered 24-hour a day satellite positioning capability 

with instantaneous updates. 

“[It] was a major breakthrough,” Chance said. “It allowed 

seismic vessels to operate around the clock with better positioning 

accuracy.” 

In 1991, Chance sold his company to Dutch-based Fugro. 

The following year, two of Chance’s sons, Thomas and Jim, 

followed in their father’s footsteps and started their own surveying 

company, C&C Technologies. C&C, now a full-service 

survey company, is an industry leader in autonomous 

underwater vehicle operations and state-of-the-art worldwide 

digital GPS services. 

In considering the way the energy business used to operate, 

Chance said bureaucracy has increased. 

“The oil industry doesn’t work on a handshake like it used 

to,” he said. “The lawyers, accountants and purchasing people 

have too much power. This has surely driven up the costs for 

everyone, [but] there are just as many opportunities today as 

there were years ago.” 

Chance, now 81, has retired. He lives in Lafayette, La., 

with Joretta, his wife of 55 years. Chance enjoys his 20 grandchildren 

and three great-grandchildren. During the week he 

also enjoys visiting with his sons at the company. 

“I guess I just can’t get away from the surveying business!” 

he laughed. 

Alden J. “Doc” LaBorde is best known for designing the 

firtst submersible, transportable drilling rig, called Mr. Charlie 

that revamped the offshore drilling business. 

He was born in St. Martinville, La., on Dec. 18, 1915. 

Following some time in the U.S. Navy in the 1940s, he was 

released from active duty in 1945. 

Though he quickly found a job as a 

helper with a seismic crew in his 

hometown, he eventually channeled 

his naval experience toward 

the growing offshore oil industry 

off the Gulf Coast. 

“I worked for this seismic crew 

long enough to decide that [it] 

wasn’t a really great future as far as 

the oil business was concerned and LaBorde 

I went to work for an independent 

named Sid Richardson, later Richardson & Bass,” LaBorde 

said. “He was starting to work down in the marshes of South 

Louisiana, and he was building a new what we call swamp 

barge – [a] submersible barge for the marsh operations—and 

mistakenly he thought he might need some guy with naval 

experience to help him. That wasn’t necessarily so, but at least 

my background was in the Navy.” 

He then went down to New Orleans where he worked in 

the marshes of Plaquemines Parish. Being in charge of the 

boats, barges and maintenance of the rig unit itself exposed 

LaBorde to the drilling side of the business. 

“I made something of a nuisance of myself. [I was] asking a 

lot of questions about it, [and] became interested in it,” he said. 

After about a year, he heard about the gangs of operations 

offshore and thought that he would have more of an advantage 

working there instead of in the marsh. 

“I went to Morgan City where Kerr-McGee had established 

their shore base for their oilfield operations and they 

already had a rig working offshore. Their approach to it was 

kind of an Oklahoma approach if you will – just set up a 

drilling rig on a platform, then try to do it as if it were on dry 

land. But a marine environment doesn’t necessarily respond to 

that,” LaBorde said. “You’ve got to allow for the seas, storms 

and other things. Needless to say they were having a lot of 

difficulty. Shrimp boats would supply all the rigs, and war 

surplus vessels would take a landing craft tank that adapted 

itself very nicely for servicing oilfield rigs, in that it had a flat 

deck [in] which they used to haul tanks around. Anyway, they 

were delighted to turn all of the headaches of that marine 

operation over to me, and they gave me the title of marine 

superintendent, and I took over there in Morgan City.” 

His career hit a crossroad when Kerr-McGee declined to 

build his barge. 

After about 4 years with the company, LaBorde tried to 



Louisiana can legitimately claim to be the cradle of the offshore oil industry with the first well 

drilled out of sight of land in 1947, a photo of which is shown earlier in this supplement. 

convince Dean McGee that building a movable drilling rig 

was a good idea. 

“He wasn’t quite ready, [and] we quarreled [about whether] 

it was necessary,” LaBorde said. “He didn’t know if it would 

work very well or not, and he just wasn’t ready to do it, so I 

told him I would resign and try to promote it, which I did.” 

LaBorde quit and connected with Charles Murphy Jr. of 

Murphy Oil Co. in El Dorado, Ark., who was looking for 

technology that would let his small company compete with 

bigger offshore drillers. He pledged funding to LaBorde’s 

design and helped to round up additional investors. They 

named their company Ocean Drilling & Exploration Co. 

From there, they built the first offshore moveable rig, Mr. 

Charlie named after Murphy Oil head Charles Murphy. 

Many industry skeptics questioned whether LaBorde’s rig 

would submerge upright, but Shell Oil eventually hired the 

rig to drill a series of wells at the mouth of the Mississippi 

River. After successfully drilling the first well for Shell, Mr. 

Charlie went on to drill for 30 more years, and Odeco built 

numerous variations of the rig’s original design. 

LaBorde soon suggested boats be designed specifically for 

the offshore service business. The most drastic change from 

the conventional design was to move the living quarters as 

well as the pilot house and controls forward on the vessel, 

which left the whole deck and stern completely clear for 

cargo. LaBorde said people probably thought he was crazy . 

“Odeco was about a year old, and the rig was just out in 


1954 when I thought we should undertake 

building one of these boats – 

Tidewater-type boats. We didn’t think 

of doing it within Odeco, [and] I wanted 

to do it in a separate entity. So I got 

about 10 people together, and we each 

put up $10,000 as I remember.” 

With the help of one of his brothers 

and some friends, they raised the initial 

$100,000 and made a deal with 

Alexander Shipyard in New Orleans. 

The first boat cost about $125,000. 

“When it came out it went to work, and 

it was apparent it would be the right 

thing. So immediately another company, 

I think Shell Oil, asked us to build 

another one of those things. We named 

the first one Ebb TIDE. We immediately 

ordered a duplicate, the Rip Tide, and 

got it going,” he said. 

The Tidewater Marine Service Co. was formed to service 

mobile rigs, and the company grew to be one of the world’s 

largest offshore vessel operators. 

“It became obvious that there was a whole future in this business 

because other companies were inquiring about boats of that 

kind. Banks were willing to go along. So, by now I am out of it, 

and they were looking around for management. They talked to 

my younger brother, John, who was a lawyer and a landman 

working for Richardson & Bass, and somewhat to my surprise, 

my older brother suggested that he thought John might be a 

good guy to run the company. So he resigned his job at 

Richardson & Bass and came over as president of Tidewater,” 

LaBorde said. “While I remain very interested from a personal 

standpoint, I had no financial interest in the company after that, 

but my brothers were involved, and I was very proud to see it 

grow and become the large company it now is.” 

LaBorde’s vision and ideas – along with great timing – 

allowed him to build a series of successes in the offshore 

industry, right from the beginning. 

“I think that’s right, and I think I realized as much. As far 

as visualizing that Odeco was going to become the world’s 

largest offshore drilling contractor before I got out of it or 

that Tidewater was going to become this big boat company 

that it became – I did not have that kind of vision,” he said. 

“It was more hand to mouth, try to make a living and these 

things just come along and happen to you.” 

62 



LaBorde gives a great deal of credit to his brother, John, for 

keeping Tidewater going. “My brother John has certainly done 

a remarkable job, especially with the reservations we had when 

he went into it. I wouldn’t want to pass up the opportunity of 

giving them full credit for what they have done,” he said. 

Even though he is the founder of Odeco, Tidewater and Gulf 

Island Fabrication, he is quite modest about how each came to be. 

“It just kind of happened one thing at a time. Mostly you do 

something that isn’t very smart – like the frog that fell into the 

bowl of cream and didn’t know what to do, so he paddled 

around until the next thing you know he’s sitting on a ball of 

butter,” he said. “As far as having designed it or planned it that 

way, I think a lot of things in life just happen to you. [We] 

make the small decisions about what we wear or what we eat 

and all that. But the big decisions like who you marry and live 

with the rest of your life or where you go or those things, what 

you do for a living are hardly accidental or coincidental.” 

As to the direction of the offshore industry, he prefers not to 

overanalyze the future. “[Offshore has] gotten so expensive,” he 

said. “That first drilling rig, Mr. Charlie, cost $2 million, and now 

they are spending like $500 million on a rig. It boggles my mind 

– that you can work a rig and pay for it with those kinds of prices. 

On the other hand, with the situation in the world, the oil business 

is such that I don’t know where it is going. The price of oil is 

$65 and natural gas $9 the last time I looked. It is mind-boggling 

and too crazy to even think about. I suppose they could make it 

all fit. We seem to be running short of fuel and trying to change 

the whole environment and the world. I don’t know where it is 

going to go. I have no vision about it – take it as it comes.” 

LaBorde retired in 1977 at age 61. He has been a director 

at Gulf Island Fabrication Inc. in Houma, La., since 1985 

and was chairman of the board from 1985 to April 2001. On 

April 1, 1985, he was selected by Fortune magazine for 

induction into the National Business Hall of Fame. 

Rutledge Deas joined the oil 

and gas business on a bit of luck – 

much to his family’s consternation. 

Now the president of Louisianabased 

South Oak Production, he 

said the decision to work in oil and 

gas wasn’t a hard one. 

“I was living in Shreveport when 

Deas 

an old friend of mine, Pete Couch, 

called me and said he was quitting 

his position in West Texas and that he understood that I wasn’t 

happy in my own position,” Deas said. “He said that if I came 

out there he could probably get me a job, so I did it. I was single 

and I had a car that was paid for so I just left. Most of my 

friends in Shreveport in the business were engineers. I had not 

grown up in Shreveport, so I didn’t have an energy background 

as such although my father knew the business. Long ago he was 

a vice president at Woodley Petroleum.” 

Deas went on to work in West Texas, where he also roughnecked 

all across the area. Out in Scurry County, he found 

himself picking the top of the reef for R.E. Bob Smith, one 

of the famous wildcatters of the time period. He has made 

discoveries and extensions in LaSalle and Quachita parishes 

in Louisiana and Union County, Ark. Together with Dalton 

Woods, of Shreveport and based on superb subsurface geology 

by Prentis Boatner, they made a significant discovery in 

the Smackover formation in Union Parish, La. His extensions 

to Valentine field and Lapeyrouse field, both with geologist 

C.W. Dobie in the 1970s, were career high points. 

“There’s nothing negative to say about the business at that 

time,” Deas said. “I was learning and the men I associated 

with were great. It was hard work and the people that you 

worked with were very ethical – none of this was boomtown 

time. The wells got completed; there was no spoilage and no 

oil running all over the ground. 

“[But] now it’s more difficult to enter and proceed from the 

place where I entered it, with no money, only to become a sole 

proprietor. Back then was a lot of fun, though. People were 

enthusiastic about being involved. Landowners were anxious 

to get a fair price but nothing more. The structuring costs 

were much lower then. Oil was only $3/bbl, so the cost of 

everything was lower because of that. Today prospects are 

fewer and structuring things is more difficult. Landowners 

are also more difficult to deal with.” 

While Deas has several discoveries under his belt, he credits 

having a good geological team as key. 

“I want to say that geology is the key to success in the oil 

and gas business. I have had the great fortune of being 

involved with some superb, creative geologists as partners – 

that’s my secret,” he said. “Today I’m investing with people I 

know in areas that I know.” 

He later worked with the land department at The 

Carter Oil Co. before he went on to do landman-broker work 

in Shreveport. 

“I had quit at Carter and was buying leases for third parties 

doing daywork at $35/day. At that time, I entered into an 

association with George Belchic Jr., Bob McDowell and 

Philip Bloomer,” he said. “Those discoveries that we had in 

64 



south Arkansas and Louisiana were critical to my future. The 

discoveries we made are still producing today. They were the 

formation of what I was able to do later on.” 

He said he has always wanted to be a sole proprietor and 

never had an interest in going public, “…but today, I don’t 

know that you can do it otherwise. The accumulation and 

aggregation of capital is so critical today that without public 

support it is very difficult, and it opens the door to financing 

that an individual doesn’t have to start.” 

Though naysayers persist in doubting where the oil and 

gas business may be in 50 years, Deas encourages optimism 

and excitement. 

“This is still a fascinating industry and it has so many disciplines,” 

he said. “Consequently, it’s a business that still needs creativity 

and it needs it all over the world. Mergers and acquisitions 

have become prominent as has the need for the aggregation of 

capital, but there is still a place for imagination, risk and hard work. 

“I’ve made a good living, but you’re not talking to a rich 

man. I don’t even know that I’m wealthy, but I’m comfortable. 

I’ve raised five children and had a marriage that’s 54 years old, 

and those are my accomplishments,” he said. 

He added that he has been honored by this industry and his 

peers and, like many of the pioneers before him, said if he 

could do it all over again, he’d still be in Louisiana oil and gas. 

“My association with people from the highest to the lowest 

has been a gift to me. There have been no ethical problems in 

this business because it has been built on handshakes,” he said. 

“It’s superb.Though contracts are the norm today, we still honor 

the handshake. It’s been an honor to work in this industry, and 

I feel like the luckiest man in the world.” Rutledge enjoys flyfishing 

and does as much as he can in Wyoming and Montana. 

Many who work in this business say its foundations began 

and continue with innovative, honorable people. From land 

developers and exploration and production founders to innovators 

of technology, here are a few others who helped make 

Louisiana oil and gas the thriving industry it is today. 

Walter Scott Heywood 

Walter Scott Heywood, born in Cleveland, Ohio, on May 21, 

1872, was a famous oil wildcatter in California, Texas and 

Louisiana. In 1893, he visited the Florence, Colo., oilfield 

while on tour with his brother’s band. After deciding the oil 

industry offered a better future than playing in a band, he and 

his wife decided to stay in Hanford, Calif., in Fresno County. 

In the 1890s, he started oil companies in Fresno and San 

Francisco to develop oil leases in those areas. Heywood caught 


Early pioneers faced hardship and danger to develop Louisiana’s 

rich oil and gas resources. 

wind of the oil discoveries being made at Beaumont, Texas, and 

headed for the area with two of his brothers in tow. Once there, 

they leased a 15-acre site in the Spindletop oilfield from the 

Higgins Oil Co. Their first well brought in about 15,000 b/d 

of crude oil. They quickly signed a deal with a company called 

Guffy and Gaily to sell 4,000 b/d at $0.20/bbl. It was about this 

time that the Heywood Brothers Oil Co. was formed and started 

selling oil to steam-plant operators in Louisiana and Texas. 

Two more brothers, Alba and O. W. Heywood, joined Walter 

to sell oil and manage the property. The second Heywood well 

was brought online in May 1901, and was the largest well in 

the United States during that time. It produced 148,000 b/d 

and was still producing a year later at a rate of 7,000 b/d. 

After the second well, the brothers started to get requests to 

do contract drilling for local oil companies, so they organized 

the drilling partnerships of Heywood Brothers and Dobbins 

and Heywood Brothers and Harper. In 1901, two businessmen 

from Jennings, La., who, with several other men, had 

formed a co-partnership and pooled their land and leases near 

Jennings, approached Walter Heywood. In April of that year, 

the brothers signed a deal with S. A. Spencer and Co. to 

organize the Jennings Oil Co. The well they built was in a rice 

field and, although it kept clogging up with sand and had to 

be abandoned, it was the first well in the state of Louisiana. 

Heywood then struck a deal with five Jennings businessmen to 

organize the Jennings-Heywood Oil Syndicate. All of the leases 

and lands were transferred to the new company and the stock was 

divided between Heywood Brothers and the businessmen. The 

new syndicate was capitalized at $10,000 with 10,000 shares selling 

for $1 each. In 1908, Heywood Brothers entered an agree- 



ment with Gulf Refining Co. that allowed Gulf to operate all of 

the Heywood Brothers Jennings oil leases, and Walter Heywood 

kept his position as president of the syndicate. In June 1929, 

Heywood became the personal representative of Gov. Huey Long 

at the National Governors’ meeting held in Colorado Springs, 

Colo. At that time, Heywood, along with the other independent 

oil producers in attendance, organized the Independent 

Petroleum Association of America. Heywood was a charter 

member and a director for the state of Louisiana. 

He quit active drilling for health reasons in 1936 and sold 

his personal wells and leases but retained his duties at 

Jennings Oil Co. and the Jennings-Heywood Oil Syndicate. 

He passed away in Jennings, La., on Nov. 28, 1950. 

Michael L. Benedum 

Oilman Michael “The Great Wildcatter” Benedum was born in 

Bridgeport, W. Va., in 1869. His career in energy began in 1890 

when he met John Worthington, the general superintendent of 

the South Penn Oil Co., a subsidiary of Standard Oil of New 

Jersey. After a brief meeting, Worthington hired Benedum as a 

landman. Six years later, Benedum left South Penn and began 

to operate as an independent oil producer. In 1897, he met 

Joseph Clifton Trees, the man who would eventually become his 

business partner. Together the pair discovered and developed 

oilfields in Illinois, West Virginia, Louisiana (the great Caddo 

field); the Tuxpam in Mexico; de Mares in Colombia; and the 

Desdemona, Big Lake, Yates, East White Point, Susan Peak 

and Benavides in Texas. The discovery of Big Lake field in 

1923 on University of Texas land took advantage of the 

resources in the Permian Basin, which opened in 1920.The first 

well in Benedum field, the Alford No. 1, which was reclassified 

as a gas field, was completed Jan. 4, 1948, at 12,011ft (3,663m) 

by Slick-Urschel Oil Co. 

The two men, who formed Shreveport-based Trees Oil Co., 

are said to have touched off an oil rush in Louisiana with the 

Caddo Lake discovery, which also gave birth to several boomtowns. 

In response to the poor living conditions their workers 

suffered, the men elected to build their own town to protect 

their employees from outsiders and reign in unlawful antics. 

The community, called Trees, was free of saloons and gambling 

dens, and was the first oil-employee refuge of its kind. 

Benedum’s generous donations helped establish one of the 

world’s large constitutional permanent university funds. During 

his lifetime, he made a fortune in the oil and gas business, earning 

him the title of one of the 100 wealthiest Americans in his 

time. In 1944, he and his wife established the Claude 

Worthington Benedum Foundation in memory of their only 

son, who died in 1918 at age 20. Benedum passed away in 1959. 

Maurice Heymann 

Maurice Heymann was born in New Orleans on Aug. 17, 

1885. As a young man, he held a variety of jobs to include that 

of a butcher boy on a train and a local eyeglass salesman. He 

ran his own five-and-dime store, played piano at a silent movie 

theatre and was appointed superintendent of an Indian reservation 

in Tucson, Ariz. In the 1920s, he organized several fundraising 

efforts for public and parochial schools, helped establish 

a clinic for disabled children in Lafayette and also helped 

launch a relief fund for victims of the flood in 1927. After 

World War II, he donated land and time to build the Lafayette 

General Hospital, the Lafayette Municipal Auditorium, the 

U.S.L. Art Center and the Bishop’s Seminary. 

Oilmen soon began to voice the need for office space for burgeoning 

oil companies in Lafayette, so in 1952, Heymann took 

property that once was a nursery and began to build what is 

now the Oil Center. The industry reacted positively to the idea 

of being close together, as many of the companies regularly did 

business with one another. The move was still risky; however, 

as other investors were nervous about leasing property to oil 

companies, wary of the ‘boom and bust’ cycle that plagued the 

energy business. Heymann nonetheless began building the 

center without having signed contracts to occupy the buildings. 

After a few major companies signed on, others followed, and 

by 1960, the local offices most of the major American oil companies 

were in Heymann’s development or nearby. Today, it is 

still the center of the south Louisiana petroleum industry. 

These same companies eventually realized the need for a meeting 

place to discuss business, and Heymann later formed the 

Petroleum Club of Lafayette. In 1955, the club’s members created 

a bi-annual, non-profit exposition known as The Louisiana 

Gulf Coast Oil Exposition, which further strengthened 

Louisiana’s historical position as a hub for oil and gas exploration. 

Claude “Doc” Pennington 

Claude B. “Doc” Pennington was a laborer in the oil and gas 

business as a young man. While he eventually decided to follow 

his father’s lead and become an optometrist, his interest in 

energy was unyielding. He eventually closed up his business 

and turned to the oil and gas industry to make a living. He 

learned about geology by consulting with several geologists and 

was able to raise money by borrowing from friends to drill wells 

on prospects he had leased. After finding oil in the Darrow and 

66 



Lobdell fields in Louisiana, he took an interest in the mineral 

rights of the Port Hudson structure north of Baton Rouge. 

In 1957, he went to see Edward Eagle Brown, chairman of 

the First National Bank of Chicago, about buying a lease on 

the property, since Brown owned a thousand-acre plantation 

there. After some negotiation, Brown sold him the property 

instead for $400,000. Pennington scraped up $100,000 in 

cash, and Brown’s bank loaned him the rest at 4.5% interest. 

After the sale Pennington and his son, C.B. Pennington Jr., 

approached Chevron about drilling on the land, but the company 

turned them down. 

The pair soon struck a deal with Amoco to drill a 

Tuscaloosa test there. The well, the Georgia Pacific No. 1, 

was successful and credited as the discovery well for one of 

the largest finds in Louisiana history. Thanks to the huge 

pool of natural gas and oil below Mount Pleasant Plantation 

along the Mississippi River, Pennington Oil quickly became 

famous. The plantation and the land around it is speculated 

to yield up to $4 billion in minerals before it stops producing. 

After Pennington’s discovery, speculators quickly began 

exploring for oil and gas all along the trend, claiming all available 

leases from Grosse Tete to St. Francisville. 

Named one of the country’s 400 wealthiest people by 

Forbes magazine, Pennington was generous with his good 

fortune. In 1980, he donated $125 million to Louisiana 

State University to build Pennington Biomedical Research 

Center. One of his greatest goals was to eradicate disease. A 

colon cancer survivor, he hoped that his research center 

would be a step toward doing just that. He passed away at 

the age of 97. 

The information included on pages 65-67 was found in Early 

Louisiana and Arkansas Oil: A Photographic History by 

Kenny A. Franks and Paul F. Lambert ©1982; The 

Wildcatters: an Informal History of Oil-hunting in America 

by Samuel W. Tait ©1946; and the Library of Congress. 

We cast a tall shadow 

in Oilfield Service. 

1105 Peters Road • Harvey, Louisiana 70058 

Telephone 504-362-4321 • Fax 504-362-1818 

www.superiorenergy.com • NYSE: SPN 


Chapter 9 • Future 

(Photo courtesy of Panhandle Energy Corp.) 

In 1959, the world’s first liquefied natural gas (LNG) tanker set sail from Lake 

Charles to deliver LNG to Canvey Island in the United Kingdom. 

“ 

The overwhelming portion of Louisiana’s manufacturing 

base is dependent upon energy as an input for 

making goods and services used worldwide.” 

68 


The Road Ahead: The 

Outlook for Louisiana Energy 

By David E. Dismukes, Associate Professor and Associate Director, Center for 

Energy Studies, Louisiana State University 

Figure 1. Deepwater 

development wells 

drilled in the Gulf of 

Mexico, subdivided 

by water depth. 

The future of Louisiana’s energy 

mix relies on innovation, technology 

and efficiency, which likely 

will create challenges and require 

high costs to maintain. 

While Louisiana is well recognized 

for its energy production, it is less 

recognized for its role as a large 

energy consuming state. The 

overwhelming portion of Louisiana’s manufacturing 

base is dependent upon energy as an 

input for making goods and services used 

worldwide. Since the advent of Louisiana energy 

development, two types of critically important 

industries have arisen. 

The first set of industries, coming early in 

the state’s energy history, were those associated 

with processing “crude” natural resources into a 

limited set of refined products, which included 

kerosene and natural gasoline. Today the refining 

portion of the industry has evolved into one 

producing a variety of differentiated specialty 

refined products. 

The second set of industries, occurring 

somewhat later in the state’s energy history,are 

those that have taken energy streams either 

wasted or of little value and converted them, 

through considerable technological innovations, 

to specialty productions like plastics, 

resins, and other final and intermediate petrochemical 

products. These historically low-cost 

energy resources (primarily natural gas) have 

served as production inputs and provided the 

industry with a considerable competitive 

advantage during the past five decades. In addition, 

these industries have been, and continue 

to be, large contributors to the Louisiana economy, 

and have provided innumerable employment 

and quality of life improvements for generations 

of Louisianans. 

Equally less appreciated has been the massive 

amount of supporting infrastructure that has 

arisen in Louisiana during its past century of 

development. This infrastructure development 

has led to Louisiana becoming an energy hub 

that has historically linked the Gulf Coast and 

its offshore areas with the rest of the United 

States, and increasingly, with the world. 

Pipelines, refineries, gas processing facilities, 

platform fabrication yards, pipe-coating yards, 

ports and supply bases, are just a few areas in 

which infrastructure investment 

has occurred. 

The challenge for 

Louisiana’s energy mix in 

the future is how to sustain 

its energy balance in the 

face of declining production. 

While some may see 

the contraction of production 

as signaling the end to 

this unique relationship 

between production and 

its supporting industries, 



Figure 2. Existing and proposed North American liquefied natural gas terminals. 

there are opportunities for maintaining the unique balance 

between the three sectors of the Louisiana energy economy. 

Production of traditional resources 

Louisiana has a long history of making considerable contributions 

to the nation’s energy supply. The state ranks first in overall 

crude oil production and second in terms of natural gas production, 

if the offshore areas of the Gulf of Mexico (GOM) are 

considered. Despite this considerable contribution, the state, 

like other producing areas, faces three unique challenges. 

The first and most immediate challenge has been the high 

and volatile prices producers face in today’s energy markets. 

The second, and much more systemic change, has been that 

capital is mobile – domestically and internationally – and a 

range of producers from integrated majors to independents 

have options on where to invest their exploration and production 

(E&P) dollars. Competitiveness, in a period of considerable 

risk and uncertainty, is an increasing concern for 

Louisiana as well as other producing states. 

The third challenge, and perhaps the more overwhelming, 

is creating production opportunities in a mature environment 

that has long since past its peak production levels. 

While there may be an inevitable decline of traditional production 

in Louisiana and the region, there are still considerable 

opportunities to develop the state’s production base from activities 

in the deepwater GOM. The future for deepwater resources 

continues to be optimistic. The U.S. Minerals Management 

Service (MMS) estimates there are some 71 billion boe of ultimate 

reserves in the deepwater, and an estimated 56.4 billion 

boe, or almost 80% of those reserves, remains to be discovered. 

Deepwater activity during 

the past several years has 

been and continues to be a 

major contributor to GOM 

activity. Deepwater production 

from 1998 to 2002 

accounted for about 31% of 

all GOM production. Today 

there are about 90 production 

facilities operating in 

some 1,000ft (305m) of 

water or deeper, producing 

some 959 thousand bbl of oil 

and 3.6 Bcf/d of natural gas. 

The deepest production 

facility is the Shell-operated 

Coulomb project C-2 well, which operates at a 7,570-ft 

(2,309-m) water depth. There are plans for further development 

and during the next 2 years, the MMS anticipates the 

development of some 22 facilities in the deepwater areas of 

the Gulf (Figure 1). 

Given the role Louisiana has played for activities in the central 

and western portion of the GOM, it is not inconceivable 

the state could benefit should any activities occur in the eastern 

Gulf. It is estimated this area has some 101 Tcf of gas 

reserves alone. The Energy Bill of 2005 has provisions for 

updating these estimates. While moratoria are in effect for the 

area, it seems likely a considerable number of support activities 

would arise, or at least be expanded from operations developed 

in Louisiana should the moratorium be lifted or relaxed. 

Another unexplored opportunity for traditional activities in 

Louisiana is deep drilling. While it can be variously defined, 

deep drilling is usually associated with exploration activities at 

15,000ft (4,575m) or deeper, with activities regularly occurring 

at the 20,000-ft (6,100-m) and deeper level. Louisiana 

has two such opportunities occurring for the development of 

deep drilling resources, one at the federal level and the other 

at the state level. The MMS recently estimated that at the federal 

level alone, there are some 10.5 Tcf of deep drilling 

reserves in the 0-ft to 197-ft (0-m to –60m) water depth. 

One of the best ways to encourage these high 

investment/high-risk deepwater and deep-drilling activities 

at the state and federal levels is to reduce barriers and increase 

the number of incentives associated with their development. 

At the federal level, the MMS has a number of incentive programs 

for deepwater and deep drilling activities. 

70 



New Technologies, 

Innovation and Efficiency 

During the next several decades, technology and innovation 

are going to becoming increasingly important for Louisiana 

for two reasons. First, to remain competitive in a decreasingreturns, 

increasing-cost environment for E&P activities, 

technology and innovation will assist in making the most of 

the state’s remaining hydrocarbon resources. Second, innovation 

and technology, particularly in the area of energy efficiency 

and fuel diversity, can preserve and possibly expand the 

state’s energy-dependent industries and infrastructure. 

The development of deepwater and deep drilling resources 

brings to bear a considerable amount of new technology to 

drilling activities in the state. As these frontier resources are 

developed, offshore Louisiana is bound to be the testing 

grounds for these new technologies and applications. In 

addition to these frontier resources, there are also considerable 

production opportunities using innovated enhanced 

recovery mechanisms. 

Enhanced oil recovery through carbon sequestration 

addresses important energy and environmental concerns. 

Recent preliminary estimates developed in a U.S. 

Department of Energy study found that there was some 

27.5 billion bbl of “stranded” oil and some 71 Tcf of 

stranded natural gas that could be accessed if enhanced 

methods, including using CO 2 

sequestration, were facilitated. 

This study found that under the most optimistic 

conditions, some 2.7 billion to 5.5 billion bbl of stranded 

oil could be extracted from offshore Louisiana producing 

regions (state and federal). 

There also are considerable opportunities associated 

with the industrial use of energy in Louisiana that could 

propel the state into new areas of development. Recently, 

Citgo and Leucadia Partners announced the development 

of a new co-generation project that would facilitate the use 

of petroleum coke. Instead of combusting the coke, however, 

the facility would gasify the coke to create synthetic 

gas for the power generation facility and hydrogen for 

refining operations. The facility, if developed, would be the 

biggest petroleum coke gasification unit in the world. 

Leveraging the state’s 

traditional infrastructure 

Liquefied natural gas (LNG), which is imported natural gas 

cooled to –256°F (-160°C), represents one of the most 

important opportunities for leveraging Louisiana’s energy 

infrastructure and supplementing production from traditional 

sources onshore and offshore. The gas is liquefied in a country 

that has excess natural gas supplies, such as Qatar, Saudi Arabia 

or Trinidad, shipped in an insulated tanker, and then “regasified” 

in the consuming country like the United States. 

There are 55 planned LNG terminals in North America, 

38 of which are on file with regulatory agencies in the United 

States, Canada and Mexico. Eighteen of the 38 proposed 

LNG facilities are being developed along the Gulf of Mexico, 

both onshore and offshore. Of those 18 facilities, at least 

eight are being developed onshore or offshore Louisiana. 

While the development of LNG facilities may represent a 

novel type of industrial processing facility, the technology is 

not new to Louisiana (Figure 2). 

One of the original and largest of the four LNG regasification 

facilities developed in the United States in the 1970s and 

early 1980s is in Lake Charles, La. Deliveries to Lake Charles 

began in 1982, but were suspended in 1983 because of LNG’s 

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high cost. Deliveries were resumed in 1989, and the facility 

has remained open since without incident. 

Liquefied natural gas represents a considerable opportunity 

for Louisiana and helps preserve the balance among production, 

industry and infrastructure in the state. The economic 

impacts attributable to the development of such large-scale 

facilities are a welcome addition. Facility investment costs 

range between $400 million to $600 million each. There also 

are several millions worth in supporting infrastructure investments 

that can include natural gas compression stations, natural 

gas storage facilities and new pipeline developments. A 

recent study by the LSU Center for Energy Studies found the 

overall economic development impacts of these LNG regasification 

facilities could be as large as $2 billion, creating some 

14,000 in construction-related employment benefits. 

The biggest opportunity for Louisiana LNG regasification 

facility development has created for Louisiana is the addition 

of new natural gas resources for the state’s large industries. 

While Louisiana ranks second in natural gas production, it 

has an insatiable appetite for low-cost energy resources. For a 

state that has a little more than 4 million people, Louisiana 

ranks third in overall natural gas consumption, which is driven 

by industrial usage. Louisiana ranks second in total industrial 

natural gas consumption in the United States. 

Louisiana’s average industrial consumption is more than 600 

MMcf/year per facility. This compares to an average industrial 

level of just over 200 MMcf in Texas (the largest user of natural 

gas in the United States) and 20 MMcf in California (the 

second largest user of natural gas). The magnitude of 

Louisiana’s energy consumption mix can be exemplified by the 

following statistic: if the state’s total industrial and power generation 

demand for natural gas are combined, it would be 

almost as large as the annual consumption for China, and larger 

than Australia, Spain, New Zealand and Brazil. 

One of the biggest negative impacts of the natural gas price 

hikes occurring since the winter of 2000 has been the significant 

loss of manufacturing jobs in the state. Louisiana’s 

petrochemical industry has lost more than 4,000 jobs during 

the past 5 years. High natural gas prices, compounded by 

increasing global competition, has reeked havoc upon an 

industry built in an environment of natural gas prices between 

$0.50/Mcf and $1/Mcf. Liquefied natural gas represents a 

valuable new supply resource for these challenged industries. 

In addition to high industrial usage, Louisiana uses a considerable 

amount of natural gas for power generation with 

about 250 generating units in the state using natural gas as a 

fuel source. Of those, some 92 are utility owned, while the 

balance are more recently developed non-utility generators 

that include industrial co-generators and independent power 

producers. While these highly efficient power producers have 

been effective at driving down market-clearing heat rates to 

levels almost unimaginable during 1999 and 2000, they are all 

still fired by natural gas. As a result, when gas prices increase, 

so too do power generation costs. 

The most recent National Petroleum Council report estimated 

that the development of a significant number of LNG 

facilities (12 or more total) could reduce overall market prices 

by as much as $1/Mcf (holding other factors constant). The 

goal of LNG development is to increase supplies and reduce 

prices. If the development of merchant power facilities is an 

indication of how rapid development of energy infrastructure 

can reduce prices, then the opportunities for this outlook to 

materialize are good. 

Conclusions 

In the past, Louisiana’s energy mix was balanced between 

energy production, energy consumption (by industry), and 

the processing and movement of production to consuming 

areas inside and outside the state, such as infrastructure. This 

balance was easily maintained for decades because of the size 

of the resource base being developed. As long as there were 

plentiful energy resources, industry and infrastructure were 

almost guaranteed of being there to support and supplement 

traditional production related activities. 

One of the biggest challenges for Louisiana’s future energy 

mix will be ensuring balance between the development of energy 

resources, industry and infrastructure. The stark realization 

in maintaining this mix is understanding the development of 

Louisiana-based hydrocarbon resources are decreasing, and 

developing new resources will be a challenge that will require 

new resources and increased costs. Maintaining the energy mix 

of the future will rest heavily on innovation and technology. 

The challenge with having to place an increased reliance on 

innovation, technology and efficiency is that it is usually more 

uncertain, and in many instances more costly. The policies 

Louisiana maintains and adopts regarding investments in 

these three things will be an important determinant for 

industries developing new, or even considering, maintaining 

investments in the state. Policies that remove investment barriers, 

provide an environment of steadiness and certainty, and 

support capital formation are those that will be critically 

important for the energy mix ahead. 

72

LOUISIANA - Oil and Gas Investor

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