OCS drilling bill in 'state of suspended animation'

OCS drilling bill in 'state of suspended animation'

Washington (Platts)--5Sep2006

Supporters of legislation that would expand gas drilling on the US Outer
Continental Shelf said Tuesday they are becoming increasingly concerned about
the bill's prospects, given the limited amount of time Congress has to act
before the November elections.

As lawmakers returned to Washington after a month-long break, staffers
with the Senate Energy and Natural Resources Committee and the House Resources
Committee planned to meet Tuesday afternoon to set some ground rules for
discussions aimed at reconciling the Senate and House versions of the bill,
said Chris Tucker, press secretary for Pennsylvania Representative John
Peterson, a Republican who has actively pushed for more offshore drilling.

"We're in a state of suspended animation right now," Tucker said Tuesday.

Marnie Funk, a spokeswoman for the Senate energy panel, said that with
just 14 business days left before Congress adjourns for the midterm elections,
the Senate had taken no steps to appoint members to a conference committee
that would work on hammering out a compromise.

The Senate bill would open 8.3 million acres of the Gulf of Mexico to
drilling, including nearly 2 million acres that were removed from the federal
government's Lease Sale 181 five years ago because of objections from Florida
officials. It also includes a provision to share 37.5% of revenues derived
from new production with four Gulf Coast states.

The much broader House bill passed in late June would lift the
congressional moratorium on nearly all OCS drilling beyond 100 miles and allow
states to decide whether to allow drilling between 50 and 100 miles of their
shores.

Funk said OCS drilling proponents are concerned about rumors that the
White House is backing the Senate version and pressuring House leaders to do
the same. She said the Bush administration "definitely thinks we need to get
the gas we have and oil we have on the Outer Continental Shelf and bring it to
market. The Senate version is the more focused, more modest bill, so it has
the best chance of Congress passing it."

But Brian Kennedy, communications director for House Resources, said he
believes President Bush supports the House version. Kennedy released copies of
an interview President Bush did with a New Orleans radio station last week in
which Bush said it was "fine" if people don't want drilling within a 100 miles
of their coastlines. "On the other hand, outside of 100 miles there is a lot
of unexplored territory and it is in our nation's interests that we do open
that up to explore," Bush said in the interview. "We need more natural gas and
more oil if we are going to become less dependent on foreign oil."

Calls to the White House were not returned as of press time Tuesday.

"I know the White House is looking for a signing ceremony and something
to declare victory on," Kennedy said. But that doesn't mean the administration
will "punt" by backing the bill with the best chance of passage. "Get in there
and fight a bit first," he urged.

Kennedy said supporters of the House bill are pointing out that the
Senate legislation contains no language that would correct errors in 1998 and
1999 leases that have resulted in the loss of billions of dollars of revenues
for the federal government. "I can't imagine the Senate Democrats standing
still for that," he said.

--Rodney White, rodney_white@platts.com

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