The congressional moratorium on oil and natural gas drilling off the East and West Coasts will remain in effect for at least another year. All efforts in the House last week to overturn the 25-year-old ban were defeated. But some headway was made in the Senate, where funding was approved to carry out an inventory of oil and natural gas resources in the eastern Gulf of Mexico.

Two of the unsuccessful amendments were offered by natural gas drilling advocate Rep. John Peterson (R-PA). One proposal, which was rejected by 196-233, sought to lift the moratorium on natural gas-only drilling 25 miles off coastal states' shorelines. The other proposed removing the ban on both oil and gas drilling 100 miles from the West and East Coasts. That was defeated by voice vote. A similar amendment sponsored by Rep. Mike Conaway (R-TX) was rejected as well 264-167.

The amendments were offered during consideration of a $27.6 billion spending bill (HR 2643) for the Interior Department, Environment and Related Agencies in fiscal year 2008, which the House approved last Wednesday by a vote of 272-155.

Peterson's amendments had the support of House lawmakers from Gulf Coast states but drew objections from Florida and California lawmakers. They argued that drilling off their coastlines would interfere with tourism and military operations. They further claimed that gas-only drilling was unrealistic, and that expanded offshore drilling -- if approved by Congress -- would not have any immediate impact on natural gas prices.

But Peterson countered that expanding gas exploration and production was an essential "bridge" to the future production of renewable fuels and ethanol. "It's the bridge to our future...It is absolute insanity for America to starve itself of clean, green natural gas," said Peterson in introducing his gas-only amendment, particularly when China is drilling 45 miles off the Florida Keys and Canada is drilling in the Great Lakes.

Conaway challenged the California and Florida opponents. "Those states who do not want this drilling off their shores [should] begin to commit today to eliminate their use of natural gas," he said. "Just simply say, 'OK, if we're not going to drill it offshore, then we're not going to use it.'"

Rep. Ginny Brown-Waite (R-FL) argued that Peterson's gas-only amendment was a "bait and switch" with last year's compromise legislation on offshore drilling. "That's not what we agreed to, to do our share for energy production," she said.

In December of last year, President Bush signed into law a bill that made 8.3 million acres in the Lease Sale 181 area in the eastern Gulf and in a tract south of Lease Sale 181 available for oil and gas leasing. The bill also provided protections (a minimum of a 125-mile, no-drill buffer zone) for Florida (see NGI, Dec. 25, 2006). The House had supported a broader measure that would have opened more of the Outer Continental Shelf (OCS) to leasing, but its leadership in the end agreed to a compromise with the Senate.

The White House has vowed to veto the Interior spending bill if a provision requiring producers to renegotiate their flawed 1998-1999 oil and gas leases is sent to the president. The requirement remains in the House Interior appropriations bill but has been struck from the Senate version. The House's $27.6 billion spending bill for Interior and Related Agencies also exceeds the spending level sought by Bush by approximately $2 billion.

Interior's Minerals Management Service (MMS) omitted price thresholds in the 1998-1999 deepwater leases, which has allowed the holders of the leases to avoid paying royalties on their production. The House spending bill would bar the leaseholders from bidding on future government tracts until they renegotiate these leases.

The Senate Appropriations Committee last month struck a similar provision from a fiscal year 2008 spending bill for the Interior Department and Related Agencies (see NGI, June 25).

The critical price thresholds serve as a benchmark to determine when oil and gas production becomes subject to federal royalties. Without them, producers who negotiated leases in 1998 and 1999 have been able to escape paying royalties on production up to a specific volume limit. The price caps were included in leases that were negotiated in 1996, 1997 and 2000, but were not in the 1998 and 1999 leases due to an oversight on the part of Interior officials.

According to a report earlier this year by the Government Accountability Office, between $6.4 billion and $9.8 billion in royalties could be lost to the federal government as a result of missing price thresholds in the 1998-1999 deepwater leases (see NGI, April 16).

In related action last week, the Senate Appropriations Committee Thursday approved a Republican amendment that authorizes up to $10 million for the federal government to conduct a seismic inventory of oil and natural gas resources in the eastern Gulf. Florida senators have vowed to do everything in their power to block the proposal on the Senate floor.

The Energy Policy Act of 2005 approved the inventory. The amendment, offered by Sen. Larry Craig (R-ID), authorizes the funding to go to the Department of Energy (DOE) to hire private companies to carry out the inventory, said Craig spokesman Dan Whiting.

The proposal was offered as part of the $32.3 billion Energy-Water appropriations bill, which was voted out of the Senate Appropriations Subcommittee on Energy and Water Development last Tuesday and cleared the full appropriations panel Thursday. The fiscal year 2008 bill, which funds the Army Corps of Engineers, Bureau of Reclamation and the DOE, exceeds the president's budget request by more than $1.8 billion and is nearly $2 billion more than the fiscal year 2007 spending measure.

There was a dispute over whether Craig's amendment should have instead been included in the Interior-Environment appropriations bill because Interior's MMS routinely conducts inventory work. This caused one supporter of Craig's proposal, Sen. Pete Domenici (R-NM), to warn that if the amendment endangers the spending bill on the Senate floor, "then you can rest assured that this senator will not be for it," CQ Today reported.

In a letter to subcommittee leaders last Wednesday, Florida Sens. Bill Nelson and Mel Martinez warned that they will filibuster efforts to include funding for a seismic inventory of OCS oil and gas resources in a final spending bill.

"We believe such attempts [inventories] undermine the protections for states like Florida that do not wish to have oil and gas development off their shores," the Florida lawmakers said in their letter to Subcommittee Chairman Byron Dorgan (D-ND) and Domenici, the ranking Republican on the Energy-Water subcommittee.

"If any such language directing seismic surveys is included in the Energy and Water Appropriations bill, or any other legislation, we will use our senatorial rights to prevent this erosion of our coastal protections," Nelson and Martinez wrote.

The Florida senators, as well as other critics, fear that a seismic survey would eventually lead to the overturning of the long-standing congressional moratorium on drilling off the East and West Coasts.

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