Impacts of Environmental Regulations on Future Resource Development in Louisiana Wetlands

Abstract

Louisiana wetlands require careful management to allow exploitation of non-renewable resources without destroying renewable resources. Current regulatory requirements have been moderately successful in meeting this goal by restricting development in wetland habitats. Continuing public emphasis on reducing environmental impacts of resource development is causing regulators to reassess their regulations and operators to rethink their compliance strategies. In addition regulators need forecasts of future E&P trends to estimate the impact of future regulations. To determine future activity we created two econometric models of North and South Louisiana relating drilling activity, success ratio, and price to future wetland drilling locations. Results of the models indicate that environmental regulations have a small but statistically significant effect on drilling operations in wetland areas. Operators want cost effective means of access that will reduce environmental impacts, decrease permitting time, and limit future liability. We examined the regulatory system and found that reducing the number of applications required by going to a single application process and having a coherent map of the steps required for operations in wetland areas would reduce regulatory burdens. Incremental changes can be made to regulations to allow one agency to be the lead for wetland permitting at minimal cost to operators. In the interim, careful planning to account for environmental impacts in all stages of the exploration process can reduce environmental costs for operators. Operator emphasis should be on avoidance rather than mitigation. Alternative methods of access to avoid impacts exist but at present they are not cost effective for all locations. Future technological innovations such as waste minimization strategies, 3-D seismic and coiled tubing will lead to reduced environmental impacts and costs for operators. Introduction Louisiana's wetlands have been the primary area for development of oil and gas resources in the state. Activity has been concentrated in south Louisiana but, all wetland habitats in the state have been affected by exploration, development, production, and transportation of petroleum. This growth has impacted the vast undisturbed wetland environments and habitats of Louisiana. Wetlands are a very valuable natural and economic resource for the state of Louisiana. Louisiana's intensive petroleum development is concentrated in the coastal areas and future potential deep discoveries also underlie these areas. The success of this petroleum activity is due to Louisiana's unique geologic history which is characterized by optimal geological conditions for the formation and trapping of petroleum resources. P. 167