Alaska would cash in on Arctic drilling under new plan

2/1/2013

Federal dollars tied to oil and gas drilling in Arctic waters near Alaska would be shared with the state, under new Senate legislation.

The measure, introduced by Sen. Mark Begich, D-Alaska, aims to ensure the state can collect a portion of the royalty payments, bonus bids and other revenue from offshore oil and gas leases that normally go straight into federal coffers. Shell Oil Co., bored the first half of two exploratory wells in the Chukchi and Beaufort seas north of Alaska last year, and other companies are looking to begin drilling there soon.

But Begich’s approach puts him at odds with his fellow senator from Alaska, Republican Lisa Murkowski, who is working with Sen. Mary Landrieu, D-La., on a broader, nationwide plan.

Begich said his measure “is just common sense.”

“Alaskans deserve their fair share, just like the residents of the Gulf Coast,” Begich said. “My bill not only encourages increased and responsible development of Alaska’s energy resources but also makes sure our communities benefit directly from oil and gas being produced in our own state.”

Begich’s bill would allow Alaska to collect 37.5 percent of the federal bonus bids and royalty payments from all nearby offshore energy development — the same share that Gulf Coast states are counting on beginning in 2017.

Of that 37.5 percent, Begich would require a quarter to go to local governments and a quarter to go to Alaska Native village and regional corporations. Ten percent would be directed to tribal governments and the remaining 40 percent would go to the state.

Inland states generally claim 50 percent of the revenue from oil and gas production on federal lands within their borders. For coastal states, however, the dynamic is different. Only four coastal states — Alabama, Louisiana, Mississippi and Texas — lay claim to offshore energy revenues, under a law that allows them to begin collecting 37.5 percent of that revenue beginning in 2017. Their take will be capped at $500 million annually.

The prospect of oil production in Arctic waters north of Alaska has added fresh urgency to efforts to expand revenue sharing beyond the Gulf Coast. And for Gulf states, the Deepwater Horizon disaster highlighted the potential local risks and damage of oil exploration in nearby waters, boosting interest in starting revenue sharing sooner than 2017.

The shared interests prompted Landrieu and Murkowski to join together on the issue. They are working on legislation that would allow Gulf states to begin collecting a share of federal royalties sooner, while expanding revenue sharing to all coastal states. Under their working plan, other coastal states could claim 27.5 percent of offshore drilling revenues, with the option to collect an additional 10 percent for funding conservation and restoration programs.

Their bill also aims to lure support from colleagues in land-locked states by authorizing them to collect 50 percent of the revenue from renewable energy development — not just oil and gas activity — on federal lands within their borders.

“The approach Sen. Landrieu and Murkowski have taken is to broaden the appeal of revenue sharing,” said Murkowski spokesman Robert Dillon. “They have included all coastal states that have any definition of offshore energy,” including renewable installations and tidal power.

Sen. Ron Wyden, D-Ore., the chairman of the Senate Energy and Natural Resources Committee, has signaled he is interested in advancing the issue.

(Fuel Fix)