Louisiana Department of Natural ResourcesLouisiana Department of Natural Resources

Louisiana Mid-ContinentOil and Gas Association

“Perspective on Energy Issues”

DNR Secretary Scott A. AngelleJanuary 26, 2012

1

Oil and Gas prices decoupling

2

Price Dynamics Changing FasterHistoric Pricing Ratio: Oil vs Natural Gas

3

Shale Plays in Lower 48 States

4

U.S. Energy Sources in 2011

5

6

Domestic Gas Production/ConsumptionTrillion Cubic Feet Per Year

Gap Filled with Imports

Oil vs Gas in U.S. Drilling

7

8

One Week of Natural Gas Prices

Petrochemicals on the way down in 2008-2009

9

Ga. Gulf cuts 100 at La. plant The Advocate June 6, 2009

Dow trimming La. jobs260 laid off around areaThe Advocate January 31, 2009

50 face layoffs at BR officesAlbemarle Corp. starts RestructuringThe Advocate January 30, 2009

Before Wednesday's announcement by Dow, the Louisiana Chemical Association anticipated losing about 1,000 chemical jobs in the next year…The Advocate December 11, 2008

• Port of New Orleans expansion after chemical exports jumped 34 percent in 2010

• Dow investing $4 billion in Gulf Coast ethane cracker near Gulf Coast by 2017, will reopen another in Louisiana, and build two propylene plants

• Methanex of Canada has announced it will move production facilities from Chile to Louisiana

• Occidental Chemical, Chevron Phillips Chemical, and Formosa Plastics Corp. have indicated interest in Gulf Coast

10

Shale Natural Gas Has Brought on Mississippi River Renaissance

Gas-to-Liquids Opportunity

• Sasol proposed Gas-To-Liquids plant in Calcasieu Parish

• Potential $10-billion direct investment and 800-plus direct jobs that are associated with it

• Designed to produce highway-grade diesel fuel

• Sasol has stated economics work at 20-to-1 oil-gas price ratio

• Already began expansion of petrochemical facility in the area

11

Northwest –Southwest Global Expressway

12

Cheniere Energy Partners has initiated a project to transform its Sabine Pass LNG Terminal into a

bi-directional facility.

Text Body in White 12-20 pt Aerial Font (bold)

Sabine Pass LNG Terminal

Updated: 04/01/2011 AD

13

1.7 tcf

.78 tcf

Louisiana total – 2.49 tcf from 19,845 wells

2011 Natural Gas Production

Haynesville accounts for 9 percent of state gas wells and 68 percent of state gas production

Haynesville only – 1.7 tcf from 1,805 wells

U.S. total – 23 tcf from 480,000+ wells

30 percent of U.S. natural gas production now comes from shale wells

14

15

2008 2009 2010 2011 2012

68 89 134 97 66

2008 2009 2010 2011 2012

49 24 31 40 44

2008 2009 2010 2011 2012

53 38 26 27 38

Three Louisianas – Five Years

Snapshots of rig activity trends

Louisiana Rig Counts 2008 - 2011

16

OCS Moratorium

Louisiana’s New Energy Map

17

Davy Jones Discovery

• 2 wells drilled, awaiting completion equipment

• First production could come in 2012

• McMoran’s investment has drawn interest in area from other exploration companies

• McMoran Exploration is developing major discovery in about 20 feet of water, 10 miles south of Vermilion Parish

• Ultra-deep prospect – drilled more than 30,000 feet under sea floor (more than 5 miles)

• May be 200 feet thick – estimates of 2 tcf to 6 tcf of natural gas, potentially one of the largest finds in the Gulf

18

OCS Activity Improving – But Not There Yet

19

OCS Moratorium

Pre-Moratorium Rig Activity Level

20

Crude Oil/Condensate Production 2011Million Barrels a Day

21

GEST Related Meetings/Phone Calls

DateMeeting /Call Location Notes

1 18-Jun-10 Call MMS & Stakeholder Conference call

2 22-Jun-10 Call MMS & Stakeholder Conference call

3 24-Jun-10 Call MMS and stakeholder conference call

4 25-Jun-10 Call MMS and Stakeholder Conference Call

5 29-Jun-10 Call MMS & Stakeholder Conference Call

6 1-Jul-10 Call MMS and Stakeholder Conference Call

7 6-Jul-10 Meeting BTR Meeting with Lori Leblanc

8 6-Jul-10 Call MMS and Stakeholder Conference Call

9 8-Jul-10 Call MMS & Stakeholder Conference Call

10 13-Jul-10 CallConference call RE: Strategy for Recovery for Oil & Gas Industry

11 21-Jul-10 Call BOEM Conference Call

12 23-Jul-10 Call Conference call on Shallow Water Drilling

13 28-Jul-10 CallConference call with Shallow and Deep water drillers

14 29-Jul-10 Call BOEM Conference Call

15 2-Aug-10 Call Lori Leblanc Conference Call

16 4-Aug-10 Meeting New Orleans Meeting with Lori Leblanc/Others RE: Workshop

17 12-Aug-10 Workshop Lafayette Offshore Drilling Regulatory

18 31-Aug-10 Call Bromwich precall

19 1-Sep-10 Call Conference call with Lori Leblanc

20 8-Sep-10 Workshop Lafayette Event at the Lite Center

21 13-Sep-10

22 13-Sep-10 Call Industry Conference Call

23 22-Sep-10 Workshop New Orleans Offshore Drilling Regulatory Workshop

24 13-Oct-10 Call Conference Call with Shallow Water Drillers

25 19-Oct-10 CallCall with Lori Leblanc, Sandi Fury, Warren Williams, Kalil Ackal and Jim Noe

26 3-Nov-10 Meeting Baton Rouge Meeting with Lori Leblanc

27 12-Nov-10 Call Conference Call with Shallow Water Drillers

28 1-Dec-10 Call Conference call with GEST group

29 2-Dec-10 Call Return to Work Coalition Conference Call

30 7-Dec-10 Call Conference call with Lori Leblanc

DateMeeting /Call Location Notes

31 20-Dec-10 Call Conference call with Lori Leblanc32 7-Jan-11 Call Conference call with Back to work Coalition

33 12-Jan-11 Meeting DC Meeting with “Back to work Coalition”

34 12-Jan-11 Meeting DC Meeting with Director Bromwich and Back to Work Coalition35 14-Jan-11 Call Conference call with Back to work Coalition

36 20-Jan-11 Call Conference call White Paper, “Should to Must”37 31-Jan-11 Call Conference call with Back to work Coalition38 1-Feb-11 Call Conference call with Back to work Coalition

39 14-Feb-11 Call Conference call with Back to work Coalition

40 21-Feb-11 Call Conference call with Back to work Coalition

41 28-Feb-11 Call Conference call with Back to work Coalition

42 14-Mar-11 Call Small Group Industry Conference Call

43 14-Mar-11 Call Large Industry Conference Call

44 24-Mar-11 MeetingNew Orleans GEST & Back to work Coalition meeting

45 1-Apr-11 Call Conference call with Back to work Coalition

46 15-Apr-11 Call Conference call with Back to work Coalition

47 11-May-11 Call Conference call with Lori Leblanc & GEST Members48 1-Jun-11 Call Conference call with Lori Leblanc

49 3-Jun-11 Call Conference call with Back to Work Coalition (Small Grp)50 7-Jun-11 Call Conference call with Back to Work Coalition51 10-Jun-11 Call Conference call with Lori Leblanc

52 16-Jun-11 Call Conference call with Lori Leblanc & Bill Townsley (Shell)53 29-Jun-11 Call Conference call with Lori Leblanc & Others

54 8-Jul-11 Call Conference call with Lori Leblanc & Ted

55 15-Jul-11 Call Conference call with Back to Work Coalition (Small Grp)56 1-Aug-11 Call Conference call with Back to Work Coalition

57 30-Aug-11 Workshop BOEMRE Workshop

58 12-Sep-11 Call Conference call with Lori Leblanc

59 15-Sep-11 Meeting BOEMRE Reorganization Meeting

60 15-Sep-11 Meeting Meeting with Back to Work Coalition and Director Bromwich61 3-Oct-11 Call Conference Call with Back to Work Coalition62 18-Oct-11 Call Conference Call with Lori Leblanc & Others

DateMeeting /Call Location Notes

63 20-Oct-11 CallConference Call with Lori Leblanc & Back to Work Coalition

64 26-Oct-11 CallConference call with Back to Work Coalition

65 28-Oct-11 CallConference call with Steve Feldgus & Back to work Coalition

66 23-Nov-11 Call Conference call with Lori Leblanc67 30-Nov-11 Meeting Houston GEST Stakeholders Meeting

22

Deepwater Plan and First APD Approval: EPs and DOCDs

92

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Day

s

DW Plan & First APD Approval Trend: EPs & DOCDs

Plans: Operator submission to "Deemed Submitted" Plans: "Deemed Submitted" to Final Action (Approval)

APD Submittal (Post Plan Approval) to APD Approval 5 Plan Average Approval Time

Deepwater plans with EA. Adjusted reference date to 10/12/2010. *APDs targeting HC only.

Based on Coalition data QC as of 1/1/2012

May June July Aug Sept OctM

arch Nov Dec