House Resources Panel's Budget Promotes Gas-Directed OCS Drilling, ANWR

The House Resources Committee on Monday released draft budget reconciliation language that would permit interested coastal states to engage in natural gas-preferential leasing in federal waters off their shorelines and would authorize oil and gas drilling in the Arctic National Wildlife Refuge (ANWR).

The committee, chaired by Rep. Richard Pombo (R-CA), is expected to approve these and other proposed energy-related provisions on Wednesday as part of its 184-page budget reconciliation package, which will be forwarded to the House Budget Committee and potentially combined with budget measures from other committees before going to the House floor for a vote.

This would mark the second time in less than a month that the House Resources panel has voted out legislation to promote exploration and production in ANWR and expand access to the Outer Continental Shelf (see Daily GPI, Sept. 29). The committee took its first action on Sept. 28, but Pombo kept the bill from going to the House floor while he tried to reach a compromise on the OCS provisions with the Florida House delegation and state Gov. Jeb Bush.

The House draft measure also comes one week after the Senate Energy and Natural Resources Committee approved leasing on the coastal plain of Alaska's ANWR as part of its budget reconciliation package, but decided to forego tackling the OCS issue (see Daily GPI, Oct. 20). Committee Chairman Pete V. Domenici (R-NM) said last week he did not think there was enough momentum in Congress to address the OCS issue this year even in the wake of the twin hurricanes, which have caused more than 342 Bcf of production in the Gulf of Mexico to be lost since late August (see Daily GPI, Oct. 19).

However, Domenici said he would continue to press President Bush to exercise his authority to open up a portion of the gas-rich eastern Gulf of Mexico to production activity. The non-leased portion of Lease 181 in the Eastern Gulf that is now under moratorium holds approximately 6 Tcf of natural gas more than 100 miles from any coastline, he said.

The House side apparently has not given up on the OCS issue this year. "In the House, we've seen a lot of support" to do something on energy prices, a House Resources Committee aide said. There is "growing support" for Pombo's OCS proposal, which would give coastal states two options: either opt out of the moratorium on OCS drilling and allow gas production off their shores, or extend the moratorium past the 2012 expiration deadline for their individual state, the aide noted.

It "remains to be seen" whether Pombo's OCS language will garner any support in the Senate, said another House Resources spokesman. "Right now, we've got to keep our heads down and work on the House...[But I think] the more this language is understood, the better our chances are in the Senate."

Specifically, Pombo's proposed budget measure calls for the secretary of the Department of Interior to publish by Oct. 1, 2006 final regulations that establish procedures for interested coastal states to enter into natural gas leases with producers. Natural gas-only leases would be available on the day after enactment of the measure for those "tracts on the Outer Continental Shelf that are wholly within 125 miles of the coastline [and are] within an area" withdrawn from existing moratorium, according to the OCS section of Pombo's budget package, known as the Ocean State Options Act of 2005.

It would allow lessees of natural gas-specific leases to produce crude oil from the leases only if they receive the approval of the governor and legislature of an adjacent state.

The measure bars Interior from conducting oil and gas, or just natural gas, leasing in any area covered by existing moratoria in the Atlantic OCS Region, Pacific OCS Region and the Gulf of Mexico Eastern Planning Area prior to the expiration of the congressional OCS moratorium on June 30, 2012. The current congressional OCS moratorium is renewed each year by Congress in the appropriations process, but Pombo's bill would extend that moratorium until June 2012.

The House budget package also would amend Interior Department's 2002-2007 leasing program to include two sales in the gas-rich Lease 181 region of the state of Alabama's zone, beginning in January 2007. It would allow for natural gas activity to occur more than 25 miles from Florida and oil activity to occur more than 50 miles from the Sunshine State, provided Alabama receives Florida's approval.

On the ANWR front, the House Resources Committee proposes that the first lease sale in ANWR be completed within 18 months after enactment of the budget reconciliation package. It further would require the revenues from leasing and other activities to be evenly divided between Alaska and the federal treasury.

The House budget package also seeks to promote oil shale and tar sands activity in western states. It would require Interior to hold the first oil shale and tar sands lease sales one year after publication of a final regulation, "offering for lease a minimum of 35% of federal lands that are geologically prospective for oil shale and tar sands within Colorado, Utah and Wyoming."

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