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BOEM Director Says Administration Opposes New OCS Revenue Sharing Bills

The head of the Interior Department's (DOI) Bureau of Ocean Energy Management (BOEM) told a Senate panel that the Obama administration is opposed to three of the 26 energy bills that are being considered for inclusion in a broader, comprehensive energy bill.

During a Senate Energy and Natural Resources Committee hearing on Tuesday, BOEM Director Abigail Ross Hopper said the three bills (S 1276, S 1278 and S 1279) would, among other things, require lease sales in the offshore of Alaska, the South Atlantic and the eastern Gulf of Mexico (GOM), without the discretion of the DOI secretary.

"Previous and current revenue sharing proposals would ultimately reduce the net return to taxpayers from development of the federal resources generated on the OCS and would add to the federal deficit," Hopper said. "Additional revenue sharing programs would likely result in a further reduction of billions of dollars in deposits to the Treasury. For these reasons, the administration opposes new or expanded offshore revenue sharing."

Hopper added that the Obama administration wants to work with Congress on writing legislation that would redirect revenue generated by the Gulf of Mexico Energy Security Act of 2006 to four GOM coastal states, rather than establishing "multiple revenue sharing programs that benefit individual states and administration of a costly and cumbersome revenue allocation formula."

S 1276 calls for amending the Gulf of Mexico Energy Security Act of 2006 by increasing exploration and production (E&P) in the Outer Continental Shelf (OCS) areas of the GOM. Meanwhile, S 1278 would amend the Outer Continental Shelf Lands Act by allowing certain lease sales in the Alaska OCS, and S 1279 would provide revenue sharing of qualified revenue from leases in the South Atlantic planning area.

Last week, U.S. Sen. Lisa Murkowski (R-AK), who chairs the Energy and Natural Resources Committee, introduced S 1278 and another bill (S 1312) to lift the ban on U.S. crude oil exports (see Daily GPI, May 13). The former calls for providing revenue sharing in the Alaska OCS region and increasing the number of lease sales in offshore planning areas that cover the Beaufort and Chukchi seas and the Cook Inlet.

"I am often times really taken aback when I hear people ask a very basic question as to whether or not we should allow drilling in the offshore, in the Arctic -- as if drilling in the Beaufort and Chukchi seas was something new," Murkowski said in her written comments. "Exploration has occurred for more than 20 years, [since] the 1980s. It has been done safely...But you hear all of the consternation and some of the press about what 'we can't possibly be going offshore in the Chukchi. We can't be going offshore in the Arctic. This is new and unexplored territory and the end of the world as we know it will likely come to pass.'

"In fact, 35 wells have been drilled up there and again it didn't make the news to anybody because there was no news to report other than that the exploration was successful...And given our history of safe and successful development, I think that it's time to expand the contribution of Alaska's offshore resources to make America's energy security."

Tuesday's hearing, which covered energy supply issues, was the third of four that Murkowski plans to hold before assembling a broader energy bill. The committee discussed 22 bills at an April 30 hearing on energy efficiency, and an additional 22 bills at a May 14 hearing on energy infrastructure.

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