Senate Expected to OK Offshore Drilling Bill

WASHINGTON, D.C. -

The Senate neared a vote Tuesday on expanding oil and gas drilling in the central Gulf of Mexico, setting up a confrontation with the House which wants even more drilling in coastal waters that are now off-limits.

The Senate bill would limit energy companies to using 8.3 million acres in the Gulf while creating a 'zone of protection' for Florida that would stretch 125 to 300 miles from the state's beaches at various points.

Meanwhile, the House already has passed a bill that would lift the quarter-century-old drilling moratorium on Outer Continental Shelf waters on both the Pacific and Atlantic coasts, while allowing states to decide whether to continue the drilling bans.

House leaders have said they're eager to negotiate a compromise bill, once the Senate acts.

Senate Democrats and GOP moderates say such a broad bill would threaten areas that have long opposed energy developing, from New England to California and the Pacific Northwest. Senate leaders say it would spark a filibuster and probably lead to no offshore drilling legislation emerging from Congress this year.

The 8.3 million acres affected by the Senate measure is believed to contain 1.2 billion barrels of oil and nearly 6 trillion cubic feet of natural gas, enough of the fuel to heat 6 million homes for 15 years.

Some part of the area, known as Lease Area 181, had been scheduled for lease sales by the Interior Department in the 1990s, but was placed off-limits by the Bush administration in 2001 at the request of Florida Gov. Jeb Bush. The remaining 6.3 million acres south of Lease Area 181 has been under a congressional drilling moratorium for years.

Broad opposition to the Senate bill began to melt away last week when Sen. Bill Nelson, D-Fla., who had threatened to filibuster any offshore drilling legislation, said he would go along given the promise that the Senate would not accept the House measure.

Sen. Mel Martinez, R-Fla., called it a 'good compromise ... to protect Florida' while addressing 'the great pressure that we're under' to expand the search for domestic energy. But he too said he strongly opposed the House legislation.

The issue has attracted intense lobbying with environmentalists arguing that drilling in areas now off-limits would threaten coastal beaches and marine life if a spill should occur.

Businesses - from chemical companies and manufacturers to utilities and farmers - have pushed lawmakers hard to open more waters to drilling, arguing that will provide new supplies of natural gas and perhaps lower prices.

The bill calls for the Interior Department to open bids for developing Lease Area 181 within a year and follow with lease sales in the rest of the area - which is farther off shore in waters more than 10,000 feet deep - as soon as practical.

Opening the 8.3 million acres to energy companies is the fastest way to get more natural gas and domestic oil and push down prices, said Sen. Pete Domenici, R-N.M., a principal sponsor of the bill.

These resources have 'been locked up for no good reason other than emotion,' argued Domenici.

Energy companies for years have coveted the Lease Area 181 because the gas and oil it holds is close to existing pipelines and other infrastructure. It lies about 100 miles off the Louisiana coast.

While benefiting energy companies the bill also would produce a windfall for Louisiana and the three other Gulf states - Texas, Alabama and Mississippi - that already have oil and gas rigs off their shores.

These states would get 37.5 percent of the royalty revenue the federal government will collect from the oil and gas that is pumped anywhere off their shores. They now get less than 2 percent.

That is expected to be as much as $1.2 billion a year within 10 years with Louisiana likely to get about half of that.

Sen. Jeff Bingaman, D-N.M., said that's too much of a hit on the U.S. Treasury. While the revenue flow to the four states will increase slowly, between 2016 and 2055 the states would be expected to get between $28 billion and $30 billion and the annual payments to the states would jump to $12.5 billion a year after that, according to an estimate by Bingaman's staff.

'There's no policy justification for diverting these revenues,' said Bingaman, arguing that the resources taken from federal waters 'belong to the entire nation.'

Sen. Mary Landrieu, D-La., who pushed for the increased revenue sharing, said the states that for decades have provided the onshore resources to allow drilling in the federal waters long have been short changed.

It's only fair that they share in a new 'partnership' with the federal government to expand energy development, she argued. 'We will use the money to restore a great coastline ... restore the great wetlands' off the Louisiana coast and improve storm protection, she said.

Still, there's no assurance a bill will emerge from Congress this year given the sharp differences between the Senate and House bills.

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