Since taking office back in January, Sen. Bill Cassidy (R-LA) has focused on small issues like amendments to healthcare and education legislation. That is, until now.
This week, Cassidy has introduced the “Offshore Energy and Jobs Act of 2015.” The legislation will expand offshore energy production by opening parts of the Outer Continental Shelf (OCS) that are currently restricted from oil and gas exploration and development. In addition, it brings greater equity in revenue sharing for the Gulf states that host offshore energy production by lifting the Gulf of Mexico Energy Security Act (GOMESA) cap to provide Louisiana and fellow Gulf states with increased amounts of revenue to protect their coasts.
“Developing oil and natural gas resources in the Gulf of Mexico could create more than 200,000 jobs, add more than $18 billion per year to the U.S. economy and strengthen our national security,” said Cassidy in a statement. “What is there to oppose? Time for everyone to get on board.”
Energy and Natural Resources Chairman Lisa Murkowski (R-AK) introduced similar legislation today to expand Alaska’s OCS, and Sens. Mark Warner (D-VA) and Tim Scott (R-SC) introduced bipartisan legislation to open the Atlantic.
Co-sponsors of Cassidy’s Gulf Coast-focused bill include Senators David Vitter (R-LA), John Cornyn (R-TX), Thad Cochran (R-MS) and Roger Wicker (R-MS).
“States like Louisiana who produce energy off our shores only receive a small portion of the revenue generated from the production,” said Vitter in a statement. “The rest goes to the federal Treasury. I’ve always said that they’re our coasts, our risk, and our workers – So we should get more of that revenue to stay here in Louisiana.”
This is how Cassidy’s legislation will provide access to new offshore energy resources:
- Provides access to frontier acreage in the Gulf of Mexico by redefining the Eastern Gulf of Mexico (EGOM) moratoria in 2017 (it is currently scheduled to expire in 2022) to open the largest undiscovered, technically recoverable, energy resources in areas 50 miles from the Florida coastline
- Directs the Department of Interior to hold three lease sales in the EGOM in 2018, 2019, and 2020. It would also allow for ongoing lease sales going forward beyond 2022
- According to a 2014 API/NOIA commissioned study, by 2035, Eastern Gulf offshore oil and natural gas development could produce nearly one million barrels of oil equivalent per day, generate nearly 230,000 jobs, contribute over $18 billion per year to the U.S. economy, and generate $70 billion in cumulative government revenue
And this is how Cassidy’s legislation would provide the greater equity in gulf state revenue sharing that he has talked about:
- Coastal states provide the docks, roads, railways, refineries and other infrastructure that make energy production possible. Also, the critical areas that support this energy supply for the country are experiencing unparalleled land-loss due to federal engineering decisions for nearly a century that have channelized the lower Mississippi River System for the benefit of the entire country
- Louisiana’s 2,300 square miles of land loss is largely attributed to this channelization, along with the placement of federal levees along the river system, which has converted a once growing delta plain to the greatest source of wetlands loss in the history of the United States. Addressing the historic costs of hosting a capital intensive industry while ensuring resilient domestic energy supply can only be attained through equitable revenue sharing
- Provides greater equity in revenue sharing for states that host offshore energy production by lifting the GOMESA revenue sharing cap for Louisiana, Texas, Mississippi, and Alabama, from $500 million in 2017 to close to $700 million annually from 2018-2025, and $1 billion annually from 2026-2055. The cap is also lifted to allow for greater allocations to the Land and Water Conservation Fund state grant program, which shares 12.5% in offshore revenue
- Provides for revenue sharing for the State of Florida starting in fiscal year 2017. Florida will share in the revenue derived from leases in the Eastern Gulf of Mexico with 37.5% going to eligible Gulf states, 12.5% allocated to the Land and Water Conservation Fund, and 50% allocated to the U.S. Treasury. It is estimated that Florida would receive $1.6 billion over a 10-year period in revenue sharing distribution from offshore energy production in the Eastern Gulf of Mexico.
Currently, 87 percent of otherwise available OCS areas from offshore oil and gas exploration is restricted. The administration’s current five-year offshore oil and gas leasing plan, which took effect on August 27, 2012, removed 1.42 billion acres of the 1.65 billion acres of available OCS lands for production.
Cassidy’s legislation is also being supported by the American Petrolium Institute, the National Association of Manufacturers and the National Ocean Industries Association.