Blanco: No offshore signoffs unless La. gets royalty share
Money could finance hurricane protection
Wednesday, February 01, 2006
By Jan Moller and Pam Radtke RussellStaff writers
Gov. Kathleen Blanco warned this week 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.
"It is abundantly clear that allowing development to occur where inadequate provisions are made for the protection of that development is irresponsible," Blanco wrote to the Mineral Management Service. "The amount of oil and gas activity off our coast means little if we have no coastal communities to take advantage of this activity."
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 Blanco's letter will not stop a March 15 lease sale of 4,000 blocks in the Gulf of Mexico for oil and gas exploration.
But if Blanco makes good on her threat, she could hold up an expected August lease sale.
Blanco's effort is the most substantial in 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.
Sidney Coffee, Blanco's executive assistant for coastal activities, said the state's sign-offs on earlier lease sales have included statements that pointed out the industry's impact on the coast. This week's letter pushes those concerns just one step short of outright opposition.
"She prides herself on being the oil and gas governor. But we've reached a tipping point," Coffee said.
Louisiana supports 80 percent of the oil and gas production in the Gulf of Mexico, she said.
"How can one state, especially a poor state like Louisiana, be expected to sustain an effort like that all on its own," she said.
The U.S. secretary of the interior, who oversees the Minerals Management Service, could override Blanco if she attempts to block the next lease sale. But Coffee said that could lead to a protracted legal battle that the federal government would likely want to avoid.
"It has the potential to be tied up legally for many, many years," she said.
Last week, Blanco met with representatives from the state's oil and gas industry. All were supportive of the governor's effort, Coffee said.
Jeff Copeskey, of Louisiana Mid-Continent Oil and Gas Association, said his organization is working toward getting Louisiana more of the offshore money and hopes Blanco will not have to use "that arrow in her quiver."
"We are for more access, not less," Copeskey said. But, he added, Blanco's letter "puts everyone on notice that the governor takes this very seriously."
The governor's letter is not meant to take aim at the state's biggest industry, but rather to bring attention to the issue, Copeskey, Coffee and others said.
"The state has been and will be a friend of the industry, said Valsin A. Marmillion, a spokesman for America's Wetland, a campaign working to restore the coast. "But it's important that everyone understands the role the state plays in providing energy infrastructure. It's a national investment to protect what we call America's wetland."
A constitutional amendment approved by the Legislature in November guarantees that 100 percent of any future royalties the state derives from drilling on the Outer Continental Shelf will be spent on coastal restoration and hurricane protection. The amendment will go before voters this fall.
"This gives us the opportunity to demonstrate to the American people, to the American Congress, that this will not be a jobs program," Department of Natural Resources Secretary Scott Angelle said. "This will not be a program that gives money to something besides coastal protection and restoration."
The Minerals Management Service has not completed its review of Blanco's letter and has not issued a response, an agency spokesman said.
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Staff writer Matt Brown contributed to this report.
Jan Moller can be reached at email@example.com or (225) 342-5207. Pam Radtke Russell can be reached at firstname.lastname@example.org or (504)826-3351.