Sen. Mary Landrieu (D-LA) said Tuesday she plans to offer an amendment during mark-up of the Senate energy bill this week that would require the federal government to share 50-50 with traditional producing states the revenues from production on the federal Outer Continental Shelf (OCS), as well as give other states the opportunity to opt out of the congressional moratorium and participate in OCS drilling.
Her amendment has the support of Sen. Pete Domenici (R-NM), chairman of the Senate Energy and Natural Resources Committee, she said during an interview on Greenwire’s E&ETV. He’s a “new fan,” Landrieu said. Currently, the federal government shares equally with states the revenues from onshore production, but the states receive no revenues from production on the federal OCS.
Landrieu sees her amendment as an alternative to a prescriptive approach of overturning the ban on oil and natural gas drilling on the OCS, which did not make it into the bill’s draft “mostly because of Sen. [Jeff] Bingaman’s objections.” Bingaman of New Mexico is the ranking Democrat on the Senate energy panel.
“We believe that at least half [of the OCS revenues are] ours. We’d like it back,” Landrieu said. At the same time, “I do want to leave an option…open for states that might want to drill off their shores,” she said. The Louisiana Democrat noted that Virginia, historically a nonproducing state, has expressed an interest in giving producers access to its coastal waters.
Sen. Frank Wagner, R-Virginia Beach, sponsored a bill earlier this year to open up the gas-rich areas of the state’s offshore region to producers. The bill was approved by the General Assembly, but vetoed by Gov. Mark Warner. Wagner has indicated that if Congress does not pass legislation this year to make more offshore areas accessible, he will reintroduce his bill in the next session.
Wagner realizes what offshore revenues can do for his state, said Landrieu. “Why not keep taxes low in Virginia? Why not take some of this money…[for] our environment and build a partnership to explore opportunities in the Outer Continental Shelf?”
Landrieu believes no state should have a free ride when it comes to energy production. In fact, she said states should be “called on the carpet” for only wanting to consume energy, and not produce it.
Separately, Landrieu said she backs the recent warning of Louisiana Gov. Kathleen Babineaux Blanco, who said she would oppose construction of liquefied natural gas (LNG) terminals off the Louisiana coast that use the “open rack” vaporization process (see Daily GPI, May 20). There are “some real questions as to whether it affects the fishes and [the] integrity of marine life in the Gulf of Mexico,” Landrieu noted. This “should be a strong signal to the industry because we are a friendly state to the oil and gas industry.”
As for the issue of whether FERC (not the states) should have sole authority over the siting of LNG terminals, “I think we have to be very careful before we supersede states’ rights in that regard until we’re sure of the environmental impact,” she said.
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