House Appropriations Panel Rejects Expanding OCS Gas Drilling

WASHINGTON, Jun 8, 2007 (Dow Jones Newswires)

The U.S. House Appropriations Committee Thursday rejected a proposal that would open up more of the U.S.'s Outer Continental Shelf to natural gas exploration and development.

By a vote of 39 to 25, the panel voted down an amendment by Rep. John Peterson, R-Penn., to end the moratorium on drilling for natural gas exploration beyond 25 miles off the coasts of the United States.

Peterson said the proposal was "about supplying jobs, heating homes, and about securing our energy future ... with clean, green natural gas."

Peterson is one of the principal figures who've consistently led the drive to open up more of the OCS to oil and gas exploration. Late last year, Congress passed a compromised drilling bill that opened up some areas offshore to exploration, but maintained the presidential moratorium for drilling off much of the OCS out to 50 miles offshore.

The oil and gas industry, as well as manufacturers and energy-intensive consumers, warn that dwindling domestic natural gas supplies, rising demand and subsequent high prices only spell higher prices ahead if production isn't expanded. That, they say, will impact their competitiveness internationally, and force businesses to leave to more energy cheap regions such as the Middle East.

The amendment was voted down, however, over environmental and fishing concerns, as well as warnings that naval exercises would be impeded.

Industry leaders and analysts warn, however, that climate change legislation under consideration in Congress could force utilities to move away from coal-fired power plants to gas-fired plants, pressuring demand - and prices - up even further.

Peterson said reliance on Alaskan natural gas - where some of the country's largest reserves remain - was foolhardy as it remained stranded until a pipeline is built. A proposed pipeline to the lower 48 states, however, has met consistent obstacles to development, and many don't expect it to be built for decades.

Separately, Rep. Maurice Hinchey, D-N.Y., was expected to submit an amendment calling for greater federal environmental studies of the impacts of drilling in Bristol Bay, in Alaska's North Aleutian Basin. Under the proposal viewed by Dow Jones Newswires that had yet to come before the committee, the Minerals Management Service, the U.S. Geological Survey and scientific bodies would be required to conduct studies on the impact of exploration in Bristol Bay in the North Aleutian Basin.

Part of Bristol Bay is to be opened up for drilling in the MMS's five-year leasing plan.

In his proposal, Hinchey said he was concerned the "MMS has inadequate coordination with other federal agencies to ensure best available protection."

More studies could delay the scheduled lease auction.

In January, President George W. Bush ended drilling bans in an area of the central Gulf of Mexico and in Bristol Bay. Congress put Bristol Bay off limits to drilling in 1990 after the devastating Exxon Valdez tanker oil spill on the other side of the Alaskan peninsula. The bay is a major fishing area for salmon, cod, red king crab, halibut and herring.

Copyright (c) 2007 Dow Jones & Company, Inc.

Company: Minerals Management Service (MMS) more info
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