Conference Committee Chairman Pete Domenici (R-NM) on Friday postponed a conference vote on the broad energy bill that was scheduled for Tuesday and shelved plans to release a conference report, citing the failure of the House-Senate tax writers to settle their differences on a number of controversial tax items.

Even before Domenici’s announcement, some in the natural gas industry were becoming increasingly disillusioned as key provisions favorable to gas production reportedly had been removed from the bill or were hanging by a thread — an inventory of Outer Continental Shelf (OCS) oil and gas resources, price supports for Alaska producers and drilling in the Arctic National Wildlife Refuge (ANWR).

It marked the second or third time that Domenici, manager of the energy measure, has been forced to delay a conference vote on the legislation. In a prepared statement, he was not only silent on when a conference session might be re-scheduled, but he seemed to be preparing the public for the possibility that a bill may not make it out of Congress in the few weeks remaining in the session.

“I know we will eventually resolve these issues and get an energy bill,” Domenici said, but he stopped short of saying when that would be. “I would like that to be sooner rather than later, but it may be that more pressure needs to build to force compromise.” Citing his re-election to a six-year term and his plans to continue on as chairman of the Senate Energy and Natural Resources Committee, he said, “I know we will get an energy bill. I will be patient.”

Domenici said he was “deeply disappointed” by the latest delay in the conference vote. He pointed the finger at Chairman Bill Thomas (R-CA) of the House Ways and Means Committee and Chairman Charles Grassley (R-IA) of the Senate Finance Committee, who he said were at an “impasse” on several issues — reform of an excise tax on ethanol, tax credits to encourage alternative energy production, tax incentives to promote the construction of new, cleaner coal plants and upgrades to existing plants, product liability waiver for MTBE producers and revisions to the clean air laws.

“I certainly understand the House’s position on these matters. But I am a pragmatist. I have no intention of emerging from conference with a bill that cannot pass the Senate,” said Domenici.

Thomas and Grassley, who met in closed-door sessions throughout last week, are having a “dickens of a time coming to agreement on taxes,” said a Democratic aide. “They can’t meet in the middle of the road,” especially on the ethanol issue. Some speculate that Senate Majority Leader Bill Frist (R-TN) and House Speaker Dennis Hastert (R-IL) may take control of the $16 billion tax package from Thomas and Grassley.

Needless to say, the text of the energy bill will not be released as had been planned. Domenici and Rep. W.J. “Billy” Tauzin (R-LA) early last week had assured House and Senate energy negotiators that they would circulate the conference report on the bill to them 48 hours in advance of the Tuesday conference.

“This thing [energy bill] is getting embarrassing in terms of when it’s going to get done,” said a gas industry lobbyist. Even if the bill should somehow emerge from conference, the Republicans are going to have to “pull a few rabbits out of their hats to keep the Democrats from bombing” the legislation.

A filibuster by Senate Democrats was “very possible” on a number of energy items, including ethanol, MTBE, a renewable portfolio standard and electricity, said the Democratic aide. It all depends on what’s in and what’s not in the conference report, he noted.

“I still don’t think it’s a given that [an energy] bill will be done” this year, the lobbyist told NGI.

If Congress should prove the prognosticators wrong, however, the odds are against the measure including some high-profile items that are supported by the gas industry — an OCS inventory, ANWR drilling and price supports (tax credits) for gas produced in Alaska and transported over a proposed 3,600-mile Alaska pipeline.

Domenici confirmed that the contentious provision calling for the federal government to inventory oil and natural gas resources in the Outer Continental Shelf (OCS) has been nixed from the bill. This came on the heels of a House vote earlier this month instructing House-Senate conferees to strike the industry-backed provision from the broad energy bill.

Lawmakers from coastal states fear that an OCS inventory, which also would catalog oil and gas resources in offshore areas where drilling has been banned for years, would be the first step towards overturning the congressional and presidential moratoria on exploration and production activity off the West, East and Florida coasts.

Observers also were pessimistic about the outcome of the talks between the House-Senate tax writers over whether to provide price supports to Alaska producers who would transport gas over the Alaska pipeline. The measure has support in the Senate, but top House energy negotiators and the Bush administration are dead-set against it.

The proposal for the Alaska gas price supports “is just sitting there. It’s not on the front burner. I’ve been led to believe that it’s not expected to make the final cut” of the tax package being negotiated by Thomas and Grassley, said Don Duncan, vice president for federal and international government affairs for Alaska producer ConocoPhillips.

It’s still on the table, but it’s at the “very edge” of it, he noted. The House conferees have said that “absolutely they will not accept” any kind of price support for Alaska gas production.

Thomas is the chief opponent of proposed price supports for Alaska producers. Alaska producers contend that the construction of the pipeline from the Alaska North Slope to the Lower 48 states turns on whether or not they receive price supports from Congress in the energy bill. Without them, Duncan said ConocoPhillips will withdraw its backing for the $20 billion pipeline project.

Likewise, reports were widespread that negotiators would drop a provision in favor of oil and gas drilling in ANWR, but Domenici has not confirmed this yet. He has signaled in the past that he will take ANWR out if he believes it would threaten congressional passage of comprehensive energy legislation. ANWR likely will be one of the last items to be decided in conference committee, Domenici noted.

The removal of the OCS inventory and possibly ANWR “is what we’ve expected all along,” said a Democratic aide, adding that these shouldn’t been seen as “grand concessions” by Republican conferees. Nixing the two controversial items “is a bow to the electoral reality of both bodies: ANWR is poison in the Senate, [and] the OCS inventory is poison in the House.”

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