Louisiana clearing the way to receive offshore funds

August 1, 2007 By Mike Hasten mhasten@gannett.com

BATON ROUGE ­— Louisiana officials are expecting federal approval soon of a plan that spells out how future revenue from offshore oil production will be used to restore the state's coastline and marshes.

Louisiana is the first state to get its coastal impact assistance plan declared "complete," which state Natural Resources Secretary Scott Angelle says sets the stage for final approval of the plan by the U.S. Minerals Management Service within 90 days. The plan includes projects in the 19 coastal parishes that share offshore production funds with the state.


"Now that MMS considers Louisiana's plan complete, we are well on our way to becoming the first state to reach the finish line" and receive about $127.6 million a year from Outer Continental Shelf production, Angelle said.

Louisiana and five other oil- and natural gas-producing states are required to submit coastal impact assistance plans to receive federal dollars from offshore operations, as established in the U.S. Energy Policy Act of 2005. Until the bill was passed, the state got no money from production on federal lands.

The impact of offshore oil production on the coast and the fact that many of other noncoastal states get revenue from production on federal lands were used successfully to convince Congress to share offshore revenue with Louisiana and the other coastal states.

Most of the money would be used to restore the coastline, marshlands and some barrier islands; but some of the funding can be used to repair highways and do work at ports and airports that handle Outer Continental Shelf equipment and supplies, said David Fruge, Natural Resources' coastal impact assistance plan director.

For example, the plan includes money for road and bridge repairs around Acadiana Regional Airport near New Iberia and the Port of Iberia because "a lot of traffic goes through there" serving offshore production, Fruge said.

Because Louisiana handles so much of the Outer Continental Shelf traffic of oil and gas, goods and services, the state and coastal parish governments will receive a larger portion of the funds received from production, he said. Other states in this region are Texas, Mississippi and Alabama.

Louisiana government receives 65 percent of the state's share — about $83 million — and parishes will split 35 percent — about $45 million in the initial years. Some of the many projects in the list are solely funded with state funds, some solely with parish money and some share state and local funds.

"The amount each parish gets is determined by population, proximity to production in the OCS tracts and the length of shoreline," Fruge said. "MMS determines how much money we get."

Louisiana should start receiving funding to get several projects under way in early 2008 if the plan is approved as expected, he said. Plans are complete on several projects, and the state has begun preliminary work based on assurances of being refunded when the money arrives.

Louisiana will be receiving about $250 million a year in 10 years, said Larry Wall, spokesman for the Louisiana Mid-Continent Oil and Gas Association. Louisiana is expected to receive $13 billion over the next 30 years.

That's because "when new areas open up for leases, it will mean more money," Wall said. "The deep water stuff farther out is going to be tremendous."