Oil & gas revenue-sharing is ‘simple fairness,’ says Alaska senator

Alaska Senator Lisa Murkowski wants Alaska to get a share of the federal revenues from oil and gas development off Alaska’s shores.

Alaska’s congressional delegation has tried before, but this time Murkowski hopes to harness the support of other coastal senators. The idea proved controversial at an Energy Committee hearing this morning.

Murkowski’s Alaska revenue-sharing bill has two siblings. One proposes revenue sharing for Atlantic states. The other would send more revenue to Louisiana and its neighbors. Murkowski promoted them all at the Energy hearing.

“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 Murkowski, who chairs the Senate Energy and Natural Resources Committee.

Revenue from continental shelf

The Alaska bill would divert 22.5 percent of revenue from Alaska’s outer continental shelf. Most of that– 15 percent—would be split between the state of Alaska and communities near the developments. The bill earmarks smaller amounts for Alaska workforce development and federal science research on the North Slope. After the first decade, the in-state share would grow and the percentage to the federal treasury would shrink to 50 percent.

Alaska now gets 27 percent of federal revenues from leases and production from the off-shore area known as 8(g). That’s the band from three miles to six miles out. It gets nothing from the Outer Continental Shelf, the area beyond six miles. Murkowski’s bill requires annual lease sales in the 8(g) zone of Cook Inlet and the Beaufort Sea.  It calls for  three OCS leases every five years in each of those areas, plus the Chukchi Sea.

The top Democrat on the Committee, Maria Cantwell of Washington, says the idea of new OCS revenue-sharing remains unpopular with senators from interior states and those who believe the federal government can’t afford it.

“These are not new concepts, my colleague from Louisiana I’m sure knows,” Cantwell said. “But they are a concept that have brought this committee to a standstill, multiple occasions, given a mix of concerns.

Revenue-sharing was among 26 bills on Murkowski’s hearing agenda, all of them candidates for the comprehensive energy package she’s working on. Cantwell and other Democrats say they want energy policy to focus more on technology, efficiency and carbon reduction.

One of the hearing witnesses, Franz Matzner, of the Natural Resources Defense Council, says combating climate change will require leaving some oil in the ground, and Matzner says off-shore oil, in particular, is best left alone.

“Whether you’re focused on the Arctic or the Atlantic there’s a risk of severe oil spills and we’ve seen what happens when we have those oil spills. The impacts are economically severe, ecologically severe, and they’re persistent,” he said.

Jobs, economic opportunities

Sen. Al Franken, a Minnesota Democrat, repeated an “irony” he mentioned at a prior Energy hearing: That the loss of Arctic ice gives rise to more oil development in the Arctic, which will cause more climate change and more ice loss.

This time, Murkowski was ready for it.

“Many in the North believe that the irony is the people of the north would be denied jobs, economic opportunities … while people 4,000 miles away lock up them and put them in an effective snow globe for life,” she said.

The senator says she wants to boost all kinds of energy production: Hydro, Nuclear, Petroleum, Renewables.

“We have an abundance of supply when it comes to our energy assets, and that’s something worth celebrating, because not every country has this,” she said.

Murkowski says she’s also trying to lift the oil export ban, so the U.S. can use that abundance to help its allies.

Related stories from around the North:

Canada:  Canada ponders exceptions to relief well rule for Arctic oil drilling, Alaska Dispatch

Finland: Finns still sharply divided over wind power, Yle News

Greenland: Arctic oil and gas must stay in ground to restrict warming to 2°C says study, Blog by Mia Bennett

Iceland:  From Arctic Circle 2013-2014, a big drop in the price of oil, Blog by Mia Bennett

Norway:  In Arctic, Norway steps on the gas, Barents Observer

Russia: Gazprom, Lukoil in Arctic alliance, Barents Observer

United States: Obama defends Arctic drilling weeks after Kerry promotes clean energy at Arctic Council, Blog by Mia Bennett