Experts: La., oil industry recovering post BP spill

BP’s $18.7 billion settlement still needs a judge’s approval, but all parties are in apparent agreement on what U.S. Attorney General Loretta Lynn called “the largest settlement with a single entity in American history.”

The result: BP will be doling out payments to Louisiana, Mississippi, Alabama, Florida and Texas for at least 16 years. Of that money, some $6.8 billion is headed to Louisiana, the state most harmed by the April 20, 2010, explosion that spilled the equivalent of at least 3 million barrels of oil, perhaps as much as 5 million, into the Gulf of Mexico. In total, the state will receive some $10 billion for the harm inflicted on it by the spill.

The length of time for the payout will diminish the value of the settlement, University of Louisiana at Lafayette economist Dr. Cary Heath said: “Over 16 years, the value goes down.”

But the impact will be felt, nonetheless, he said.

In an issued statement, U.S. Sen. David Vitter, R-Metairie, said Louisiana’s payout will be divided this way:

•$5 billion for natural resources

•$1 billion for state economic damages

•$787 million in Clean Water Penalties through RESTORE

Heath said because the money is coming from out of state, its “ripple effects” will be felt more broadly in Louisiana. “It’s not like taking the money from one group of Louisianians and giving it to another,” he said. It’s better.

If the money is spent as intended, he said, if it is directed toward restoring and enhancing the coastline, it will have a beneficial effect on tourism from fishermen and other visitors. That, too, would have a beneficial economic effect.

“Tourism, recreation, all have real economic value,” he said, as well as benefits for the quality of life in our state.

Robert Barham, secretary of the Department of Wildlife and Fisheries, said the impact will be profound in his department.

“Five years ago, the Sportsman’s Paradise took a significant hit,” Barham said at Thursday’s news conference on the settlement. “Some of the iconic images of the Deepwater Horizon disaster were photos of Louisiana wildlife covered in oil.

“The impacts permeated our fragile coastline, threatening the vitality of one of the world’s most productive ecosystems. We’ve come a long way in furthering our understanding of the effects of the spill on our wildlife and fisheries. The department is eager to continue efforts to restore those resources that are essential to our coast and the people who depend upon it.”

Barham said Thursday afternoon that the money is in place to do proper restoration work.

“The money will be there to do the restoration that needs to be done in Louisiana Wildlife and Fisheries,” he said. The state will have the means to monitor research to aid “fish, creatures and mammals.”

Barham, restricted by the judge in the case in what he could say, said more exact figures will be available soon.

Gov. Bobby Jindal, in statements released by the state, said Louisiana made good on its 2010 pledge to hold BP accountable for damages.

“This agreement will not only restore the damage inflicted on our coastal resources by the Deepwater Horizon oil spill, it will also allow Louisiana to continue aggressively fighting coastal erosion.”

But representatives of the oil and gas industry say the oil and gas industry, which employs some 60,000 Louisianians, will come out of the BP oil spill stronger. Don Briggs, president of the Louisiana Oil & Gas Association, said new safeguards have been developed to prevent well blowouts and limit spill damages.

“What came out of BP, we have containment systems for deepwater that will protect us from another such disaster. We owe that to BP and other companies operating in deepwater Gulf of Mexico.”

Briggs said the deepwater Gulf of Mexico remains “the crown jewel” of drilling locations, where exploration and production remains far more cost effective than on land, such as in shale plays in western Texas.

Chris John, president of Louisiana Mid-Continent Oil and Gas Association, said five years after the BP oil spill, the U.S. is the world’s largest producer of oil. Shell has announced new, aggressive plans for the Gulf of Mexico, which promises that it will remain a treasure for oil producers.

He said the image of the oil and gas industry suffered a “black eye” from the spill and its bad effects, but the industry is recovering. New regulations, he said, will keep drilling safe in the Gulf.

Fathi Boukadi, LAGCO endowed professor at the University of Louisiana at Lafayette, said changes in how producers drill in deepwater has created an opportunity for UL’s petroleum engineering department to develop a niche specialty to help make drilling safer.

He said the department and its advisory board, which includes Stone Energy and Schlumberger, “are working on changing course syllabi to address deepwater, high pressure, high temperature environments.”

The result, he said, is that UL engineers will graduate “with unique skills no other department is producing, nationally and internationally.”