White House opposes giving states share of OCS royalties: MMS

Washington (Platts)--14Jun2006

The head of US Minerals Management Service told a House committee
Wednesday the Bush administration opposes a plan that would give states that
agree to open their offshore areas to oil and natural gas drilling up to 75%
of the royalties from any production.

The House Resources Committee is considering a bill sponsored by
Representative Bobby Jindal, Republican-Louisiana, that would allow coastal
states to "opt out" of federal bans on drilling outside of the Gulf of Mexico
in exchange for up to 75% of federal royalties. While states now receive a
portion of revenue from drilling in state waters, they get no money from
production in federal waters that typically begin six miles from shore.

MMS Director Johnnie Burton told the panel the administration has
"serious concerns about this bill because of its excessive short- and
long-term costs." Burton said the administration, however, generally supports
the opt-out provision, which would allow states in the off-limits areas of the
OCS to petition for a waiver of drilling moratoria.

Burton said the bill's revenue-sharing plan was "inconsistent with the
president's budget priorities and would have a significant, long-term impact
on the budget deficit."

Proponents of the legislation disagree, arguing that new offshore
drilling would increase revenues for the Treasury.

One Republican aide said the details of the royalty provision could
change before the committee debates the bill, possibly next week. The House
may consider the bill in the last week of June, a period congressional
Republicans have set aside to deal with energy issues.

---Matt Spangler, matt_spangler@platts.com

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