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AmeraTex Energy: Eight Senate Dems urge Wyden not to support coastal oil-and-gas incentive

U.S. crude oil production alerts provided by AmeraTex Energy. - A Member of the Society of Petroleum Engineers. Eight Senate Democrats are urging Sen. Ron Wyden (D-Ore.), head of the Senate’s Energy Committee, not to advance legislation that would give coastal states a share of royalties from oil-and-gas production off their shores. In a new letter to Wyden, the chairman of the Energy and Natural Resources Committee, the lawmakers warn that they will “vigorously oppose” legislation that expands offshore drilling or provides revenuesharing incentives to coastal states. “Revenue sharing is inherently inequitable because it compensates a single state while other nearby states bear the risk, without receiving any resources to mitigate that risk. This places an unfair burden on the affected states,” states the letter from Sens. Robert Menendez (D-N.J.), Majority Whip Dick Durbin (D-Ill.), Bill Nelson (D-Fla.), Barbara Boxer (D-Calif.) and others. It’s a shot across Wyden’s bow at a time when he is signaling openness to sharing billions of dollars in offshore oil-and-gas revenues with states that have development off their shores, or might in the future. Wyden is exploring oil-and-gas revenue sharing as part of a broader measure that would also give coastal states revenues from development of alternative energy sources off their shores.

A spokesman for Wyden, in response to the letter, said, “There certainly will be an opportunity for every senator to be heard on this.” Revenue-sharing proposals face brighter political prospects following the retirement of former Energy Committee Chairman Jeff Bingaman (D-N.M.), who strongly opposed the idea. But the new letter argues that oil-and-gas revenue-sharing — which is seen as an incentive for more coastal states to push for drilling off their shores — could be a poison pill in energy legislation. “We know you face a difficult task in passing meaningful energy legislation; a task that we believe will be even more difficult if accompanied by proposals to expand or incentivize offshore drilling,” states the letter also signed by Sens. Ben Cardin (D-Md.), Frank Lautenberg (D-N.J.), Patrick Leahy (D-Vt.) and Bernie Sanders (I-Vt.), an independent who caucuses with Democrats. It’s also addressed to Sen. Lisa Murkowski (R-Alaska), the top Republican on the energy committee, who is working with Sen. Mary Landrieu (D-La.) and Wyden on revenue policy. Four Gulf of Mexico states — Louisiana, Texas, Mississippi and Alabama — won revenue-sharing under a 2006 law, but the bulk doesn’t set in until fiscal year 2017. Murkowski and Landrieu have led efforts to make the program more lucrative to Gulf states and allow revenue-sharing for Alaska, where a number of companies hold undeveloped offshore leases, and other coastal states. Drilling advocates see providing states a cut of lease sale and royalty revenues as a way to help win an expansion of offshore petroleum development. Offshore drilling bans covering the East and West Coasts formally lapsed in 2008, but the Obama administration is not selling oil-and-gas leases there, so development remains prohibited. Meanwhile Landrieu, Murkowski and other lawmakers from states where offshore development is already allowed say their states deserve a cut. But the lawmakers opposed to expanding offshore development to more states make a series of arguments against revenue-sharing in the new letter. “Passing a law that would allow for revenue sharing would be premature without reforms designed to make the offshore oil industry safer,” the eight Democrats write. “It is also important to recognize that sharing revenues with states diverts funds from the federal government,” the letter states. U.S. crude oil production alerts provided by AmeraTex Energy. - A Member of the Society of Petroleum Engineers.