Louisiana’s love-hate relationship with the oil industry

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The trucks came at night, ferrying load after load of oil-field waste from Alabama to the US Liquids disposal facility in this tiny south Louisiana settlement.

For the oil company, it was an easy decision: Exxon’s drilling and production waste was classified as hazardous under Alabama law. Its disposal there would cost about $100 a barrel. In Louisiana, however, the chemical waste could be dumped into open pits at a cost of $8 a barrel.

The US Liquids plant is across a two-lane highway from Clarice Friloux’s property, which backs up to an alligator-filled bayou. Now, 16 years after her struggling community took oil giant Exxon to court to stop the toxic discharge, little has changed. Even though the citizens of Grand Bois won the court case and helped change state laws, their battle against big oil continues.


In Louisiana, towns like this are the exception. The state is replete with communities that took on oil interests but failed to get energy companies to clean up their air, land and water.

Tangled with 83,000 miles of pipeline, home to the nation’s largest oil refinery and an 85-mile corridor of petrochemical factories, Louisiana has sacrificed much in the name of oil, including part of the biologically rich wetlands that nourish its seafood industry and protect its cities from storms.

Friloux and others question what the state and its people have gained from that uncommon devotion.

Return to business

Louisiana’s oil fealty has been a persistent backdrop to the drama sparked by BP’s Gulf of Mexico well blowout April 20. With the well capped and slicks vanishing from the state’s waters, Louisiana wants to get back to business. And by and large, that business is drilling.

The oil and gas industry bankrolls 14% of the state’s budget through royalties and other fees, and its total economic impact, according to a 2007 industry-commissioned study, amounts to $70 billion, directly or indirectly supporting 320,000 jobs. People may argue over the industry’s figures, but few disagree that energy jobs are dear to a state that otherwise struggles to create jobs.


Such numbers go a long way toward explaining Louisiana’s evolving reaction to the BP blowout. State and local officials quickly condemned the federal government — not BP — for its response. Lately, they have insisted that the Obama administration’s moratorium on deep-water drilling in the gulf will devastate the state’s economy.

Jim Welsh, commissioner of conservation in the state Department of Natural Resources, is blunt about it: “We are an energy state; there’s no doubt about it,” he said. “This is what we do in this state.”

Oliver Houck, professor of environmental law at Tulane University in New Orleans, called the industry’s control over public dialogue “corrosive.”

“You won’t find any power center in Louisiana taking a critical stance on oil,” Houck said. “It’s simply not possible.”

It did not surprise Friloux that the documented cases of skin rashes, burning eyes, respiratory problems and other illnesses that swept over Grand Bois’ 300 residents in 1994 were met with official indifference.

“I said: ‘Look, guys, these people are poisoning us. What can we do?’ ” Friloux said recently, sitting on her porch on a stiflingly muggy day and gazing at the waste pits across the road.


“What I found out is that people are scared,” she said. “Oil and gas companies run Louisiana. Our politicians get their pockets lined. Sixty miles south of Bourbon Street and this is what’s going on. No one would believe you. And it still goes on.”

Since the blowout on the Deepwater Horizon rig, the world’s attention has been trained on the waters 50 miles from Louisiana’s coast. But a turn of 180 degrees shows the fuller footprint of a century of aggressive energy prospecting: stands of piney forests cleared to make way for gas fields and thousands of miles of wetlands converted into watery highways.

On a per-capita basis, Louisiana has the highest volume of toxic chemicals in the country. The energy infrastructure that followed the state’s first gushing well in 1901 has transformed it into an industrial powerhouse, converting a stretch of the Mississippi River from Baton Rouge to New Orleans into “chemical alley.” Some residents refer to it as “cancer alley.”

Louisianans like to say they get their hands dirty for the rest of the country, and they are still rolling up their sleeves. The latest strike, the Haynesville Shale formation in Louisiana’s northwest corner, is projected to become the nation’s top-producing natural gas field, bringing in an estimated $150 million a year in tax revenue.

The process to uncouple gas from the deep shale, called hydraulic fracturing, is the same extraction method that left ranchers in Wyoming with tap water that could be ignited, stock ponds that sicken livestock and wells that became poisonous.

But few here question the pell-mell ramp-up of the Haynesville project. “We didn’t think about the water issues; it’s all moved so fast,” said Helen Smith, vice chairwoman of the state Mineral and Energy Board’s Audit Committee. “We are enjoying the increased revenue from shale, but to project the long-term environmental issues … I’m not so sure anyone’s thinking about that.”


Who’s responsible

For the moment, it’s clear who will clean up after BP’s well blowout — federal officials promise to hold the oil giant responsible.

It’s less clear who should pay for the industry’s legacy of damage. Oil and gas companies have dredged an estimated 10,000 miles of canals to make way for pipelines and access to drill sites through the state’s 5 million acres of coastal marshes. Scientists say that has disconnected and degraded Louisiana’s nursery for its abundant seafood and its buffer against violent storms.

The estimated cost to fully restore Louisiana’s coastline marshes, bayous, bays and rivers surpasses $100 billion.

Few outside Louisiana’s marginalized environmental movement have demanded that oil companies pay their share, which some scientists have estimated is 30% to 50%.

Oil boosters point out that the industry already pays plenty: $1.3 billion in taxes and royalties went to the state in the most recent fiscal year.


“Anyone who says we don’t pay our way doesn’t understand the industry,” said Chris John, president of the Louisiana Mid-Continent Oil and Gas Assn., the lobbying arm for the major energy companies. John, a former Democratic state representative and congressman, is one of many Louisiana lawmakers who have left public life to work for the industry.

If not for the receipts from the energy industry, John said, Louisiana would be in poor shape.

“We have been very willing in this state to explore and exploit our natural resources,” John said. “The state has prospered; the industry has prospered. Louisiana gets an exceptional benefit. It’s literally been the engine for a way of life in Louisiana.”

But by some indicators, the Louisiana way of life is not faring as well as it could. More residents live in poverty than in any state except Mississippi. Public health indicators are miserable, and Louisianans have the nation’s second-lowest life expectancy.

Wyoming, another energy-dependent state that receives about the same annual tax and royalty income from the industry, steers much of its oil and gas receipts toward education, boosting the state to No. 3 in the nation in spending per elementary student in 2008, the most current figures available. Louisiana ranks 23rd, according to the U.S. Census Bureau. Wyoming directs a portion of oil receipts into a rainy-day fund to hedge against the cyclical booms and busts inherent in the industry. Louisiana has no such plan.

“Our state should be the most prosperous state in the South, but we’re in a race with Mississippi to the bottom,” said Foster Campbell, a longtime former Democratic state senator who lost the most recent governor’s race to Bobby Jindal, largely because of Campbell’s stance of forcing oil companies to pay the state more. “It’s a failure of backbone, pure and simple. We ought to be taking this excess money and putting it into coastal erosion and education.”


As some political pundits predict the BP blowout will be a “game changer” in U.S. energy policy, in Louisiana, few seem prepared to just say no.

“Not here,” said law professor Houck. “We are going to drill as rapaciously as we possibly can. We will drill to the last drop. We will resist environmental and safety safeguards with the same vigor that we have resisted them in the past. I don’t think it will end until the oil plays out. And we are going to be the last place in America to get the word.”

Back in Grand Bois, Friloux counts progress in small ways — cancer that’s in remission, days when kids can play outside without developing rashes. Really good days are those when no trucks rumble past to the waste pits. There aren’t many days like that.