Replies to This Discussion

Permalink Reply by Martin on May 9, 2010 at 15:52

Les B --
I have read the statement several times in WSJ and the Economist that most if not all of the oil from Alaska's North Slope is sold in Asian markets.

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Permalink Reply by Les Bamburg on May 9, 2010 at 18:26

Martin, EIA information shows that only ~ 0.6% of US crude oil production is exported and that goes to Canada from the Midwest and East Coast. Almost no crude oil is exported from the West Coast (PADD 5) including Alaska. I believe essentially all Alaska crude oil is delivered to California refineries by tanker from Valdez.

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Permalink Reply by Martin on May 11, 2010 at 17:23

Les B --
Well, so much for the WSJ, the NYT or my long term memory -----

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Permalink Reply by adubu on May 8, 2010 at 8:05

parker --are you saying the states receive 0 royalty and the operator take 100% of production offshore drilling? I assume they pay severance taxes to the individual states?

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Permalink Reply by sesport on May 9, 2010 at 21:01

adubu (and anyone else trying to keep up) - Here's a quick & readable explanation.

http://www.pbs.org/now/shows/224/royalty-relief.html

"The act reduced the amount of royalties that companies had to pay for drilling in American waters in the Gulf of Mexico. At the time when gas prices were fairly low, the move was seen by many as an incentive to get petroleum companies to drill for oil and natural gas and keep energy production inside the United States"

80)

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Permalink Reply by The_Baron on May 12, 2010 at 4:15

severance taxes are only paid to the state when the well is in LA teritorial waters. LA gets three miles out from the 1812 shoreline.

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Permalink Reply by Doob on May 8, 2010 at 8:17

The Royalty Relief Act was passed to lure companies into the deep water when it wasn't economically attractive. To revoke that relief would be a violation of a contract between the federal government and the oil companies. In doing so we would join other governments like Russia, Venezuela and numerous African nations. Is this who we want to emulate?

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Permalink Reply by Spring Branch,mineral owner on May 8, 2010 at 14:01

How would it violate any contract for the Federal government to share 1/2 of the royalties with the State of Louisiana which is collected on offshore oil and gas in Federal waters off our coast, Doob? That, at least, is what Les B. suggested which makes an enormous amount of sense to me

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Permalink Reply by Doob on May 9, 2010 at 3:49

I'm not arguing that point. However, I believe it is analogous to a surface owner telling a mineral owner of the same lands that he deserves half of the mineral owner’s royalty because the development compromises the surface. How many mineral owners would agree to that? A major difference is that Louisiana has had tremendous financial benefits to the OCS leasing as well as environmental damage.

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Permalink Reply by Les Bamburg on May 9, 2010 at 6:02

Doob, I am not convinced there have been such tremendous financial benefits to Louisiana in recent years associated with leases in the Federal offshore leases. Most of the companies moved their staffs to Houston and a lot of the offshore workers live in other states. Most of the commodity is delivered to other states.

Your analogy doesn't really fit the situation. Let's say you live next door to a large factory and all the trucks and employees drive across your property within 5 feet of your house and you receive little compensation for the noise, pollution, etc. I think that analogy is closer to the Louisiana situation.

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Permalink Reply by Bobi Carr ("parker") on May 9, 2010 at 7:55

Les,

You hit on the main issue that Mr. Foster makes. A platform that he has had for a long time.

In his Memo, he says:

90% of the oil and gas processed in our state comes from foreign or offshore sources and is not taxed-despite the heavy environmental cost it inflicts on us--and all the tax burden falls on in-state producers.

So in addition to the fact that they pay no royalties, if they have the oil or gas processed in Louisiana, they also pay no tax there either. Now if a Louisiana operator drills within our state they pay these taxes. I don't understand how this is an equitable situation. How is this fair?

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Permalink Reply by Doob on May 9, 2010 at 9:25

Who processes that oil? Are there not a few jobs associated with that, and some tax revenues for the state? Do you really think a refinary doesn't pay any tax? I'm not saying it's worth it, I don't know the facts well enough. But there is surely another side to this--a benefit to the state. Ask one of the employees of one of the refineries.

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