Louisiana

Overview

Situated at the mouth of the Mississippi River, Louisiana has abundant crude oil and natural gas resources both onshore and offshore, buried beneath the thick sediments of the Mississippi Delta. Freshwater and saltwater wetlands cover about one-third of Louisiana’s land area. The state rises gradually from the marshes, bayous, and estuaries along its extensive Gulf of Mexico coastline to the prairie of the state’s north and west. On average, Louisiana is only 100 feet above sea level.

In addition to crude oil and natural gas, Louisiana’s energy resources include minor deposits of lignite coal and substantial biomass potential from agricultural byproducts and from wood and wood waste. The state’s abundant water, subtropical climate, and rich soils create a diverse agricultural economy that includes sugar cane, rice, and livestock, as well as forest products from upland pine and hardwood forests.

Louisiana’s total energy consumption and per capita energy consumption both rank among the highest in the nation, largely because of an industrial sector dominated by the energy-intensive chemical, petroleum, and natural gas industries. Energy consumption in Louisiana’s industrial sector is second only to that of Texas. Although demand for air conditioning is high during the hot, humid summer months, heating demand is limited in the moderate winters, and Louisiana’s total and per capita energy consumption in the residential sector are both near the national median.

Renewable Energy

Louisiana obtains less than 4% of its net electricity generation from renewable sources. Biomass is abundant in Louisiana, and electricity generated from wood and wood waste accounts for more than two-thirds of the state’s renewable generation. Hydroelectric power provides almost all of the remaining renewable generation. Sugar cane waste, called bagasse, and other agricultural residues can provide additional biomass resources. Facilities to convert bagasse into pellets for power plant fuel and other products are being developed.

Louisiana has a small amount of distributed (customer-sited, small-scale) solar photovoltaic (PV) generation, which provided all of the state’s solar electricity generation in 2015. State tax credits for installation of distributed solar systems, which were first available in 2008, are fully subscribed and the program will end on January 1, 2018. Louisiana has little wind potential. In 2013, the state legislature repealed state tax credits for the development of wind systems.

The Louisiana Public Service Commission initiated a renewable energy pilot program in 2010 to determine whether a renewable portfolio standard (RPS) was suitable for the state. In 2013, the commission concluded that Louisiana did not need a mandatory RPS. Louisiana has other policies designed to encourage renewable energy and energy efficiency, including voluntary electric utility efficiency programs, energy standards for public buildings, and net metering. Distributed installations of up to 25 kilowatts using solar PV, wind, biomass, and other renewable technologies are eligible for utility net metering, but total consumer capacity connected to the system is limited to 0.5% of each utility’s load. Because customer demand for distributed connections has exceeded that limit, the state is considering how to accommodate additional distributed facilities.

Electricity

Per capita retail sales of electricity in Louisiana are among the highest in the nation, particularly in the residential sector, where three-fifths of all households use electricity for home heating and almost all households have air conditioning. The primary fuel used for electricity generation in Louisiana is natural gas. It provides about three-fifths of the state’s net electricity generation, nearly twice the national average. Coal was Louisiana’s second-leading source for electricity generation for decades but now provides less generation than the state’s two single-reactor nuclear power plants. They are located along the Mississippi River and typically contribute about one-sixth of the state’s net electricity generation. Petroleum, petroleum coke, industrial gases, woody biomass, and hydroelectricity provide nearly all the rest of Louisiana’s net electricity generation. About three-tenths of Louisiana’s net electricity is generated at industrial and commercial facilities. The state does not generate enough electricity to meet consumer demand and receives power from the regional interstate grid.

Natural Gas

Louisiana is one of the top natural gas-producing states in the country. In 2015, the state accounted for about 6% of U.S. marketed production and, at year’s end, held about 5% of the nation’s proved dry natural gas reserves. Among its many productive areas is the Haynesville Shale. Louisiana is also a top natural gas-consuming state. Nearly three-fourths of its production is consumed in the state, mainly by the industrial sector.

The first large-scale LNG export terminal in the Lower 48 states is in Louisiana.

Louisiana delivers the remaining one-fourth of its natural gas production to other states via a vast network of interstate pipelines. More than two-thirds of the natural gas entering Louisiana comes from Texas. Most of the rest comes onshore from the federal OCS in the Gulf of Mexico. Louisiana plays an essential role in the movement of natural gas from the U.S. Gulf Coast region to markets throughout the country. The state has five natural gas marketing centers. The most active natural gas market center in North America is the Henry Hub in Erath, Louisiana, where nine interstate and four intrastate pipelines interconnect to provide natural gas to major markets throughout the country. The Henry Hub is the chief pricing benchmark location for natural gas physical and futures trading on the New York Mercantile Exchange.

Nineteen natural gas storage facilities are located in salt caverns and depleted fields in Louisiana, providing about one-twelfth of U.S. storage capability. Those facilities allow Louisiana to store natural gas when national demand is low and to quickly ramp up delivery when markets across the country require larger volumes. Historically, natural gas demand was highest in the winter for home heating. With the growing use of natural gas for U.S. electricity generation, Louisiana now withdraws natural gas from storage during the summer months as well, when electricity demand rises for air conditioning.

In February 2016, the Sabine Pass liquefaction plant and tanker terminal opened, giving Louisiana the first large-scale liquefied natural gas (LNG) export terminal in the Lower 48 states. Sabine Pass, like Louisiana’s two other LNG terminals, was originally designed for imports. All three terminals are in the process of adding capability to export LNG. The world’s first deepwater LNG import facility, the Gulf Gateway Energy Bridge Deepwater Port, was located 116 miles off the Louisiana coast in federal waters. Commissioned in March 2005, this facility delivered natural gas to the Gulf Coast region through two offshore pipeline systems until Hurricane Ike damaged both pipelines in September 2008. The port was decommissioned in 2012.

Industrial processes use almost seven-tenths of the natural gas consumed in Louisiana. Electricity generation consumes another one-fourth. One-third of Louisiana households rely on natural gas for home heating, but the volume consumed is small because of the state’s mild winters. In many years, residential use is less than the amount used statewide by pipelines to maintain pressure. Louisiana’s pipeline use of natural gas is among the largest of any state in the nation.

Source: U.S. Energy Information Administration (Jan 2017)