The Senate narrowly defeated a Republican measure last Thursday that would have cleared the way for the exploration and production of natural gas off of Viginia’s shoreline. The vote underscored the Democrats’ unshakable stance against opeining up additional offshore regions to energy activity.
By 43-44, the Democratic-controlled Senate rejected an amendment offered by Sen. John Warner (R-VA) that would have permitted Virginia to petition the Interior Department for a waiver of the congressional moratorium, which has placed the West and East coasts off-limits to producers for 25 years. The measure, which was offered as part of the broad energy package (HR 6) being considered on the Senate floor, would have allowed exploration for natural gas to occur in waters at least 50 miles from Virginia’s coastline.
After being in effect for a quarter of a century, Warner said it was time for Congress to “reexamine [the] existing framework” of the moratorium in light of higher energy prices.
But Democrats and some Republicans, particularly those representing coastal states, feared that lifting the moratorium for Virginia could result in a “domino effect” that would eventually undo the entire congressional ban. “Any drilling on the Mid-Atlantic puts us on a slippery slope” to having oil rigs dot the entire coastline, argued Sen. Robert Menendez (D-NJ).
Warner countered that his amendment would only allow exploration for natural gas, not crude oil. But that did not win over any detractors. To say “we’re only going to drill for gas…is, in fact, rather ludicrous…There’s always the possibility that oil could be found,” said Menendez, who feared that the New Jersey coastline would be environmentally impacted by drilling off of Virginia’s shoreline.
Menendez sought to modify Warner’s amendment by requiring the Interior secretary to get the approvals of the governors of all the states within 100 miles of the coastal waters of Virginia before granting Virginia’s petition. This would be in addition to the approvals required by Warner’s measure of Virginia’s governor, the state’s General Assembly, Interior Department and the Department of Defense.
“Other states have been accorded this right [to explore and drill]. Why deny my state?” Warner asked his opponents. He noted that both Virginia Gov. Timothy Kaine and the state’s General Assembly have expressed “a measure of support” for natural gas exploration. Last year, the Virginia General Assembly passed legislation in support of natural gas exploration (see NGI, April 10, 2006).
In related action, Sens. Byron Dorgan (D-ND) and Larry Craig (R-ID) plan to offer an amendment possibly this week to the Senate energy package that would permit domestic producers to drill for oil and natural gas in U.S. and Cuban waters located as close as 45 miles from Florida.
The amendment contains much of the same language as is in the Security and Fuel Efficiency Energy Act of 2007, which the two lawmakers introduced in March, said Craig spokesman Dan Whiting (see NGI, March 19). It would seek to lift the 40-year-old embargo on companies doing business with Cuba, giving U.S.producers access to waters off the Florida coast that Cuba currently is leasing to producers in a number of other countries, such as China, Spain, Portugal and Canada.
It calls on Congress to open up more of the eastern Gulf of Mexico by lifting the federal moratoria boundary from 125 miles to within 45 miles of the Florida coast. The current 125-mile boundary was set in the Energy Policy Act, which was signed into law last year (see NGI, Dec. 25, 2006). The amendment faces significant opposition from Florida and other coastal state senators.
The Dorgan-Craig measure also would propose that an inventory be conducted of the oil and natural gas resources off the southeastern seaboard of the U.S. using the best available assessment technologies. The inventory would be contingent on the governors of the affected states — Virginia, North Carolina, South Carolina and Georgia — petitioning the Interior Department to remove any existing federal legislative or administrative prohibitions on such assessments.
The Senate Finance Committee last week unveiled a $13.7 billion package of energy tax incentives to be included in the energy legislation. The tax measure, which will be marked up on Tuesday, provides incentives to promote the development of clean and green power, alternative fuels and biofuels, coal resources and energy savings.
The tax package was viewed as a “clear and significant disappointment relative to the lofty plans of the wind and solar industry proponents who had hoped to secure substantially increased tax incentives for their industries,” said energy analyst Christine Tezak of the Standford Group Co.
“The overall Senate measure is very modest; indeed, it would cost $13.7 billion against raised revenue provisions that would provide $14.6 billion over 10 years. On the upside, electric transmission gets a modest boost, as do hybrid vehicles. Integrated gasification combined cycle gets a boost to its existing program, and other coal gasification (including coal-to-liquids) gets some money too, if the projects sequester at least 70% of the carbon dioxide produced,” she said.
The revenue raisers in the tax package “are coming out of the hide of the oil and gas industry, but not from the expected or feared sources and less than some anticipated,” Tezak noted. “The Senate has retained the House’s language to remove the oil and gas industry from the domestic manufacturing credit, but not the royalty ‘fix’ seen by many as a key opportunity to generate funds to spend on other programs.”
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