The House Resources Committee on Monday introduced a compromise bill that would open up heretofore closed portions of the Outer Continental Shelf (OCS) to oil and gas drilling and would give states a greater share of the royalty pie from offshore production.

The measure, the “Deep Ocean Energy Resources Act (DOER),” is a hybrid of two bills sponsored by Reps. John Peterson (R-PA) and Bobby Jindal (R-LA). “The DOER Act is …the most comprehensive, balanced and forward-thinking approach proposed to date,” said House Resources Committee Chairman Richard Pombo (R-CA). The panel plans to mark up the bill on Wednesday.

The bill would make permanent the executive moratorium on oil and gas leasing within 50 miles of a coastline and would make the congressional moratorium that is renewed annually “moot.” The executive moratorium currently is set to expire in 2012. A state could opt out of the executive moratorium with the approval of their legislature and agreement of the governor.

In waters between 50 miles and 100 miles offshore, states would be given one year from enactment of the bill to permit or deny natural gas leasing, and until June 30, 2009 to allow or prohibit oil leasing activities. The bill also would establish a buffer zone barring oil and gas leasing to address the concerns of neighboring states who do not support drilling.

As in the Jindal bill, the House Resources’ measure calls for the federal government to share with states 75% of the OCS revenues on production within 12 miles of the coastline and share 50% of OCS revenues from production beyond the 12-mile point.

Johnnie Burton, director of the Interior Department’s Minerals Management Service (MMS), said last week that the Bush administration has concerns about federal-state sharing of royalties on production in existing fields (see Daily GPI, June 15). She said the administration was more interested in talking about revenue-sharing “in the context of new [production] areas.”

But the committee believes it can win the support of the Bush administration with the inclusion of language that would grant the Interior secretary authority to renegotiate with willing companies those leases issued in 1998 and 1999 that omitted price thresholds and consequently are costing the federal government billions of dollars.

“It will correct the Clinton administration error” that excluded price thresholds in leases, which has cost the federal government $10-11 billion, said committee spokesman Brian Kennedy. The bill “will help mitigate some of their concerns” about sharing of OCS royalties because it will seek to stem the loss of revenues from the 1998 and 1999 leases, he noted.

If the holders of the 576 leases that do not have price thresholds refuse to renegotiate, the bill proposes that a new “Conservation of Resources” fee be imposed on each unit of their production of oil and gas. The measure further mandates that price thresholds be include in all future leases, “so as to avoid this costly mistake from happening again.”

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