Following the stinging defeat last week of the controversial proposal to open the Arctic National Wildlife Refuge (ANWR) to oil and natural gas drilling, the Senate leadership signaled that it expects to wrap up and vote on the omnibus energy bill this week (S. 517).

The Senate is scheduled to vote Tuesday on a procedural motion that would limit debate on the legislation to 30 more hours, which would mean that a vote on the bill would probably come either Wednesday or Thursday. Senators have until mid-day Monday to file additional first-degree amendments to the bill.

The Senate energy bill will not have a tax title. Republicans last week objected to an attempt by Senate Finance Committee Chairman Max Baucus (D-MT) to include a measure, which provides for $14 billion of tax credits and incentives for energy (including oil and gas producers), in the legislation. As a result, the tax issue will be thrashed out in the House-Senate conference on the bill.

Last Thursday, Sen. Frank Murkowski (R-AK) and other proponents of drilling in ANWR were dealt a crushing blow when the Senate blocked an attempt to end debate on the issue and bring it before the full chamber for a vote. But Murkowski’s office indicated the war wasn’t over yet.

By a vote of 54 to 46, Senate Democrats — aided by a handful of Republicans and Independent Sen. Jim Jeffords of Vermont — effectively halted the Murkowski-led drive to include ANWR oil and natural gas drilling in the omnibus energy bill being debated on the Senate floor. This represented a major setback for President Bush, who favors giving producers access to ANWR.

Murkowski and other proponents were 14 votes shy of the 60 votes that they needed to cut off debate on the ANWR amendment and force a vote by the entire Senate.

Significantly, however, Murkowski did not withdraw his ANWR leasing amendment after the vote Thursday, and indicated he had no plans to do so. This opens up the possibility that he still could offer “variations of his ANWR amendment,” a Capitol Hill aide said.

David Woodruff, a spokesman for the Republican side of the Senate Energy and Natural Resources Committee, declined Friday to rule out the possibility of another ANWR proposal by Murkowski. “He’s looking at a number of different options to increase domestic production.”

A gas industry source believes it’s “possible but unlikely” that Murkowski will go this route. He said Murkowski would be smart to “let it [ANWR] go until conference.”

The vote on Murkowski’s measure was closer than had been anticipated, but the final outcome was far from a surprise. Even those who advocated opening ANWR to drilling knew that the hot-potato issue was essentially unwinnable in the Senate. The issue has prevailed in the House, which included ANWR leasing in the energy bill that it passed last summer.

The odds appear slim now that ANWR will be part of the final energy bill that emerges from House-Senate conference, but not everybody agrees. “I wouldn’t rule it out,” said Martin Edwards of the Interstate Natural Gas Association of America. Woodruff agreed, noting that ANWR will be “alive and well in conference.”

Last week was not a total loss for Murkowski. By a resounding vote of 88 to 10, the Senate on Thursday adopted his amendment that calls for the United States to discontinue oil imports from Iraq until it agrees to comply with the United Nations Security Council’s resolution to allow nuclear inspectors into the country, as well as satisfy other requirements.

Prior to the Senate’s action on the Arctic refuge, Majority Leader Tom Daschle (D-SD) said he wanted to complete debate on the energy bill by Tuesday.

Murkowski accused Daschle of stacking the deck against ANWR drilling in the Senate. “One might say we were defeated before we even started this process” when Daschle last summer withdrew the energy bill from consideration by the Senate Energy Committee, which favored opening ANWR to exploration and production, he said.

Even if his amendment had received the required 60 votes, Murkowski said that Daschle had threatened to pull it from the energy bill.

The Murkowski-sponsored proposal would have given Bush the option to open a 1.5 million-acre portion of ANWR to drilling if he decided it was necessary for national security. By leaving it up to the president, Murkowski said his amendment presented “a radically different approach” to ANWR than the measure included in the energy bill that passed the House.

A second-degree amendment, sponsored by Sen. Ted Stevens (R-AK), that was designed to win support from Steel Belt senators for ANWR drilling also was defeated, by a vote of 64 to 36. The proposal, which Stevens later withdrew, sought to funnel $12 billion in federal royalty and bonus bid revenues from the development of ANWR reserves over 30 years to build up the bankrupt steel industry.

Despite the promised bailout, steel state senators, such as Sen. John D. Rockefeller IV (D-WV), voted against the amendment because the White House had refused to back it. “No matter how genuine” Stevens has been in his efforts, Rockefeller noted he had been unable to win a commitment from the administration for the measure. Rockefeller also opposed Murkowski’s amendment, noting that “drilling in and of itself is wrong” in the Arctic refuge.

Sen. Phil Gramm (R-TX) opposed the ANWR-related bailout for the steel industry as well, saying it would set a dangerous precedent by rewarding inefficient steel producers at the expense of efficient producers. “By doing this, we are adding to the problem in the steel industry.”

With the defeat of ANWR leasing, Murkowski said there was not “one single thing” in the Senate energy measure that will increase domestic oil and gas production.

Nevertheless, independent producers say they are optimistic about Bush administration efforts to streamline permitting and increase producer access to public lands in the West. With ANWR now off the table, this “should” put the spotlight on production in the Lower 48 states, particularly natural gas development in the Rocky Mountains, said Diemer True, chairman of the Independent Petroleum Association of America (IPAA), and a partner in True Oil Co. in Casper,WY.

The Clinton administration “was almost obstructionist in its efforts to delay, block…any kind of mineral exploration,” while the Bush White House is “adhering” to laws, such as the National Environmental Policy Act, that allow for leasing and exploration of minerals on public lands, he told NGI. There hasn’t been a “wholesale opening” of public lands for producers, True stressed, but access has improved.

“I am optimistic that in accordance with all the environmental laws that we will see in the next few years more exploration under the Bush administration.” He believes the most energy-rich public lands are located in the Rockies, which the U.S. Geological Survey estimates hold 137 Tcf of gas.

The independent producers’ optimism is tied to several actions:

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