UPDATE: Senate Leaders Cut Deal on Gulf Coast Development

Senate Majority Leader Bill Frist (R-Tenn.) today said he intends to find floor time this month for legislation that represents a negotiated settlement among key Senate figures to expand Gulf of Mexico oil and gas leasing while steering offshore production revenues to Gulf Coast states.

Crucially, the deal would give Florida a 125-mile no-drilling buffer zone in many areas through the year 2022. The agreement also opens the eastern Gulf Coast's Lease Sale 181 area and a deepwater tract to its south. It also requires the Interior Department to share gulf production revenues with Louisiana, Texas, Alabama and Mississippi. Sen. Mary Landrieu (D-La.) announced an agreement on the revenue sharing issue late last month (E&E Daily, June 29)

The Florida coastal provisions were added to win the agreement of Sen. Mel Martinez (R-Fla.), who appeared at a press conference today announcing the deal along with Frist and Sen. Pete Domenici (R-N.M.), chairman of the Senate Energy and Natural Resources Committee, among others.

Another key figure, Florida Sen. Bill Nelson (D), provided conditional support for the measure. "The devil is in the details," Nelson said. "If it is as it has been described to me, it is very promising."

Domenici said the deal would provide access to over 1.1 billion barrels of oil and over 5 trillion cubic feet of natural gas. But the revenue sharing language represents a break with Domenici's ranking member, Sen. Jeff Bingaman (D-N.M.), who opposes revenue sharing with coastal producing states.

The two had introduced a measure together early this year to open at least 2.9 million acres of the Lease Sale 181 area -- a bill that did not include a revenue component. Bingaman's spokesman today said the new drilling agreement marks a return of Republicans freezing out Democrats when shaping energy policy, in contrast to the bipartisan drafting of last year's comprehensive energy bill.

"We have not been consulted on any of this," Bingaman spokesman Bill Wicker said today. "It is kind of like going back to the old way of doing business."

The Senate drilling measure is sharply different than offshore drilling legislation the House passed last month. The House bill ends current drilling bans that apply to most coastal areas, replacing them with a system that allows drilling anywhere beyond 100 miles from states shores. The House bill would also provide states discretion to maintain or remove protections within 100 miles.

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