Louisiana's energy consumption

Summary: The state of Louisiana is the fourth-largest energy consumer in the country. Tapping vast reserves of oil and natural gas on land and offshore in the Gulf of Mexico, the state serves as a global center for oil refining and natural gas distribution.

Among the states, Louisiana has the third-highest natural gas production and has about 7 percent of the country's natural gas reserves. Natural gas generated about 68 percent of the state's electricity in 2022 while nuclear power generated about 15 percent. Renewable resources contributed about 3.5 percent of the state's electricity.

Louisiana’s largest power facilities include several natural gas plants, two nuclear plants, and a few coal plants. Major electric utilities include Entergy Corporation, Cleco Corporation, and Southwestern Electric Power Company, which are publicly traded (Southwestern through its parent, American Electric Power). Combined, these three providers deliver more than 80 percent of retail electricity sales in Louisiana.

Energy Sources

Oil production in Louisiana began in 1901. The state reached peak production in 1969, but still ranks high among oil-producing states, placing tenth in 2024. Petrochemical refining is a major industry; Louisiana has one of the largest refining capacities in the nation. Louisiana is home to many active oil refineries, and accounts for nearly 20 percent of the United States’ total crude oil refining capacity. Three of the ten largest US refineries are located in Louisiana: an ExxonMobil facility in Baton Rouge, a Marathon Oil facility in Garyville, and a Citgo facility in Lake Charles.

There are hundreds of offshore oil wells operating in Louisiana’s section of the Gulf of Mexico. The country’s first freestanding offshore platform was completed off the coast of Louisiana in 1938. Historically, offshore drilling was feasible only in shallow waters close to shore. As technology improved, producers began drilling in deeper waters. By 1998, the majority of oil extracted in the Gulf of Mexico came from 1,000 feet or more beneath the ocean surface. With greater depths came growing technical challenges. Drilling rigs have also proven vulnerable to hurricanes, most notably Hurricane Katrina in 2005.

On April 20, 2010, an explosion occurred onboard the Deepwater Horizon oil rig, owned by BP (formerly British Petroleum), which was operating 48 miles off the coast of Louisiana. The explosion killed 11 workers, sank the rig, and caused oil to begin gushing from the mangled wellhead on the sea-floor. The well continued to release oil for more than 12 weeks before it was capped. Efforts to stop the flow were complicated by the fact that the wellhead was 5,000 feet (nearly a mile) beneath the ocean surface. The incident proved to be the largest oil spill by volume in US history to that date. The full extent of the environmental, economic, and social consequences from the spill continues to be analyzed. The incident led to new rules regarding offshore oil drilling and response to spills, as well as restructuring of federal oversight agencies.

Natural gas is also abundant in Louisiana. The state was the third-largest producer of natural gas in the nation in 2022, accounting for approximately 11 percent of domestic marketed production. Louisiana imports and exports natural gas. In 2022, it received 3.9 trillion cubic feet of natural gas and delivered 5.5 trilling cubic feet. Innovations in drilling technology have drastically reduced production costs and allowed producers to extract natural gas from underground rock formations known as shale. The 2-mile-deep Haynesville Shale Formation, centered in northwestern Louisiana and eastern Texas, is an example of a field that has experienced a surge of interest and growth. Estimated to be one of the largest natural gas deposits in the world, the Haynesville Shale became the United States’ most productive field in 2011, with more than 1,000 wells utilizing horizontal drilling and hydrofracturing techniques, with permits secured for nearly as many new wells. It set a record in March 2023, producing 14.5 billion cubic feet of natural has.

Louisiana receives significant revenues from its oil and gas production. By 2004, the state was collecting mineral revenues in excess of $1 billion annually. In 2008, the total exceeded $2 billion. By 2020, its revenues from oil and gas reached $73 billion. The federal government, too, receives substantial income by issuing offshore leases to oil companies for sections of the Gulf of Mexico.

Transmission

An extensive network of transmission infrastructure has developed in Louisiana to accommodate shipments of energy produced within the state, offshore, and abroad. Louisiana has oil import sites in six cities. It is also home to the Louisiana Offshore Oil Port (LOOP), the only deep-draft tanker port in the country. Oil tankers that are too large to enter into coastal ports use LOOP to offload their supplies while remaining at sea. Unloaded at LOOP, the oil is transmitted through a series of hoses to land-based facilities for processing.

Louisiana’s natural gas infrastructure is also extensive. There are many interstate natural gas pipelines passing through the state, as well as many interstate lines. A significant portion of natural gas consumed in the United States moves through the sprawling Henry Hub, a junction for thirteen pipelines near the town of Erath. The Henry Hub also serves as the location at which the price of natural gas is traded on the New York Mercantile Exchange. Louisiana is home to three of the nation’s nine import facilities for liquefied natural gas (LNG). Among them is the Sabine Pass terminal on the Louisiana-Texas border, the largest such facility in the United States. A fourth terminal, the Gulf Gateway Energy Bridge, was the world’s first deepwater facility for unloading natural gas. Similar to LOOP, the port allows large tankers to offload their shipments without entering shallow water. In 2016, the Sabine Pass facility opened a large-scale LNG export terminal, the first in the nation outside of Alaska.

Two of the four sites comprising the US Strategic Petroleum Reserve (SPR) are located in Louisiana. The SPR acts as an emergency stockpile of oil that can be tapped in times of supply disruptions. It was established during the 1970s in reaction to the oil crises after the Arab Oil Embargo. SPR oil is stored in massive underground salt formations and can be drawn to the surface at any time.

Offshore production can be affected by hurricanes, which enter the Gulf of Mexico periodically from June to November. These storms disrupt the flow of oil from offshore platforms and damage infrastructure. Hurricanes Katrina and Rita in 2005 destroyed more than 100 platforms and damaged a number of vessels and pipelines. Supply disruptions caused by hurricanes have led the US president to authorize the tapping of SPR in the past.

Bibliography

"Louisiana's Expanding Energy Sector." Louisiana Economic Development, 2024, www.opportunitylouisiana.com/key-industries/energy. Accessed 8 Aug. 2024.

"Louisiana: Profile Analysis." US Energy Information Administration, 15 June 2023, www.eia.gov/state/analysis.php?sid=LA. Accessed 5 Aug. 2024.

Muller, Wesley. "Louisiana Residents Share Similar Views of Fossil Fuels and Renewables." Renewable Energy World, 14 June 2024, www.renewableenergyworld.com/solar/utility-scale/louisiana-residents-share-similar-views-on-fossil-fuels-and-renewables-regardless-of-politics/#gref. Accessed 5 Aug. 2024.