Washington (Platts)--10Sep2008

US House of Representatives Speaker Nancy Pelosi is expected to offer a
broad energy bill this week or early next that would call for opening millions
of acres of the US Outer Continental Shelf to oil and gas drilling, a move
most Democrats have resisted for years.

Pelosi's Comprehensive American Energy and Security Act of 2008 would
open the OCS to drilling beyond 100 miles offshore along both the East and
West coasts.

It addition, it would also allow governors and state legislatures to
decide whether to open the area between 50 and 100 miles from their coast to
energy development. Parts of the OCS within 50 miles of coasts would remain
off-limits to oil and gas production.

Under the proposed bill, the eastern Gulf of Mexico would be the only
area that would remain closed to production.

In addition, the bill would roll back a manufacturers tax cut for major,
integrated oil and gas companies while freezing the incentive for smaller
independent companies.

It also would put revenue gained from the repealed or reduced tax cuts to
work paying for an extension of renewable energy tax credits that are
scheduled to expire at the end of 2008.

Further, the bill would require investor-owned electric utilities to
obtain 15% of their power from renewable resources. Some 4% of this renewable
electricity standard could be satisfied with efficiency efforts, according to
a draft of the bill.

The bill also would require the release of oil from the Strategic
Petroleum Reserve to reduce gasoline prices. The measure, however, would not
contain any language aimed at curbing speculation in oil and natural gas
markets, but Pelosi has promised to tackle the issue in a separate measure.
At the end of a conference call September 5 with the speaker, Democratic
Representatives Gene Green of Texas and Nick Rahall of New Mexico were asked
to take the lead on the energy bill, the Texas congressman told Platts on
Wednesday.

Because Green is a staunch ally of the oil and gas industry, and Rahall
is a coal state Democrat, Representative George Miller of California was
pulled in to protect environmental interests on the bill.

"I do feel like my views have been heard by the leadership," said Green,
who had spearheaded his own oil-friendly effort that drew support earlier this
summer from two dozen Democrats from energy producing states.

Though the bill is much more extensive than what was expected from
Pelosi, who has been a strong opponent of expanded offshore drilling, Green
said he believes House Republicans would still oppose it.

"We're in the middle of a political season," he said. Green also said he
believes Republicans might object to some of the proposed rollbacks to oil and
gas incentives.

He predicted that they would still try to make it an election issue in
some districts. "I don't mind having that argument with them. I'm from an
energy state," he said.

--Jean Chemnick, jean_chemnick@platts.com