LA governor wants larger share of GoM royalties

Louisiana's governor warned that the state would not support future offshore lease sales in the GoM unless Louisiana gets a share of the federal royalties.

Offshore staff

(US, GoM) - Louisiana's governor warned that the state would not support future offshore lease sales in the GoM 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 GoM for oil and gas exploration.

However, the August lease sale could be held up.

Although this issue has often been raised, the push for it may be stronger 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 GoM from six miles from shore to international waters. Louisiana received about $32 million of that.

Previously, the state has repeatedly 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 3 and 6 mi offshore.

The US 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.

02/05/06

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