LORI LEBLANC, Vice President, LMOGA
LORI LEBLANC, Vice President, LMOGA
The presidential and congressional elections on Nov. 3 could have significant impacts on U.S. oil and gas production and, ultimately, Louisiana's courageous fight to save our vanishing coast. The two are inextricably linked through the Gulf of Mexico Energy Security Act (GOMESA), which relies on offshore oil and gas to provide critical funding for coastal restoration efforts. Energy production and coastal funding are now at risk.
That's why LMOGA is working vigorously with congressional leaders to change a key provision in GOMESA that restricts the expansion of offshore oil and gas development, obstructing this vital economic engine for fueling the construction of critical projects in our state's $50 billion Coastal Master Plan.
President George W. Bush signed GOMESA into law in 2006, prescribing that the federal government share revenues from oil and gas leasing activities on the Gulf's Outer Continental Shelf (OCS) with producing states for coastal restoration projects. In addition to launching the revenue- sharing program, however, GOMESA also imposed a total ban on federal oil and gas drilling leases within 125 miles of the Florida coastline in the Gulf's Eastern Planning Area through June 2022.
Today, Louisiana, Texas, Mississippi and Alabama share 37.5 percent of all qualified OCS revenues, capped at an annual payout of $500 million per state. An additional 12.5 percent of OCS revenues, capped at $500 million per year, is paid out to the Land and Water Conservation Fund. Louisiana congressional and state leaders continue to advocate for the lifting of this $500 million annual cap to increase critical funding for coastal restoration, which LMOGA also vigorously supports.
The success of any revenue-sharing formula is dependent on the success of Gulf lease sales and the oil and gas production on those leases. The federal government must generate more money in the Gulf to share with states like Louisiana for restoration, and an essential step in generating more revenue is opening the eastern Gulf for offshore production.
Cutting off valuable national energy resources during prosperous times is challenging enough: During today's COVID- 19-stressed economy, the moratorium in the eastern Gulf starves our nation of affordable energy, as well as thousands of jobs and millions of dollars in revenue for important coastal restoration efforts. If access to the eastern Gulf is opened, production on new leases would generate $5 million per year in federal and state GOMESA revenue after 20 years. The moratorium must end to secure our economy and protect our coast.
Federal revenue from oil and gas lease sales in the Gulf was on the decline for the past 10 years, and then the pandemic arrived. From March 2010 through March 2020, lease revenue fell from $1.3 billion to $108.5 million. Due to the COVID-19 crisis and global oil price wars, energy businesses have cut at least $40 billion in capital. Without expanding access into the eastern Gulf, long-term oil and gas production is sure to follow this downward trajectory, and funds needed to sustainably support coastal resilience and conservation programs through GOMESA will dwindle.
As Louisiana combats catastrophic hurricanes and coastal land loss, our state is desperate for long-term investment to protect local communities and fund the state's $50 billion Coastal Master Plan. The GOMESA revenue-sharing program provides us with that opportunity, as long as a robust offshore oil and gas industry can generate the revenue. Today's unprecedented economic conditions and lack of full drilling access in the Gulf, however, are decimating production and risking core investment in our coastal resilience programs.
LMOGA urges you to join us and members of our Louisiana congressional delegation in our push to expand access for oil and gas leases into the eastern Gulf and reject any attempt to extend the GOMESA moratorium on leasing the eastern Gulf beyond 2020. Louisiana's coast depends on it.
For more information about Louisiana's oil and gas industry and LMOGA's work to protect and grow the industry, visit www.lmoga.com or call (225) 387-3205.
