Senator Murkowski Introduces Bill to Increase Alaska's Share of Offshore Oil and Natural Gas Revenues

U.S. Senator Lisa Murkowski (R-AK) took a step to ensure that Alaska receives its share of revenue from oil and natural gas production on Alaska's outer continental shelf by introducing the Alaska Outer Continental Shelf Lease Sale Act.

“Alaska’s natural resources are vital to our prosperity” Murkowski said. “With exploration proceeding in the Chukchi, and the Alaska offshore emerging as a key part of our national energy security, it is critical that we ensure revenue sharing for the state and coastal communities and invest in the workforce development, science and infrastructure necessary to bring these vast resources to market.”

Alaska’s OCS in the Beaufort and Chukchi seas are estimated to contain undiscovered resources of 23.6 billion barrels of oil and 104.4 trillion cubic feet of natural gas. Additionally, Cook Inlet, which provides the natural gas supply for southcentral and interior Alaska, contains an estimated undiscovered resource of 19 trillion cubic feet of natural gas.

Alaska currently receives 27 percent of revenues from oil and gas leasing and production in the 8(g) zone, the area between three and six miles from shore, but does not receive revenue sharing from beyond the six mile limit. This is in contrast to Gulf of Mexico states, which beginning in 2017 will share 37.5 percent up to a cap of $500 million annually from certain offshore production. Of the remaining funds, 50 percent is directed to the U.S. Treasury and 12.5 percent is directed to the Land and Water Conservation Fund (LWCF).

“Unlike Gulf states, whose production supports the LWCF, which has primarily been used in recent years to put more land in federal hands, which I oppose in Alaska,” Murkowski said. “Alaska has unique energy and infrastructure challenges that demand a different policy.”

Murkowski’s bill for Alaska would provide additional long-term benefits to Alaskans by directing 12.5 percent of the revenues from offshore development to the federal Low-Income Home Energy Assistance Program (LIHEAP), weatherization, and the development of infrastructure in the Arctic.

“In the near term, providing energy and revenues to Alaskans requires increasing access in the areas where Alaska already receives revenue sharing like the within the six-mile limit,” Murkowski said. “But in the longer term, my legislation will ensure that the state of Alaska and coastal communities supporting development will receive a substantial share of the revenues from production to compensate for impacts from development.”

The Alaska Outer Continental Shelf Lease Sale Act would:

•         Provide for revenue sharing in the Alaska OCS region for the state and coastal communities.
•         Increase access to additional resources by requiring a minimum of three lease sales in each of the Beaufort, Chukchi and Cook Inlet planning areas during any five-year period, and annual lease sales in the 8(g) zone of the Beaufort and Cook Inlet planning areas.
•         In the near term, direct funds for workforce development, investments in science and permitting to ensure OCS oil has a pathway to the trans-Alaska oil pipeline.
•         In the long term, direct funds to LIHEAP, weatherization, and Arctic Infrastructure.

Bill text and a fact sheet on S. 1278, the Alaska Outer Continental Shelf Lease Sale Act are available on the Senate Energy and Natural Resources Committee website.

Date Posted: 5/13/2015