Natural Gas Leases Approved Closer to Shore

By BEN GEMAN, Greenwire
Published: June 9, 2009

The Senate Energy and Natural Resources Committee approved expanded oil and gas leasing today in the eastern Gulf of Mexico in a bipartisan vote that would upend a 2006 compromise with Florida senators that provided their state at least a 125-mile buffer in most areas until mid-2022.

The committee voted 13-10 in favor of Sen. Byron Dorgan's (D-N.D.) plan to allow leasing as close as 45 miles from Florida's coast. It also allows leasing in a gas-rich region called the Destin Dome off the Florida Panhandle that is even closer to shore.

The drilling amendment vote was part of the committee's ongoing markup of a broad energy bill.

Dorgan said the measure should be part of a bill that also addresses alternative energy and efficiency. "I am interested in doing this to increase production," Dorgan said.

But Sen. Robert Menendez (D-N.J.) said wider drilling in the eastern gulf would endanger Florida's environment and tourist economy while failing to reduce gasoline prices. "This continues our dependency and at the end of the day just helps the oil industry," he said.

Florida Democratic Sen. Bill Nelson slammed the plan in a prepared statement, arguing it could hamper military training, while blaming prices at the pump on financial speculators.

"Congress ought to be looking at that and at a real alternative energy program, instead of trying to put oil rigs off the world-class tourist spots all along Florida's coast," Nelson said.

Nelson vowed to block the effort in remarks to reporters after the vote. "We will have a bunch of senators filibuster this if we have to protect the interests of the United States military," he said.

Environmentalists oppose Dorgan's effort. "The Dorgan amendment would threaten Florida's coasts with oil spills and pollution while increasing our dependence on oil and increasing global warming pollution," said Anna Aurilio, director of the Washington office of the group Environment America, this morning.

But American Petroleum Institute President Jack Gerard praised the action after the vote. "By allowing greater access to oil and natural gas leasing in promising areas of the eastern Gulf of Mexico, Senator Dorgan's amendment stands to help the American people by creating new jobs, adding new energy resources and providing new revenues to federal, state and local governments," he said in a prepared statement.

After a long debate, the committee rejected, 10-13, an amendment by Sen. Mary Landrieu (D-La.) to provide states with offshore production in adjacent federal waters with a 37.5 percent share of revenues, while steering 50 percent of their revenues to federal deficit reduction and 12.5 percent to the Land and Water Conservation Fund.

A 2006 gulf leasing law created a revenue-sharing program for Louisiana, Texas, Mississippi and Alabama. Landrieu's plan would have provided this share to Alaska and to states that might have offshore leasing in the future, which she calls a critical state incentive for allowing oil and gas drilling in the outer continental shelf.

Landrieu also argued that revenue-sharing compensates for the impact of infrastructure for offshore development on coastal states, and she also cited the conservation funding in an effort to corral support.

But revenue-sharing opponents said the OCS is a national resource and cited future losses to the Treasury if a large share of leasing and royalty payments is directed to coastal states.

Chairman Jeff Bingaman (D-N.M.) said the Interior Department has estimated that total future federal losses from revenue sharing could be between $653 billion and $790 billion dollars. "We are not in a position as a country today where we can give away $653-$790 billion in future revenue," Bingaman said.

Several lawmakers said they will look to revisit the revenue-sharing issue to seek a compromise as the bill proceeds toward the Senate floor.

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