House Democrats plan to take up a package of energy measures next week that would put producers in the unenviable position of having to either drill on their existing leases or face the prospect of paying higher fees.

The Democratic response follows calls by President Bush and presumptive Republican presidential candidate John McCain to remove the long-standing congressional moratorium on oil and gas drilling in much of the federal Outer Continental Shelf (see Daily GPI, June 19). The Republican proposals were not welcomed by House Speaker Nancy Pelosi (D-CA). She questioned why Congress should lift the offshore drilling ban when “oil companies are sitting on 68 million acres of public lands they have already leased.”

“No one is sitting on their hands these days,” countered Rayola Dougher of the American Petroleum Institute on Fox News. “I think there’s a big misunderstanding about these leases,” she said, adding that oftentimes producers acquire leases without knowing if there are any oil and gas resources beneath them. The federal government has estimated that more than 50% of the wells drilled between 1995 and 2005 were dry holes.

One of the Democratic measures would assess a fee on energy companies for leases that are not being drilled. The fee would escalate if the leases go unused over the course of several years, reaching as much as $50 an acre each year, Dow Jones Newswires reported.

Offshore, producers are producing only about 20% of the acres they hold, while onshore, companies are producing on less than 30% of the acres they hold, according to House Democrats. They estimated that the unused areas could produce an additional 4.8 million b/d of oil and 44.7 Bcf/d of natural gas.

Other House measures to be possibly voted on next week would seek to tackle price gouging in the oil industry, address speculation and price manipulation in energy markets and would help to offset transit fares.

The Democratic bills are likely destined to run into opposition from Republicans, a number of whom support Bush’s proposals to open the offshore to more drilling, open a small part of the Arctic National Wildlife Refuge to exploration and production, provide incentives for oil shale development and expedite the permitting for new refineries.

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