Washington (Platts)--11Jun2008

The US House of Representatives Interior Appropriations subcommittee
Wednesday rejected an amendment by Representative John Peterson that would
have opened more of the Outer Continental Shelf to oil and natural gas
drilling.

This is the Pennsylvania Republican's fifth attempt to remove the bill's
annual moratorium on fossil fuels drilling on most of the OCS, and is likely
to be the last one as he is not running for reelection this fall.

The amendment was defeated along party lines, by a vote of 6-9. The
amendment would have allowed drilling from 50 to 200 miles from shore, with or
without an adjacent state's permission. Perennially, appropriations for the
Department of Interior bars using funds to lease closed-off areas.

"I believe we have an energy crisis in America at this point if we don't
address it soon, it will do long-term collateral damage" to the US economy,
Peterson said.

Subcommitee Chairman Norm Dicks, Democrat-Washington, said that the areas
protected by the congressional moratorium had relatively little oil, and that
the US government had "dramatically" increased the number of permits issued to
fossil fuels producers in recent years.

"What we are protecting are very precious areas," said Dicks.

He and other Democrats argued that oil companies often did not develop
lease areas, with Peterson adding that that was generally because some leases
offered little oil. "If you hit a dry hole, you stop drilling," he said.

The panel did give its nod to a fiscal year 2009 interior appropriations
bill that would provide the Department of Interior with $10.5 billion, an
increase of nearly 6% over current levels. The bill would provide the Bureau
of Land Management, which overseas federal leasing on public lands, with
slightly more than $1 billion.

A committee aide said that the figure for the Minerals Management
Service, which is responsible for royalty collection and offshore leasing, had
not yet been finalized.

The full committee will take up the bill next week. The aide said
Appropriations Chairman David Obey, Democrat-Wisconsin, hoped it would come to
the floor of the House in July.

--Jean Chemnick, jean_chemnick@platts.com