For the most part, a more than two-decade-old moratorium on new oil and gas drilling in Lake Pontchartrain has left pre-existing production — which was grandfathered in — out of sight and out of mind for residents across the region.
That changed Sunday, when an oil and gas platform near the Treasure Chest riverboat casino exploded, sending seven workers to the hospital with injuries. Late Monday, rescue crews were still searching for an eighth crew member.
The platform is owned by Clovelly Oil Co., a New Orleans-based independent exploration firm that has a majority stake in the seven active wells in the lake, according to Patrick Courreges, a spokesman for the Louisiana Department of Natural Resources.
Hydra Steam Generator Inc., a Houston contractor, was cleaning the platform's pipes when the explosion occurred, resulting in a large fire that broke out on the structure's top tier. Investigators were still probing what caused the accident.
The platform serves as a transfer station for Clovelly's five active wells, taking in oil and gas from nearby rigs and storing the material until it can be shipped out by barge. The platform was not engaged in active drilling.
Of Clovelly's five wells, three primarily produce oil, one primarily produces natural gas, and the other is a saltwater disposal well, where water collected as a byproduct of oil and gas production is deposited.
The company's active wells account for the bulk of the current production in the lake, roughly 125 barrels of oil and 415 million cubic feet of gas per day, Courreges said.
Clovelly spokeswoman Virginia Miller said the work being done on the platform when the fire occurred was routine maintenance and had nothing to do with any drilling permits. She said the three oil wells were all shut in at the time, so no oil was spilled. The gas well was flowing but was shut in shortly after the explosion.
Overall, Clovelly has a dozen active wells in Louisiana and has a permit to drill a new one. Seven of the wells are in Evangeline Parish, and five are in Jefferson Parish in Lake Pontchartrain.
Clovelly also has six active wells in Mississippi, the company said.
The five wells in Lake Pontchartrain are tied to the platform where the explosion occurred through pipelines that run along the lake bottom. Natural gas products are separated into gas and liquid condensates, similar to propane and commonly called “natural gasoline.” The gas is distributed to refineries via pipelines. The liquid condensate and heavier crude oil are collected on the platform and sent off on barges.
The wells in Lake Pontchartrain were first drilled in 1973, the same year Clovelly Oil Co. was registered with the state.
Clovelly recently received permits to drill a new well in Lake Pontchartrain, farther west in St. Charles Parish waters, and a “workover” permit to redrill an existing well closer to the accident site, in Jefferson Parish waters.
A review of inspection reports on all of Clovelly’s Lake Pontchartrain wells and facilities since 2010 found no safety or permit violations. The platform was last inspected last month and passed all categories.
Drilling in Lake Pontchartrain was mostly curtailed in 1991, when the state Mineral Board voted to ban new development amid concern about pollution. The move allowed energy operators to produce oil and gas on existing leases in the lake as long as they complied with regulatory requirements.
The board indefinitely extended the ban in 2000. About a decade ago, some industry backers, including the Louisiana Oil and Gas Association, lobbied unsuccessfully for it to be lifted, but the effort died as environmental groups, including the Lake Pontchartrain Basin Foundation, lined up in opposition.
In 2000, the Louisiana Geological Survey estimated that the lake held reserves of potentially 137 billion cubic feet of natural gas and 14 million barrels of oil and condensate, totaling about 38 million barrels of oil.
In a 2010 report, the Lake Pontchartrain Basin Foundation found that more than three decades of drilling in the lake had yielded 119 billion cubic feet of natural gas and 12 million barrels of oil and condensate — less than one-fifth of south Louisiana's annual production.
"The low production is due to the relatively poor conditions for oil and gas accumulations in the lake, and it is the reason major oil companies have generally avoided Lake Pontchartrain," the group's report said. "As far as we know, no major companies are interested in lifting the moratorium."
But some industry officials — including Gifford Briggs, acting president of the Louisiana Oil and Gas Association — contend that drilling in the lake offers advantages over the costlier deepwater Gulf of Mexico.
"If you're in the middle of Lake Pontchartrain, a lot of those challenges aren't there, so you're going to be able to look at producing the resources at a lower cost," Briggs said. "Because of that, it's more economical."
The foundation's report also assessed oil and gas platforms and structures in the lake in 2009, finding issues with many that remained, including at least seven in "various stages of disassembly, decay and disrepair," which it said would likely become worse during future storms and potentially pose a threat to navigation.
The report sided against lifting the ban, saying that "the risk of spill is real and the potential adequate spill cleanup is very poor in highly sensitive habitats."
Although drilling in the lake offers the advantage of being "very close to a market, regardless of what you find," the area has offered marginal potential compared to other drilling options, said Eric Smith, associate director of the Tulane Energy Institute.
That was probably a leading factor in why operators didn't loudly object to the moratorium in the first place, he added.
"It's going to cost millions of dollars to restore this platform, and there's not millions of dollars worth of oil and gas left in the ground," he said, predicting that Clovelly may ultimately decide to plug and abandon the wells and remove the fire-damaged platform.
Oil Co., the New Orleans-based company that runs the oil and gas platform that caught fire in Lake Pontchartrain on Sunday, has been more active in the long dormant oilfield in recent years.
The company, which has 10 employees, received permits to drill at old wells in 2016 and 2017 and is looking to drill a brand-new well in Lake Pontchartrain, too.
Clovelly has 12 active wells in Louisiana – seven in Evangeline Parish, and five in Jefferson Parish in Lake Pontchartrain. A new well was permitted in January to be drilled in St. Charles Parish.
Clovelly also has six active wells in Mississippi, the company says.
The five active wells in Lake Pontchartrain include three oil wells, one natural gas well and one saltwater disposal well, all of which feed into the storage and production facility that caught fire Sunday.
Those five wells are connected to the central facility through pipelines running along the bottom of the lake. The natural gas products are separated into gas and liquid condensates, which are similar to propane and commonly called “natural gasoline.” The gas is distributed to refineries via pipelines. The liquid condensate and heavier crude oil are collected on the platform and sent off on barges.
That group of wells off the Kenner coast were first drilled in 1973, the same year Clovelly Oil Co. was first registered with the Louisiana Secretary of State. Clovelly went through two mergers, one in 1983 and the other in 1991, combining Clovelly Drilling and Development, Clovelly Energy, Pine Prairie Oil Co. and Lake Pontchartrain Gas Producing Co.
Clovelly recently received permits to drill a new well in Lake Pontchartrain, further west in St. Charles Parish, and a “workover” permit to re-drill an existing well closer to the accident site.
Clovelly spokeswoman Virginia Miller said the work on the platform when the fire occurred was routine maintenance and had nothing to do with any of the planned drilling work. She said the three oil wells were all shut in at the time of the incident, so no oil was spilled. The gas well was flowing, but was shut in shortly after the explosion Sunday, she said.
The company later released a statement that noted crews were cleaning wax (paraffin) that had built up in the tubes connecting the oil wells to the platform. The statement is below:
“While the cause of the accident is under investigation, we can say that routine maintenance was being conducted on the platform and the flow lines that feed it, specifically cleaning of paraffin from flow lines using steam. Lines from 2 wells had been successfully cleaned and personnel were in the process of cleaning the third (of 3) when the incident occurred. The 3 oil wells were shut in before the cleaning.”
A review of the inspection reports of all of Clovelly’s Lake Pontchartrain wells and facilities since 2010 found no safety or permit violations. The platform was last inspected last month and passed all categories.
The Coast Guard found pollution violations at a facility in the same oil field in 2001, but Miller said Clovelly was not responsible and the main facility owner, Dominion Oklahoma Texas Exploration Co., paid the federal fine.