Alaska Provision Doesn't Make Cut into Formal OCS Bill

Senate GOP leaders formally introduced legislation last night to expand eastern Gulf of Mexico oil and gas drilling, minus language that would have provided Alaska a share of federal production revenues from leases off its coast. Debate and a vote is expected next week, sponsors said.

A draft of the plan in circulation this week had provided Alaska a major revenue share along with the Gulf Coast states. But the final version introduced last night does not include the Alaska funding, prompting Sen. Ted Stevens (R-Alaska) to say he will oppose the bill.

"He is going to go to the floor and object," said Stevens spokesman Aaron Saunders yesterday. "Alaska should be included in that revenue sharing. Alaska should have all the same rights as all the other states."

Stevens' opposition adds a new twist to delicate efforts to secure the 60 votes needed to overcome a possible filibuster of the bill when it is debated next week on the Senate floor. "In a situation where every vote counts, it further muddies the waters on anyone's vote count chart," said one industry lobbyist.

This source nonetheless believes supporters are likely to win passage of the measure next week, and Stevens also predicted to reporters yesterday that sponsors have enough votes for cloture, his spokesman said. Senate Minority Leader Harry Reid (D-Nev.), speaking before the bill was introduced, yesterday said he hopes to support it.

Environmentalists are hopeful they can block the bill with a coalition of lawmakers who oppose wider drilling and those who may be supportive of more gulf production but are nonetheless wary of sending billions in federal revenues from offshore production to gulf states. In a decade, Louisiana alone could begin receiving more than $650 million per year under the plan, Sen. Mary Landrieu's (D-La.) office said earlier this month.

Several questions remain heading into the floor debate. For one, some Democratic lawmakers have expressed concern that Senate Majority Leader Bill Frist (R-Tenn.) may block them from offering amendments. "We are hopeful that leadership will do the right thing and not deny senators the right to offer amendments," said Bill Wicker, a spokesman for Sen. Jeff Bingaman (D-N.M.), the ranking member of the Senate Energy Committee.

Wicker said Bingaman "has some amendments in mind" but did not provide further detail. An aide to Frist said the amendment picture was not clear last night.

Sources on and off the Hill say Sen. John Warner (R-Va.) is mulling an amendment that would expand offshore leasing beyond what is included in the new bill. He offered legislation earlier this year that would allow states -- notably Virginia -- to "opt-out" of offshore leasing bans and receive a share of offshore revenues (E&E Daily, Feb. 15). His office could not be reached for comment last night.

The Gulf Coast leasing bill introduced yesterday is sponsored by Frist, Landrieu, Sens. Pete Domenici (R-N.M.), Mitch McConnell (R-Ky.), and several other gulf state lawmakers.

Backers laud new energy production chances

The bill would open 8.3 million acres in the Gulf of Mexico to new leasing, sponsors said last night. This includes part of the Lease Sale 181 area, an eastern gulf tract coveted by industry that has largely been withheld from development but is not covered by formal offshore leasing bans.

It also includes a region south of the 181 area that is currently under federal leasing bans, which would be lifted for this tract under the bill. The combined area is estimated to contain 1.26 billion barrels of oil and 5.8 trillion cubic feet of gas, sponsors said. (click here to view a map of the area.)

Under the bill, the Interior Department must lease the 181 area within one year after enactment of the bill and sell leases in the "181 south" area as soon as "practicable."

"Moving toward energy independence is an important step to reducing high energy prices, but it can only be achieved if we work to bring more of America's energy to American consumers," Frist said in a statement last night.

The plan would provide the current gulf producing states -- Louisiana, Texas, Mississippi and Alabama -- 37.5 percent of revenues from leasing in the newly opened areas. Starting in fiscal year 2017, they will also get 37.5 percent of revenues from leases entered into after enactment of the bill in areas of the gulf where leasing is already authorized.

The bill also steers 12.5 percent of federal revenues from the newly opened areas to the stateside Land and Water Conservation Fund, and starting in fiscal 2017 also provides the fund 12.5 percent of revenues from leases entered into after enactment of the bill in currently available gulf areas.

There is a $500 million annual cap on federal spending from the leases in the current planning areas, according to Domenici's office.

The bill includes protections for Florida designed to win backing from that states' senators. It bars leasing east of the so-called military mission line -- about 235 miles from Tampa -- until mid-2022. It also creates a 125-mile buffer from Gulf of Mexico drilling for other parts of the Florida coast until mid-2022, although the buffer is only 100 miles for areas considered part of the "central" Gulf planning area.

Sen. Mel Martinez (R-Fla.) endorsed the plan last week when its outlines were announced. Less clear is the stance of his colleague, Sen. Bill Nelson (D-Fla.). Nelson last week offered cautious support for the Florida protections but stressed he needed to see details of the plan. Also, he is seeking assurances it will not be conferenced with much more sweeping House-passed offshore drilling legislation.

His office could not be reached for comment after the bill's formal introduction last night.

Related Items

To view the text of the new Gulf of Mexico Drilling bill before the Senate, click here.

To view a map of the drilling area outlined in the bill, click here.

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