The Senate’s energy debate likely will have a lot more to do with increasing offshore oil and gas development and revenue-sharing than expected as lawmakers work to cobble together a number of bills into a comprehensive energy package by the end of the year.
Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski, R- Alaska, indicated as much at a Tuesday hearing on energy supply legislation, underscoring the importance of increased offshore drilling and sharing the revenue with the states.
She was joined by other senators who introduced bills with similar revenue-sharing programs for states on the Gulf Coast and Atlantic seaboard.
Sen. Bill Cassidy, R-Louisiana, said a bill he introduced with his Louisiana counterpart David Vitter and other lawmakers from the Gulf would increase the share of revenue states receive from production on the outer-continental shelf to more equitable levels.
Cassidy said the federal government received $4.6 billion last year, while his state received $3.4 million, which is not sufficient when Louisiana has to maintain shipping lanes and combat coastal erosion.
Cassidy’s bill would remove a drilling moratoria on the Eastern Gulf of Mexico for offshore drilling. An American Petroleum Institute official said at the hearing that the change would add $70 billion to federal coffers. Cassidy’s bill would increase the states’ take of that money by redefining the terms of a previously enacted 2006 law that governs federal revenues to the Gulf states.
He said additional production from the Eastern Gulf would pour billions of dollars into his state, Mississippi, Alabama and Texas, providing citizens with a more equitable stake from energy production there.
Republicans say they have the support to pass the oil and gas measures. Aides say a majority on the committee supports the measures, and the GOP does not appear to be in a bind to gain Democratic support.
A previous version of revenue-sharing legislation from when Democrats controlled the upper chamber included using some portion of the revenue generated by offshore oil development to fund renewable energy development.
Aides say “that’s the old proposal” when supporters were attempting to appeal to a different array of interests. Now, the GOP has a 12-10 majority and it has the support to move forward without the addition of renewable energy.
Nevertheless, Murkowski welcomed another revenue-sharing bill that includes a clean energy provision, introduced by a Democrat and backed by several Republicans. Sen. Mark Warner of Virginia introduced the bipartisan bill with several Southeastern Republicans. The bill would open up the South Atlantic to offshore drilling and use 10 percent of the money received from fossil fuel development to fund a host of renewable and clean energy technologies, as well as transportation and environmental stewardship programs.
“[Ten] percent of the state-allocated funds must be used for either land and water conservation efforts, beach nourishment and coastal dredging, public transportation projects, or for alternative, clean, or renewable energy production and generation,” a statement from Warner’s office reads.
Another 2.5 percent of the state-allocated funds would be used to fund a public-private partnership between the energy industry and academic institutions to “broaden the study of geological and geophysical sciences,” educate the next generation of offshore energy scientists, and research offshore energy resources.
Murkowski has introduced legislation alongside the oil and gas measure to expand hydroelectric resources and is encouraging other senators with legislation to expand ocean and marine energy development.
“I believe it is in our national interest to make energy abundant, affordable, clean, diverse and secure. Today’s hearing — like the bill that we are assembling — is not designed to pit energy resources against each other, but instead to view energy supplies holistically, and to find areas where we can come together,” she said in prepared remarks.
Debate over revenue-sharing stalled when the committee was controlled by former Democratic Chairman Jeff Bingaman of New Mexico, during President Obama’s first term.
Bingaman “shut down the committee over revenue-sharing,” said Murkowski spokesman Robert Dillon. “Bingaman did nothing to help this.”
He disqualified revenue-sharing on “principle,” even though there were both Republicans and Democrats who supported the idea, observers say.
Murkowski’s bill on revenue-sharing would exact a portion of the money that the federal government receives from the development of federally-held leases for offshore drilling, while expanding oil and gas production by increasing the number of lease sales annually.
A portion of the money would be funneled from those sales to state projects. For example, 12.5 percent of the money would go to support state weatherization programs to boost energy efficiency for low-income families, while also boosting a state’s low-income heating assistance program. That money would be secured in the second 10-year period of the program.
The first 10 years, 2016-2026, would funnel 7.5 percent of revenues to the state, with another 7.5 percent divided between coastal cities and local governments. Additional percentages would go to workforce training programs, a science program run by the Department of Interior, and funding for improving the pipeline approval process.
But the main thrust of her legislation is to increase the number of annual lease sales, improving the less-than-optimal level of development under the Obama administration’s five-year lease program.
“My legislation would also provide for more frequent lease sales than called for in the current five-year plan, and extend lease terms to accommodate the stringent regulatory requirements and short operating windows in the Beaufort and Chukchi [seas],” Murkowski said.
Dillon says most members of the committee support moving forward with some version of the proposals. Ultimately, “the chairman will decide how this will be included in a comprehensive bill,” but that is “not determined.”
