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Gas Groups Assess Energy Agenda of New Democratic Congress

Natural gas association officials on Wednesday publicly expressed optimism about working with a new Democratic Congress, although they acknowledged that the direction of energy policy would likely shift to alternative energy and away from oil and gas in the short run, and that offshore drilling legislation -- if not passed by Republicans in the upcoming lame-duck session -- would become a back-burner issue.

"I think it's going to be more of a challenge to move energy legislation, particularly things like new oil and gas production" over the next year, said Martin Edwards, vice president of legislative affairs for the Interstate Natural Gas Association of America (INGAA), which represents gas pipelines. "Maybe over time it will become more possible, but in the short run the Democrats are going to want to focus on alternative fuels," he noted.

"I'm not saying that in the long term that Dems won't be open to some of those [oil and gas] options. I'm just saying it may take awhile for them to get there," Edwards told NGI. "They were in power for 40 years [before losing both houses in 1994] and dealt with these issues. I don't see why they wouldn't do so again," he said.

"I'm certain that may be an approach that they want to take," focusing first on alternative energy fuels, said Mark Stultz, a spokesman for the Natural Gas Supply Association (NGSA), which represents major producers. "If that's the way Congress wants to proceed, we're looking forward to working with them on it."

In Tuesday's elections, Democrats picked up 27 seats in the House for a majority of 229. The Democrats also gained five seats in the Senate and are leading by a razor-thin margin in Virginia. The official outcome of the race will determine if Democrats recapture the majority in the Senate.

The sweeping Democratic victory may put more pressure on existing Republican leaders to pass legislation opening up more of the Outer Continental Shelf (OCS) to oil and gas drilling when they return for the lame-duck session. "I think that that's a possibility. It all depends on whether the folks in the current majority come back in a mood to deal or if they are looking more toward the next session and they just say 'We've done all we can,'" said Michael Kearns, a spokesman for the National Ocean Industries Association (NOIA), which represents the offshore sector.

"It may very well be that's where they limit their focus and the OCS legislation doesn't go anywhere. That's one of the scenarios. The other is that they may try to cut a deal and get this finished because they've come so far and they're so close to the goal line," he noted. The House and Senate have passed vastly different OCS drilling bills, but negotiations to reconcile the measures are stalled.

A spokeswoman for the American Gas Association, which represents gas utilities, said the group remains "optimistic" that the existing Congress may resolve the differences and approve legislation that provides more access to OCS gas supplies in the next few weeks.

The NGSA called on the current Congress to pass an OCS bill before it adjourns for the year. "We're hoping that they're close enough to an agreement to be able to get something done in the lame-duck session," said Stultz. "I do think that...in the new Congress more access to the OCS will be a greater challenge due as much to geographical interests as it is to party interests."

INGAA's Edwards expects Congress to return for the lame-duck session as early as next week. But the key questions, he says, are "for how long and exactly what beyond the absolute minimum would they do."

The odds of Congress passing a bill to provide greater OCS access to producers during the lame-duck session is an "amazing long shot," said one legislative observer. "I think we're more likely to get struck by a meteor that would wipe us off the surface of the planet...I don't think that the Dems would willingly go along" with an OCS bill now, he noted.

Senate Democratic Leader Nancy Pelosi, who is in line to become the first female Speaker of the House, hails from California, a state that strongly opposes any offshore drilling. Pelosi personally is against offshore exploration and has called for the repeal of billions of dollars in tax breaks for oil and gas producers, a move that would hurt independent producers more than majors.

Several new Democrats voted into the House are moderates and conservatives, which could turn out to be a good thing for the oil and gas industry. "That bodes well for the ability for us to have a reasoned debate across the aisles," said NOIA's Kearns. "A lot of moderate to conservative Democrats could play a very influential role in energy or other economic-related legislation," noted Edwards.

He cited Rep.-elect Heath Shuler of North Carolina as an example. "Heath Shuler is not a West Coast liberal Democrat. He'll be as conservative as a lot of Republicans. So I would not assume that he would be an automatic vote for the Democratic leadership 100% of the time. And there's a lot of other guys like that."

Because of the changing face of Democrats and the fact that Dems have a relatively close margin of control in the House, Edwards believes it makes sense for the Democrats to have an open process that includes the Republicans.

As for House committee chairmanships, Rep. John Dingell (D-MI) is in line to take over the powerful House Energy and Commerce Committee. INGAA's Edwards said to expect "a lot of focus on oversight at least initially" in a lot of areas. "You name it, fill in the blank" in which Dingell will conduct investigations, he noted. He also sees Dingell addressing the management of the Yucca Mountain nuclear waste site.

Dingell is a moderate Democrat, "so I wouldn't type cast him in either direction" as supporting or opposing initiatives for the oil and gas industry, Edwards said.

Rep. Richard Pombo (R-CA), chairman of the House Resources Committee that oversees offshore drilling and environmental issues, was soundly defeated Tuesday. It's not known if Rep. Nick Rahall of West Virginia, the ranking Democrat on the panel, will succeed Pombo as chairman.

If the Democrats manage to cinch the Senate, Sen. Jeff Bingaman of New Mexico will become the next chairman of the Senate Energy and Natural Resources Committee. "Jeff Bingaman is a gentleman. If he chaired the committee, he wouldn't change his MO one iota. He would still be the same gentleman that he is right now," said Edwards.

"I would look to him to be very conciliatory to Republicans, but to focus more on some of the environmental issues as well as the traditional production issues." he noted, adding that Bingaman would reach out to Sen. Pete Domenici (R-NM), who is the current chairman. "They have a pretty nice relationship. Bingaman is cordial with all of the members, whether they be Republican or Democrat."

The Senate Commerce Committee, which oversees gas pipeline safety legislation, will probably be chaired by Sen. Daniel Inouye of Hawaii. "I wouldn't expect a lot of change there. He's worked very cordially and cooperatively with the current chairman, Ted Stevens" of Alaska.

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