Senator protests funding new trust with oil royalties
WASHINGTON — President Barack Obama proposed a new “Energy Security Trust” on Friday to fund research and development for alternative energies and more efficient fuels, but the plan is already receiving opposition from some of the Louisiana congressional delegation.
Sen. Mary Landrieu, D-La., quickly criticized the plan, which must receive congressional approval, because the proposal involves funding the $2 billion, 10-year trust by using royalty revenues from offshore oil-and-gas drilling in the Gulf of Mexico and beyond.
Landrieu, Sen. David Vitter, R-La., and other members of the state’s delegation are all fighting to increase the shares of the royalty revenues for Louisiana and the other Gulf Coast states instead of having the funds go the federal Treasury or a newly proposed trust.
Louisiana is slated to start receiving more offshore oil-and-gas revenue sharing in 2017, but the state delegation wants to remove the cap on revenue sharing and speed up the timeline as much as possible.
In an email response, Landrieu said her problem with the president’s proposal is not the idea but the funding source.
“But dedicating offshore oil and gas revenues toward this purpose and not at the same time acknowledging the role that coastal states play in producing these revenues for the nation is a grave oversight,” Landrieu said.
“As interested as I am in research and development for alternative fuels, I will not be able to support such a proposal without first addressing the inequity that currently exists between interior and coastal states,” Landrieu continued. “I am certain that the other current and future energy producing coastal states agree with this position.”
While visiting the Argonne National Laboratory in Illinois on Friday, Obama called on Congress to establish the trust to help fund research to create better and cheaper fuels and energy sources.
“We can support scientists who are designing new engines that are more energy efficient,” Obama said, “support scientists that are developing cheaper batteries that can go farther on a single charge; support scientists and engineers that are devising new ways to fuel our cars and trucks with new sources of clean energy — like advanced biofuels and natural gas — so drivers can one day go coast to coast without using a drop of oil.”
Vitter filed a comprehensive bill last month to increase offshore oil production revenue sharing with Louisiana and other affected states and to expand drilling access. Vitter has said his Energy Production and Project Delivery Act is intended to boost domestic energy production and economic development while also helping the “host” states that would share in the increased federal revenues.
Domestic energy production has increased under Obama, but the jumps have occurred mostly on private lands.
The legislation bears some similarities to the OPEN Act filed last year by Landrieu, which would have expanded offshore drilling access and removed the cap on state revenue sharing in the Gulf of the Mexico.
But that bill did not progress, and Landrieu is currently working on a tighter version of the bill with Sen. Lisa Murkowski, R-Alaska, that is expected to focus only on increasing revenue sharing.
Both Vitter’s new bill and Landrieu’s anticipated legislation would expand on revenue-sharing legislation first approved in 2006.
Louisiana residents are waiting until 2017 for a potentially steady stream of revenue because the Landrieu-sponsored Gulf of Mexico Energy Security Act that became law in 2006 does not fully kick in until 2017.
The law will allow Louisiana to share in the 37.5 percent royalty that the federal government receives from new drilling in 8.3 million acres in the Gulf of Mexico.
Louisiana is expected to receive close to half of the funds with the rest going to Texas, Mississippi and Alabama.
Because the offshore drilling revenue sharing is capped at $500 million a year for the four states, rough estimates show Louisiana starting with as much as $100 million in 2017, and then growing from there. But much of that depends on the amounts of future offshore oil-and-gas drilling off Louisiana’s coastline.
Vitter’s new bill increases the cap in the Gulf from $500 million to $1 billion from 2017 through 2024 and then hikes it to $2 billion through 2055.