The US opens up Mexico’s east coast in an attempt to reduce dependency on foreign energy supplies.
The US Senate has approved legislation that opens up the eastern Gulf of Mexico to new exploration.
The bill was wrapped into a broad tax and trade package and will open 8.3 million acres in the eastern Gulf of Mexico to new oil and gas drilling. President George W. Bush said the bill would help reduce US dependence on imported energy by increasing access to domestic sources of oil and gas. It will also redistribute billions of dollars in federal royalties to the four nearby Gulf Coast states: Texas, Louisiana, Mississippi, and Alabama.
Each of these states will receive 37.5% of federal royalties. Another 12.5% will go to a Land and Conservation fund, which will be shared by all 50 states. The remaining 50% of the royalties will go to the US Treasury. According to congressional estimates, that provision could redistribute about US $60 billion in federal leasing fees to states over the next 25 years.
In 2005, the United States saw its energy prices spike as a result of the destruction from hurricanes Katrina and Rita. According to Christopher Hosek, chief of staff of the Railroad Commission of Texas, opening these waters to exploration and production is one of several avenues the US is exploring in an attempt to increase domestic supply.
“This is a necessary step which will help ensure that America is as self reliant as it can be,” said Hosek. “There still remain large offshore geological provinces that are restricted for development. There are also several onshore areas including the Alaskan National Wildlife Reserve, which are believed to contain significant undeveloped hydrocarbon resources. All of these eventually must be developed to their full potential.”
Hosek added that this initial step alone will not immediately reduce the country’s dependence on imported sources of oil.
“It will take a long time and tremendous capital investment to bring these reserves to market, but the production should make an important contribution to our domestic supply,” he said. “With the energy market so tight, every barrel counts, making the Gulf of Mexico extremely important to our energy supply.”