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March 2008

Vol. 13, No. 12 Week of March 23, 2008

Resolution on OCS sharing introduced

Now only some Gulf states share; Senate proposal urges Congress to share OCS revenues with all coastal energy-producing states

Kristen Nelson

Petroleum News

The Alaska Legislature is following up on U.S. Sen. Ted Stevens’ view that it is time for the federal government to share monies it receives from outer continental shelf oil and gas leasing and development offshore Alaska with the state.

Sen. Bill Wielechowski, D-Anchorage, introduced a joint resolution urging Congress “to provide a means for consistently sharing, on an ongoing basis, revenue generated from oil and gas development on the outer continental shelf with all coastal energy-producing states to ensure that those states develop, support and maintain necessary infrastructure and preserve environmental integrity.”

The resolution, SJR 17, was passed out of Senate Resources March 14; it passed the Senate unanimously March 18 and now moves to the House.

Wielechowski told the committee the Mineral Lands Leasing Act of 1920 provides for 50-50 sharing of mineral revenues within state boundaries between federal and state governments, with the revenue distributed to states automatically, outside of the budget process and not subject to appropriations.

“Unfortunately there’s no comparable authority for the federal government to automatically share revenue from oil and gas activity occurring six miles or more offshore of adjacent coastal states, despite the contribution made by those states to the nation’s energy supply,” although states “provide the infrastructure that supports offshore operations and bear the environmental risks,” he said.

There have been energy revenue sharing programs, Wielechowski said, but there were temporary or limited to certain states. The most recent was the Gulf of Mexico Energy Security Act of 2006, which gave Alabama, Louisiana, Mississippi and Texas 37.5 percent of oil and gas revenues from newly opened acreage in the Gulf of Mexico, he said.

Wielechowski said if Alaska had been included, it would stand to receive $975 million from the recent $2.6 billion Chukchi Sea lease sale.

He said Stevens’ office is confident legislation will be introduced this year for a multi-state revenue-sharing program and that a resolution from the Alaska Legislature will be useful in efforts to secure revenue sharing for Alaska.

Bingaman not in support

The issue of revenue sharing came up at the Energy Council, held in Washington, D.C., the first week in March.

Rep. Ralph Samuels, R-Anchorage, said March 10 at a House Majority press availability that Sen. Jeff Bingaman, D-N.M., chair of the Senate Energy and Natural Resources Committee was asked about OCS revenue sharing for Alaska.

Samuels said Bingaman “was pretty unambiguous with his answer,” saying he hadn’t supported revenue sharing for the Gulf states and didn’t support expanding it.

OCS development in the Chukchi and Beaufort seas “is going to put a strain on state resources,” Samuels said. Roads, runways, healthcare — there is a strain on all of those from developments and the workers that come to the state to support them, he said.

“So I wholeheartedly disagree with Sen. Bingaman,” Samuels said. If the federal government wants to see those OCS developments happen, “then the feds should pony up … part of the money to pay for the services that are required.”

Bingaman’s stance in opposition to OCS revenue-sharing also came up March 14 in Senate Resources by other members of the Legislature who attended the Energy Council.

Sen. Resources Chair Charlie Huggins, R-Wasilla, said Bingaman “was not necessarily supportive of the concept of revenue sharing overall,” a concern because Bingaman chairs the Senate resources committee.

Sen. Tom Wagoner, R-Kenai, said although Bingaman indicated he didn’t support it, “The one thing he didn’t do though, is he didn’t come out and state absolutely no.”

Stevens, Palin in agreement

Stevens, Alaska’s senior senator, said when he was in Alaska to address the state Legislature in February that Alaska was originally included in the 2006 energy bill that allocated monies from OCS lease sales and development to Gulf of Mexico states, but the Alaska provision was removed.

Stevens said then that he doesn’t think there will be production from the Alaska OCS until the state gets revenue sharing.

Alaska Gov. Sarah Palin agreed, and said she thinks the issue is “going to become much brighter on everyone’s radar screen.” She said in February that she thinks it’s time for that to change, and thinks it’s time for Alaska to start pushing for that change.

See related story on page 14 in this issue.






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