Senate Democrats are scrapping their plans to move forward with a broad-based energy bill before the start of the August recess, an industry spokesman said.

Instead, Senate Majority Leader Harry Reid (D-NV) Thursday said he wants the Senate to vote out a "narrower bill" before the Aug. 6 recess, which primarily is directed at BP plc for its role in the mammoth oil spill in the Gulf of Mexico. "We are not putting forth this bill in place of a comprehensive bill...but we will not pass up the opportunity to hold BP accountable," Reid said.

The legislation would have four components: offshore drilling safety provisions (removal of the cap on a producer's liability for economic damages from an oil spill on the federal Outer Continental Shelf; and enhanced equipment safety initiatives); tax breaks for natural gas vehicles and refueling; a home energy efficiency program; and a permanent authorization of $900 million annually for the Land and Water Conservation Fund.

Reid "assumes all of these proposals will have strong bipartisan support" in the Senate and "will be passed with virtually unanimous support," said Martin Edwards, vice president of legislative affairs for the Interstate Natural Gas Association of America.

The limited energy bill could come up either next week or the following week, he said. Senate Democrats have not given up the possibility of pursuing a more comprehensive bill after the November election, The Washington Post reported.

Reid made the announcement Thursday after conferring behind closed doors with other Senate Democrats about energy legislation.

It's not likely that the Senate energy bill will have a climate change component. The chamber's climate change bill has been in limbo ever since Sen. Lindsey Graham of South Carolina -- the only Republican sponsor of the legislation -- withdrew his support in April (see Daily GPI, April 27).

In a letter to Reid Thursday, 67 industrial and agriculture energy users called on the Senate not to artificially create power and transportation sector demand for natural gas in legislation, which they said would boost volatility and drive up prices. "Our economy needs a diverse base of price-sensitive natural gas consumers -- and a diverse energy supply -- in order to reduce price volatility in all energy sectors," said Peter Molinaro, vice president of federal and state government affairs for Dow Chemical Co.

The coalition of end-users said gas demand has been steadily rising over the past decade without incentives and in the absence of carbon caps, which would increasingly shift more power generators from coal to natural gas. The power sector's gas demand has grown by nearly 30% since 2001, estimated the end-users, some of which included the American Forest & Paper Association, Dow Chemical, Kimberly-Clark Corp., Steel Manufacturers Association and The Fertilizer Institute.

The letter urged the Senate to allow the market to set supply and demand for natural gas instead of picking "winners" and "losers" through legislation. The coalition acknowledged that there is great hope that large shale gas reserves will materialize as recoverable supplies.

"However, history has shown that unforeseen circumstances, including the potential for both federal and state regulations to be placed on shale drilling, can either slow its production, increase its costs or otherwise dramatically alter these types of future projects," the coalition said.

©Copyright 2010 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.