News from the Tennessee Valley State, Local and National news

Alabama getting extra oil, gas revenue from hurricane program

MONTGOMERY (AP) — Alabama and its two coastal counties are getting $18.5 million more than expected from federal offshore oil and natural gas revenues, thanks to an unlikely source — Hurricane Katrina.

The 2005 hurricane set back oil and gas operations in the western Gulf of Mexico, giving Alabama an increased share of production and revenue from the federal government's Coast-al Impact Assistance Program.

U.S. Sen. Jeff Sessions announced that Alabama and Mobile and Baldwin counties will share $51.1 million for 2007 and 2008 instead of $32.6 million.

"The funding distribution is based on where production occurred in the Gulf. Production in the western Gulf of Mexico was disrupted after Hurricane Katrina, so a larger share than was initially expected occurred closer to Alabama. As a result, Alabama's share of the funding is greater," Sessions' spokeswoman said Tuesday.

The Coastal Impact Assistance Program was created by Congress in 2005 to share federal offshore oil and natural gas revenues with six producing states and their coastal counties for four years: 2007 through 2010. The amount each state receives depends on the production from nearby areas of the Outer Continental Shelf.

For both fiscal 2007 and fiscal 2008, the program will provide $16.6 million to the state of Alabama, nearly $5 million to Mobile County and nearly $4 million to Baldwin County, according to the U.S. Department of Interior.

"It is only fair that producing states are rewarded for their willingness to share a disproportionate amount of the burden of producing oil and natural gas," Session said in a statement.

The state government's share will not go into Alabama's trust fund for royalties from natural gas wells drilled in state-owned waters. Instead, the state and the two counties can use the money for conservation, protection and restoration of coastal areas and wildlife or to pay for a comprehensive coastal conservation management plan.

State Conservation Commissioner Barnett Lawley said Tuesday his department will spend the money on a variety of coastal projects ranging from reclaiming marshland heavily damaged by hurricanes to improving the fishing pier at Gulf State Park.

The amount Alabama will receive for 2009 and 2010 will be calculated later using more recent production levels, Sessions said.

The program is separate from the Gulf of Mexico Energy Security Act that Congress passed in December 2006. That program will give Alabama and three other Gulf Coast states 37.5 percent of the royalties from oil and natural gas production when it starts in an area of the Gulf about 125 miles southeast of the Alabama coast.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Save $84.50 a year off our newsstand price:
Subscribe today for only 38 cents a day!

Leave feedback
on this or

Email This Page