DALLAS - Discussions at the first official meeting of Louisiana's Coastal Protection and Restoration Financing Corp. focused on the need to maintain and improve the state's economically important coastal areas with revenue bonds supported by future offshore revenues.
The special-purpose public corporation was established by the Legislature in 2007 to manage the state's share of royalties from oil and natural gas production in federal leases in outer continental shelf waters in the Gulf of Mexico off Louisiana. The CPRFC is authorized to issue bonds based on 100% of the royalties, which are expected to be between $400 million to $900 million a year when the revenue stream begins flowing in 2017.
The state's first sale of debt supported by the increased revenues from offshore oil and gas production is still some way off, said Chris Macaluso, spokesman for the governor's office of coastal activities.
"We've talked with financial institutions about the expected revenues, and there is still some iffiness," he said. "We're still not sure how much we'll be getting in royalties, because a lot will depend on the price of oil and gas in 2017."
Wednesday's inaugural session was an opportunity to brief board members on the need to protect Louisiana's Gulf Coast, Macaluso said.
"We wanted to show them what was at stake, and why the state needs to make the best use of the money that will be available," he said.
David Miller, who was recently appointed director of implementation for the governor's office of coastal protection and restoration, said the current annual plan includes about $525 million in projects the state can currently pay for and about $1.2 billion in projects that could be built if more funds were available.
"There is a long list of projects that the state could build if this corporation can produce some additional revenue for us," Miller said.
Scott Angelle, secretary of the Louisiana Department of Natural Resources, said protecting and restoring coastal areas is essential for domestic energy production. More crude oil, natural gas, and revenue for the federal treasury are produced from Louisiana's Outer Continental Shelf than any other state, he said.
"It seems like America is betting everything on the Gulf of Mexico to provide energy for this entire country," Angelle said. "With that in mind, we need to do all we can to protect those interests by finding a way to fund restoration and protection projects."
Garret Graves, chairman of the Louisiana Coastal Protection and Restoration Authority, which works closely with the CPRFC, said Louisiana offshore leases have produced almost $150 billion in federal revenues since exploration began more than 50 years ago. Graves said a lack of federal spending in the state makes every dollar the state can generate for coastal restoration and protection efforts extremely valuable.
"If the federal government and the state had been more proactive about using some of that revenue to protect and restore Louisiana's coast, we could have prevented 80% to 90% of the deaths that occurred because of hurricanes Katrina and Rita in 2005."
Director of Administration Angéle Davis, who represents Gov. Bobby Jindal on the 15-member Coastal Protection and Restoration Financing Corp., was elected chair of the agency.
The state will begin receiving additional revenues under a law passed by Congress in 2006 that increased the offshore royalties share to 37.5% for Louisiana, Alabama, Mississippi, and Texas, up from 27%.
The higher royalties went into effect in mid-March with a lease sale that brought in $3.7 billion in high bids. The revenues are expected to be $8 million to $10 million a year until platforms in the newly leased areas begin commercial production in 2017.
