Louisiana: The State We're In; 223; Farmers, Oil Exploration, Woody Jenkins

Production funding for this program was provided in part through contributions to Louisianians for Educational Television. The following program is a production of Louisiana Public Broadcasting. [Theme music] Good Evening. I'm Beth George. Welcome to this edition of Louisiana: The State We're In. This week we look behind the headlines on stories affecting the state. We hear more bitter words from Louisiana farmers, study oil exploration both here and in the North Atlantic, and profile a conservative candidate for the United States Senate. 1977 may have been the year teachers found their political voice, but, so far in 1978, some of the loudest voices around belong to the nation's farmers as we see in this week's viewpoint. Farmers in America are often viewed as the last bastion of rugged individualism, a boom or bust capitalism based on supply and demand. But now when the cost of

living is too high for many farmers, even in boom years, some of them are organizing and taking their political clout to both Baton Rouge and Washington. This sounds as though the farmer's getting along fine. But this is a false assumption made by many Americans. In 1920 there were 6.5 million farms in the United States. In 58 years, 4 million farms have vanished. This proves something must be wrong to force the disappearance of this many farms. The food industry is our nation's largest and most basic. It contributes over $130 billion annually to the economy, but the farmer is not the person receiving this money. Mr. Batey, why are you here on the steps of the Capitol today? We're laying groundworks for our state legislature to endorse this family farm program. Nearly all, well, most of the Midwestern states, their legislatures have endorsed our program and we feel like we deserve to have our state legislature to endorse it for us because this is predominantly an agricultural

state, too. You just returned from Washington. What sort of feedback did you get up there? Were you encouraged? We were highly encouraged. The urban representatives are for us. We just have to work out a practical program. The big problem is the increased cost of food by way of this 100 percent of parity. But they know that if we don't save this family farmer now, that in a few years when the big people control all the production 100 percent of parity will really be a bargain. So we want to get one step ahead, we've got to save this small family farmer. Do you think that most people are afraid that the increase in food prices will force consumers to turn against the farmer or what? I don't think the consumer is going to turn against us at all. I really don't because the American people are smarter than you think. They know we have a problem. They really know it. We have expressed our problem real good and they have accepted it. Now, the challenge is now to our legislators to work out a reasonable program.

Do you think that local legislatures can then put pressure for quick action on the part of the federal government? Well, they can keep the heat on. Now Senator Long is the most powerful man in the United States, and he's for us 100 percent. He says get me 50 more senators and we'll get that 100 percent of parity or we'll tack it on to every bill that comes out of that House of Representatives. We were really encouraged by him. We know that he's the poor man's friend and we may be the poor group, but we're the necessary group because we're growing your food and fiber. At a press conference, growers of food and fiber heard from the state official most responsible for their livelihood, Commissioner of Agriculture Gil Dozier. We have a very different type situation here in Louisiana than they have in the Midwest. For example, in Iowa and Nebraska and some of those grain states, they have a simple and a singular type problem. We have almost 15 major commodities produced here in Louisiana.

So we have 15 different types of situations. While the sugar people had one of the most devastating years they've ever had, the rice people because of the price had one of the better years that they've had. But to affect ourselves, to help ourselves in Louisiana, President Carter is going to have to come to grips with the question of import quotas, a restriction on imports. I'm married to the concept that that's the only thing that's going to really help agriculture is a restriction on imports because some of the countries that are competing with a commodity that is being produced and sold at a price cheaper than the cost of production here in the United States is what's really hurting us. After implying that it's the middle man who's really hurting farmers, Dozier said 100 percent parity is great in theory, but virtually impossible in practice. But let me tell you what my idea about 100 percent parity is.

In the period of 1910 to 1914 in that four-year span, because of the action taken by Congress and because of the price that was paid at that time for a particular commodity and we'll take a bushel of corn as being the yardstick, let's assume for the sake of this illustration that the bushel of corn brought a dollar a bushel in 1910. At that time that dollar that was derived to the farmer had a certain purchasing power. Now if we equate and move that purchasing power into today's marketplace, the question of parity becomes one that you almost have to go in the back door. You have to back into it as to what the the purchasing power would be and what the price would have to be for that same bushel of corn, taking into account the inflation that we've had since 1910 to 1978.

And that's what parity is in the broadest sense, if you talk about 100 percent parity. To get 100 percent parity, the only mechanical device that I know you could get it with would be direct government funding, which would cost somewhere in the neighborhood of $25 billion per annum. And all of the AAM leadership that I've talked to have told me clearly that you don't want governmental subsidies and I believe that's your position. Batey said that if supply and demand is the only game in town, farmers can certainly limit supply. But he outlined two alternatives to decreased plantings. We have two avenues to go. We can either go the subsidy route, which really we don't like, but we're gonna go any route to get 100 percent of parity. But the other route is that when we go,

when we go the market route, we have to coordinate this with the raising the Social Security checks, the welfare checks, and these people in these ghettos, we've got to raise their allowances to cover to compensate for what this increased food cost will be. Now we realize that when we talk to these people. Now they want us to get 100 percent of parity. They want us to stay in business. The farmers challenged Governor Edwards to endorse their lobbying efforts, both in the state legislature and through Senator Russell Long in Congress. Make up a public statement fortifying, in which you have done, fortifying Senator Long's position that he took when we went to Washington. He said if we would get him 51 senators or just 50 senators along with him that would stick, he would get us a good decent farm bill and he'd hang it on to every bill that came out of that House of Representatives until it was accepted. Now what we really like to challenge you to do is ask our

people in Louisiana to write Russell Long a letter in support of his position. The Longs have always stood up for the poor people and we feel like we are grassroots people and we must ask for some support for him. I'd be very pleased to issue an executive order declaring some day...I'll pick an arbitrary day probably around the middle of February, and declare it as Farmers Day in Louisiana. As part of the executive order I will urge all state employees and state agencies and the citizens of Louisiana to write Senator Long and support his efforts to get some meaningful legislation passed in the National Congress. I'm sure that it would help him in his efforts up there and he'd be pleased to hear from them. I hope that the media will give some attention to the fact that I'm requesting citizens of Louisiana in all walks of life and especially the state employees who depend upon your production in order to help the economy of the state continue to operate. I hope that all of them will just take time out to take a simple postcard and address it to U.S. Senator Russell Long, Washington

D.C. It's very simple. The address is very easy and simply say, Dear Senator Long, we support the farm movement and we urge you to get legislation passed which will help. Even the aid of powerful people like Edwards and Long won't make the complex questions involved in farm economics any simpler. If a solution is found, that solution will almost certainly cause other problems because a nation's economy and the political maneuvers as directed form the tangled web that is not easily unraveled. [Music about farmers] Some weeks ago, we talked with a group from New England seeking support industries for the proposed oil drilling off the Atlantic seaboard. Since then the issue has been clouded by delaying the oil lease sale.

But the story remains and should be watched closely by oil-producing states like Louisiana. This background report outlines what the fuss is all about. To the oilman, the waters of Georges Bank still conceal a long list of unknowns. Oil has never been found here nor has it even been seriously drilled for. But geologists note that some of the formations and soil types they found on the bottom offshore are indicators that oil and gas could be here in quantity. It looks like we have a good sized, or a good thickness, of stratigraphic rocks down there that could entrap, could have generated, could have entrapped and could be a source of significant petroleum accumulation. In order to produce oil fields big enough to justify the expense of offshore drilling, like this operation in the Gulf of Mexico, four geological features must be present

naturally within the ocean bottom. First there must be a source for hydrocarbon or oil and gas formation. This is usually an accumulation of dead plant and animal matter which, over the course of millions of years, yields to high temperatures and pressures to form oil. The second requirement is a reservoir. That is, spaces between the rock and sand particles where oil can form and move around. Third, and most importantly, there must be a trap. That is, a place where large amounts of petroleum can accumulate in one location. Typically such traps contain natural gas, oil and water. Finally the trap must be sealed so that the oil and gas cannot leak out or otherwise escape before it can be drilled. In places where all four of these characteristics are present, source, reservoir, trap and seal, the probability of finding practical quantities of oil is greatest. The bulk of the scientific effort thus far on Georges Bank has been directed at finding those tracts in which these four

conditions occur simultaneously. To look for a source of reservoir formations, 19 oil companies got together three years ago to drill two deep holes in the ocean floor. The first was drilled about 75 miles southeast of Cape Cod, the other about 50 miles further offshore. As the drill bit tore through layers of rock and sediment more than four miles deep into the ocean bottom last summer, onboard geologists were sifting through the shavings of rock brought up with the drilling mud to the platform level. The types of rocks they found were carefully identified and logged and the information was handed over secretly to the oil companies which financed the exploration project. Throughout 1977, the company's own geologists were examining this first-hand account of the makeup of the ocean floor, trying to decide if the Georges Bank bottom fulfills the basic prerequisites of source and reservoir beds.

We are investigating the entire sedimentary column, down to the basement rock or the igneous or metamorphic rock, to see if we have source beds and reservoir beds which would be favorable for commercial accumulation of hydrocarbons. At the same time another group of scientists has been working from the decks of research ships, looking for places where oil traps are likely to exist. Here the technique is called seismology, examination of the ocean floor not by drilling into it, but instead by bouncing sound waves off the bottom. They study the kinds of echoes which return to special sensors right behind the instrument laden ship. These return pulses are carefully logged and charted as the ship cruises the exploration area. Potential oil traps leave a characteristic signature on the seismic charts. Using the vast amount of seismic data gathered shipboard, geologists can actually

draw maps pinpointing the likely spots where oil has accumulated. But even then the science is far from exact, and the same information can be interpreted in vastly different ways. The total information that's available, and what this means in terms of exploration, is really in the eye of the beholder. That's why one person will drill alongside the dry hole of another person on land, for example. That's why one company will think a prospect's no good and another will think it's great. It's really strictly interpretive and the interpretation is quite different between companies. There's an expression by one of the giants in the oil business, "Petroleum is found in the minds of men and minds differ quite a bit." We see the same data and interpret it differently. It is that wide variety of opinion which makes the dynamics of the lease sale so very interesting.

Oil companies combine computer technology with human guesswork to calculate how much they should bid on each tract. To do that, they compute or guess four factors: the probability that oil will be found, the size of the field that might be present within each tract, their projected cost in developing that particular tract, and the rate of return they'd like to see if oil is struck. A complex formula combines those factors and the result is a bid price, essentially an opinion about what each tract is worth. After all that research, the bottom line is nothing more than an educated guess. After the lease sale, the real exploration will begin. More test holes will be dug. More seismic surveys will be made. In some instances, the oil companies will admit they made a mistake. Some tracts will be abandoned. Other tracts perhaps will be worth the full half-billion dollar cost of production. The lease sale, when and if it occurs, will for the first time provide a public consensus of opinions

about whether there is enough oil and gas under the sands of Georges Bank to start drilling for it. Still, no one will truly know its worth unless and until the bit of some companies drilling rig actually strikes oil. If some New Englanders are trying to get oil rigs, some Louisianians are trying to get rid of them, played out rigs that is. The State Department of Natural Resources is currently surveying abandoned drilling structures to ensure that they've been properly plugged for safety. The surveyors are now working in South Louisiana, but will eventually turn their attention north where the state's oil production began at the turn of the century. Louisiana is divided into six conservation districts. In the northern part, we have Monroe, and Shreveport. In the southern part, we have Lake Charles, Lafayette, Houma and New Orleans. We are presently surveying each one of the conservation districts, checking out the inactive fields. That is fields which the wells that were drilled have already been produced

to the ultimate. We are trying to ensure that the wellheads are no longer on the locations, that the wells have been plugged and abandoned and the proper amount of cement has been put in them to ensure that they won't blow out in the future. And also you don't want to wake up one morning, discover that we have all these abandoned wells that aren't anymore producing. Right. Louisiana is known for its oil and gas production. And as this production decreases and ultimately goes to zero at some time in the future whenever that time is, we want to make sure that the wells are also gone. What do you do with an oil field once it has played out? Well, under the present pricing structure, when a well that is not capable of producing in paying quantities, it's abandoned. And unfortunately this is not good economics. If, if the operator were

allowed to get world oil prices or newer upper tier prices, he could probably initiate some innovative ideas to either water flood or do the various things that they can do to stimulate production. But under the Department of Energy rules and regulations, you can only get upper tier price in old fields if you're a stripper producer or a small producer and your well only produces 10 barrels or less per day. So in order to get the upper tier price, you must meticulously keep your wells at this reduced rate of production. Mr. Huls, then does it behoove an oil producer to go in and plug a well and then hope that the price will go up to make it more profitable? Well, that's not economical either nor is it practical to plug in the hope that it will go up because you have lease hold obligations and once you plug and abandon

usually your lease expires and it goes on to some other use. What Commissioner Sutton is in the process of doing is evaluating all old fields from the standpoint of the plugging and the abandoning procedure which is under his jurisdiction. I would imagine as the value of a barrel of crude oil ascends and it's true value becomes known, that a lot of these old areas will be revitalized and knowledge of these fields, as to the plugging and the abandoning procedure, where the plug was set, where casing was set and all of the other engineering data that would be necessary in the event they went back in to go into these old fields, that would be

very interesting data. Do you think that our grandchildren are going to wake up and look around and find themselves surrounded by abandoned wells and fields? Are we going to have these vestiges of the great oil and gas boom even when the oil and gas is no longer here in Louisiana? Well, I'm really not concerned about my grandchildren. I think the next generation are going to have to handle this the best way they can, just as just what we've done. I would say this. That with the technical ability and the inquisitive minds that are coming out of the schools in the technical areas of our life today that the value of a barrel of crude oil will be so great that whatever its cost, of going to recover, will be worthwhile. The study of abandoned wells is expected to take about a year, but less than nine months remain before the Louisiana's senatorial primary. In these short months, the young state

representative hopes to expand a highly localized reputation into statewide and national prominence. Representative Woody Jenkins is not widely known outside his Baton Rouge district. He's beginning his uphill battle against J. Bennett Johnston with all the media savvy of the journalist he was and the advertising man he is. LPB's John Demers reports, however, that Jenkins' campaign will be more than baby kissing and hand shaking, even among those repulsed by his conservatism. The 31-year-old lawyer and legislator has a reputation for doing his homework and voting his sometimes unpopular convictions. In fact he plans to orchestrate his Senate race with familiar tunes from the conservative song book. The federal budget can be balanced and the national debt can be reduced. The cruel ravages of inflation can be ended and the dollar can once again be sound and stable. As spending is brought under control,

taxes can be reduced so that people will have an incentive to work and be productive and so that business will have the capital investments necessary for the creation of new jobs. The free enterprise system can be freed from the heavy hand of the federal bureaucracy. And our economy can again be the most prosperous on Earth. In the family of nations, the United States can stand for human liberty without apology or appeasement. Our national defense can once again be second to none and we can have the power to aid our allies and punish our enemies. All of these things can happen if we change the United States Senate. [Applause]

Many of the changes Jenkins would like to make concern the nation's economy. Though he admits Johnston is a popular political personality in Louisiana, he insists the incumbent can be beaten if held accountable for his votes on such issues as deficit spending and Social Security taxation. If left unchallenged, the Johnston philosophy will mortgage the future earnings of all future generations of Americans and will lead to economic bankruptcy. Thomas Jefferson said no generation has the right to bind succeeding generations with vast public debts. And James Madison said a public debt is a public curse. We must heed their warnings or accept the tragic consequences. Now, let's look at taxes. Americans are now among the most heavily taxed people in the world. We pay

40 percent of our income, on the average, in local, state and federal taxes. On December 18th of last year, Johnston voted for the largest tax increase in American history, the Social Security tax increase, which will cost us $227 billion, $227 billion over the next 10 years. It will raise the Social Security taxes of many in this room by more than 300 percent, yet Social Security will still not guarantee a secure retirement for our elderly people or an adequate return on their investment for younger people. In the field of energy, our junior senator portrays himself as an advocate of deregulation. But as in many other areas, in this area he talks one way in Louisiana and does just the opposite in Washington. Johnston was an early advocate of wage and price controls in 1973. In fact, when the controls were taken off, he argued strongly that they ought to be restored. How can someone who favors controls on the price

of goods and services be effective in arguing for the decontrol of natural gas prices? His arguments can never be based on principle. They must always be based on expediency. Few can accuse Jenkins' no-compromise conservatism of expediency, but politics after all is the art of compromise. For Jenkins to have a shot at Johnston, key questions must be answered. Will the nation's conservatives help bankroll a relative unknown? Can money, even a lot of it, buy Jenkins the statewide name recognition he so desperately needs? And finally can Louisiana voters get excited about or even comprehend a serious issue-based campaign? The serious issue-based personalities of both Johnston and Jenkins imply that they may have to. In these inflated times, a decision to run for the U.S. Senate cannot be made lightly. To mount his campaign against the high profile incumbent, Jenkins expects to spend as much as a million

dollars. If Louisiana politics is an endless process of turning the fat hogs out and letting the lean hogs in, economic realities are forcing the lean hogs to be fatter and fatter all the time. Next week we'll talk to incumbent Senator J. Bennett Johnston. I'm Beth George. Good evening. [Theme music] The preceding was an LPB production. Production funding for this program was provided in part through contributions to Louisianians

for Educational Television.