US Congress votes to expand offshore exploration

US House of Representatives voted on June 29 to reduce the extent of US offshore area subject to a federal drilling moratorium. Support for the bill was expanded by including provisions for revenue sharing with affected states. The White House supports the moratorium-dropping parts of the bill, and opposes the revenue-sharing parts.

- Waters within 50 miles would remain protected unless the state petitions to have them removed from the moratorium,
- Waters 50 to 100 miles offshore would be open for drilling unless the state petitions to retain the moratorium,
- Waters 100 to 200 miles offshore would have the moratorium removed.

This bill still needs approval in the Senate, where opposition is expected.

7 items follow:

Portland Press Herald, Maine
New York Times
New Orleans, Times-Picayune
Los Angeles Times
Seattle Post-Intelligencer (Associated Press)
Anchorage Daily News (Associated Press)

Sierra Club statement

Map

House favors drilling closer to coastlines

By BART JANSEN
Portland Press Herald
Friday, June 30, 2006

WASHINGTON — Drilling for oil and natural gas would be allowed 50 miles off Maine's coast for the first time in nearly a quarter-century under legislation approved Thursday in the House. The bill's prospects remain uncertain, however, because of a threatened filibuster in the Senate. Also, the House measure would give states power to push their boundaries out to 100 miles or authorize drilling less than 50 miles from shore.

Drilling has been prohibited within 200 miles of the shore under annual provisions in spending bills. The ban on drilling in what is called the Outer Continental Shelf began off the coast of California in 1982 and included New England two years later.

But the House voted 232-187 Thursday to allow drilling, which is expected to occur primarily in the Gulf of Mexico. Reps. Tom Allen and Mike Michaud, both D-Maine, voted against the bill, citing concerns that accidents could hurt tourism and commercial fishing.

"The heart of this bill is to drive states to allow drilling offshore," Allen said. "We don't need to do that, at least at this stage."

Michaud criticized the Republican president and congressional leadership for failing to reduce consumption of fossil fuels rather than propose more drilling.

"The congressional leadership has once again threatened Maine's tourist and fishing industries with an ill-advised plan for coastal drilling," he said.

Conservationists and other critics of coastal drilling fear that accidental spills could spoil commercial fishing and tourism and affect public health in Maine. Advocacy groups opposed to the legislation include the League of Conservation Voters, Natural Resources Defense Council and the Sierra Club.

Despite House approval, Florida's two senators - Democrat Bill Nelson and Republican Mel Martinez - vowed to filibuster the legislation. Sens. Olympia Snowe and Susan Collins, both R-Maine, also oppose lifting the drilling ban.

The House bill would allow drilling from 50 to 200 miles of shore, though states could set the limit at 100 miles - or under 50 - by voting to do so every five years.

Muddying the debate is the fact that former presidents George H.W. Bush and Bill Clinton each signed executive orders similar to the existing 200-mile moratorium. The order is set to expire in 2011, though President Bush could abolish it at any time without a congressional vote.

Waters covered by the ban hold 19 billion of the 86 billion barrels of oil thought to lie beneath the Outer Continental Shelf, and 86 trillion of the 420 trillion cubic feet of natural gas, according to the Interior Department's Minerals Management Service.

Rep. Richard Pombo, R-Calif., who drafted the bill as chairman of the Resources Committee, said oil and gas deposits can be developed while protecting the environment. "It's time to stop saying no."

He broadened the legislation's appeal by changing the way revenue from federal oil and gas royalties would be shared with states. The nonpartisan Congressional Budget Office said the bill would funnel $20.6 billion to states from now until 2017, with all but $1.7 billion going to four states that already have drilling: Texas, Louisiana, Mississippi and Alabama.

"This bill will spur an immediate debate on the state level regarding the safety, feasibility and necessity of offshore energy production," said Rep. John E. Peterson, R-Pa.

But California Gov. Arnold Schwarzenegger opposed the legislation. Officials from other states with beaches, including New Jersey and Delaware, opposed the legislation as a threat to their multibillion-dollar tourism industries

"How do we opt out when New York or Virginia has a spill and it comes to our shores?" said Rep. Frank Pallone, D-N.J. "It would devastate our tourism."

About 3 million gallons of oil spilled from offshore oil and gas wells in 73 incidents from 1980 to 1999, according to a federal Minerals Management Service report. Decades ago, major oil spills occurred from offshore rigs in the Gulf of Mexico and along the California coast.

Although drilling isn't expected immediately in Maine waters, the concern among lawmakers and conservationists is that a spill would taint fisheries. A spill within the Gulf Stream off the East Coast could move as far as 140 miles in 24 hours, the Sierra Club warned, based on a University of Miami study.

"Oil and gas drilling threatens to destroy a way of life in Maine's coastal communities," said Matthew Davis, a spokesman for Environment Maine.

Washington Correspondent Bart Jansen can be contacted at (202) 488-1119 or at:
bjansen@pressherald.com

Copyright © 2006 Blethen Maine Newspapers Inc.

http://pressherald.mainetoday.com/

House Votes for Expansion of Oil and Gas Exploration

By Michael Janofsky
New York Times
Published: June 30, 2006

WASHINGTON, June 29 — The House voted on Thursday to approve oil and gas exploration in coastal waters that have been protected from drilling for 25 years.
The vote was largely along party lines, 232 to 187, for a measure that would sharply expand efforts to make use of energy supplies beyond the Gulf of Mexico, the only area unaffected by executive branch and Congressional bans on drilling.

"This is really the first major step in producing domestic energy that we have taken in almost 30 years," said Representative Richard W. Pombo, Republican of California, chairman of the House Resources Committee and the chief sponsor of the bill.

Whether the drilling bans are ultimately eliminated depends on the Senate, where the chairman of the Energy Committee, Senator Pete V. Domenici, Republican of New Mexico, has been trying to build support for a measure that would expand oil and gas exploration in the gulf in an area west of Tampa, Fla., known as Lease Sale 181.
Mr. Domenici still lacks enough support to win Senate passage of his bill, but he said he was optimistic "that Congress can do something this year to increase environmentally sound energy production" in the coastal waters, known as the Outer Continental Shelf.

Passage of the House bill to a large degree reflected the persistent split in approaches to energy policy as prices for crude oil, gasoline and natural gas remain unusually high. In hours of debate before voting, Republicans repeatedly expressed a need to tap more of the resources that the United States controls, while Democrats argued for bills that encouraged conservation and placed a greater emphasis on renewable energy sources.

Under the House bill, the federal moratorium would remain in effect up to 50 miles offshore unless a state petitioned the Interior Department to allow drilling. The request would require the approval of the legislature and the governor.

Waters 50 to 100 miles offshore would be open for drilling unless the state petitioned the department to retain the moratorium.

Companies would be free to drill in waters 100 to 200 miles offshore.

The bill would also create revenue sharing between the federal government and any state where new resources were mined, a change from current policy in which all royalties are claimed by the federal government. The Congressional Budget Office estimated that the change would cost the federal government $102 billion from 2007 to 2016.

But Mr. Pombo said that figure did not take into account the tax revenues lost on the billions of dollars Americans are spending on energy from foreign sources.

One of the strongest opponents of the bill was Representative Sherwood Boehlert, Republican of New York, who echoed many Democratic concerns that the bill was a giveaway to the oil companies and, at best, a short-term solution to a long-term problem.

Arguing for bolder conservation efforts, like high fuel standards for cars, Mr. Boehlert said he worried that the gas and oil that might be recovered would be more valuable to the country in a time of emergency.

"Drilling today," he said, "depletes the oil we may need tomorrow."

But other lawmakers argued that ignoring the ample supplies of natural gas that the Interior Department estimates are available would leave prices unnaturally high, harming American industries.

"This country cannot compete in the global marketplace without natural gas," said Representative John E. Peterson, Republican of Pennsylvania. "Natural gas keeps us competitive until renewables become a bigger part of our energy portfolio."

Also on Thursday the Senate Appropriations Committee approved an amendment to the Interior Department appropriations bill that would punish companies that refused to renegotiate their offshore leases and pay full royalties during times of high prices.

The amendment, sponsored by Senator Dianne Feinstein, Democrat of California, passed by a vote of 15 to 13, after the panel also passed an amendment from Mr. Domenici that encouraged the Interior Department to renegotiate their leases.

http://www.nytimes.com/

State closer to netting offshore revenue

WASHINGTON -- Louisiana's long campaign to snag a share of offshore drilling revenue moved ahead on two important fronts Thursday, with the House passing a bill projected to generate $9 billion for the state over the next decade and key senators striking a first-ever bargain to give Louisiana a percentage of new production in federal waters of the Gulf of Mexico.

The money is still a long way off, as the full Senate would need to approve the revenue-sharing deal. A vote is likely in July. Then, the House and Senate would have to reconcile vastly different approaches. Already, senators from Florida have threatened to filibuster the House bill if it ever comes to the Senate, and the White House has voiced strong opposition.

Still, Thursday's developments indicate that after decades of trying, Louisiana's congressional delegation has finally convinced enough lawmakers in other parts of the country that the state deserves to share in the abundant revenue generated annually off its coast.

"I think this is a huge step forward," said Rep. Bobby Jindal, R-Kenner, who led the charge for Louisiana in the House along with Rep. Charlie Melancon, D-Napoleonville. "This includes revenue-sharing but also includes provisions for coastal protections and provisions we think will result in more (oil and gas) production and lower energy prices."

Drilling moratorium

The House measure would lift a 25-year-old drilling moratorium off the U.S. coast and allow states to share in the federal royalties paid by oil and gas companies. The moratorium excludes most parts of the Gulf of Mexico, where the bulk of U.S. oil and gas is produced.

Backed by environmental groups, Democrats from Florida and California led the opposition to the House measure, saying that it could lead to oil spills close to shore.

The bill would prohibit drilling up to 50 miles off the east and west coasts of the United States, unless those states vote to allow it. That provision, along with projections of new jobs and cheaper natural gas, helped to win the support of enough Democrats to pass the bill relatively easily. In the end, 40 Democrats voted for it.

The 232-187 House vote to approve the Deep Ocean Energy Resources (DOER) Act came over Bush administration objections to the price tag. In a statement Thursday, the White House said it supported passage of the bill to "advance the legislative process," but also said it would divert "several hundred billion dollars over 60 years" from the federal Treasury.

The statement said the White House favored the narrower revenue-sharing approach being pursued in the Senate, which would give states a share of production on new leases, not existing ones.

"The administration strongly opposes the bill's revenue-sharing provisions because of their adverse long-term consequences for the federal deficit," the White House said.

Appealing to conservatives

Louisiana's cut of the House proposal was scaled back in the past 48 hours to trim the overall costs and soften opposition among fiscal conservatives. Originally, all coastal states with drilling off their shores would have gotten 75 percent of the federal royalties on oil and gas produced within 12 miles of shore.

The new formula directs 25 percent to coastal states in the first five years, gradually increasing to 50 percent 10 years after enactment. The scaled-back formula effectively reduced Louisiana's projected share over the next decade by more than $1 billion.

Despite the changes, Jindal predicted that after 10 years, the arrangement could mean as much as $2 billion a year to the state, money that would be put into repairing Louisiana's eroding coastline.

The deal in the Senate grew out of meetings Sen. Mary Landrieu, D-La., had over the past two days with Senate Republican leaders. She was negotiating at the behest of other Gulf Coast senators, who agreed to the bargain at a meeting late Thursday afternoon.

"This agreement marks a significant victory in our delegation's decade-long fight to secure our fair share of the substantial revenue we generate each year," Landrieu said in a prepared statement.

Sen. Trent Lott, R-Miss., applauded the breakthrough, but was slightly more circumspect.

"It's not everything we would have wanted, but I think it's good enough," Lott said. "We ought to pass it."

New natural gas wells

Under the arrangement, some 8 million acres in the eastern Gulf of Mexico, partly covering an area known as Lease Sale 181, would be opened to oil and gas production. It is believed the area contains enough natural gas to fill the nation's needs for six years.

Of the expected royalties paid to the federal Treasury, 37.5 percent would be paid into a coastal impact assistance fund and divvied up among the states of Alabama, Mississippi, Louisiana and Texas, with Louisiana getting about a third. Landrieu's office estimated the state would collect $200 million in the first 10 years.

After 2017, the scope of the deal would broaden, cutting coastal states in for a share of royalties on all new wells in the entire Gulf of Mexico. Landrieu's office estimated the state's annual share at that point could be $650 million.

"We've seen models from people in the industry saying it could be twice that if not more," said Adam Sharp, Landrieu's spokesman.

The money would be in addition to the $135 million per year over the next four years for the state that came out of the energy bill last year.

Sen. David Vitter, R-La., said in a statement that based on the House vote and the Senate deal, royalty sharing has an "excellent shot."

"I think that the more focused approach (of the Senate) is a lot more likely than the broad House approach, but certainly what the House has been doing has helped our efforts enormously," Vitter said.

. . . . . . .

Bill Walsh can be reached at bill.walsh@newhouse.com or (202) 383-7817.

House Offers States Incentives for Offshore Oil, Gas Drilling

By Maura Reynolds
Los Angeles Times
June 30, 2006

WASHINGTON — Spurred in part by higher energy prices, the House of Representatives voted Thursday to in effect rescind a decades-old federal moratorium on offshore drilling for oil and gas, a move proponents hope will be the first step toward opening the outer continental shelf to more fuel exploration.

The bill, passed by a vote of 232 to 187, would permit states that agree to offshore drilling to share in the royalties from the leases, thereby creating a financial incentive to spur development.

Gov. Arnold Schwarzenegger has expressed strong opposition to the House measure, saying that the "impacts of new offshore oil and gas leasing and development off the California coast are unacceptable."

Supporters said the measure would give states control over their shorelines and an opportunity to debate the balance between energy needs and coastal protection.

"Any state will be able to stop production from occurring within 100 miles of its shores should it choose to do so," said Rep. Shelley Moore Capito (R-W.Va.), a co-sponsor of the bill. "If state officials decide to allow production, they will share in the royalties."

Opponents argued that sending royalties to states that permit drilling would rob the federal government of billions of dollars in revenue, and would in effect transfer billions out of the federal budget to four Gulf states that already permit offshore drilling.

"This legislation tempts states to sell off their natural heritage by presenting a false choice between federal dollars and their coastlines," said Rep. Doris Matsui (D-Sacramento), who voted against the bill. "Even worse, the closer to shore a cash-strapped state allows drilling, the more money it stands to receive. In other words, the more intrusive the drilling, the larger the payoff."

It is not clear how much support the legislation may receive in the Senate, where a more modest bill — permitting drilling in just one area more than 100 miles off the Florida coast — has been stalled because of the threat of a filibuster from coastal-state senators.

Energy issues tend to align coastal lawmakers against those from inland and oil-producing states, regardless of party affiliation.

Generally, California and Florida lawmakers have opposed offshore drilling. However, that alignment has begun to crumble under the pressure of high oil prices.

For example, Rep. Jerry Lewis (R-Redlands) had previously opposed drilling, but he has changed his stance because of high pump prices.

"In the past, he had felt it has not been economically feasible or necessary and he saw no reason to create this potential environmental problem," said Lewis spokesman Jim Specht. "Now, in our current situation, he feels it's time to take a look at this situation."

California lawmakers voted largely along party lines, with Republicans in favor and Democrats opposed. Only two Republicans voted against the bill — Reps. Mary Bono of Palm Springs and John Campbell of Irvine. Just one Democrat, Rep. Jim Costa of Fresno, voted for it.

Overall, 40 Democrats joined with 192 Republicans to pass the bill; 31 Republicans joined 155 Democrats and one independent in voting against it. Fourteen lawmakers were absent or did not vote.

The legislation — written largely by Rep. Richard W. Pombo (R-Tracy), chairman of the House Resources Committee — received strong support from Gulf state lawmakers, especially those from Louisiana, who argued that the royalties would assist them in rebuilding coastline and wetlands destroyed by Hurricane Katrina and years of mismanagement.

"I wish we had the beaches that you have. We don't," complained Rep. Charlie Melancon (D-La.), who supported the bill. "We've lost our beaches."

Supporters also suggested that coastal drilling would help lower consumer prices for natural gas and other fuels.

"This legislation will impact the price consumers pay at the pump," Capito said. "Natural gas prices are set on a local, not a global, market. The United States pays the highest natural gas prices in the world, and it is no surprise that countries that make use of their own natural gas reserves pay the lowest prices."

But opponents said that a better long-term strategy for addressing energy prices was not to increase supply, but reduce demand.

"We should be seizing this opportunity to address our energy crisis responsibly by reducing consumption, improving efficiency and embracing alternative energy sources," said Rep. Lois Capps (D-Santa Barbara), whose district was the site of a devastating 1969 coastal oil spill. "Instead, the majority has voted to enable our country's oil addiction and rely on 19th century energy sources to fuel a 21st century economy."

In a letter sent this week to Pombo, Schwarzenegger boasted that energy conservation efforts had kept California's per-capita electricity use nearly flat, whereas demand has increased nationwide by 50%.

"If California's approach to energy conservation and efficiency standards were adopted nationwide, we might not be having this debate over the exploitation of the oil and gas resources off our coast," Schwarzenegger said.

The Bush administration, while generally supporting opening up coastal waters to drilling, has not pressed the issue. In a statement of policy issued while the House was debating, the Office of Management and Budget expressed reservations about the effect of the House measure on the federal budget.

"Increased revenue sharing for existing leases creates no additional production incentive," the statement said. "The administration strongly opposes the bill's revenue-sharing provisions because of their adverse long-term consequences on the federal deficit."

The chairman of the Senate Energy and Natural Resources Committee, Republican Pete Domenici of New Mexico, issued a statement welcoming the House action, but it fell short of endorsing the bill's approach.

"Given the international situation right now, I think we should take all responsible steps to increase our own energy production," he said.

If Domenici's more limited bill passes the Senate, the two chambers would meet to negotiate a compromise

http://www.latimes.com/

House lifts offshore drilling ban

House OKs oil drilling off coasts

By H. JOSEF HEBERT
The Associated Press
Anchorage Daily News
Published: June 30, 2006

WASHINGTON -- The House voted Thursday to end a quarter-century offshore drilling ban and allow energy companies to tap natural gas and oil beneath waters from New England to Alaska.

Opponents of the federal ban argued that the nation needed to move closer to energy independence and said the gas and oil could be taken without threatening the environment and coastal beaches. They said a state choosing to keep the moratorium could do so.

The measure was approved 232-187.

But the bill's prospects in the Senate were uncertain. Florida's two senators have vowed to filibuster any legislation that would allow drilling within 125 miles of Florida's coast. Other senators from several coastal states also have strongly opposed ending the drilling restrictions.

Many lawmakers fear that energy development could despoil coastal beaches should there be a spill and threatens the multibillion-dollar recreation and tourist economies of states where offshore energy development has been barred since the early 1980s.

An attempt by a group of Florida lawmakers to allow states to maintain a protective zone of 125 miles was rejected.

"Our beaches and our coastline is what is critical to Floridians," said Rep. Jim Davis, D-Fla. "We should not be sacrificing our economy, our environment for a little oil and gas."

Rep. Richard Pombo, R-Calif., a leading proponent of lifting the moratorium, argued that drilling still would be prohibited within 50 miles of shore and states could extend the ban up to 100 miles.

He ridiculed the bill's critics as "opposing everything" when it comes to increasing domestic energy production. "You can't say no on everything," Pombo said.

But Lois Capps, D-Calif., said states would have to overcome numerous hurdles to continue the drilling restrictions, including having state legislatures and the government seek such protection every five years.

The bill also would revamp how the federal government shares oil and gas royalties with states, producing a windfall for four Gulf states -- Louisiana, Texas, Mississippi and Alabama -- that currently have oil and gas rigs off their shores.

The eastern and western Gulf of Mexico produces virtually all of the country's offshore oil and gas, with waters off the eastern Gulf, the Atlantic and Pacific coasts and much of Alaska under the drilling moratorium.

Under the bill, states' share of royalties would increase to 50 percent over 10 years and eventually could rise as high as 75 percent. States currently get less than 5 percent of royalties from offshore oil and gas leases in the central and western Gulf.

The Interior Department estimated that revenue-sharing changes could cost the federal government as much as $69 billion in lost royalties over 15 years and "several hundred billion dollars" over 60 years.

The White House issued a statement saying it favors much of the bill but strongly opposes the changes in royalty revenue sharing, which it said "would have a long-term impact on the federal deficit."

The Interior Department estimates there are about 19 billion barrels of recoverable oil and 86 trillion cubic feet of natural gas beneath waters currently under drilling bans from New England to southern Alaska.

But supporters of the drilling moratorium argue that there is four times that amount of oil and gas available in offshore waters open to energy companies, mainly in the central and western Gulf of Mexico and off parts of Alaska.

The country uses about 21 million barrels of oil a day.

"We should not be opening all of our coasts to oil drilling when we have not taken the first step to conserve oil," said Rep. Sherwood Boehlert, R-N.Y.

But Rep. John Peterson, R-Pa., argued that developing more U.S. energy resources -- especially more natural gas -- is needed to ease supply shortages that have caused natural gas prices to soar and America to rely increasingly on oil imports.

"This is not about oil companies," Peterson said. "This is about America competing. ... We're the only society that has said we're going to lock up our resources."

http://www.adn.com/

Congress Wastes Energy on Offshore Drilling, Ignores Smart Energy Solutions

Annie Strickler
Sierra Club
June 30, 2006

To: Editorial Writers
From: Sierra Club
Date: June 30, 2006
Re: Congress Wastes Energy on Offshore Drilling, Ignores Smart Energy Solutions

The U.S. House voted 232-187 today to lift the 25-year moratorium on offshore drilling, just as millions of Americans are headed to America’s beaches for the holiday weekend. The bill was the single piece of legislation Congress passed related to energy this week, what was once heralded by congressional leaders as "energy week" in a promise to address the country's energy problems. Important measures to improve efficiency standards for automobiles, buildings and appliances were left on the cutting room floor.

Please consider using your editorial voice to encourage Congress to stop wasting energy on outdated proposals likes offshore drilling and to get some guts and stand up to Big Oil and stand for American families.

Just a few months ago President Bush acknowledged that the country is addicted to oil, yet Congress passed an offshore drilling bill which feeds that addiction while doing nothing to move us toward energy independence. Congress appears to have lost faith in the power of American ingenuity. America has incredible, untapped potential for innovation and can accomplish anything we make a commitment to. It’s time for Congress to make a commitment to smart energy solutions instead of Big Oil.

New offshore drilling won’t help address problems today, tomorrow or next year. It’s the slowest, dirtiest and most expensive way to meet our energy needs and it would threaten our beaches with pollution and potential oil spills and destroy billion-dollar tourism and fishing industries. There are faster, cheaper, cleaner and longer-term energy solutions like energy efficiency and clean, renewable energy that will start saving families and businesses money today and protect our coastal waters, beaches and economies. In the seven years we would wait for offshore gas to come online, we could reduce natural gas demand by 8% through efficiency and renewables. http://www.aceee.org/pubs/e052full.pdf

While Pombo and the Republican leadership were busy spending the so-called "Energy Week" thinking of ways to subsidize Big Oil, they ignored the biggest single step we can take toward saving consumers money at the pump, ending our dangerous oil dependence and curbing global warming: making cars and trucks go farther on a gallon of gas. CAFE was not only ignored by the leadership this week, but the Rules Committee ruled a CAFE amendment to the Pombo bill out of order, despite a call from Rep. Boehlert and 39 other Republicans to consider the Boehlert-Markey CAFE proposal during the drilling debate. That proposal would have raised CAFE to 33 miles per gallon over 10 years time, saving us more oil than we currently import from the Persian Gulf and saving the average driver more than $500 a year.

The offshore drilling bill, H.R. 4761 sponsored by Rep. Richard Pombo (R-CA), replaces the national moratorium with a tiered system: the moratorium line would stop at 100 miles; from 50-100 miles, states would have to actively oppose drilling every five years; states could petition for drilling within 50 miles of the coast.

For more information: http://www.sierraclub.org/wildlands/coasts/threats.aspbvrjNrzujjrZy