ANWR Efforts in Doubt While Gas Users Eye OCS

House budget votes expected late this week could determine whether this year's Arctic drilling battle continues, while industrial natural gas users are pushing hard to keep another major supply issue -- wider offshore leasing -- alive in this Congress.

House leaders plan floor action on the $2.8 trillion budget resolution before the upcoming Easter recess. The blueprint that cleared the House Budget Committee last week does not contain language aimed at paving the way to allowing Arctic National Wildlife Refuge oil and gas leasing.

But the Senate blueprint passed last month does, so floor passage of the House measure is essential to keep this year's ANWR effort alive, because drilling advocates are holding out hope they might address the matter in a House-Senate budget conference (E&E Daily, March 30).

The Senate budget contains a $3 billion reconciliation instruction to the Senate Energy and Natural Resources Committee, which committee Chairman Pete Domenici (R-N.M.) plans to raise with projected ANWR leasing revenues. In contrast, the House blueprint contains no parallel reconciliation instruction to the House Resources Committee.

Under the spending reconciliation process, which follows the budget resolution, committees seek mandatory spending cuts and new revenues from programs in their jurisdiction.

To keep the ANWR issue alive for conference, the House blueprint must first clear the floor. To do so, House leaders must balance concerns among moderates who feel the $873 billion domestic spending cap will harm health and education programs with demands of fiscal conservatives who favor tougher spending curbs.

Last year, anti-drilling House GOP moderates forced leadership to jettison ANWR from a $39 billion spending reconciliation package after pledging to vote against it if leasing remained. The moderates had key leverage because every Democrat -- including the 30 or so that back drilling -- unified against GOP budget plans.

Even if the House blueprint passes the floor this week, one key Senate lawmaker says ANWR faces the same hurdles. "It seems to be going the same way it was last year," said Sen. Jeff Bingaman (D-N.M.) on Friday. "The chances are substantially less than 50-50 they will get it done."

Use of the budget process is essential for lawmakers who back drilling, because budget measures are immune from Senate filibuster. Drilling supporters currently have a slim Senate majority but are well short of the 60 votes needed to cut off debate.

OCS pressure builds

While ANWR is floundering, industry is increasing its efforts to address the other major domestic supply issue alive in this election-shortened session: expanded oil and gas leasing on the outer continental shelf.

Industrial users of natural gas are pouring resources into a new coalition -- called the Consumer Alliance for Energy Security -- to push for Senate legislation that would open the Gulf of Mexico's coveted Lease Sale 181 area. The coalition also backs more agressive plans that would let coastal states "opt-out" of OCS leasing bans and receive a share of development revenues.

The National Association of Manufacturers, American Chemistry Council, the American Forest and Paper Association and the Agriculture/Energy Alliance, which represents agribusiness, recently brought the group together. It represents a broadening of efforts by chemical and other companies that use natural gas as a feedstock to win new offshore leasing.

The new effort broadens and re-brands an earlier coalition called Consumer Alliance for Affordable Natural Gas that brought together chemical and other companies to push for new access. Industrial users say high natural prices will force investment in new plants and other manufacturing toward countries where the fuel is cheaper.

"Despite record-level demand and prices, federal policies continue to drastically restrict exploration and development, drastically limit supply of domestic natural gas," said NAM President John Engler in a speech last week to the Economic Club of Pittsburgh. "And remember, natural gas is by and large a regional market –- unlike oil, we cannot ship in additional supplies from the Middle East or Russia to meet growing demand."

The new coalition plans to hold a press briefing this week to publicize the issue. It has also brought on the Crosslink Strategy Group, which specializes in efforts to apply "grassroots" pressure on lawmakers -- the group "is founded on the modern day reality that political power is derived in the home states and districts of federal and state officials," according to its Web site. The company has deep GOP connections.

Domenici and Bingaman -- cosponsors of S. 2253, which would open the 181 area -- are trying to secure floor time for the measure. "We are trying to light a fire over in the Senate to get this on the floor in May," said a lobbyist involved in effort to expand OCS access.

But barriers remain, including a threatened filibuster from Sen Bill Nelson (D-Fla.), who opposes allowing leasing any closer to Florida's shores.

Sen. Mary Landrieu (D-La.) and other Gulf Coast senators who support offshore develop are seeking state revenue-sharing from OCS production, which Bingaman opposes. While continuing to press ahead with legislation to allow revenue-sharing, Landrieu has indicated in recent weeks she could support a compromise on the 181 measure that steers additional revenue to Gulf Coast restoration even without a formal revenue-share.

The 181 bill would allow leasing in as much as 3.6 million acres of the 181 area but does not call for leasing within 100 miles of Florida's shores. Bingaman said last week that securing floor time in the shortened session will depend on winning agreement from other lawmakers for a "discrete" 181 bill, meaning one that does not address a host of other issues that could generate a sprawling and time-consuming floor fight.

One industry observer says securing floor time from Senate Majority Leader Bill Frist (R-Tenn.) for the 181 measure will depend on Senate backers' ability to corral enough backing to limit debate. "The biggest issue for the Senate advocates of that is to figure out what they need to do with revenue-sharing or something else to make sure they have enough votes for cloture to fend off adverse amendments," said Lee Fuller, vice president for government relations with the Independent Petroleum Association of America.

"If they can get a commitment of floor time from Frist, it is going to be in the context of 'we can get this done in a reasonable window,'" he added.

Broader offshore leasing bills introduced in this Congress include an "opt-out" measure, S. 2290, backed by Sens. Mark Pryor (D-Ark.) and John Warner (R-Va.) that also includes revenue-sharing, and a House opt-out and revenue-sharing measure by Rep. Bobby Jindal (R-La.). The measures are similar to plans offered last year by House Resources Committee Chairman Richard Pombo (R-Calif.).

Pombo's committee office has said he wants to address OCS access again this year but his precise plans are not clear. "The chairman has not yet determined when -- or in what form -- OCS legislation will be considered by the committee," Pombo aide Brian Kennedy said in an email exchange last week. House leaders have said they want to have an energy package on the floor in the late spring or early summer, but details have not emerged.

Also, Rep. John Peterson (R-Pa.) has over 140 supporters on a more sweeping bill to lift offshore leasing bans for natural gas to within 20 miles of state coasts. However, several observers have said in recent months that congressional passage this year of broad offshore legislation -- in contrast to the more targeted approach focusing on the 181 area -- is a longshot.

The 181 area has been largely withheld from leasing but is not part of the formal congressional and executive branch offshore oil and gas development bans that cover both coasts, most of the eastern gulf and part of Alaska.

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