The House late Tuesday overwhelmingly rejected a Republican amendment that would have lifted the congressional moratorium on natural gas-only drilling off the East and West Coasts.

The amendment, which was defeated by 196-233, was offered by gas drilling advocate Rep. John Peterson (R-PA) during debate on a $27.6 billion spending bill (HR 2643) for the Interior Department, Environment and Related Agencies in fiscal year 2008. A related amendment offered by Rep. Mike Conaway (R-TX) was rejected as well by 167-264. Early Wednesday evening, the house approved HR 2643 by a vote of 272-155.

The vote on the gas-only amendment came only hours after the House rejected by voice vote another amendment, also sponsored by Peterson, that sought to lift the 25-year-old ban on both oil and gas drilling 100 miles off U.S. coastlines (see Daily GPI, June 27).

Peterson’s amendments had the support of House lawmakers from Gulf Coast states, but were strongly opposed by Florida and California lawmakers. They argued that drilling off their coastlines would interfere with tourism and military operations. They further claimed that gas-only drilling was unrealistic, and that expanded offshore drilling — if approved by Congress — would not have any immediate impact on natural gas prices.

But Peterson countered that expanding gas exploration and production was an essential “bridge” to the future production of renewable fuels and ethanol. “It’s the bridge to our future…It is absolute insanity for America to starve itself of clean, green natural gas,” said Peterson in introducing his gas-only amendment, particularly when China is drilling 45 miles off the Florida Keys and Canada is drilling in the Great Lakes.

Conaway challenged the California and Florida opponents. “Those states who do not want this drilling off their shores [should] begin to commit today to eliminate their use of natural gas,” he said. “Just simply say, ‘OK, if we’re not going to drill it offshore, then we’re not going to use it.'”

Rep. Ginny Brown-Waite of Florida argued that Peterson’s gas-only amendment was a “bait and switch” with last year’s compromise legislation on offshore drilling. “That’s not what we agreed to, to do our share for energy production,” she said.

In December of last year, President Bush signed into law a bill that made 8.3 million acres in the Lease Sale 181 area in the eastern Gulf of Mexico and in a tract south of Lease Sale 181 available for oil and gas leasing. The bill also provided protections (a minimum of a 125-mile, no-drill buffer zone) for Florida. The House had supported a broader measure that would have opened more of the Outer Continental Shelf to leasing, but its leadership in the end agreed to a compromise with the Senate.

The White House has vowed to veto the House spending bill if a provision requiring producers to renegotiate their flawed 1998-1999 oil and gas leases is not struck. The $27.6 billion appropriations bill exceeds the spending level sought by Bush by approximately $2 billion.

The Interior Department omitted price thresholds in the 1998-1999 deepwater leases, which has allowed the holders of the leases to avoid paying royalties on their production. The House provision would bar the leaseholders from bidding on future government tracts until they renegotiate these leases (see Daily GPI, June 8).

The Senate Appropriations Committee last week struck a similar provision from a fiscal year 2008 spending bill for the Interior Department and Related Agencies (see Daily GPI, June 20).

The critical price thresholds serve as a benchmark to determine when oil and gas production becomes subject to federal royalties. Without them, producers who negotiated leases in 1998 and 1999 have been able to escape paying royalties on production up to a specific volume limit. The price caps were included in leases that were negotiated in 1996, 1997 and 2000, but were not in the 1998 and 1999 leases due to an oversight on the part of Interior officials.

According to a report earlier this year by the Government Accountability Office, between $6.4 billion and $9.8 billion in royalties could be lost to the federal government as a result of missing price thresholds in the 1998-1999 deepwater leases (see Daily GPI, April 16).

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