Gov: No Offshore Signoffs Without Royalty Share

Louisiana’s governor warned that the state would not support future offshore lease sales in the Gulf of Mexico unless Louisiana gets a share of the federal royalties generated by oil production there. Under a federal law that governs offshore drilling, governors in adjacent states are required to agree that federal lease sales are consistent with their states' coastal management plans. Louisiana governors have traditionally signed off on such lease sales, and the current governor’s letter will not stop a March 15 lease sale of 4,000 blocks in the Gulf of Mexico for oil and gas exploration. However, the August lease sale could be held up.

This is the latest push for a share of federal royalties from oil and gas production off Louisiana's coast. The issue has been brought forward every year by the state's congressional delegation, but has never won support in Congress. This year, the revenue stream is getting consideration as a way to finance $32 billion to $40 billion in hurricane protection and coastal restoration projects following Hurricanes Katrina and Rita. The federal government received $5.7 billion last year from oil and gas production occurring in the Gulf of Mexico from six miles from shore to international waters. Louisiana received about $32 million of that.

For years, the state has asked for half of the royalties from oil and gas produced beyond the state's three-mile boundary -- a sum that could amount to more than $2 billion a year. The state currently gets 27% of royalties produced between three miles and six miles offshore. The U.S. secretary of the interior, who oversees the Minerals Management Service, could override the decision if there are attempts to block the next lease sale. However, this could lead to a protracted legal battle that the federal government would likely want to avoid.

(Source: The Times-Picayune)