The Senate Energy and Natural Resources Committee has scheduled an Oct. 19 mark-up of a budget reconciliation package for fiscal year 2006 that would authorize exploration and production in the Arctic National Wildlife Refuge (ANWR).

The committee’s reconciliation package assumes that leasing in Alaska’s ANWR would produce $2.4 billion in revenue over five years. It will be melded with budget-trimming proposals from other congressional committees into an omnibus budget bill that seeks to cut net spending outlays of the federal government in fiscal year 2006.

The Senate Budget Committee earlier this year instructed the Senate Energy Committee, which has jurisdiction over ANWR, to come up with a way to increase federal revenues by $2.4 billion. Energy Committee Chairman Pete Domenici (R-NM) supports removing the statutory prohibition against oil and natural gas drilling on the coastal plain of ANWR as the best way to achieve the gain.

Opening ANWR, which has been the target of a more than decade-long fight in Congress, may have a shot of being passed as part of the budget reconciliation process, given that a budget package can’t be filibustered under Senate rules. Pro-ANWR Senate forces won’t have to muster the necessary 60 votes to overcome a filibuster by anti-ANWR lawmakers. Instead, the budget measure will require only a simple majority vote (51) to pass.

Domenici also is considering addressing another hot-potato issue in the budget reconciliation package — opening up more of the federal Outer Continental Shelf (OCS) to oil and gas drilling, according to Capitol Hill aides. He believes the Senate needs to do more in this area, particularly in the wake of Hurricanes Katrina and Rita, which exposed the vulnerabilities of the concentrated Gulf energy infrastructure.

Since returning from its August recess, the Senate has postponed work on the budget reconciliation process several times. If this occurs again, then the Senate energy panel would likely delay its mark-up, said Bill Wicker, spokesman for Sen. Jeff Bingaman of New Mexico, the ranking Democrat on the committee. The current deadline for the Senate to complete work on the reconciliation package is Oct. 26.

On the House side, Rep. Richard Pombo (R-CA), chairman of the House Resources Committee, also is looking to include language on ANWR and possibly the OCS in his panel’s budget reconciliation proposal (see Daily GPI, Oct. 4). Last week Pombo’s committee voted out a bill that would open ANWR and more of the OCS, but he has decided to delay taking it to the House floor in an effort to work out a deal with Florida lawmakers, who have opposed any relaxation of the OCS moratorium.

“Virginia and Georgia are interested in allowing oil and gas exploration off their coasts and South Carolina is interested in opting out of the moratoria and allowing natural gas drilling. Florida, however, remains steadfastly opposed to changes in the OCS moratoria that could result in drilling closer than 100 miles off its coastline. If the deal under negotiation to allow states to opt out of the current moratoria gets sorted out in the Senate, we may see it gain some traction in that chamber. If Florida can get comfortable, Virginia, Georgia and South Carolina may get their opportunity to participate in the royalty programs that are available to producing states,” says energy policy analyst Christine Tezak with Stanford Washington Research Group.

It’s unclear if the reliability power alerts that have been called in Florida daily throughout the Katrina-Rita crisis because of the loss of natural gas from the Gulf, which is used to fire 35% of the power generation in the state, will have any impact on negotiations.

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