Fending off Democratic attempts to weaken pro-oil and natural gas bills, the Republican-led House Natural Resources Committee Wednesday was on track to vote out legislation that would end the de facto moratorium in the Gulf of Mexico (GOM), open up the East Coast to leasing and set a strict time line for the secretary of the Department of Interior to act on permits to drill in the Outer Continental Shelf (OCS).
By a vote of 27 to 16, which broke along party lines, the committee voted out HR 1229, also known as the "Putting the Gulf Back to Work Act." The two others measures -- HR 1230, the "Restarting American Offshore Leasing Now Act," and HR 1231, the "Reversing President Obama's Moratorium Act" -- were expected to clear the committee later Wednesday.
Committee Democrats tried at every turn to water down HR 1229 and the other bills, but the Republican majority deflected their attempts. "These three bills were written as if the Deepwater Horizon [rig] disaster never occurred," said Rep. Rush Holt (D-NJ). "To suggest we are pretending that the spill never occurred, nothing could be further from the truth," countered Committee Chairman Doc Hastings (R-WA)
"Critics would have you believe that not one thing has changed" since the deadly explosion aboard the Deepwater Horizon, which will mark its one-year anniversary next week, Hastings said. But he noted the new Interior safety regulations and issuance of permits in the deepwater Gulf demonstrate that the Obama administration believes that offshore drilling is becoming safer.
In addition to ending the de facto moratorium, HR 1229 would require Interior Secretary Ken Salazar to act on applications for permits to drill in the GOM within 30 days. It does not require him to approve a permit within 30 days, just to act on it within 30 days.
Under the bill, a drilling application would be deemed approved after 60 days, whether or not a safety and environmental review has been completed by Interior. Holt offered an amendment to strike this language, but it was defeated by 15-25.
Despite an objection by Holt, the committee approved an amendment, offered by Rep. Bill Fiores (R-TX), that would grant a "blanket extension" to expiring offshore leases. Holt argued that the expiring leases should be addressed by Interior on a case-by-case basis.
Republicans defeated an amendment, proposed by Rep. Edward Markey (D-MA), that would have established multiple lines of defense against blowouts, including minimum standards for blowout preventers (BOP), safe well designs, cementing procedures and third-party certification of BOPs.
The amendment would add "proscriptive regulations," and micromanage and dictate technical standards, said Rep. Doug Lamborn (R-CO), who urged a "no" vote. This is "largely duplicative" of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) regulations, Fiores said.
"I find it insulting that not one member [of this committee] has gone down to my district" to witness first hand the safety improvements made by oil and gas producers, said Rep. Jeff Landry (R-LA). "I went down to Louisiana twice last summer," Markey responded.
A Democratic proposal sought to require all oil and gas companies to buy all their BOPs, pipelines and drilling rigs in America. "There is no way industry could meet this requirement," Lamborn said. The United States does not have the shipyards to meet these requirements.
Hastings indicated that this could turn out to be a "poison pill," resulting in the shutdown of oil and gas drilling rigs while they await upgrades by U.S. manufacturers. The sponsor of the amendment, Rep. John Garamendi (D-CA), withdrew it, saying he would work with Hastings and other committee members to fine tune the proposal.
By press time the committee had not voted on HR 1230, which calls for the federal government to move forward with lease sales in the GOM and offshore Virginia. The Virginia lease sale -- the first one off the East Coast in 30 years -- would be held no later than one year after the bill is signed into law. And it directs Interior to hold three GOM lease sales.
Democrats sought to block the proposed Virginia lease sale, but Republican Rep. Robert Wittman of Virginia fired back, saying "there is a definite need" for the state's offshore oil and gas resources. Natural gas resources off the state's coastline were estimated at 2.5-2.7 Tcf.
Rep. Louie Gohmert (R-TX) said he supported HR 1230, although he agreed that the lessons from the BP plc oil spill haven't been learned. "We're still involved in cozy capitalism," where companies are issued permits no matter how many violations they may have, he noted. And despite the massive oil spill last year, BP is getting "friendly help from the administration."
Holt sought to strike language in the bill that deemed sufficient a pre-Macondo well blowout analysis by the Minerals Management Service (MMS), the predecessor to the BOEM, which concluded that an oil spill of 4,000 bbl would likely be the largest spill in the Gulf. He noted that the Deepwater Horizon incident caused more than 4 million bbl to be dumped into the Gulf. A vote on the proposal was pending at press time.
Holt ran into a wall of Republican opposition when he offered an amendment that would have barred companies that are "guilty of egregious violations, resulting in death or bodily injury" from doing business with the federal government in the OCS.
Foreign companies would get a "free ride," while companies that are subject to U.S. laws would be punished, Landry said. Holt's amendment was defeated on a voice vote.
Rep. Ben Lujan (D-NM) proposed that all oil and gas resources produced domestically be sold in the U.S. He noted that 15 million bbl of oil were exported last year, and permits to export natural gas, particularly to China, jumped in the last few years.
Republicans did not embrace the amendment. "This amendment is unnecessary...because exports [are] already subject to the Export Administration Act," Lamborn said. This allows the president to issue an order to halt exports if there is a violation.
Markey introduced an amendment, which appears headed for defeat, to correct a flaw in offshore oil and natural gas leases issued by the Interior in 1998-1999 that reportedly is costing the federal government billions of dollars.
The MMS failed to include in the 1998-1999 leases oil and gas price ceilings, which when exceeded would make production from the leases royalty-bearing (see Daily GPI, Sept. 15, 2006). The Government Accountability Office has estimated that the error in the leases could cost the federal government up to $53 billion over the next couple of decades, according to the sponsors of the legislation.
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