Administration opposes bill to share OCS revenue with coastal states

Tighter federal budgets and more pressure to reduce the budget deficit make sharing US Outer Continental Shelf energy revenue with coastal states and communities unaffordable and impractical, an Obama administration official told the Senate Energy and Natural Resources Committee on July 23. Two cosponsors of an OCS revenue-sharing bill countered that it’s essential and long overdue.

“The revenue-sharing provisions of S. 1273 would ultimately reduce the net return to taxpayers in every state from the development of offshore energy resources owned by all Americans, have significant and long-term costs to the federal treasury, and increase the federal deficit,” said Pamela K. Haze, deputy US Interior secretary for budget, finance, performance, and acquisition.

“In addition, the bill does not appear to be targeted to achieve clear conservation or energy policy outcomes,” Haze said, adding, “For these reasons, the administration cannot support the bill.”

But the bill’s sponsors—Lisa Murkowski (R-Alas.), the committee’s ranking minority member, and Mary L. Landrieu (D-La.)—countered that coastal states in general and communities in particular are asked to withstand energy development impacts without getting any of the revenue directly.

“It doesn’t make any difference if your project is one, three, or 20 miles offshore,” Murkowski said. “It still uses coastal communities’ resources, and their assets are limited. We know there will be infrastructure impacts because we can see what’s happened to states farther south.”

Landrieu said, “Whether you’re standing on the coast of Oregon, Florida, Louisiana, or Alaska, you can see oil and gas platforms and windmills generating revenue for the federal government, but not for the communities that can’t afford an emergency room at their local hospital.”

More than $5 billion

Haze said US Department of the Interior calculations made since Murkowski and Landrieu introduced the bill a week earlier would like reduce offshore energy revenue deposits to the US Treasury by more than $5 billion through 2022, and at a greater rate thereafter. “This loss of revenue to the Treasury is a major concern for the administration as agencies are already forced to do more with less under sequestration,” she observed.

The measure also would provide $62.5 million/year—slightly less than 7% of the Land and Water Conservation Fund’s annual $900 million commitment—to the fund’s state grants, which are only part of its operation, Haze said.

“The bill’s insufficient funding and exclusion of most LWCF programs are major concerns, and are inconsistent with the president’s budget request to establish mandatory dedicated funding for LWCF programs, with full funding at $900 million annually beginning in 2015,” she indicated.

But witnesses from coastal states and communities supported Murkowski and Landrieu’s assertion that receiving a share of federal offshore revenue is both fair and necessary.

“Congress should pass this legislation now, because it helps to ensure that state and local governments will have resources they need to keep up with infrastructure requirements, expand emergency response and search and rescue capabilities, take an active role in oil spill preparedness, and work to maintain healthy communities and a healthy ecosystem,” maintained Charlotte Brower, mayor of Alaska’s North Slope Borough.

Reggie Dupre, executive director of the Terrebonne Levee and Conservation District in Houma, La., explained that levees in the state and other Mississippi River flood control measures since the early 20th century have benefited the rest of the country, but advanced the state’s subsidence and coastal erosion rates.

‘Answers the call’

“Today, the people of Louisiana’s gift to the country is affordable domestic energy through its service of the oil and gas industry,” he said. “My region is a leader in this service especially that of deepwater oil and gas production. Our ability to work on this coast is threatened by our problems, but our dedication and resilience answers the call each time.”

Cathie J. France, deputy director for energy policy in Virginia’s Mines, Minerals, and Energy Department, said, “I’m always taken aback that we have to pick winners and losers, and that there’s this false line 3 miles offshore.”

She added, “Virginia has one of the most robust ports on the East Coast. With offshore energy production—whether oil, gas, or wind—upgrades will need to be made to bring that energy to all the other states. Giving the states an unfunded mandate to do that is false and ingenuous. It has to be a true partnership to mitigate impacts on coastal communities.”

The discussion is largely academic if most of the federal OCS remains closed to energy resource development, noted National Ocean Industries Association Pres. Randall B. Luthi. “Companies invest capital where they’re allowed to work. This could divert operations to other countries,” he warned.

“It’s only by providing additional oil and gas access that this theoretical resource revenue can become reality,” Luthi said. “Congressional delegations from South Carolina and Virginia have introduced legislation to open areas off their shares. Only in Washington, DC, do we think that getting 100% of nothing is preferable to getting 60% of something.”

Murkowski said S. 1273’s aim was not to open more of the OCS to energy development, but correct a revenue-sharing inequity that could advance that goal in the long run. She added that she and Landrieu plan to find ways to offset any of the bill’s costs to the federal treasury before moving their bill out of committee and seeking a full Senate vote.

Contact Nick Snow at nicks@pennwell.com.

Related Articles

Obama’s proposed fiscal 2016 budget recycles oil tax increases

02/02/2015 US President Barack Obama has proposed his federal budget for fiscal 2016 that he said was designed to help a beleaguered middle class take advanta...

MOL absorbs Eni’s Romanian retail assets

02/02/2015

MOL Group, Budapest, has completed the acquisition of Eni Romania, including 42 service stations to be rebranded under the MOL name.

CNOOC subsidiary inks deal for grassroots refinery

02/02/2015 Hebei Zhongjie Petrochemical Group Co. Ltd., a subsidiary of China National Offshore Oil Corp. (CNOOC), has entered into a $700 million agreement w...

Pessimism mounts over UK offshore industry

02/02/2015

Pessimism about the UK offshore oil and gas industry is gaining momentum.

EnLink agrees to purchase Coronado Midstream for $600 million

02/02/2015 EnLink Midstream has agreed to acquire Coronado Midstream Holdings LLC, which owns natural gas gathering and processing facilities in the Permian b...

Antero trimming, delaying Marcellus drilling

02/02/2015 Antero Resources Corp., Denver, has announced a $1.8 billion budget for 2015, which is down 41% from 2014. The independent said it plans to defer c...

Woodside gets NEB approval for British Columbia LNG exports

02/02/2015 Woodside Energy Holdings Pty. Ltd. has received approval from Canada’s National Energy Board on its application for a 25-year natural gas export li...

Syncrude sees additional $260-400 million in possible budget cuts

02/02/2015 The estimate for capital expenditures has also been reduced to $451 million net to COS, which includes $104 million of remaining expenditures on ma...

Kerry expects to receive other agencies’ Keystone XL reports soon

02/02/2015 US Sec. of State John F. Kerry said he expects to receive other federal agencies and departments’ reports soon on the proposed Keystone XL crude oi...
White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts

On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected