Time for Another Royalty Sharing Battle

Back in 2005, I took interest in the new debate of Louisiana’s delegation pushing for our state to receive a greater share of offshore oil & gas royalties from production off our coast.  Several of my letters and columns were published in various newspapers across the state.

As it was then, and currently stands for the next 6 years, Louisiana receives royalties up to 3 miles from the coast, which is state waters, but nothing after that in federal waters.

In 2006, then-Rep. Bobby Jindal authored a House Bill to provide Gulf Coast states with at least 50% of oil & gas royalties from federal waters off their respective coasts.  The bill overwhelmingly passed the House, even with bi-partisan support.

However, President Bush, who had not once vetoed a single bill at that point of his tenure, threatened to do so, citing the national fiscal concerns of such a proposal.  Meanwhile Bush, along with big-spending Republicans and Democrats in Congress, made no real attempts to discontinue their reckless deficit spending.

Finally a “compromise” bill was offered by Sen. Landrieu, whereby Gulf States would receive 37.5% of the royalties from federal waters off their coasts, but not effective until 2016.

Port Fourchon alone furnishes between 16-18% of the oil supply for the entire country.  Roughly one-third of U.S. oil production is from offshore production, and 80% of that production is from off our state’s coast.  More than one-fourth of the nation’s oil production comes from off the Louisiana coastline.  Our reserves account for almost 20% of all the U.S. oil reserves, and we also hold 10% of the nation’s natural gas reserves.

We assume risk that other NIMBY states choose not to take in order to help with domestic production of oil and natural gas, yet until 2016, we will get nothing from production more than 3 miles off our coast, and after that, will only receive 37.5%.  Meanwhile, those same states get to enjoy the fruits of offshore royalties pouring into the federal treasury. 

Many ignorant talking-heads and politicians claim that Louisiana’s coastal problems are a result of our “dancing” with the oil & gas industry, saying the industry is killing our vast seafood and marine life.

Here is a clue for those people.  We have a 6,000-7,000 square mile Dead Zone in the Gulf right off our coast, where no marine life can survive.  The cause of this huge dead area is NOT oil & gas exploration.  Rather, it is due to farm “run-off”, chemicals pouring into the Mississippi River, then being dumped into the Gulf.  Your farm chemicals have done more damage to our marine resources than all the exploration in the Gulf would ever accomplish.

Louisiana needs to demand that we stopped being treated as the rear-end of the country.  Your state doesn’t want to help produce domestic petroleum.  Fine.  But neither should you reap the benefits of offshore royalties from Gulf of Mexico production.

It is time for our delegation in Washington, D.C. to fight the offshore royalties battle again.  Yes, we scored a minor victory with Landrieu’s Senate bill almost three years ago, but the monies will be too little for what our coast provides, and certainly too late.  If the current President and his closest political allies have their way, we won’t be drilling in the Gulf of Mexico by 2016 anyway.

This is not a Republican/Democrat issue.  Louisiana deserves a greater share of royalties for our risk, and we deserve them now.  Unfortunately, the President Obama and Congressmen from other states, will argue about fiscal concerns, while we continue to bail out other industries and state governments.

 Nick Bouterie works in the oil & gas industry and lives in Iota.

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