Interior secretary nominee grilled about offshore drilling stances

U.S. Interior Department secretary nominee Sally Jewell said Thursday that she wants to find an “appropriate resolution” for increasing revenue sharing for states like Louisiana that allow offshore oil-and-gas production near their coasts.

Jewell was quizzed for nearly three hours by members of the Senate Energy and Natural Resources Committee, which must next consider approving her nomination and sending her name to the Senate floor for final confirmation.

Jewell, a former oilfield engineer and banking executive, is currently the president and CEO of the Seattle-based Recreational Equipment Inc.

The Interior Department is responsible for the management of most federal lands and natural resources, ranging from federal parks and fisheries to coal-mining sites and the Gulf of Mexico’s Outer Continental Shelf.

Sen. Mary Landrieu, D-La., who is a member of the committee, and committee Chairman Ron Wyden, D-Ore., both quizzed Jewell about revenue-sharing issues.

She lacked specifics to many of her answers, but Jewell spoke frequently about finding the “balanced approach” between energy production and nature conservation.

“Revenue sharing (with states) is clearly a very important issue that deserves some attention from the Department of the Interior,” she told Wyden.

Jewell also discussed finding the right revenue-sharing balance with Landrieu.

“I know that we’re all in a situation with a tight federal Treasury, and it would take good collaboration,” Jewell said about finding the “appropriate resolution.”

Using a map, Landrieu showed the oil-and-gas pipelines from Louisiana and other coastal states to offshore drilling sites. She said offshore drilling revenues from the Gulf Coast states have produced more than $210 billion in federal revenues since 1950, compared with about $61 billion produced from on-shore drilling during the same time.

But the states with greater on-shore energy production keep almost half the revenues, Landrieu said, while the coastal states have received just a few million dollars.

“We have sat here since 1950 producing the oil and gas … and cannot get a penny from the federal government to save the land,” Landrieu said.

“This is one of the great injustices in the country today,” she added.

Last year, Landrieu filed the OPEN Act to expand offshore drilling access and remove the cap on state revenue sharing in the Gulf, but that bill did not progress.

Landrieu currently is working on a tighter version of the bill with Sen. Lisa Murkowski, R-Alaska, that is expected to focus only on increasing revenue sharing.

Likewise, Sen. David Vitter, R-La., filed a comprehensive bill last month to increase offshore oil production revenue sharing with Louisiana and other affected states, to expand offshore drilling in the Gulf of Mexico and along the Atlantic and Pacific coasts, and to expedite permitting for projects such as the controversial Keystone XL pipeline.

Both Vitter’s new bill and Landrieu’s anticipated legislation would expand on revenue-sharing legislation first approved in 2006. Louisiana residents are waiting until 2017 for a potentially steady stream of revenue because the Landrieu-sponsored Gulf of Mexico Energy Security Act that became law in 2006 does not fully kick in until 2017.

The law will allow Louisiana to share in the 37.5 percent royalty that the federal government receives from new drilling in 8.3 million acres in the Gulf of Mexico.

Louisiana is expected to receive close to half of the funds, with the rest going to Texas, Mississippi and Alabama.

Because the offshore drilling revenue sharing is capped at $500 million a year for the four states, rough estimates show Louisiana starting with as much as $100 million in 2017, and then growing from there. But much of that depends on the amounts of future offshore oil-and-gas drilling off Louisiana’s coastline.

Overall though, Landrieu praised Jewell’s business background. “You bring a particularly interesting and exciting set of skills to this job,” Landrieu said.

Vitter previously expressed a “lot of concerns” about Jewell, before recently meeting privately with her. Vitter was a vocal critic of outgoing Interior Secretary Ken Salazar.

On other issues, Jewell spoke relatively positively about natural gas production. Louisiana is currently the nation’s second-highest producer of natural gas, Landrieu noted.

“It is cleaner than some sources of fuel,” Jewell said. “Its development also depends on its economic viability.”

Jewell frequently touted her support of President Barack Obama’s “all-of-the-above energy strategy,” which includes offshore oil, natural gas, wind production, renewable energies and more.