Axios Event: Louisiana energy industry faces uncertainty amid tariffs and budget cuts

BATON ROUGE, La. – Continuing to grow its robust energy industry is a main priority for Louisiana's economic growth, leaders said at a June 4 Axios event.

Axios' Chelsea Brasted and Chuck McCutcheon spoke with Tulane Energy Institute associate director and professor Eric Smith, and Louisiana Economic Development secretary Susan Bourgeois at the event, sponsored by Shell.

The big picture: Louisiana has historically been a national leader in energy production and liquefied natural gas exports, and the state is focused on maintaining that leadership.

• "Our infrastructure and our legacy in so much of the energy space really incredibly well positions us for a future in it as well," Bourgeois said.
• Energy is one of the state's top priority sectors for future economic growth. "I would say energy and process industries probably has the biggest upside in the short run," she said.

Context: Louisiana's LNG export capacity is an "undeniable asset" built on access to abundant natural gas and vast pipelines spanning tens of thousands of miles, Bourgeois said.

Yes, but: Tariff debates and budget cuts in Washington are creating uncertainty for state energy projects, Smith said.

What they're saying: "We have these huge spending plans in Louisiana, $60 billion or so in capital projects that kind of span everywhere from additional LNG export capabilities to producing low-carbon steel," Smith said.

• "They all depend on somebody investing money … people don't invest if they don't think they're going to get paid back."
• "Louisiana doesn't control the tariff decisions. That's something that comes out of Washington – but the effects can be immediate, and we need to worry about that."

The Energy Department's cancellation of $3.7 billion in carbon capture and sequestration (CCS) grants for already approved projects "is a no-no if you're trying to build confidence in long-term economic benefits," Smith said.

• The biggest issue for Louisiana, he said, is the impact of carbon capture program cuts on the state's ability to remain a leader in hydrogen production.

• "We can't do that without CCS. If you want to have a hydrogen hub in Louisiana, you want to switch over and decarbonize some of the industry"

Content from the sponsored segment:

In a View From the Top conversation, Rick Tallant, Shell EVP of supply chain, contracting and procurement, said that Louisiana is well positioned to lead in production of both traditional and newer energy sources.

• "We have the traditional forms of energy that we all talk about – oil and gas, refineries, et cetera. But Louisiana, I think, is a great central location for the new energy of the future."
• "So we were talking about CCS previously, we're talking about lower carbon fuels that will be able to help fuel the world, we're talking about hydrogen, Louisiana is situated in a great place to do that."