offshore drilling battle looms

Offshore drilling battle looms
Senate set to vote on expanding Gulf oil and gas production, but measure falls far short of House proposal.
by Steve Hargreaves, CNNMoney.com staff writer
July 28 2006: 2:33 PM EDT


NEW YORK (CNNMoney.com) -- The Senate is set to vote Monday to expand oil and gas drilling in the Gulf of Mexico, setting up a possible battle with the House of Representatives which wants to allow drilling off the entire continental shelf.

The Senate bill, sponsored by Sen. Pete Domenici, (R-NM) and having bi-partisan support, would open up for drilling areas in the eastern Gulf of Mexico that are estimated to contain about 2 billion barrels of oil.


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The bill is much more narrow than a House bill passed last month, which would allow allow drilling off the costs of all 50 states, although states could ban drilling in the first 100 miles from shore if they so choose.

It's estimated that the House bill would unlock the equivalent of about 34 billion barrels of oil for production, according to the U.S. Interior Department. The U.S. uses what amounts to about 11 billion barrels of oil and natural gas each year, according to the Energy Information Administration.

The Senate bill, like its House counterpart, has been criticized by environmentalists.

"We're not going to see a real energy debate here at all. This is just another drill bill," said Karen Wayland, legislative director for Natural Resources Defense Council. Unfortunately, she added, the Senate will probably have to vote on the legislation as it stands. "There no chance for them to fix this bill or offer and amendments that would decrease our dependency on oil, like increasing the fuel efficiency of our cars."

If the Senate bill passes, which it's expected to do, a compromise would need be hammered out with the House. No one expects that process to be easy.

The Senate version was able to gain widespread support after several deals.

One was a provision to ban drilling within 125 miles of Florida's coast, a provision to win support from tourism concerns in the state.

Another was a pledge by both Republican and Democratic Senate negotiators on the legislation that they would do their best to return to the Senate with a bill essentially unmodified by the House.

But a House staffer said fat chance of that.

"Somebody needs to roll a copy of 'How a Bill becomes a Law' over to the Senate for a refresher course," said Brian Kennedy, a spokesman for the Republican side of the House's Committee on Resources.

Kennedy said House members would try to substantially change the bill, as the scope of the Senate measure was too small to provide any meaningful relief in terms of bringing down gas and electric bills.

He also said that, as part of a deal signed under the Clinton administration but postponed by the Bush administration, most the areas the Senate is proposing to open are due to open next year anyway.

How tough House members actually are when it comes time to negotiate is a matter of debate.

"Lots of posturing happens going into conference," said Marnie Funk, a staffer on the Republican side of the Senate's Committee on Energy and Natural Resources. "But when they know what has to happen for it to pass, people tend to get pretty reasonable."

Funk also disputed Kennedy's claim that the areas in question will open next year, regardless of the Senate bill, pointing to the fact that their opening was already delayed once.

Both the Senate and House versions have drawn fire from Republican and Democrat legislators for provisions that share oil and gas revenue with the coastal states.

Currently all royalties from drilling in federal waters, which extend from 3 to 200 miles offshore, go to to Washington.

And other legislators and environmental groups have criticized expanding offshore oil drilling, saying it takes the focus off conservation measures and needlessly opens up sensitive coastal ecosystems and tourism-dependant economies to pollution and visual blight.

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