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Governor Threatens to Block Oil Leases

Posted on: Saturday, 4 February 2006, 18:00 CST

By MELINDA DESLATTE

Governor threatens to block oil leases

Gov. Kathleen Blanco is demanding that the federal government give Louisiana more of the billions in royalties from oil and natural gas extracted off its coastlines and is threatening to block future leases without an increase in the states share.

Blancos warning, in a letter this week to the federal agency that manages offshore drilling, comes as the state is struggling to finance up to $40 billion in hurricane recovery and protection projects.

Louisiana officials have been repeatedly rejected over the years in their bids to get more federal oil and gas money from the offshore drilling.

But they say the state is owed a greater share of the dollars because it provides vital infrastructure used by the oil and gas industry and because wetlands and coastline have been damaged by the deep canals carved into Louisianas marshes and dredging from the industry.

I am getting pressure from our coastal parishes to consider using the option to object to future oil and gas lease sales off our coast, Blanco said in a statement released with her letter to the Mineral Management Service. This is not my preference, but the pressure is mounting to take a stronger stand.

Coastal states receive only a fraction of the billions of dollars the federal government gets from the offshore leases and activities each year while interior states get half of the royalties from drilling on their land.

Blanco wants Louisiana to receive 50 percent of the royalties from the oil and gas produced beyond its three-mile boundary which would equal more than $2 billion a year.

The state currently gets 27 percent of royalties produced between three miles and six miles offshore. For oil and gas production in the Gulf of Mexico beyond six miles offshore, Louisiana received just $32 million of the $5.7 billion the federal government brought in.

Under federal law, for lease sales to go through, governors in adjacent states must agree that the sales are consistent with their states coastal management plans. Blancos letter said Louisiana was being asked to continue its role as the workhorse for offshore oil and gas production without provisions and assistance to maintain and repair its coastline.

The Minerals Management Service has not completed its review of Blancos letter and had no response Wednesday, an agency spokesman said.

The U.S. interior secretary, who oversees the Minerals Management Service, could overrule Blanco if she attempts to block the next lease sale. But Sidney Coffee, Blancos executive assistant for coastal activities, said Blanco could appeal and eventually take the matter to court.

Blancos letter this week is the closest the state has come to rejecting a lease sale, Coffee said.

The next lease sale is set for August.

Larry Wall, spokesman for the Mid-Continent Oil and Gas Association, said the organization supports Louisianas efforts to get an additional share of the offshore dollars, but it doesnt back the governors threat to hold up leases.

If you stop leases, you stop creating jobs, you stop sustaining jobs and you put a crimp in the industry, Wall said.

Source: Advocate; Baton Rouge, La.

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