Natural gas association officials last 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 the current Republican-controlled Congress in the 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 initially 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 last Tuesday’s elections, Democrats picked up 28 seats in the House for a majority of 230. The Democrats also gained six seats in the Senate for a slim majority of 51. This marks the first time in 12 years — except for a brief period — that both houses are controlled by Democrats. The Senate briefly shifted to Democratic control after the defection of then-GOP Sen. Jim Jeffords of Vermont in June 2001, but it returned to Republican control after the November 2002 elections.

The sweeping Democratic victory may put greater pressure on current 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 this week. “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, and negotiations to reconcile the measures are stalled.

It’s unclear whether current Republican leaders will have enough clout and will to broker a deal on OCS drilling. Key Senate GOP proponents of expanded offshore drilling — Sen. Pete Domenici of New Mexico and current Majority Leader Bill Frist of Tennessee — and House GOP proponents — Rep. Richard Pombo of California and current Speaker of the House Dennis Hastert of Illinois — are likely to be in weaker negotiating positions following the trouncing by Democrats in the mid-term elections.

Frist is expected to retire at the end of the year. Pombo was soundly defeated last Tuesday, and will not be returning for the 110th Congress. And Hastert, although he retained his congressional seat, will not be holding a leadership position next year. But on the flip side, there are some who believe that Republicans will view offshore drilling legislation as sort of their last hurrah and will do everything possible to get it passed during the lame-duck session.

A spokeswoman for the American Gas Association, which represents gas utilities, said the group remains “optimistic” that the current Congress will resolve the differences and pass OCS legislation 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 believes the fate of OCS hinges on the key questions of “for how long [will lawmakers remain in session] 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.

But Senate Democratic Leader Harry Reid of Nevada, who is in line to be the next majority leader, said last Wednesday that one of his priorities during the lame-duck session is to reach a deal to open up more of the OCS to oil and gas drilling.

“I’ve told the president; I’ve told the two Republican leaders that I’d like to get…five things done,” including offshore drilling legislation, Reid said during a press briefing on Capitol Hill. “I think it’s so important that we complete the work we did in the offshore drilling…That’s important for the American people.”

It also was reported that House Democratic Leader Nancy Pelosi of California who’s in line to be the next Speaker of the House is open to an offshore drilling deal during the lame-duck session, but a Pelosi spokesman said this was “extremely unlikely” to happen.

“We’re hearing from the [House] floor staff that it would be difficult to get this done with everything else on our plate,” said spokesman Drew Hammill. And when Pelosi becomes the speaker in January, OCS drilling “is not something” that will be on her immediate agenda, he noted. Pelosi 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.

At meetings with congressional leaders last Thursday, President Bush called on lawmakers to take up legislation expanding offshore drilling during the lame-duck period.

If OCS legislation is held over for the next Congress, some pointed out that several of the 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,” agreed 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.”

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” on the issues in which Dingell will conduct investigations, he noted. He sees Dingell addressing the management of the Yucca Mountain nuclear waste site, and some believe that Dingell will revisit the issue of the energy industry’s influence on the Bush administration’s national energy policy..

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 last Tuesday. The loss of Pombo, who was one of the architects of the House offshore drilling bill, will be felt by the energy industry. It’s not known if Rep. Nick Rahall of West Virginia, the ranking Democrat on the panel, will succeed Pombo as chairman.

Sen. Jeff Bingaman of New Mexico is in line to 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 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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