Following an announcement by the Interior Department’s Minerals Management Service (MMS) Monday that Lease Sale 200 off the coasts of Texas and Louisiana will proceed as scheduled on Aug. 16, Louisiana Gov. Kathleen Babineaux Blanco pledged to take immediate action to block the proposed sale in court.
Blanco has been vowing for months to stop the oil and natural gas lease auction unless the federal government agrees to give Louisiana a greater share of the federal royalties from production offshore Louisiana to help restore the state’s receding coastal areas.
“In the coming days I will use all legal powers afforded me under federal and state law to protect the coast of Louisiana, and I will challenge Lease Sale 200 in court,” Blanco said in a statement issued Monday. “Our lawyers have been hard at work and they will put forward the best possible case for Louisiana. I will continue this fight until such time that the federal government and the Congress make a significant commitment to the long-term sustainability and protection of coastal Louisiana.”
Under current law, states that engage in onshore oil and gas production receive 50% of the royalties from production, which typically are used to finance their annual budgets. But states that support offshore production, such as Louisiana, receive only a small fraction of the royalties, with the bulk of the revenues going to the federal government. Blanco wants to change that equation.
Two bills currently are in the Senate and House that would significantly increase the offshore royalties that would go to Louisiana and other coastal states. The House, as part of the broader measure to expand Outer Continental Shelf (OCS) leasing (HR 4761), approved last month revenue-sharing provisions that would immediately bring Louisiana 25% of the energy royalties produced three to 12 miles offshore for the first five years, with that amount increasing to 42.5% between six and 10 years. This would escalate to 63.75% as royalty receipts grow. The state also would receive 42.5% of the royalties from 12 miles out phased in through 2022, resulting in nearly $9 billion over the next 10 years. The Senate OCS measure — which has yet to be introduced on the Senate floor — has a more modest revenue-sharing provision. It would give the four Gulf coast states 37.5% of the federal revenues generated from offshore production in the Gulf of Mexico.
Lease Sale 200 includes 3,865 unleased blocks of approximately 20.87 million acres in the OCS Planning Area offshore Texas and in the deeper waters offshore Louisiana. The blocks are located from three to about 210 miles offshore, according to MMS. The agency estimates the sale could result in the production of between 136 million and 262 million barrels of oil and 0.810 Tcf to 1.440 Tcf of natural gas.
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