Washington (Platts)--13May2008

Senate Republicans failed Tuesday to win passage of a proposal that would
have boosted domestic production opportunities for conventional energy
producers. The proposal was rejected by a 42-56 vote.

The Republican bill (S. 2973), which was introduced last month as a
response to soaring oil and gasoline prices, was offered as an amendment to a
flood insurance bill. Under an agreement between party leaders, it would have
needed 60 votes to succeed.

The so-called American Energy Production Act would have lifted
moratoriums on oil and natural gas drilling on the Outer Continental Shelf and
parts of the Arctic National Wildlife Refuge, repealed new application fees
for drilling on federal lands, and created a production mandate for coal
derived fuels.

It would also have repealed a one-year moratorium on oil shale
development on federal lands and would have stopped fill of the Strategic
Petroleum Reserve. The Senate Tuesday overwhelmingly passed a Democratic
proposal on halting SPR fills.

"We feel very comfortable giving the other side the opportunity to vote
'no' again" to increase production, said Senator Pete Domenici, who sponsored
the bill. The New Mexico Republican acknowledged before the vote that it was
unlikely to go his way.

Senator Kay Bailey Hutchison, Republican-Texas, said "this is a simple,
practical, economic principal--supply and demand." She said that opening an
area the size of an airport in ANWR would provide the US with 10 billion
barrels of oil, enough to make a major dent in the need for foreign fuel.

Senator Jeff Bingaman said the Republican proposal "does not hold out
much promise for affecting the price of oil and the price of gas."

--Jean Chemnick, jean_chemnick@platts.com