Pushing for larger share of offshore oil and gas revenues
Alaska’s Senator Lisa Murkowski put forward new legislation last week that hopes to bring more revenue from oil and natural gas production on Alaska’s outer continental shelf (OCS) back to the state. The bill, S. 1278, will “ensure revenue sharing for the state and coastal communities and invest in the workforce development, science and infrastructure necessary to bring [Alaska’s] resources to market,” said Sen. Murkowski.
In an interview with OAG360®, Alaska Governor Bill Walker said that the state would like to see a larger share of the revenue from offshore operations. “[Arctic exploration] will create some revenue in the private sector, [but] it doesn’t produce any dollars in the state. Sort of unique to Alaska is that our offshore development, we don’t receive any share of that revenue; it all goes to the federal government,” said Walker. “We’re certainly very supportive of safe and responsible offshore development, but we also believe that we as a state should share in the revenues from that.”
This new bill will give Alaska a larger piece of the revenue from drilling done further than 6 miles offshore. Alaska currently receives 27% of revenues from oil and gas leasing and production in the area between three and six miles from shore, but does not receive revenue sharing from production beyond that point, according to a release from the Senate Energy Committee.
According to the text of Murkowski’s proposed bill, for the fiscal years 2016 to 2026, 50% of qualifying income will go to a general U.S. Treasury fund, 27.5% will go to the Treasury to be used for deficit reduction, 7.5% will go to a Treasury account to be distributed to Alaska, 7.5% will be sent to a Treasury account to be distributed to Alaska’s coastal counties, 2.5% will be used to carry out North Slope Science Initiative, 2.5% will provide financial assistance for offshore leasing and development programs in Alaska and development of rights-of-way for pipeline, and the remaining 2.5% will be used to provide grants on a competitive basis to eligible institutions of higher education and workforce investment boards in Alaska to provide a skilled workforce for the oil and gas industry.
For every fiscal year after 2027, 50% will go to a general U.S. Treasury fund, 30% will go to a Treasure fund to be distributed to Alaska, 12.5% will be used for low-income home energy assistance, weatherization programs, and infrastructure in the Arctic and 7.5% will be distributed to coastal counties from a Treasury account.
“In the near term, providing energy and revenues to Alaskans requires increasing access in the areas where Alaska already receives revenue sharing like within the six-mile limit,” Murkowski said. “But in the longer term, my legislation will ensure that the state of Alaska and coastal communities supporting development will receive a substantial share of the revenues from production to compensate for impacts from development.”
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