House Resources Committee unveils OCS drilling 'compromise' bill

Washington (Platts)--19Jun2006

The House Resources Committee unveiled on Monday "compromise" legislation
that would open up areas of the US Outer Continental Shelf closed to oil and
natural gas drilling while giving states a greater share of revenue from
offshore production.

Committee Chairman Richard Pombo, Republican-California, said the Deep
Ocean Energy Resources Act is a "hybrid" of measures sponsored by
Representatives Bobby Jindal, Republican-Louisiana, and John Peterson,
Republican-Pennsylvania.

DOER would codify into law the moratoria on oil and gas drilling, which
are currently established by a presidential order set to expire in 2012, and
by annual appropriations legislation renewals within 50 miles of all states'
coastlines.

In the area 50 to 100 miles off their shores, states would have a year to
ban gas drilling, and until June 30, 2009 to prohibit oil drilling. Beyond 100
miles from their shorelines, oil and gas drilling would be permitted. As with
the Jindal bill, on which the committee held a hearing last week, DOER would
give states a 75% share of OCS revenues for leases within 12 miles from their
coasts and 50% of revenue beyond 12 miles.

US Minerals Management Service Director Johnnie Burton said in the
hearing the Bush administration could not support the measure with the revenue
sharing provision written that way. Resources spokesman Brian Kennedy,
however, said Monday the committee hopes to gain the White House's support
with the addition of language that seeks to force oil and gas companies to
renegotiate 576 offshore leases issued in 1998 and 1999 without "price
threshold" language.

Without this language the government is not collecting royalties on the
leases, even with oil prices having hovered beyond $70/barrel for months. An
MMS spokesman would not immediately comment on the provision. The committee
will mark up the legislation on Wednesday.

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