Chris John is president of the Louisiana Mid-Continent Oil and Gas Association. He grew up in Crowley, where he enjoyed the outdoors and encountered the web of oil works in his backyard.
“I hunted and fished in the marshes, which exposed you to all the exploration and production,” he says. “You can’t go down to the coast without seeing oil and gas infrastructure.”
He studied business at LSU and worked for his family’s trucking firm, getting more exposure to petrochemicals via shipping. He served on the Crowley City Council, became a state representative [serving in his father’s former seat] and then a U.S. congressman, taking an interest in the energy industry. He lost a bid for the U.S. Senate in 2004 but stayed in D.C. for a couple years to lobby for energy companies before taking his current job. He commutes to Baton Rouge from his home in Lafayette.
1. What effect does the current plunge in natural gas prices have on the industry and on Louisiana’s economy before demand is expected to rise in winter?
Look at what happened up in north Louisiana. There was a heyday of leasing up all of the land. They were offering enormous amounts of dollars per acre to kind of gobble up all of that land that potentially had a lot of gas in it. But that’s just the rights to drill. What has happened is that I don’t think the drilling activity has followed a lot of those leases because of the price. They’re just not going to go out very far into the future and put a bunch of money down in the ground today, until they get a little better idea of where this is going.
2. We hear about minor innovations in “green technology” by fossil fuel companies that also rail against the cap and trade plan; how does the power industry embrace real environmental stewardship?
This cap and trade issue is going to drive the answer to that. I don’t think that it addresses the climate change that people are trying to get. It’s buying and selling these carbon credits, so there’s one school of thought that will say you can keep emitting the CO2 that you want and we’ll just buy the credits. So does that help the environment? The refiners who are not the major emitters of the greenhouse gas—they are a contributor—aren’t treated in this piece of legislation fairly. The major emitters of greenhouse gases are power generators, specifically coal. If we were to transform some of the power generation away from coal into natural gas, that does a lot of things. It’s cleaner environmentally, it’s cheaper at this point in time, it’s more abundant and it’s American.
3. Cap-and-trade won’t have a major price impact on power companies before 2020, so why a big industry push now against the switch to sustainable power?
It is going to have a negative impact on employment, and it’s going to have a negative impact on the refiners of this state and the power generators. Other countries that don’t have the environmental laws on the books are the ones that really should join us in this. There’s a whole thought that, ‘Why should we take this first step and make us more dependent on foreign sources of oil?’ It’s going to be expensive to do that.
4. We get a lot of e-mails saying the “nuclear renaissance” is a myth fueled by political lip service instead of practical incentives and industry investment. Where do you see nuclear today?
I think that that’s the big gorilla in the room. The only downside to nuclear is the waste. I think 8% of our energy today in America comes from nuclear. That, I believe, is out of whack with the portfolio of where we should get our fuel. If you look at some of the other countries—France does what, 70% or 80% of their power is done from a nuclear standpoint? We talk about how it’s “safe,” but everybody thinks of a couple of the big disasters they had. The real key is solving the waste problem.
5. Everyone remembers Katrina and Rita, yet plans to reverse coastal erosion seem forever delayed. How long can government and oil companies wait before it is too late?
We had a meeting here yesterday with America’s Energy Coast, where environmental groups, wildlife and fisheries groups, oil and gas groups have all come together because all of us, including the members that I represent, have a stake in what happens in coastal Louisiana. You look at the four hurricanes in the last three years, we had problems with not only platforms being destroyed but pipeline infrastructure being exposed, canals being stopped up from being navigable. So the oil and gas industry frankly has put billions of dollars toward coastal restoration.
6. What specifically are oil companies doing in concert with government?
There’s a coastal restoration trust fund that I did in 1989 where we actually put in, for the first time, dollars from oil and gas. All scientists agree that the channelization of the Mississippi River was the most contributing factor to the loss of our wetlands. Now, our guys are stepping up to the plate to rebuild the coast. Frankly, they have as much to lose as everybody else if their infrastructure gets damaged.
7. There is a looming layoff of thousands of contract workers for Marathon Oil on the horizon. What are the prospects for job growth or loss in the next month or two in your industry?
Marathon is coming to the end of a $4 billion expansion of their Garyville refining facility. By the end of the first quarter is when they’re gonna start actually using the new facility to refine product. It’s natural, when you build a big project, you’ve got all these contract employees building it all, and once it’s built, you just have the employees to run it.
8. Does that mean there won’t be enough oil jobs to fill the gap?
When an oil and gas company decides to go out and explore and produce, it’s a multibillion dollar project. You don’t do that overnight. You’ve got to be good in your projections—commodity price, workforce development, political environment. Just in the latter part of ’07 and the first part of last year, there were two of the largest lease sales in the history of the Gulf of Mexico. I’m still very optimistic that the deepwater Gulf, which employs a lot of people, will see somewhat of a rebirth over the next couple, three years.
9. Can you predict where a barrel of oil and a gallon of gas are heading price-wise in the next few months?
[Laughs.] No, I really can’t. Look at the price of oil over the last 30 or 40 years; if anybody could have predicted any of that, then good for them. Think about this: If you were in the oil and gas business on July 3, 2008, it closed at $125 [per barrel]. Six months later it was at $30 and 20-something cents. Seventy-five dollars is where I’ve heard is kind of where many economists believe it probably should be on an average basis. The spikes come with wars and global downturns in the economy, unrest in the oil-rich countries. It is very hard to predict.
10. How about gasoline?
Gasoline is coming down. A lot of that has to do with demand. What I believe happened last summer when gasoline reached $4, I mean for the first time in history, the American people actually had a mindset change, when it was costing a hundred bucks to fill up your SUV. The demand has decreased [but] anything can happen to make that spike: a war, a disaster, a hurricane. Fifty percent of the refining capacity of this country is between Corpus Christi and Pascagoula. All of those last year, every one of those refineries, were at some point shut down. That certainly contributed to the price of gasoline.
