United States Senator Mary L. Landrieu, D, today announced that she and other Gulf Coast senators have reached an agreement with Senate leaders to bring to the floor legislation that shares with Gulf Coast states a portion of the federal revenues generated by oil and gas production in the Gulf of Mexico.
”This agreement marks a significant victory in our delegation’s decade-long fight to secure our fair share of the substantial revenue we generate each year,” said Sen. Landrieu, who represented the Gulf Coast states in final negotiations this week with Senate Majority Leader Bill Frist, R-Tenn., Majority Whip Mitch McConnell, R-Ky., and Senator Pete Domenici, R-N.M. The final measure will be formally introduced by Sen. Domenici, the chairman of the Senate Energy Committee on which Sen. Landrieu sits.
”Paired with Senator Domenici’s leadership on energy issues, the Gulf Coast’s hard work and spirit of cooperation has paid off for all our states,” Sen. Landrieu said. ”Senator Lott has been a particularly strong partner in the negotiations, and I thank Senators Vitter, Cochran, Shelby, Sessions, Cornyn and Hutchison for all their hard work on behalf of their constituents.
”We have also made affirmative progress in the House of Representatives through the work of Congressmen Jindal and Melancon, whose effectiveness in bringing other Democrats on board played a key role in securing the passage of their revenue-sharing bill.”
The plan as currently drafted would open about eight million acres of the Gulf of Mexico to energy production. A 37.5 percent share of the federal revenues generated by this lease sale and subsequent production would flow to the four Gulf Coast energy-producing states: Louisiana, Texas, Mississippiand Alabama.
In the first ten years, Louisiana would stand to receive about a third of these funds, based on a formula that allocates shares based on each state’s distance to production, with no state receiving less than ten percent. In combination with the coastal impact assistance funding secured in last year’s Energy Bill, Louisiana stands to receive more than three-quarters of a billion dollars over the next ten years.
Beginning in 2017, coastal energy-producing states would receive 37.5 percent of oil and gas revenues generated from any Gulf lease issued after the enactment of this legislation. The distribution among the Gulf Coast states would continue to be based on proximity to production, with historical production levels also taken into account. Louisiana’s share would be approximately 40 to 50 percent, but the formula would be recalculated each year.
Current OCS revenues are approximately $6 to $8 billion, and are expected to top $12 billion within 20 years. Conservative estimates based on forecasts from the Congressional Budget office and Minerals Management Service predict that Louisiana would under this plan receive more than $650 million per year, beginning in fiscal year 2017.
The area of new production includes a 1.7 million acre section of the Gulf of Mexico known as Area 181, as well as an additional 6.3 million acres to its south (map attached). It is expected to produce more than 1.3 billion barrels of oil – more than the proven reserves of Wyoming and Oklahoma combined – and at least six trillion cubic feet of natural gas, or six times current U.S. imports of liquefied natural gas each year.
”This fight has always been one about fairness,” Sen. Landrieu said. ”This is a fair bill that will give all the coastal states an effective tool for building levees, battling coastal erosion, securing our national economy and protecting our coastal communities.”
The federal government would retain 50 percent of the new revenues, and up to $450 million per year of the remaining 12.5 percent would be allocated to the state side of the Land and Water Conservation fund.
Today’s agreement marks the most significant advance in the state delegation’s fight for its fair share since the 1998 Conservation and Reinvestment Act (CARA) and 2002 Energy Bill. Led by Sens. Landrieu and John Breaux, D-La., 63 senators signed a letter to the Republican and Democratic leadership demanding that CARA be brought to the floor, but no further Senate action was taken before Congress adjourned.
Last year, Sens. Landrieu and David Vitter, R-La., secured with Sen. Domenici a $1 billion coastal impact assistance amendment to the 2005 Energy Bill that will result in Louisiana receiving $135 million per year for the next four years. Also last year, as part of the negotiations for her pivotal vote in passing the President’s Budget Resolution, Sen. Landrieu was able to secure a reserve fund of up to $10 billion for coastal protection and restoration in the Senate version of the bill.
Today’s agreement is expected to be brought to the floor for full Senate consideration following the Fourth of July holiday recess. The agreement does not specify definitive resolution to coastal issues raised by the Florida delegation, but the leadership is expected to address those concerns before bringing the agreement to the floor.