The new GOP-crafted compromise on oil and gas leasing in the eastern Gulf of Mexico will be introduced as stand-alone legislation in the Senate later this month, according to a spokeswoman for Senate Majority Leader Bill Frist (R-TN). It will not serve, as some expected, as a vehicle for other unrelated energy measures that could weigh down the bill in the legislative process.
The text of the bill will not be released this week, but rather later this month, said Frist spokeswoman Carolyn Weyforth. Frist has said he will find floor time for the Senate to take up the measure before Congress departs for its month-long August recess.
Sen. Pete Domenici (R-NM), chairman of the Senate Energy and Natural Resources Committee, who played a key role in negotiating the compromise, “would prefer it to be just an OCS [Outer Continental Shelf] bill,” said Angela Harper, a spokeswoman for Domenici.
The legislation will include the key components of a Republican compromise announced on Wednesday that would open up eight million acres in the eastern Gulf to oil and natural gas leasing, expand protections for Florida’s coastline and allow sharing of federal royalties from offshore production with four Gulf coastal states.
The agreement limits drilling as far as 234 miles from Florida’s western coastline and provides a 125-mile, no-drill buffer extending from the state’s Panhandle. The protections expire in 2020. It seeks to open 1.7 million acres in Lease Sale 181 in the eastern Gulf to leasing, as well as a 6.3 million-acre tract south of Lease 181. It’s estimated that the Lease 181 area, which is located 100 miles south of the Florida Panhandle, contains 1.25 billion barrels of oil and 5 Tcf of natural gas. The pact also would require the federal government to share royalties from offshore production with four Gulf states: Texas, Louisiana, Mississippi and Alabama.
The deal leaves intact the revenue-sharing language announced last week by Sen. Mary Landrieu of Louisiana, the only Democrat to publicly endorse the mostly Republican-drafted compromise. The plan calls for the four Gulf coastal states to receive 37.5% of the federal revenues generated by Lease Sale 181 and subsequent production in the first 10 years. And starting in 2017, the coastal energy-producing states would snare 37.5% of oil and gas revenues generated from any Gulf lease issued after the enactment of the bill.
Florida Republican Sen. Mel Martinez, who has sharply opposed expanded drilling on the OCS, signaled his support for the compromise over previous plans. “After the relentless attempts and growing pressure in Congress to open drilling as close as 50 miles from our coast, this agreement gives Floridians the concrete assurances we need that our coasts are protected now and well into the future,” Martinez said. “This is a good deal for Florida and one we need to take.”
Florida Democratic Sen. Bill Nelson noted that the deal “comes close to achieving the protections for Florida” that he and Martinez had sought earlier this year, but he added “the devil’s always in the details.”
Domenici indicated that he believes there is enough support in the Senate to get the 60 votes needed to fend off any filibuster by Nelson or other senators.
The compromise “builds upon” the original Lease Sale 181 bill (S. 2253) that was approved by the Senate energy panel in March, according to Domenici. He and Sen. Jeff Bingaman of New Mexico, the ranking Democrat on the energy committee, sponsored the bill. It sought to open up about 2.9 million acres in Lease 181 to producers, but it did not include revenue-sharing language or an extended no-drilling buffer for Florida.
Bingaman spokesman Bill Wicker said his boss felt slighted by not being included in the negotiations, and may not be able to support the measure because of the revenue-sharing provisions. “It’s particularly frustrating when a bill my boss has sponsored has been used as the basis for negotiations” and he has not been invited to participate, he said. “Based on what we’ve read and heard so far, it can’t be something we’d support mainly because of the royalty [sharing] provisions,” Wicker told NGI.
A key challenge will be whether the narrower Senate Lease 181 bill can be successfully conferenced with the more comprehensive House OCS measure that was approved in late June. The House measure applies to the entire federal OCS, while the Senate measure is limited to leasing in the Lease Sale 181 area in the eastern Gulf. It would give states complete control over whether to allow oil and gas leasing within 100 miles of their coastlines, and would lift the ban on offshore drilling beyond the 100-mile mark. The House bill also would give coastal states a bigger chunk of the offshore production royalties (50% to 75%) than what is proposed in the Senate compromise.
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