Watching Government: Lousiana's OCS gambit

April 17, 2006
How likely is it that Louisiana-which has supported oil and gas development off its coast-will try to delay or block an Outer Continental Shelf lease sale scheduled for this summer?

How likely is it that Louisiana-which has supported oil and gas development off its coast-will try to delay or block an Outer Continental Shelf lease sale scheduled for this summer?

“Louisiana is fighting for our fair share of revenues from offshore oil and gas drilling,” Gov. Kathleen Babineaux Blanco said in her 2006 state-of-the-state address Mar. 27. “I have threatened to block the sale of oil and gas leases up for renewal in August if we do not see progress.”

Scott Kirkpatrick, the governor’s policy advisor for natural resources, environment, and transportation, said the state could do this by certifying that the lease sale would be inconsistent with the plan Louisiana was required to develop under the federal Coastal Zone Management Act.

The federal government-in this case, the Minerals Management Service-could try to override the finding, and the state could then take the matter to court, he told OGJ.

“This is a case we’ve taken to the federal government for a long time. Certainly in the wake of Hurricanes Katrina and Rita, it has an even greater significance. Coastal restoration and hurricane protection are vital to the protection of communities that support offshore oil and gas activities,” Kirkpatrick said.

Price of support

Louisiana’s push for 50% of federal revenues from oil and gas produced off its coast comes amid strong congressional interest in expanding production from federal offshore acreage. Four bills-two each in the House and Senate-have been introduced.

Floor votes on each of them could be close enough that members of Louisiana’s congressional delegation could effectively withhold support if meaningful revenue-sharing is not included. Sen. Mary L. Landrieu (D-La.) did just that in early March when the Energy and Natural Resources Committee approved a bill to begin leasing in the so-called Sale 181 area of the eastern Gulf of Mexico.

Landrieu and Louisiana’s other US senator, Republican David Vitter, joined senators from Alabama and Mississippi a few days later in introducing a separate bill to direct 50% of Sale 181’s federal revenues to the states for coastal impact assistance.

Similar terms

Kirkpatrick said: “We would like the same deal that those states who host onshore drilling have. They get 50% of federal revenues ongoing and into the future. We think that’s fair, but we’re willing to work with the process.”

Securing what Louisiana considers its fair share of federal revenues from oil and gas produced off its coast is preferable to having to go back to Congress for hurricane protection and coastal restoration each project, he said.

In her address, Blanco said, “We have been warning for decades of the danger to our people from our lost wetlands. It’s no consolation to say I told you so, but this seems to be the best shot we’ve had in 20 years of getting our fair share of offshore revenues.”