NGI The Weekly Gas Market Report / NGI All News Access

House Dems Not Likely to Reinstate Offshore Ban

The American Petroleum Institute (API) said last Tuesday that it welcomed the House Democratic leadership's assurances that it would not reinstate the moratorium on oil and natural gas drilling in the federal Outer Continental Shelf (OCS).

"We believe the position outlined to news reporters by House Majority Leader Steny Hoyer -- that the Democratic leadership would not seek to re-impose the ban on oil and natural gas leasing in federal waters -- is the right approach," said the producer group.

"The American public has made clear its strong support for increased access to untapped domestic oil and natural gas resources. At least two-thirds of Americans in recent exit polling [during the elections] said they supported offshore drilling. Neither Congress nor the next administration should set unreasonable, arbitrary limits on leasing because such restrictions could remove some of the nation's most promising oil and natural gas prospects for development, and the industry has proven it can develop these resources in an environmentally safe manner."

President Bush in July lifted the presidential ban on oil and gas leasing off the East and West coasts and in parts of the eastern Gulf of Mexico, and the congressional moratorium on leasing in those areas expired on Oct. 1, leaving the OCS free of restrictions for the first time in decades (see NGI, Oct. 6; July 21). But with a new president and Congress taking office in January, domestic producers are wary about how long this will last.

Even if the moratorium remains off the table, the offshore will be a central issue in the 111th Congress. For starters, Sen. Jim Webb and Senator-elect Mark Warner, both Democrats from Virginia, may pursue legislation that would allow Virginia to share in any revenues from oil and natural gas development off the state's coastline. This has become a priority for the state following the announcement by Interior Department's Minerals Management Service earlier this month that it plans to hold the first lease sale offshore Virginia in 2011 (see NGI, Nov. 17).

Webb and retiring Sen. John Warner (R-VA) introduced legislation in June calling for revenue-sharing for Virginia, but the Senate has failed to take it up. Webb's "very interested in pursuing" the bill in the new Congress, possibly along with Senator-elect Warner, said Webb spokeswoman Jessica Smith.

Senator-elect Warner "would like to see that [revenue-sharing] as a component" of a larger energy bill, said spokesman Kevin Hall.

In the upper chamber. Sen. Mary Landrieu (D-LA) is one of the chief advocates of allowing states that permit offshore drilling to share royalties with the federal government. "Revenue-sharing is important to Sen. Landrieu," said spokeswoman Marnie Goldberg. The only states in the Lower 48 that currently share revenues are Texas, Alabama, Mississippi and Louisiana.

Landrieu "intends to continue working in a bipartisan fashion with the 'Gang of 20' on the greater issue of America's energy crisis," Goldberg said.

A coalition of 20 senators (the Gang of 20) is expected to revive a compromise plan, which fizzled in the weeks before the election, that would allow Virginia, North Carolina, South Carolina and Georgia to opt in to drilling at their discretion and give them a share of the royalties, reported CQ Today (see NGI, Sept. 22).

In the House, Webb "is philosophically in line with reaching an agreement on a comprehensive energy package" that mirrors the Gang of 20 proposal as well, said his spokeswoman.

Sen. Jeff Bingaman (D-NM), chairman of the Senate Energy and Natural Resources Committee, has his sights set on a broad energy bill in the new Congress, said spokesman Bill Wicker. It would include a supply component that would focus on trying to get an inventory of OCS oil and natural gas resources completed.

"Perhaps the right next step would be to undertake a serious and expeditious inventory of the energy resources on the Outer Continental Shelf," Bingaman said last week. He noted that Congress called for an OCS inventory in the Energy Policy Act of 2005, but it failed to provide the funds to carry it out.

©Copyright 2008 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus