Abstracts: 2002

Do Deepwater Activities Create Different Economic Impacts to Communities Surrounding the Gulf OCS?
According to the MMS, the Gulf of Mexico Outer Continental Shelf (OCS) region accounts for more than a billion offshore acres and collects about $6 billion in mineral revenues annually. The region produces a substantial amount of oil consumed in the U.S. and about 97 percent of gas production in the country. This large influence does not go unnoticed to the regional economies surrounding the Gulf.
It is therefore not surprising that the economic impact of offshore activities has become an increasingly important issue to the MMS. A very large portion of MMS research focus is subsumed within the agency's Environmental Studies Program (ESP) and defined in its National Strategic Plan (NSP).
This paper is a very condensed version of a larger study sponsored by the MMS that examines three fundamental issues for estimating regional economic impacts associated with offshore activities: developing unit costs for each activity; developing expenditure profiles (production functions) for each offshore activity; and developing onshore allocations for the economic impacts associated with each activity. This paper concentrates on the overall methods used to develop these drivers of economic activity. We conclude with an examination of the relative differences between shallow water and deep water for one type of offshore activity: exploratory drilling.

Analysis of the Economic Impact Associated with Oil and Gas Activities on State Leases.
At the request of the Louisiana Department of Natural Resources' Office of Mineral Resources (OMR), the LSU Center for Energy Studies has conducted an examination of the economic, tax, and revenue impacts associated with drilling and production activities on state leases. In order to generate reasonable estimates, we have developed economic models that isolate the impacts that oil and gas activities have on the Louisiana economy.
Our study facilitates an economic impact estimating methodology known as Input-Output modeling (I/O model). I/O models are economic tools used to estimate sector specific impacts associated with exogenous changes in regional economic activities. The advantage of I/O models is that they can estimate a host of economic impacts on a commodity and an industry sector specific basis. These impacts include the direct, indirect, and induced economic impacts associated with regional economic changes.
It is important to recognize that the energy industry, as well as the Louisiana economy, is in constant change. Most modeling approaches, however, assume that "other things are equal." These changes can include shocks from the national and regional economy that also influence the outcome of oil and gas development. Our model assumes that other potential influences to the Louisiana economy were held constant during the study period.

Cretaceous Fine-Grained Mudstones of the Maracaibo Basin, Venezuela.
The Maracaibo Basin of western Venezuela is considered one of the most prolific petroleum producing regions in the world. The Cretaceous interval consists mainly of fine-grained clastic and carbonate sediments deposited during a period of passive margin development. Stratigraphically, the early Cretaceous Apon Formation of Aptian age contains interbedded rich organic dolomitic and calcareous shale and black bituminous limestone (Mercedes, Tibu, Guaimaros and Machiques Members). These represent maximum flooding surfaces and constitute important source and reservoir rocks in the southwest region of the Maracaibo Basin. To the north, the Apon along with the Lisure and Maraca Formations of the Aptian-Albian Cogollo Group, represent a shallow to middle shelf environment transgressive systems tract consisting mostly of limestone and fine-grained sandstone.
In the south, the Cretaceous Capacho, consisting of black shale and the La Luna Formation comprised of interbedded calcareous shale and black cherty limestone, were deposited during a period of relative sea level rise. The La Luna Formation is the primary source rock in the basin as well as a reservoir in places where microfractures produce the necessary permeability for hydrocarbon flow. Numerous geochemical studies performed in the Maracaibo Basin provide evidence for the existence of multiple stratigraphic intervals containing hydrocarbon generating organic-rich shale and calcareous mudstone within the Cretaceous. Integrated reservoir studies and production data indicate that some of the same intervals are excellent oil and gas producers where fracture systems exist.

Dominant Structural and Stratigraphic Characteristics Influencing Hydrocarbon Production Distribution in Louisiana's Livingston Field.
Livingston Field's main Eocene producing interval, the 1st Wilcox sand reservoir, was discovered in 1983 at a depth of approximately 10,000 feet (3048 meters). After completion of twenty-two successful producers and a secondary waterflood in the reservoir, the cumulative production is approximately 8.8 million barrels of oil and 4.7 billion cubic feet of gas. In the past, several field studies have been made of the main producing interval. However, only two of these included reservoir simulation. From these studies, the original oil in place was estimated to be between 24.5 and 32.6 million barrels. Therefore, present recovery efficiencies of 39 to 30 percent, from both the initial primary gas solution drive and secondary water flood phases of production appear to be low for a reservoir containing 35 degree API gravity oil, core permeability averages of 290 millidarcies, and an average porosity of 20.4 percent.
A 2001 geological and engineering field study, incorporating advanced reservoir simulation technology, provides a new definitive high-resolution multi-layered model. This facilitates more accurate spatial mapping of the petrologic heterogeneities that occur within the producing reservoir. Therefore, a more reliable basis is established for (1) locating the suspected non-swept remaining reserves within the reservoir, and (2) explaining the heretofore-low recovery efficiency of less than 39 percent. Armed with a new identification of the reservoir's specific petrological spatial relationships and a multi-layered simulation-based tertiary production plan, significant further reserve recovery is expected for the field.

Natural Resource and Environmental Policy Trade-Offs: a CGE Analysis of the Regional Impact of the Wetland Reserve Program.
There are perceived fundamental conflicts between agriculture, in terms of land use, and the societal goals of sustained environmental quality improvements. Regulatory policy response is often criticized for having the potential of adversely affecting agricultural production and the economy. The Wetland Reserve Program (WRP) is intended to be an alternative approach, aiming to improve environmental quality without significantly impacting the agricultural production or the economic wellbeing of the concerned regions. Using a computable general equilibrium modeling approach, we examine the impact of the WRP on the regional economy of Louisiana. Results show no significant negative impact on the economy as a whole, but effects on particular sectors within the economy may differ significantly.

Affects of Eocene Beach Rock on Reservoir Compartmentalization in Livingston Field: Livingston Parish, Louisiana.
Solidification of Recent unconsolidated beach sand into "beach rock" is the apparent result of rather rapid calcium carbonate (CaCO3) cementation of beach sand grains at the tidal zone. Evaporation of saturated seawater or groundwater flowing through the loose beach sediments is the primary process responsible for the precipitation of the CaCO3. Petrographically, the resulting rocks are characterized by the presence of a microcrystalline cement matrix (micrite) and less frequently sparite, engulfing terrigenous grains and allochemicals.
The location of many areas of primary beach rock formation, especially in the coastal areas of the modern Caribbean, is well documented. However, occurrences of beach rock in the fossil record have largely been overlooked, neglected, or misidentified, probably because of their apparent lack of economic value and possibly because their recognizable primary beach rock characteristics may have been modified during burial diagenesis. The Eocene upper Wilcox "First Sand Reservoir" in south Louisiana's Livingston Field provides examples of apparent counterparts to the modern deposits. "Hard streaks" with thickness ranges of <0.3 to >4.5 meters, occur widely within the eolian, beach, and shoreface sediments comprising the oil and gas reservoir. These altered zones bear close similarities to many documented modern beach rock examples. Their presence acquire special economic importance as they serve to compartmentalize and provide permeability and porosity restrictions to the vertical flow of hydrocarbons within several areas of the reservoir. Both primary and secondary hydrocarbon recovery from the field have been affected by the distribution of these ancient beach rocks.

Explosive Removals of Offshore Structures in the Gulf of Mexico.
A statistical description of the explosive removal of offshore structures in the federally regulated Outer Continental Shelf of the Gulf of Mexico are presented based on data collected by the U.S. Minerals Management Service. The influence of factors such as water depth, planning area, configuration type, and structure age upon the application of explosive removal methods are investigated. The number of structures expected to be removed from the Gulf of Mexico using explosive methods is also forecast over a short-term time horizon according to structure, configuration type, water depth, and a planning area categorization.

LIHEAP as a Textbook Case of Government Befuddlement.
The Low-Income Home Energy Assistance Program federal block grant programhas been a focus of contention since its inception in 1981 over the manner in which funds are allocated to the states. A 1984 revision to the original funding formula that sought to correct an overallocation of funds to cold-weather states has been so constrained as to be ineffective. The means of distributing LIHEAP funds to states needs to be revised.