Vitter Wants Answers on Offshore Wind Lease in Atlantic Outer Continental Shelf
Vitter questions ban on oil and gas leasing in the same geographical area, renews request for economic data on offshore wind
June 4, 2013
U.S. Sen. David Vitter (R-La.) responded to news reports that today the U.S. Department of Interior will outline details of an offshore lease sale for wind energy in the Atlantic Ocean. In November 2012, Sens. Vitter and Lamar Alexander (R-Tenn.) wrote a letter to former Interior Secretary Ken Salazar, noting that the agency will not allow offshore oil and gas leasing in the Atlantic Outer Continental Shelf (OCS), and requested data on the economics of the wind lease sale, to compare with "the value of a similar lease for oil and gas on equivalent acreage." Seven months later Interior has not yet released the economic data.
"The administration has a habit of picking energy industry winners and losers. While they do everything they can to advantage renewable energy production, they ignore the benefits that traditional energy provides. Since November, we've been asking them to explain the economics behind their plans for offshore lease sales for wind, but they have failed to answer our letter," Vitter said. "The Interior Department should at least be able to defend the economics of offshore lease sales for wind energy - or at the very least respond to our letter. The federal government receives significant revenue from royalties for offshore oil and gas production in the form of rents, royalties, bonus bids and taxes. Can the same be said for any potential offshore wind project?"
In the November letter, the senators write, "the Federal Government derives significant revenue from royalties for offshore oil and gas production. The current rate companies must pay is between 12.5% and 18.75%." This is before taxes and after competitively bidding on the lease. This tax is levied on all energy produced by an oil and gas company working on federal offshore or onshore resources. The senators want to compare with an offshore wind lease granted without competitive bidding in October 2012: "What is the effective royalty rate Interior has contracted with NRG Bluewater Wind Delaware LLC for this lease for the energy it produces? What is the anticipated revenue to be raised from this development over the next 10 years?"