The Republican draft energy bill was close to emerging from three House committees Wednesday with provisions affecting natural gas virtually unscathed by a host of defeated amendments offered by Democrats.

The teflon draft Republican bill at press time Wednesday included provisions to bolster domestic production and LNG imports. It included authorizing oil and gas leasing in the Arctic National Wildlife Refuge (ANWR), exclusive FERC authority over siting of LNG facilities, and a host of royalty and tax incentives (see separate tax story).

House energy leaders were expected to take the measure to the House floor next week. The Senate energy leaders, working toward a compromise behind closed doors, have yet to come up with legislation.

Throughout the day both Tuesday and Wednesday Democratic amendments lost by lopsided votes. Rep. Ed Markey, D-MA, lost on two key amendments, one of which would have stripped the Federal Energy Regulatory Commission of exclusive jurisdiction over siting of LNG terminals and another that would have dropped a leasing plan for the ANWR(see Daily GPI, April 13). The vote on LNG siting was 35-18. The prohibition on ANWR lost 30-13.

In opposing ANWR leasing, Markey said this was just the first step on a “slippery slope,” and warned the action would put the other 539 wildlife refuges under siege. Markey was concerned that the bill included incentives for supplies, but would not to include any new fuel economy standards for any vehicle, nor for appliances. There is a tremendous “hypocrisy coefficient” in a bill that calls for drilling in ANWR and “a $35,000 tax break if you buy a Hummer II,” he said.

Markey’s attempt to sink the ANWR provisions came near the end of the session before the House Resources Committee. That committee started off by rejecting a Democratic substitute, stripping most supply side incentives by a 27-11 vote. Rep. Nick J. Rahall II of West Virginia, ranking Democrat member and sponsor of the amendment said, “The Democratic alternative is about energy development, empowerment and endowment. It is about development, because it proposes to facilitate over 35 Tcf of natural gas from developed fields in the North Slope and the Lower 48 states. This is at least a full year and a half of our total natural gas consumption. There are no misappropriated subsidies in this proposal, no kick-backs, no windfall profits.”

But it’s a “poorly thought out alternative in the nature of a substitute” to the energy bill, according to Nevada Republican Rep. Jim Gibbons, who said the substitute “fails to understand the basics of Economics 101” and is “a warmed over rerun” of what was presented as a substitute in the last energy bill. “It fails actually to increase domestic energy supply,” he said. “In fact, it does not even contain an issue about how do we address the billions and billions of barrels of oil that are contained in the Alaska’s Arctic National Wildlife area that should be used to meet this nation’s energy needs.”

Resources Committee Chairman Richard Pombo (R-CA) pointed out that ruling out drilling in the Alaska reserve would be shutting off a sizeable potential resource. He noted that at 591,000 square miles, Alaska is as wide as the Lower 48 states and larger than California, Texas and Montana combined.

An amendment to inventory available reserves in the Outer Continental Shelf (OCS) currently under a leasing moratorium was introduced by Rep. John E. Peterson (R-PA) but later withdrawn, with the possibility it would be reintroduced on the floor of the House. Federal Reserve Chairman Alan “Greenspan got it wrong,” Peterson said, pointing out that relying on LNG imports is the most expensive solution and only increases this country’s reliance on unstable countries.

“We have ample natural gas in this country; at least we should inventory the OCS,” Peterson said. “The reason the economy is not hot today is because of energy prices; companies are moving overseas as we speak; the fertilizer industry is half gone.”

Democratic opponents labeled the OCS inventory measure “a backdoor attempt to undo the coastal moratorium.” Another measure that would have limited protests to leasing and drilling permits was defeated in committee. A supporter of the provision pointed out that 10 protesters in Utah had filed 392 protests in opposition to oil and gas development.

Democrats failed 10-31 to dislodge a provision in the bill that would authorize the Secretary of Interior to set up a domestic offshore energy reinvestment fund to share excess royalties with coastal states in proportion to their offshore production. The fund would include royalties collected in excess of $7 billion in 2006, with the amount going into the federal treasury increasing each year through 2014 when only the excess above $9 billion would go into the coastal states fund.

Democratic opponents of the measure said it provided an incentive for coastal states to break the offshore moratoria and support leasing and drilling.

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