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LNG, OCS Holding Up Oil and Gas Title of Senate Energy Bill

Senate negotiations on the oil and gas title of the energy bill are being stymied by two key issues -- jurisdiction over the siting of liquefied natural gas (LNG) import terminals and drilling on the federal Outer Continental Shelf (OCS), according to Capitol Hill sources.

Negotiators last week still were working on four titles (including oil and gas), and a portion of the nuclear section of the bill. They completed negotiations on nine full titles and part of the nuclear title. The completed titles were made public Friday. Sen. Pete Domenici (R-NM), chairman of the Senate Energy and Natural Resources Committee, and Sen. Jeff Bingaman of New Mexico, ranking Democrat on the panel, said mark-up of the completed titles will begin May 17 and will run through May 19. Mark-up of the still-unfinished titles has been preliminarily scheduled for the week of May 23, they said. Debate on the Senate floor is expected at the end of June and will last until the July 4 recess.

Negotiations over LNG and OCS "haven't been closed out yet. Those two issues have always been difficult" because lawmakers' positions are normally dictated by geography rather than party affiliation, said William Wicker, Democratic spokesman for the Senate energy panel.

He said that committee staff negotiators have made "terrific progress" on a number of areas in the oil and gas title, but the big issues -- such as OCS and LNG -- often have to be resolved by the committee members themselves.

Wicker noted that the stand-alone natural gas legislation, offered by Sens. Lamar Alexander (R-TN) Tim Johnson (D-SD) in early April, "has certainly been the subject of most of the negotiation." (see related story)

The stand-alone bill seeks to tame gas prices by giving coastal states the opportunity to opt out of the federal moratorium on offshore oil and gas leasing and potentially freeing up gas-rich Lease 181 in the eastern Gulf of Mexico for leasing. It also would give the Federal Energy Regulatory Commission, not the states, the exclusive authority over the siting of LNG terminals. But it does not give the Commission additional authority to grant eminent domain, or the power to completely override a state with respect to the Coastal Zone Management Act, the Clean Air Act or the federal Water Pollution Control Act (see NGI, April 11).

In letters delivered last Wednesday, more than 50 companies and associations called on individual senators to "encourage Chairman Domenici to incorporate the Alexander-Johnson bill into a comprehensive Senate [energy] bill, and work to pass such a bill to assure that the near- and long-term needs for competitively priced natural gas for a growing U.S. economy can be met." The companies are members of the Consumers Alliance for Affordable Natural Gas, which organized the letters.

Separately, the American Public Gas Association, American Gas Association, American Farm Bureau, Industrial Energy Consumers of America and numerous other organizations sent a letter last week to the Senate energy panel calling for its to remove the restrictive offshore moratoria as part of its energy bill. They noted that a report released by the committee last month found that "approximately 85% of the Lower 48 state offshore acreage has been placed under congressional and executive moratoria." Given these vast areas placed off limits, "it is a reasonable expectation that there are areas where moratoria could be safely removed," the associations said. They said while LNG is needed as an additional supply source, "LNG alone will not solve our nation's energy crisis."

Even though Republicans and Democrats have worked in a bipartisan fashion on the energy bill this year, conference on the bill, which could come this summer, is expected to be difficult. For one, the Senate measure does not include a liability waiver for producers of the gasoline additive methyl tertiary butyl ether, as the House bill does. The House passed its energy bill in late April (see NGI, April 25).

In addition the Senate energy bill, unlike the House measure, does not include a provision calling for oil and gas drilling in the Arctic National Wildlife Refuge. ANWR is expected to be addressed separately in the Senate as part of the budget reconciliation process.

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