New York Times: Bill Allowing More Drilling Along Coasts Appears Dead

EXTRACT: Industry officials said the lobbying campaign began weeks ago when it became clear that Democrats had a good chance of taking the House. “I would hope that the House could appreciate what is possible and try to help move forward for the American people,” John Hofmeister, president of Shell Oil, said in an interview. “Let’s get a bill cleared that the president can sign.”

THE ARTICLE

November 11, 2006
By CLIFFORD KRAUSS

HOUSTON, Nov. 9 — Just a few months ago House Republicans and representatives of the energy industry were poised to rewrite a quarter-century of national energy policy and open the seas off the Atlantic and Pacific coasts to oil and gas drilling, which environmentalists had fervently resisted.

But Tuesday’s Democratic victory in midterm elections has changed the legislative landscape, obliterating the chances that anything close to the aggressive drilling bill passed by the House of Representatives will be enacted for years to come.

Now, with the Democrats’ mid-term election victory, the proponents of drilling off the nation’s beaches are reluctantly jockeying to settle for a small patch of new offshore exploration allowed in a competing and more modest Senate drilling bill. “I don’t want to end up having no progress,” said Representative John E. Peterson, a Pennsylvania Republican who is a leading proponent for expanded offshore drilling. “Something is better than nothing.”

He added, “With Nancy Pelosi as speaker it will be difficult to talk about producing in the outer continental shelf.”

Dave Parker, president of the American Gas Association, which represents utilities, said: “It’s a matter of being pragmatic. The Republicans who had thought they would retain control basically now have one option, which is to accept the Senate-passed version.”

The Senate bill opens to bidding 8.3 million acres of federal waters in the Gulf of Mexico. The waters, south of the Florida Panhandle and 235 miles west of Tampa, are thought to hold 5.8 trillion cubic feet of natural gas and 1.3 billion barrels of crude oil.

Exxon Mobil, Shell, BP, ConocoPhillips and many independents are expected to make bids in the area, known as Lease Area 181, which is attractive because it is relatively shallow and close to pipelines and other infrastructure built previously.

Many lawmakers and energy industry officials had expressed little enthusiasm for the Senate bill before the election. They said it was too limited because it would produce, at most, only the equivalent of two months of domestic demand for oil, along with enough gas to cool and heat six million homes for 15 years.

Unlike the House version, the Senate bill would prohibit drilling over a far greater area, in particular a section 125 miles off most of Florida’s west coast.

The House bill, passed in June, would virtually eliminate a federal moratorium on drilling on most of the outer continental shelf off the Atlantic and Pacific coasts that has been in place since 1982. In the summer, energy industry leaders were in strong support of the House bill.

Industry officials said drilling off the two coasts would add enormous amounts of oil and gas to the national inventory over many years, though the exact amounts are not known.

Brian J. Kennedy, deputy chief of staff for the House Committee on Resources, conceded that there was now no chance of expanding offshore drilling at anything close to what the House had hoped for, but he expressed hope that a law could be enacted in the lame-duck session.

Speaking of Representative Richard W. Pombo of California, chairman of the Resources Committee and chief backer of the House bill, Mr. Kennedy added, “The chairman wants a bill and he’ll do everything he can to make sure we get a bill.” Mr. Pombo lost his re-election bid.

Mr. Kennedy said Senate and House leaders had already agreed to some compromises, a provision to recover up to $13 billion in lost revenue from energy companies and a set-aside of some future energy production revenue for rural schools.

Some Senate Republicans would like to amend the Senate bill to give Virginia an option to opt out of the moratorium, according to Congressional sources. But it remains doubtful Senate Democratic leaders would go along with such a version.

Before the midterm election was tallied, lobbyists for energy and manufacturing companies switched tack and began pressing Congressional leaders and the White House to enact the Senate bill passed in August and discard most if not all of the far more ambitious House bill.

Industry officials said the lobbying campaign began weeks ago when it became clear that Democrats had a good chance of taking the House. “I would hope that the House could appreciate what is possible and try to help move forward for the American people,” John Hofmeister, president of Shell Oil, said in an interview. “Let’s get a bill cleared that the president can sign.”

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