Gulf states’ share of oil, gas revenues would soar under drilling bill
WASHINGTON – Oil and gas drilling could resume in most coastal waters after a 25-year freeze under a bill that would generate billions of dollars for four Gulf states that already welcome offshore rigs.The House measure also would benefit energy companies that operate miles from the U.S. shore by easing environmental rules for coal and hardrock mining and production of geothermal energy.In addition, the bill would direct nearly $6 billion over 10 years for a range of programs such as rural schools, engineering scholarships, job training and research into renewable energy sources.The House planned a vote on the legislation on Thursday.The bill would end a freeze on oil and gas drilling in place since the early 1980s over most of the Outer Continental Shelf waters beyond the eastern and central Gulf of Mexico.The drilling restriction still would apply within 50 miles of shore.The protected waters, spanning both coasts from New England to southern Alaska, would be opened to drilling in areas beyond 50 miles unless a state acts to continue the freeze.Opponents of the legislation say the energy development raises the risk of an oil spill in sensitive waters and near states that depend heavily on tourism and recreation.While proponents say opening such areas to drilling would provide access to badly needed energy, states that may gain the most already have offshore drilling rigs: Texas, Louisiana, Mississippi and Alabama.An initial analysis of the legislation by the nonpartisan Congressional Budget Office estimates that the proposed changes in oil and gas royalty sharing included in the bill would funnel $20.6 billion to states between 2006-2017; all but $1.7 billion of that money would go to those four Gulf states.Those numbers could change, at least for the early years, because the bill’s sponsors planned to extend the phase-in for increased revenue sharing with the states.The waters off Texas, Louisiana, Mississippi and Alabama account for virtually all of the country’s offshore oil and gas now. Those states stand to gain billions of dollars in increased revenue if the bill becomes law.Gulf Coast lawmakers say that is fair and that most of the money would pay to repair coastal wetlands, barriers and flood protection.”It’s not a windfall,” said Rep. Charlie Melancon, D-La. “We’ve paid for it through the years. … It’s something we deserve to have just like other states that provide energy and get royalties.”Melancon and Rep. Bobby Jindal, R-La., who introduced the bill, said Louisiana and the other Gulf Coast states have allowed offshore oil and gas production for decades with little return on the royalties companies sent to Washington.Last year Louisiana received only about $30 million from more than $6 billion worth of oil and gas taken from federal waters off its shores, they said.The proposed revenue-sharing has raised alarm at the Interior Department because every dollar going to the states would be one fewer dollar heading to the Treasury.”Our preliminary and very rough estimates indicate that these provisions, if unchanged, would result in a decline of $69 billion of retained federal royalties over 15 years,” wrote R.M. “Johnnie” Burton, head of department’s Minerals Management Service.The department estimates that under current leasing plans and the freeze in place, only about $5 billion of $205 billion in expected offshore royalty payments over the next 15 years would go the states.Under the proposed changes in the House bill, the federal share would fall to 59 percent and the state’s share would increase to 41 percent, or $91 billion.A section of the bill unrelated to offshore drilling would make it easier for energy companies to avoid environmental restoration requirements and get out of leases if they run into permitting problems. It would apply to extraction of oil, natural gas, coal, geothermal energy or hardrock minerals such as gold or silver.