US Senator Sees July Vote On Oil, Gas Drilling Bill

U.S. Sen. Pete Domenici, a key lawmaker on energy issues, said the Senate is likely to follow the lead of the House of Representatives and pass legislation this month to allow more drilling for oil and natural gas in federal waters.

“I remain optimistic … that we can pass a bill in the Senate in July,” the New Mexico Republican said in a recent statement.

Despite protests from environmentalists, the House last week approved a bill that would allow drilling in offshore federal areas that have been subject to bans for the past 25 years. About 85% of federal waters are off-limits to energy production, according to the Department of the Interior. The vote Thursday marked the first time the House has agreed to overhaul more than two decades of moratoriums that prohibit drilling in most of the Outer Continental Shelf, the federal lands submerged offshore.

House bill sponsors Reps. Richard Pombo,R-Calif., and Bobby Jindal,R-La., told reporters they expect the Senate to follow suit. Senate approval would pave the way for a House-Senate conference committee where a final Congressional bill would be hashed out. But passing an offshore drilling proposal in the Senate – where a similar bill introduced earlier this year remains stalled – could be difficult.

Senate Hurdles Remain

The bill, introduced early this year by Domenici, who chairs the Senate Energy and Natural Resources Committee, and Sen. Jeff Bingaman, the committee’s top Democrat, would allow companies to drill for oil and gas in a defined area of the eastern Gulf of Mexico. Proponents of the measure say the area, off the coasts of Louisiana and Florida, holds roughly 6 trillion cubic feet of gas and nearly 1 billion barrels of oil.

The federal government has already proposed opening the unleased portions of the area, called Lease Sale 181, to development. But the Senate bill would open a broader area to oil and gas production and require the Interior Secretary to open the area within a year of the bill’s passage.

Energy companies, farmers and manufacturers that use gas as a feedstock have urged support for the measure. But Florida senators oppose it, saying the drilling would be too close to their state’s coastline. Senators from Gulf Coast states have also found fault with the bill, arguing that their states should receive a share of the drilling revenues that under current rules would go only to the federal government.

Passage of the bill would likely require 60 votes to overcome a filibuster by Florida Senator Bill Nelson, who believes the legislation would endanger Florida’s economy.

Deal Or No Deal?

Domenici said he has yet to work out “a complete deal” with Sen. Mary Landrieu, D-La., and other senators from Gulf Coast states who want their states to receive a share of potential new drilling revenues. Landrieu, however, indicated a deal had been reached.

“I’ve had a number of productive meetings with Sen. Landrieu and others about my Lease Sale 181 bill,” Domenici said in his statement, released June 30. “We’ve made good progress in those meetings, but we’re not there yet.”

But Landrieu said she had reached an agreement with Senate leaders, including Domenici, to allow a vote on a drilling bill that would grant Gulf states a portion of the revenues generated by oil and gas production in the Gulf. Revenue-sharing has been a big issue for Louisiana, where Gov. Kathleen Blanco has vowed to derail efforts to open new portions of the U.S. Gulf to drilling unless her state gets a cut of the revenues.

Under the deal Landrieu described in a June 29 statement, a bill would be debated on the Senate floor following the week-long Independence Day holiday recess. The compromise legislation would open about 8 million acres in the Gulf to energy production and allow 37.5% of the federal revenues generated to flow to Louisiana, Texas, Mississippi and Alabama, Landrieu said. She added that Louisiana would receive one-third of the funds during the first 10 years, under a formula that would award revenues based on each state’s distance to production.

Source: Maya Jackson Randall, Dow Jones Newswires; 202-862-9263; Maya.Jackson-Randall@dowjones.com