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Associations: SEACOR Proposal Is Win-Win for States, Federal Government and Consumers

A congressional proposal that would give states control over drilling activity off their coastlines is a "unique solution" that would address the concerns of states that frown on offshore drilling, and would bolster natural gas supply, shave gas prices and put more revenues in state and federal coffers, five trade associations said in a letter last Tuesday to several U.S. senators.

"We believe that a legislative proposal called 'State Enhanced Authority for Coastal and Offshore Resources Act' (SEACOR) is a unique solution to addressing [the] myriad challenges. In our view, drilling in state waters should not be a zero-sum game, as it is today," said the heads of the American Gas Association, American Public Gas Association, American Farm Bureau, National Corn Growers Association and Industrial Energy Consumers of America.

"Under SEACOR, everyone wins. States get more control over coastal waters and significantly increase leasing income that they would not have achieved otherwise. At the same time, the federal government gets badly needed revenues from leasing and consumers get reliable...and affordable natural gas," they noted.

Tuesday's joint letter was sent to 11 senators from coastal states who expressed "strong objection" to any consideration of natural gas exploration and production (E&P) on currently restricted areas of the Outer Continental Shelf (OCS) in a letter last month to Sen. Pete Domenici (R-NM), chairman of the Senate Energy and Natural Resources Committee.

"It is with profound regret that we read your...letter" to the committee, the associations wrote. "Our regret is for the millions of beleaguered homeowners, workers, industries and institutions that once relied on affordable and clean natural gas to sustain their quality of life, but now face skyrocketing and volatile prices because demand for natural gas is outpacing available supply."

At the same time, however, "we understand your views," they told the senators. "Under existing law, the federal government is in complete control of your coastline beyond three nautical miles, and states have little financial incentive to open their coastal waters to drilling for natural gas."

The associations urged the senators to join them in exploring SEACOR as a solution. "SEACOR is a 'states rights' bill that provides states with the authority to completely control whether or not drilling can occur near their coastlines, while sharing that control with the federal government further from the coastline," they said.

Key parts of the SEACOR proposal include:

"We respect every one of you for clearly stating your position on this issue. [But] we believe that if the people in your state (who include many of our members) were given the option, they would support an approach that gives their state more control over their offshore areas, increases natural gas supply, increases the affordability of natural gas, and increases jobs and badly needed state and federal revenues," the associations said.

State interest in SEACOR appears to be growing. In late February, Virginia's Senate passed an amended bill that advocated opening the state's coastal waters to natural gas E&P activities. The state measure specifically supported congressional passage of the federal SEACOR proposal (see NGI, Feb. 28).

And last November, the National Association of Regulatory Utility Commissioners passed a resolution that encouraged state and federal policy makers to consider "removing existing moratoriums to oil and gas exploration and production in both state and federal coastal waters off the coast of the states that agree to such removal, while also urging state and federal policy makers to ensure that offshore oil and gas production practices are environmentally sound."

The coastal state senators who opposed removal of OCS drilling restrictions in the letter to Domenici were Elizabeth Dole (R-NC), Barbara Boxer (D-CA), Richard Burr (R-NC), Maria Cantwell (D-WA), Lincoln Chafee (R-RI), Susan Collins (R-ME), Dianne Feinstein (D-CA), John Kerry (D-MA), Frank Lautenberg (D-NJ), Bill Nelson (D-FL) and Olympia Snowe (R-ME).

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