Give States a 50/50 Split for Offshore Drilling Revenue

Mike Brownfield / June 15, 2011

Among the many broken pieces of America’s offshore energy policy is the split between federal and state government royalty revenue. Implementing an even split would go a long way to encourage more offshore oil and gas production and promote states’ rights.

Currently, in offshore waters where drilling occurs, coastal states collect 100 percent of the royalties from production in state waters and 27 percent of the revenue within three miles of state waters. The 2006 Gulf of Mexico Energy Security Act (GOMESA) gives Alabama, Louisiana, Mississippi, and Texas a 37.5 percent share from just one federal lease sale area.  Although bountiful oil and gas resources exist off the Atlantic and Pacific coasts, policies restrict access and thus the states collect no royalty revenue. As gas prices hover around $4 per gallon, there is a renewed interest in expanding oil and natural gas exploration and production off America’s coasts. With that has come a push for a 50/50 royalty revenue sharing for the states for all lease sales. (more…)