03/14/2008 03:30 PM Senate RESOURCES

               SJR 17-OFFSHORE OIL & GAS REVENUE                                                                            
                                                                                                                                
3:37:22 PM                                                                                                                    
CHAIR HUGGINS announced SJR 17 to be up for consideration.                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI, sponsor of SJR  17, said this measure calls                                                               
on Congress  to provide  Alaska and other  coastal states  with a                                                               
fair share of revenue from oil  and gas leases and development in                                                               
the  outer  continental  shelf  (OCS).  He  explained  under  the                                                               
Mineral Lands Leasing Act of  1920, the federal government shares                                                               
50 percent of  the revenues generated from  mineral production on                                                               
federal lands within each state's  boundaries with the state. The                                                               
shared mineral  revenue is  distributed automatically  outside of                                                               
the budget process and is not subject to appropriation.                                                                         
                                                                                                                                
     Unfortunately there is no  comparable authority for the                                                                    
     federal government to  automatically share revenue from                                                                    
     oil  and  gas  activity  occurring six  miles  or  more                                                                    
     offshore  with  adjacent  coastal  states  despite  the                                                                    
     contribution  made  by  those states  to  the  nation's                                                                    
     energy supplies.                                                                                                           
                                                                                                                                
     For  years,  coastal  states   have  argued  that  they                                                                    
     deserve a  share of OCS  revenues because  they provide                                                                    
     the  infrastructure that  supports offshore  operations                                                                    
     and   bear   the   environmental  risks   of   offshore                                                                    
     development.  Several  times  Congress  has  recognized                                                                    
     this federal  contribution and created  revenue sharing                                                                    
     programs  most of  which have  been  temporary or  were                                                                    
     extended to only  a handful of states.  The most recent                                                                    
     one  of these  programs  was included  in  the Gulf  of                                                                    
     Mexico  Energy Security  Act of  2006. Under  that act,                                                                    
     the   federal  government   agreed  to   give  Alabama,                                                                    
     Louisiana,  Mississippi  and   Texas  37.5  percent  of                                                                    
     revenue  from oil  and gas  leasing and  development in                                                                    
     newly  opened federal  waters in  the  Gulf of  Mexico.                                                                    
     This  act  is  expected  to distribute  more  than  $60                                                                    
     billion to those four states over the next 25 years.                                                                       
                                                                                                                                
     Alaska  was  excluded  from this  program  despite  the                                                                    
     efforts   of   our   congressional   delegation.   This                                                                    
     resolution  supports  the  position  that  all  coastal                                                                    
     states with adjacent OCS  development should receive on                                                                    
     a regular  and ongoing  basis a  fair share  of revenue                                                                    
     from  OCS activities  as  compensation  and reward  for                                                                    
     their  contribution to  the  nation's energy  security.                                                                    
     Since statehood,  oil and gas activities  from Alaska's                                                                    
     OCS have generated billions of  dollars for the federal                                                                    
     government.                                                                                                                
                                                                                                                                
A spreadsheet in their packets  showed that almost $6 billion has                                                               
been  collected  from leasing  and  development  in Alaska's  OCS                                                               
since  1982, not  including  the $2.6  billion  that the  federal                                                               
government is  likely to  earn from the  recent Chukchi  Sea Sale                                                               
known as  lease sale 193, a  record breaking event with  667 bids                                                               
offered for 488  blocks. If the revenue sharing  program had been                                                               
in existence  similar to the  one in  the Gulf of  Mexico, Alaska                                                               
would have  stood to gain $975  million from that sale  alone. He                                                               
said  more leasing  and development  is  likely to  occur in  the                                                               
future and while  Alaska is still considered a  frontier area for                                                               
OCS development, two-thirds  of the nation's OCS  is off Alaska's                                                               
coast.  The Minerals  Management  Service  (MMS) estimates  there                                                               
could  be   as  much  as   55  billion  barrels   of  technically                                                               
recoverable oil  and 280 Tcf  of technically recoverable  gas off                                                               
of  Alaska's coast.  Alaska already  has 263  active oil  and gas                                                               
leases off of its coast covering more than 1.4 million acres.                                                                   
                                                                                                                                
3:40:47 PM                                                                                                                    
SENATOR WIELECHOWSKI  said the Chukchi  Sea sale could  result in                                                               
the  leasing of  an additional  2.7  million acres  and that  his                                                               
office  has been  in touch  with aides  in Senator  Ted Stevens's                                                               
office regarding this resolution and  has been assured it will be                                                               
useful  in the  Senator's effort  to secure  revenue sharing  for                                                               
Alaska.  Senator Ted  Stevens's  chief aide  for  energy and  the                                                               
environment says  he is confident legislation  will be introduced                                                               
in 2008 to create a multi-state revenue sharing program.                                                                        
                                                                                                                                
3:41:28 PM                                                                                                                    
MICHELLE  SYDEMAN,  staff  to Senator  Wielechowski,  added  that                                                               
Senator Ted  Stevens thought it would  be good to act  before the                                                               
November elections for  a number of reasons. One  is that several                                                               
members  of Congress  who  support OCS  revenue  sharing will  be                                                               
retiring this year.                                                                                                             
                                                                                                                                
CHAIR  HUGGINS countered  that three  Alaska legislators  were at                                                               
the  Energy  Council  and  New  Mexico  Senator  Bingaman  didn't                                                               
support  the revenue  sharing concept  and  while he  lives in  a                                                               
landlocked state, he's the Senate Resources Committee chair.                                                                    
                                                                                                                                
SENATOR  WAGONER  added that  Senator  Bingaman  didn't come  out                                                               
strongly opposed to their pursuing it.                                                                                          
                                                                                                                                
SENATOR  STEVENS moved  to report  SJR 17  from committee.  There                                                               
were no objections and it was so ordered.