Today, the Department of Interior held a lease sale for the Central Gulf of Mexico. The sale garnered a great deal of enthusiasm from the industry, attracting 407 bids from 52 companies. The total bids for today’s sale exceeded $1.2 billion dollars—one of the highest sales since leasing began in 1983.
This huge amount of federal revenue begs the question: Why are legislators in Congress and the administration calling to raise taxes on the oil and natural gas industry when the industry is garnering a huge deal of revenue for the country? Repealing critical tax deductions would undoubtedly curtail this enthusiasm in the Gulf and onshore. It’s vital that Washington doesn’t mess with tax deductions and an investment plan that are clearly working.
The revenues are so great that states want in on more of the bounty. Today, Senators Mary Landrieu (D-LA) and Lisa Murkowski (R-AK) introduced legislation that enables states currently open for offshore production (Gulf states and Alaska) to keep more of the revenue generated by offshore energy development. The Fixing America’s Inequality with Revenues (FAIR) Act provides up to 37.5 percent of all revenues from offshore development to coastal states. Of this percentage, states would automatically receive 27.5 percent of these revenues, 25 percent of which would go to the coastal communities most impacted by offshore development. They’d also be eligible for additional 10 percent if they establish funds to support projects relating to clean energy or conservation.
Although the IPAA supports efforts to increase American offshore oil and natural gas production, we believe the real solution to increasing offshore production would be to increase access to areas in the Eastern Gulf of Mexico and the Atlantic. Rather than limiting offshore exploration to a few areas across the nation, the federal government should allow the states along the eastern seaboard and elsewhere to begin the process of exploring for additional energy resources off their coasts.
What independent producers – and states – really struggle with is access. We need to open up the eastern Gulf of Mexico – to explore for the resources that are undoubtedly lying beneath the waters there. When the federal government refuses to allow producers to explore for American energy, it not only hurts the industry, but it does the American people a disservice. More American energy means more American jobs, more revenue for depleting government budgets, and more growth for our economy.
The oil and natural gas industry supports efforts to remove these federal roadblocks to American development. So do many legislators in Congress. Today, more than 40 legislators sent a letter to President Obama, urging his administration to complete the long-delayed Environmental Impact Statement (EIS) for the conduct of a safe, environmentally protective seismic assessment of the oil and natural gas resources offshore the Atlantic outer continental shelf (OCS). As the letter expressed, it’s been more than two generations since the last seismic testing was done on the eastern seaboard. Clearly, the technology has advanced greatly since then. We didn’t even have 3-D seismic testing at that point. The letter expressed that this testing “represents a critical step toward making science-based decisions with regard to any future commercial or recreational activities in the federal waters off our Atlantic coastline that could provide the nation much needed energy, economic, and environmental benefits.”
It’s time to let states that have been barred from offshore development explore this opportunity for jobs, economic growth, and energy security. It’s time to let industry get excited about developing the eastern seaboard and the Western Gulf of Mexico. The economic potential of this energy opportunity is so large that the industry, states, federal government, and the American people can all share in the bounty.