OREANDA-NEWS. May 27, 2015. For years, legislative efforts to give coastal states a larger share of offshore drilling revenue have brought the Senate Energy and Natural Resources Committee “to a standstill,” Washington Senator Maria Cantwell, the committee’s top Democrat said at a hearing last week.

Now, after a renewed push by committee lawmakers to get Alaska, Gulf of Mexico and Atlantic Coast states a greater share of offshore energy revenues and clear resistance from the Obama administration towards these efforts, it appears that standstill continues.

Three bills, one to expand drilling and revenue sharing offshore Alaska, one to allow drilling in the eastern Gulf of Mexico and increase the current limit on revenue shared with Gulf states and one to allow drilling in the South Atlantic and share revenues with Georgia, North Carolina, South Carolina and Virginia, have been introduced.

“Each area I think we recognize is different, with specific needs and interests, but it’s out of simple fairness that we should provide revenue sharing to all of them,” said Senator Lisa Murkowski, an Alaska Republican, chairman of the committee and sponsor of the offshore Alaska bill.

All three bills, S. 1278, S. 1276 and S. 1279, are opposed by the Obama administration.

These three bills would require offshore lease sales without input from the Department of the Interior nor an administration review of whether the areas in the eastern Gulf, offshore Alaska or in the south Atlantic are “appropriate” for leasing, said Abigail Ross Hopper, director of Interior’s Bureau of Ocean Energy Management, during that hearing.

“They would divert offshore energy development revenue from the Treasury, reducing the net return to taxpayers and adding to the federal deficit,” Hopper said in her prepared testimony.


The administration has proposed a plan which would redirect revenue sharing payment allocated by the Gulf of Mexico Energy Security Act of 2006 to the four Gulf States to broader natural resource, watershed, and conservation programs. This would allow all states to benefit from offshore development in the Gulf, the administration has argued.

The revenue sharing issue is particularly important since it is widely seen as a chief incentive for states to allow oil and gas operations off their coasts. Without a significant revenue stream from nearby drilling, states without offshore operations may be resistant to the industry taking root off their coast.
At the same time, offshore drilling is unlikely to leave the Gulf if a new revenue sharing scheme is not put in place, Hopper said.

“There is such economic benefit and pride there for the resource that they provide for our country,” Hopper said in an interview with Platts last week.

However, support from lawmakers in the South Atlantic for offshore drilling is “intricately linked with a desire to see revenue sharing,” she said.

She said while the administration has proposed its plan for redistribution of revenues, nothing is set in stone.

“We really do believe we should be having a conversation about the equitable distribution of all taxpayers’ assets,” Hopper said. “That’s the conversation we want to have without a pre-determined end.”