U.S. Senate Scrambles for Deal on Expanding Lease Areas

U.S. Senate leaders are still looking for an agreement to expand Gulf of Mexico oil and gas drilling, even as floor time grows more and more scarce the closer Congress gets to the midterm election.

On Friday, an aide to Senate Majority Leader Bill Frist (R-Tenn.) said the leader hopes to bring a measure to the floor that would require new exploration in the eastern gulf's Lease Sale 181 area. The aide said there has been good progress in talks on the issue but added there is no floor date yet.

Sen. Mary Landrieu (D-La.) recently said lawmakers from four Gulf Coast states -- Louisiana, Alabama, Mississippi and Texas -- have reached an agreement with Senate leaders on sharing federal revenues from gulf production (E&E Daily, June 30). Yet Florida's senators are calling for a wider no-drilling "buffer" than current Senate leasing proposals allow. Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-N.M.) issued a statement June 30 cautioning that a deal has not yet been finalized on a Gulf Coast drilling plan but added he is optimistic the Senate can pass a bill this month.

Legislation sponsored by Domenici and committee ranking member Jeff Bingaman (D-N.M.) would open at least 2.9 million acres of the 181 area. It is an eastern gulf tract rich in natural gas coveted by industry that is not covered by offshore leasing bans yet has been largely withheld from development.

Landrieu said the revised plan that includes revenue sharing -- a concept Bingaman opposes -- would open just 1.7 million acres of the 181 area but would also open a deep water area to the south that is currently under moratoria. Total acreage available under the plan would be 8 million acres, her office said.

Industry concerns

Some energy interests appear concerned with plans that would open less of the 181 area than the Domenici-Bingaman bill envisions. Dan Naatz of the Independent Petroleum Association of America said offering less of the 181 area would remove significant gas development potential.

Naatz, the group's vice president for federal resources, also said the area south of 181 -- which has become colloquially called the "182" area -- is very deep water and not as attractive to some of the independent companies as the 181 area itself. "It is not a straight-up trade," he said.

An industry source familiar with the goals of larger companies, meanwhile, said opening the "182" area is a good idea but that it should not be accompanied by new restrictions on the 181 region.

The House passed a far more sweeping offshore drilling plan late last month that lifts current coastal leasing bans that now cover nearly all of the East and West coasts, and much of the eastern Gulf Coast. The House-passed bill allows drilling anywhere beyond 100 miles from state coasts, while giving states discretion to block or allow leasing closer to shore.

Domenici's statement in late June said he is optimistic about "potentially" going to conference with the House bill.

Copyright 2006 Greenwire. All Rights Reserved. Visit E&E Publishing for a free trial.

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