Offshore oil and natural gas producers received an unexpected Christmas gift in the stopgap funding measure signed by President Obama — it excludes a provision that would have extended the federal review period of new offshore drilling plans to 90 days from 30 days. It also provided additional funding to the states for low-income energy customers.

Both Sens. Mary Landrieu (D-LA) and Lisa Murkowski (R-AK) objected to the extension, saying it would further delay the permitting process for offshore oil and gas development that has been stalled since the explosion aboard the Deepwater Horizon last April (see NGI, April 26, 2010). The Obama administration imposed a moratorium on deepwater drilling in the Gulf of Mexico (GOM) following the fatal disaster, and removed it in mid-October. But activity in the GOM remains at a standstill.

The stopgap spending measure funds the federal government until March 4.

The two senators expressed their opposition to the proposed extension in a letter last month to Sen. Dianne Feinstein (D-CA), chairwoman of the Senate Appropriations Subcommittee on Interior, and Sen. Lamar Alexander of Tennessee, the ranking Republican on the panel. “It has now been eight months since the Deepwater Horizon accident and our nation’s offshore oil and gas industry is still reeling from the economic impact of the moratorium and now the de facto moratorium that has taken its place. Adding more time to the clock will only serve to further delay a process that needs to be accelerated,” they wrote.

The Interior Department’s Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) “has not approved one exploration plan in the past six months, despite several permits pending since June 8 — this exceeds the statutory length of review time by over 150 days. We cannot in good conscience legitimize this inexcusable delay by codifying it in an appropriations bill while offshore workers and their families continue to suffer,” Landrieu and Murkowski said.

A Senate omnibus spending measure, which was shelved by Republicans, would have extended the review period to 90 days.

The exclusion of the extension in the stopgap spending measure makes it much less likely that a change to the federal review period will make its way into law, given that Republicans, who criticized the Obama administration’s response to the GOM oil spill, will control the House when the next funding measure is written, CQ reported.

The spending measure also provides more funding for offshore regulatory programs, specifically for BOEM-related reorganization and to implement new regulations for the offshore, said Lee Fuller, vice president of government relations at the Independent Petroleum Association of America.

In addition, the short-term spending measure provides additional funding to states for low-income energy customers.

The Senate was first to pass the continuing resolutions (CR), which authorizes the funding for the Low Income Heating Energy Assistance Program (LIHEAP) at $5.1 billion in fiscal year (FY) 2011. The House followed suit and sent the bill to the president to avert a shutdown of the federal government.

So far the federal government has been funded by CRs in FY 2011, and as a result states have been forced to operate at a lower LIHEAP level of $3.3 billion, said the American Gas Association (AGA), which represents natural gas utilities. The latest CR directs the Department of Health and Human Services to allocate the same amount of funding that was provided during this time in FY 2010 when LIHEAP was funded at $5.1 billion.

Although this is not a guarantee that LIHEAP will be fully funded at $5.1 billion for FY 2011, it does mean that funding for the LIHEAP program will be greater than the $3.3 billion in funding for the states, the AGA said.

“The inability of Congress to pass a budget for FY2011 has been disastrous for LIHEAP, especially at this point in the year when the temperatures have dropped significantly,” said AGA CEO David Parker. “Without this critical funding, more than three million low-income householders — nearly eight million Americans — could lose access to LIHEAP.”

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