Senate GOP bill boosts drilling

Energy plan opens 8.3 million acres in Gulf

July 23, 2006|By NEW YORK TIMES NEWS SERVICE

WASHINGTON -- Senate Republicans have agreed on legislation that would open four times more of the Gulf of Mexico to oil and gas drilling than the Bush administration was seeking, and a vote on the bill is expected this week.

The bill is the Senate's only energy measure with a chance to pass this year and would open 8.3 million acres of the Gulf to new drilling for oil and natural gas.

The bill is more ambitious than the administration's plan to open 2 million acres for a five-year period, starting in 2007. But it is more narrowly tailored than a bill the House passed last month that would open even more areas of the Gulf as well as waters of the Outer Continental Shelf in the Atlantic and Pacific oceans.

Neither bill includes energy conservation provisions, which many Democrats say should be part of any effort to address the nation's steadily rising energy costs.

"My top priority this year has been OCS legislation that makes a real difference in our energy supply," said Sen. Pete V. Domenici, a New Mexico Republican, chairman of the energy committee and the bill's chief sponsor.

The original version of the Senate bill would have expanded drilling in an area known as Lease Sale 181 to 2.9 million acres, about 900,000 acres more than the administration was planning to offer for lease.

But the new bill, introduced Thursday night, would open an additional 5.7 million acres, mostly in deep waters. Supporters say the area could produce 5.8 trillion cubic feet of natural gas, enough to satisfy a quarter of the nation's electricity needs for a year, and 1.26 billion barrels of oil, enough to satisfy the national demand for about two months.

The final version also includes several new components to placate lawmakers from Florida, who wanted wider protections around the state shoreline, and to assuage Gulf State lawmakers, who demanded a cut of royalties generated by any new energy development. The bill places a moratorium on drilling in waters from 125 miles to 234 miles off Florida's gulf coast until 2022. The earlier version had set a 100-mile limit.

The bill also creates a revenue-sharing plan that would give Florida, Alabama, Mississippi and Louisiana 37.5 percent of the royalties from new areas of production and from new leases in existing areas. Now, the federal government keeps all royalties beyond those generated by drilling within three miles of a state's coastline.

Negotiators did not accommodate a request from Alaska's senators, who wanted to include the same revenue sharing formula for their state. Despite projected large volumes of energy resources in Alaskan waters, Senate negotiators said that keeping the bill narrowly focused on the Gulf would enhance its chances of passage.

The Congressional Budget Office estimated that the energy production from the areas designated by the final bill would generate royalties of $1.55 billion in the first 10 years.

Opponents argue that the concession to Florida puts energy-rich waters off-limits and that the revenue-sharing plan is ill advised at a time federal deficits remain uncomfortably high, about $300 billion.

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