A compromise under negotiation on offshore drilling between House Resources Committee Chairman Richard W. Pombo, R-CA, and Florida politicians could result in the leasing and drilling in about 70% of the eastern Gulf of Mexico area off the Florida coast that is expected to contain huge reserves.

The deal would allow individual states to decide whether to allow drilling (and collect royalties) off their coasts, but it would enforce a federal ban on drilling up to 125 miles from the Florida coastline. As it is being crafted, the legislation could free up a good part of the area believed to hold up to 2.9 Tcf and 396 billion barrels of oil, a Pombo aide said. The area originally had been included in Lease Sale 181 in the Eastern Gulf, which was held in 2001.

Following an outcry and political pressure from Florida politicians, that sale was reduced by Interior Secretary Gale Norton from 5.9 million acres to 1.5 million acres, denying access to about two-thirds of the area’s potential (see Daily GPI, July 3, 2001). The area actually leased was estimated to contain 1.25 Tcf of commercially recoverable (by 2001 price standards) natural gas and 185 million barrels of oil. The restricted Lease Sale 181 brought the federal government $341 million in high bids (see Daily GPI, Dec. 6, 2001).

Shell was the high bidder on the deepwater tracts in 2001, winning 28 bids for $110 million. Other high bidders included Anadarko, Kerr-McGee, Amerada Hess, Spinnaker, Dominion, Petrobas, Murphy and EOG.

The new agreement under construction would allow leasing of more, but not all, of the original Lease Sale 181 area.

Reportedly the deal being crafted by Pombo also would include drawing a line offshore between Alabama and Florida, with no drilling for oil allowed for 50 miles on the Alabama side and no drilling for natural gas for 25 miles on the Alabama side. In contentious debates over the lease sale in 2001 an Alabama congressman had threatened to hold up construction of the Alabama to Florida Gulfstream Pipeline, if leasing was not allowed offshore Alabama.

Florida Gov. Jeb Bush, long an outspoken opponent of drilling anywhere near Florida, sent a letter to Pombo last week commending him on portions of his OCS bill that would allow states to decide whether to permit drilling. Bush said he appreciated Pombo’s efforts “to codify the presidential withdrawal of the waters around Florida [from leasing], which would include the newly-defined Florida Adjacent Zone, the newly defined Straits of Florida planning area and the portion of Lease Sale 181 within 100 miles of the coast of Florida.”

The bill would allow Florida to extend the ban on “new drilling within 125 miles off Florida’s coast and 100 miles off the coast of Alabama in the area commonly known as the ‘stovepipe'” beyond 2012 when the federal drilling moratorium of all OCS territories expires,” Bush said. The governor, however, continues to oppose a new resources inventory of the OCS, particularly off the Florida coast, and said the issue of pre-existing leases off Florida (from 1941) has not been addressed.

Most members of the Congress from Florida have yet to look favorably on the proposed legislation. A Pombo aide said the two sides were “moving closer to consensus,” and the result might surface the week of Oct. 17.

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