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GOP Pushes Onslaught of Energy, Offshore Bills

July 30, 2012
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House and Senate Republicans last week stepped up efforts to pass legislation proposing more lease sales on the Outer Continental Shelf (OCS) during 2012-2017, but the action may turn out to be more show, given that the odds of legislation being voted out by both houses of Congress this session are slim.

The House last Wednesday overwhelmingly passed a Republican-sponsored bill that would expand oil and natural leasing in the OCS during the five-year period. But the victory was overshadowed by President Obama's threat to veto the GOP plan, which was proposed as a replacement to the Obama administration's slimmed-down OCS leasing plan.

The GOP leasing bill (HR 6082), which cleared the House by a vote of 253-170, proposes to offer nearly 30 lease sales for producers during 2012-2015 in eight OCS regions, including the Mid-Atlantic off Virginia's coast and South Carolina, Southern California, the GOM region, and Alaska's Beaufort and Chukchi seas and North Aleutian Basin. That's nearly double the lease sales that the Obama administration has proposed.

The president's five-year leasing plan was defeated on the House floor by a vote of 164-261. The final leasing program, which was released in June and submitted to Congress for review, has come under attack from industry because it has left out the East and West coasts as leasing opportunities (see NGI, July 2). Interior proposed 15 potential lease sales in six offshore areas, focusing primarily on the tried and true areas of the GOM and Alaska offshore.

The House vote will not stop the administration from moving forward with its five-year leasing plan. The House vote was a "protest vote," and "symbolic" in nature, said one Capitol Hill source. "The House was registering a strong protest...that they're not happy with the administration's plan."

Barry Russell, president of the Independent Petroleum Association of America, applauded the House passage of the GOP replacement leasing plan. Interior's current proposal, he said, "follows the same tired plan for American offshore exploration that has been pursued for more than a generation."

In contrast, the House plan sponsored by Rep. Doc Hastings (R-WA) "opens new areas for exploration of our nation's rich resource potential offshore. It allows for states that have been yearning to explore their energy potential -- states like Virginia -- to tap into the energy and economic renewal that has been sweeping the nation. Development of offshore oil and natural gas would revitalize coastal economies from Southern California to South Carolina," he said.

House Republicans defeated a number of Democratic amendments that would have watered down the bill, including a measure to bar exports of OCS resources developed as a result of the bill, and a proposal to strike a GOP provision that would require only a single environmental assessment to be conducted of all the new lease sales.

On the Senate side last Wednesday, Sen. Lisa Murkowski of Alaska, the ranking member of the Senate Energy and Natural Resources Committee, introduced a bill that also would significantly expand the number of oil and natural gas lease sales to be offered to producers during 2012-2017.

The Murkowski bill (S 3438) would require Interior to hold 26 lease sales in eight OCS areas during the next five years, including two new regions -- such as the Mid-Atlantic and Southern California -- as well as the Western GOM, Central GOM, the portion of the Eastern GOM that is not subject to congressional moratorium, as well as Alaska's Chukchi and Beaufort seas, and Cook Inlet. The Mid-Atlantic would include offshore Delaware, Maryland, North Carolina and Virginia, according to the bill. It also proposes that coastal states that allow drilling be awarded 37.5% of OCS revenues.

The Murkowski legislation has eight co-sponsors (four Democrats and four Republicans), and it complements a separate measure unveiled by Republican Sen. John Hoeven of North Dakota and Rep. Kevin McCarthy of California last Thursday calling for Interior to add a lease sale off the coast of Virginia to its five-year plan and to step up permitting for energy development on federal lands. It also gives the go-ahead for the construction of the northern leg of the Keystone XL oil pipeline.

The measure, which was unveiled at a press briefing on Capitol Hill, proposes that a lease sale be held in a 2.9 million-acre area located about 50 miles offshore Virginia in the Mid-Atlantic Planning Area. Interior's Bureau of Land Management (BLM) estimates that the area may contain 130 billion bbl of oil and 1.14 Tcf of natural gas, the lawmakers said.

Hoeven and McCarthy also are proposing that coastal states receive a greater share of the OCS revenues -- $750,000 for the years 2023 through 2055 compared to the current level of $500,000.

The bill, known as the "Domestic Energy and Jobs Act of 2012," seeks to ensure that BLM permitting offices have the personnel and resources that are necessary to approve energy development on federal land, and it includes hard timelines on permit approvals. It gives Interior the authority to conduct Internet-based auctions for onshore leases as well.

Moreover, the measure would provide producers with access to the National Petroleum Reserve on Alaska's North Slope, and also directs Interior and the Department of Transportation to work toward the development of pipelines and roads in the reserve.

The measure gives the green light for the construction of the northern leg of Keystone XL oil pipeline (see NGI, March 5). It "deems the environmental review process complete and allows TransCanada to construct the northern leg of the pipeline immediately except in Nebraska, while the state continues it routing process within the state." The pipeline would deliver 830,000 bbl/d of oil to U.S. refineries, including 100,000 bbl/d from U.S. producers.

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