Despite BP oil spill, Louisiana still loves Big Oil

Deepwater drilling and Louisiana are synonymous. Despite the BP oil spill, the industry is still seen as delivering lifeblood.

By , Correspondent

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    A shrimp boat carrying an oil-containment boom left Buras, La., May 17 to help cleanup efforts. Despite the BP oil spill, which has wreaked havoc on Louisiana's environment and economy, talk of coming down hard on offshore drilling is virtually nonexistent.
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One week after the Deepwater Horizon oil rig collapsed into the Gulf of Mexico, a letter arrived on President Obama's desk from Sen. Bill Nelson (D) of Florida, demanding an immediate moratorium on offshore oil drilling.

The same day, Florida Gov. Charlie Crist – a man once seen cheering as Sarah Palin said "drill here, drill now" – called for a special state legislative session to ban offshore drilling.

Even on the other side of the continent, the effects of the Gulf oil spill were transformative: Republican Gov. Arnold Schwarzenegger withdrew his support for limited drilling off the California coast.

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IN PICTURES: Louisiana oil spill

"If I have a choice between the $100 million [for drilling] and what I see in the Gulf of Mexico, I'd rather just figure out how to make up for that $100 million," he said May 3.

Yet in Louisiana, the state where the spill poses the greatest threat to fragile and environmentally vital marshlands, as well as to the entire fishing economy, talk of coming down hard on offshore drilling is virtually nonexistent.

Democratic Sen. Mary Landrieu is steadfastly against a moratorium on Gulf Coast deepwater drilling – as are other members of Louisiana's congressional delegation. Republican Sen. David Vitter has seen fit to chastise Congress for holding hearings on the growing crisis before the deep-sea leak has been plugged.

BP has come in for some harsh words, and in some cases even legal action. But one parish that is suing BP takes pains to explain its purpose: The suit is aimed at BP, not the oil industry, a lawyer says.

That local leaders facing such a disaster feel compelled not to antagonize Big Oil is telling.

It is quintessentially Louisiana.

Louisiana is entwined with offshore oil more closely than any other state. The world's first offshore oil well was drilled in the Gulf, south of Morgan City, in 1947, and the ties binding Louisiana and offshore oil have strengthened since then.

For a relatively poor Deep South state, plentiful stores of oil and natural gas have become a crucial source of wealth.

"An upwardly mobile career path often leads people in Louisiana to the oil and gas industry," says Kirby Goidel, director of Louisiana State University's Public Policy Research Lab in Baton Rouge. "The state lags behind in higher education, and you can go make a good living on the rigs without going to college."

A major source of jobs

The oil industry employs about 58,000 Louisiana residents and has created another 260,000 oil-related jobs, accounting for about 17 percent of all Louisiana jobs. The average annual oil-industry salary is $95,000 – a very good income in Louisiana.

Moreover, in 2008, oil and gas made up 6.5 percent of Louisiana's revenue, more than five times the national average. As a result, Louisiana and offshore drilling have become synonymous.

"One third of the oil produced in this country comes from offshore, and 80 percent of offshore production comes from deep water off Louisiana," says Eric Smith, associate director of Tulane University's Energy Institute.

Indeed, 40 deepwater platforms operate in depths comparable to that of the Deepwater Horizon rig, producing petroleum from more than 400 wells off Louisiana, according to Mr. Smith. "Deepwater is ... the most productive area of oil production and that's where the big companies are working," he says.

This all plays into Louisiana's response to what some scientists suggest is already the biggest oil spill in American history.

To be sure, the state of Louisiana and its parishes are not doing nothing. A state Senate panel on May 18 endorsed a bill that would make it easier for the state to sue BP. And on May 17, the Terrebonne Parish district attorney filed suit against BP, seeking unspecified damages for wildlife killed or injured by the oil leak. The suit is the first filed on behalf of the state over the oil spill and is expected to be followed by similar claims from other coastal parishes.

Statewide, there are signs of growing anxiety and anger as the first heavy oil slicks to make landfall washed into Plaquemines Parish May 19. Images of oil-soaked wetlands coincided with news that the federal government was doubling the area of Gulf waters where fishing is banned due to the spill.

Many families in south Louisiana work in both the fishing and oil and gas industries, and marine scientists say the spill could severely damage the state's $1.8 billion annual fishing industry for years to come.

Fishing, drilling have coexisted

"What makes the oil spill such an interesting issue is that, historically, fishing and oil have worked well together here. This is the first time that one industry is threatening the survival of the other," says Mr. Goidel.

Yet so far, the official state response has been marked by restraint. Despite joining a multistate suit against federal health-care reform legislation, Gov. Bobby Jindal said April 30 that Louisiana was not considering a lawsuit against BP. (He has decided, however, to go forward with plans to build sand berms off the coast to try to keep oil from washing into sensitive areas, even though the US Army Corps of Engineers has not yet issued the state a permit to do so.) Prominent Democratic and Republican officeholders say they will hold BP responsible for the spill, but none has yet called for suits against BP or for new industry regulations.

"In the state's economy and politics, there's no question that the oil industry plays a central role across the board," says Goidel.

Private attorney Don Carmouche, one of the legal team handling the Terrebonne Parish suit, is something of a local Erin Brockovich. His firm has previously sued oil companies in Louisiana on behalf of the state, school boards, and other clients who own public land contaminated by oil operations. During the past century, oil companies used open pits to dispose of hazardous wastes including arsenic, lead, and radioactive material that leached into ground water. But he's careful to say that the Terrebonne suit isn't aimed at the oil industry but at BP alone.

"We don't want to be seen as attacking the oil and gas industries, but a major oil company operating in this state ignored the regulatory system, or benefited from regulators that allowed them to get by with it," he says. "In the early days, the oil companies did whatever they wanted to and got away with it, and apparently that was going on now with BP and the [US] Minerals Management Service."

IN PICTURES: Louisiana oil spill

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