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US Gulf Coast states push for offshore oil revenues

* Gulf Coast states say will use funds to restore wetlands

* Revenue-sharing may be key to Senate spill bill passage

NEW ORLEANS, La., July 30 (Reuters) - BP Plc's BP.LBP.N massive oil spill has given Gulf Coast lawmakers leverage to push for a larger share of the billions of dollars in royalties that oil companies pay to drill in U.S. waters.

As a part of 2006 energy legislation, lawmakers like Louisiana Senator Mary Landrieu secured a deal to direct a 37.5 percent share of U.S. offshore royalties to coastal states starting in 2017. The provision would net $650 million a year to Louisiana alone, with smaller amounts flowing to Alabama and Mississippi.

In spill-related legislation being debated by Congress, lawmakers are pushing to accelerate the timetable to allow the royalties to begin flowing to Gulf Coast states’ coffers immediately.

“We’ve been patient. But this oil spill is exceeding our patience level,” Landrieu said in an interview. “This has been a bone of contention for Gulf Coast states for decades.”

Revenue-sharing provisions are absent from an energy bill the House of Representatives began debating on Friday. [ID:nN30172764]

But the provisions could be key to gaining support of Gulf Coast lawmakers when the bill comes before the Senate, with a possible test vote scheduled for next week. Landrieu has said she will not support a spill-related bill that lacks the revenue-sharing provisions.

Gulf Coast officials say they need the money sooner to help restore the fragile wetlands -- a crucial habitat for wildlife that also acts as a grassy, shrubby water levee.

“There is a high level of frustration about the entire situation,” said New Orleans Mayor Mitch Landrieu, Senator Landrieu’s brother, in an interview.

Louisiana’s oil and gas industry is estimated to be worth about $65 billion, while its offshore energy activities are estimated at $10 billion to $14 billion, according to the Louisiana Mid-Continent Oil and Gas Association.

Currently Gulf Coast states, such as Louisiana, Mississippi, Texas and Alabama get nothing from existing offshore lease revenues. Meanwhile, U.S. states split onshore lease revenues down the middle with the federal government.

The offshore oil and gas industry contributed some $20 billion in federal, state and local revenue in 2009, according to IHS Global Insight, an economic consulting group. The revenue includes royalties and money from other businesses that benefit such as restaurants.


For nearly three months, millions of gallons (litres) of the oil leaked into Gulf waters. BP temporarily capped the well July 15 and is trying to permanently stop the leak in late August. [ID:nN30176970]

In St. Bernard Parish, a fishing community on the outskirts of New Orleans covered in grassy marshes, David Dysart surveys the waters with a grim expression.

Dysart came to Louisiana in 2005 to help the parish recover after Hurricane Katrina and has now made St. Bernard his home.

“Katrina has nothing on this oil,” said Dysart, a former Marine Corps officer and now the director of homeland security for the parish. “The oil has the potential to take out this community.”

The fishing industry has been crippled by the spill and its future may be further imperiled by the damage to Louisiana’s vast wetlands.

The woody, shrubby marshes are home to hundreds of birds and furry creatures and serve as nurseries for fish, shrimp and blue crab. The wetlands also act as a natural levee with its grasses and bushes slowing water from moving inland when storms hit the Gulf.

Other residents hope the oil spill will help convince lawmakers of the risks associated with offshore drilling.

“Maybe this will turn into a blessing in disguise,” said Clifford Montecino, a 66-year-old Marrero, Louisiana, resident who used to run a charter fishing business before the spill.

“We should get our share of the money.”

Editing by Chris Baltimore and Eric Beech