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House Passes ANWR Bill; Lease Sale 181 Awaits Senate Floor Vote

A stand-alone bill to open the coastal plain of the Arctic National Wildlife Refuge (ANWR) to oil and gas drilling passed the U.S. House Thursday on a vote of 225 to 201. However, the vote was largely symbolic as drilling backers don't have the Senate votes to overcome a filibuster.

The legislation was introduced by Rep. Richard Pombo (R-CA) as HR 5429, the American-Made Energy and Good Jobs Act. Its intent is to open 2,000 acres of ANWR to energy production. This is about the dozenth time ANWR legislation has come before the House. Unlike previous ANWR bills approved by the House, this one contains no other provisions. The only provision is to allow leasing in ANWR.

"There is no logical reason to oppose safe energy exploration and production on ANWR's northern coastal plain," House Resources Committee Chairman Pombo said in a statement last week. "It is not a silver bullet solution to America's energy problems, but it represents one of the biggest pieces to the simple supply-and-demand equation that seems to have puzzled Washington liberals for more than a decade."

Legislation to open ANWR to drilling is given slim odds in the Senate where several senators have vowed a filibuster of any ANWR drilling bills.

Seven members did not vote Thursday, the 12th time the House has voted to open ANWR to drilling since 1995. The last time the House voted on ANWR was April 2005 when drilling passed by a vote of 231 to 200 with 3 members not voting. Edward Markey (D-MA), a senior Democrat on the House Resources and Energy Commerce Committee, was quick to note that ANWR drilling got fewer votes this time around.

"Support for protecting our most pristine national wildlife is growing everyday," he said in a statement. "Today's vote should send a signal to the other body that support for this ill-founded plan to drill in the Arctic is waning."

The National Association of Manufacturers praised the House vote Thursday. "Opening portions of ANWR to environmentally safe energy exploration is an important step toward a more abundant, flexible and more affordable energy supply that is critical to keep the U.S. economy growing strong," said NAM President John Engler.

Engler noted that earlier this month the House narrowly defeated a proposal to open the Outer Continental Shelf to expanded natural gas drilling (see NGI, May 22). "The NAM will continue to make an aggressive push toward unlocking our energy supplies and making America a more affordable place to live and work."

Twenty-seven Democrats voted in favor of the bill. But Thursday's House debate broke down along party lines almost exclusively, with but a few exceptions. House Democrats who spoke in favor of the bill and their Republican colleagues who spoke in opposition were generally the most articulate speakers to take the floor.

Like a couple of other speakers, Rep. Sherwood Boehlert (R-NY) seized on President Bush's now famous declaration of America's oil addiction, when he spoke out against drilling in ANWR, an area set aside by "radical environmentalist" Dwight David Eisenhower. Boehlert said that if Congress had not blocked tightening of corporate average fuel economy (CAFE) standards 11 years ago, the nation wouldn't be in the oil fix where it now finds itself.

Texas Democrat Gene Green spoke in favor of the bill, noting that it only affects 2,000 acres out of the 1.5 million that comprise ANWR. "It's true that passing this bill will not lower gas prices immediately, but in the medium term it will. If we had opened [ANWR] in 2000 and 2001 that production would have helped us when the Gulf of Mexico was shut down because of [hurricanes] Katrina and Rita."

After about an hour of debate on the House floor, ANWR drilling opponent Rep. George Miller (D-CA) introduced an amendment to the bill that he said would exclude from ANWR leases any producer that has "exploited" a controversial loophole in Gulf of Mexico royalty relief rules that came to light earlier this year. Miller called the situation a "royalty holiday" for producers and said his amendment would prevent the government from "getting fleeced twice" by the oil companies.

Pombo, noting that even Miller had conceded that the amendment had nothing to do with ANWR specifically, called it a "cynical attempt to kill" his ANWR legislation.

Lease Sale 181 Headed to Senate Floor

The Senate Energy Committee's majority counsel said last week he expects the Lease Sale 181 bill, which was voted out of the committee in March, to be taken up soon for a floor vote, possibly leading to the formation of more comprehesive energy legislation in the Senate this year.

Frank Macchiarola, counsel for committee chairman Sen. Pete Domenici (R-NM), said Tuesday in a briefing to gas industry representatives in Washington, DC, that U.S. Senate Majority Leader Bill Frist (R-TN) currently is negotiating with other senators on the Lease Sale 181 bill, which would open up a small portion of the Eastern Gulf of Mexico to drilling.

"We do expect that this bill will be taken up, and we are encouraged by [Frist's] interest in the issue," Macchiarola said at the Natural Gas Roundtable in Washington. He also said Domenici and committee minority leader Sen. Jeff Bingaman (D-NM) are beginning to work toward another comprehensive energy bill that would address both gas and oil supply and demand issues.

Exactly what it would contain, he said, is very difficult to say "because we passed a very comprehensive energy bill [last year]. And to go right back at it, one of the things you worry about is whether we would be taking up some of the bad ideas that were left out of the [previous legislation] rather than building on it with new ideas," said Macchiarola. "That's something that we have to consider before we jump in, but I think there is a chance that Sens. Bingaman and Domenici will be working on a [comprehensive energy bill] this year.

Domenici intends to "do his best to move ANWR to the finish line" in the Senate, said Macchiarola. "If ANWR were not vetoed a decade ago by President Clinton we would have an additional supply of one million barrels of U.S. oil on the market today. At the time of that veto, oil was trading at about $19/bbl; today it hovers around $70/bbl. With this change in price environment, the failure to rethink policy is just inexplicable. We must act on this legislation."

In a separate briefing at the National Press Club Tuesday in Washington, the Independent Petroleum Association of America (IPAA) said some of issues that should be addressed in the next round of energy legislation should include adequately funding federal agencies, such as the Bureau of Land Management, that provide drilling permits, and allowing more access to "nonpark, nonwilderness" federal lands in the Intermountain West, the eastern Gulf of Mexico and off the Atlantic and Pacific coasts.

In addition to providing more land access for drilling, independents also sent a "do no harm" message to Congress. IPAA said Congress should put a stop to legislation that has been proposed that would impose windfall profits taxes on producers, increase royalty rates, or eliminate tax provisions related to drilling costs and would repeal deepwater royalty incentives.

The association, which represents independent oil and gas producers, said there are 16 pieces of windfall profits tax legislation currently floating around Capitol Hill. "They do the opposite of what you want them to do," said IPAA Chairman Mike Linn, CEO of Pittsburgh-based Linn Energy LLC. "The last time we had a windfall profits tax,...we had a 16% increase in imported oil... The super majors went overseas. It compounds the problem. We had it before; it didn't work. Something has to change."

Linn singled out the 400-acre Lewis and Clark National Forest, a roadless area in Montana, as one place in the West that should be among many other areas in the Rockies that are opened up for oil and gas drilling. "On the books it shows that is an area available for leasing, but in all practicality you can't lease it" because it's a roadless area, he said.

Linn also noted that even if Congress lifts the moratorium on offshore drilling in the Eastern Gulf and off the East and West Coasts, the president still has his own moratoria on those areas, so the industry needs to work with both Congress and the administration. It also has to get the word out to the states that the industry can drill off their coasts in an environmentally safe manner, he said.

"We are trying to do a grassroots effort to reach out to editorial boards with letters to the editors and meetings with editorial staff on [many state] newspapers to get our word out," said Linn. "It's hard to do that. We have to build from the ground up. [IPAA is] having [its] mid year meeting in Florida in two weeks. We are going to meet with people while we are there. You have to build a consensus or at least tell our side of the story that we can do this in an environmentally safe manner."

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