Senate bill would expand OCS activity, allow contact with Cuba

Nick Snow
Washington Correspondent

WASHINGTON, DC, Mar. 15 -- US Sens. Byron L. Dorgan (D-ND) and Larry Craig (R-Ida.) introduced an energy bill Mar. 14 that they said balances increased conservation, renewable fuels development incentives, and alternative fuels research with increased domestic oil and gas production. The bill quickly drew fire from both Florida senators, however, because the proposed production increase would come from the eastern Gulf of Mexico.

The measure also would permit US companies to explore for oil and gas in Cuban waters as close as 45 miles to US shores where Cuba already has granted access to oil companies from other countries. It would authorize travel necessary for US companies' fulltime employees, executives, agents, consultants, distributors, and shippers to visit Cuba for work related to exploration and production. The bill defines a US company as one in which at least one US citizen owns a 51% or more equity interest.

The sponsors said the Security and Fuel Efficiency (SAFE) Energy Act of 2007 closely follows many of the policy recommendations of the Energy Security Leadership Council, which released its "Recommendation to the Nation on Reducing US Oil Dependence" report in December 2006. A number of council members joined Dorgan and Craig at a press conference announcing the legislation, which also aims to increase transportation fuel efficiency, develop alternative fuels and the necessary infrastructure, and manage international energy security risks.

Dorgan called the bill "a major bipartisan initiative that bridges the gap between those who argue increased oil production is the only way to increase our nation's energy security, and those who say increased conservation is the only answer." He said, "We've found a sensible, workable way to do both, as well as to make sure new, alternative, renewable sources of energy are brought into our mix in a very important way."

Craig said, "What you see before you is a comprehensive approach that includes something for everyone to support, as well as provisions that some have not supported individually in the past. For example, I haven't supported increasing automobile efficiency standards alone, but I can when it is coupled with expanded production and innovative alternative fuels like cellulosic ethanol. This is not an end-all-be-all, but SAFE represents a truly bipartisan compromise that goes much farther than any partisan provision could."

Production provisions
Title III of the bill, dealing primarily with increased OCS production, also would authorize a survey of oil and gas resources off the southeastern US, provided governors of the affected states (Virginia, North Carolina, South Carolina, and Georgia) petitioned the US Interior secretary to lift any existing federal prohibitions of such activity.

Another section within this title would require the US Energy secretary to give priority to projects conducting field demonstrations in geologically challenging fields when carrying out enhanced recovery programs authorized by Section 354 of the 2005 Energy Policy Act (EPACT).

Section 305 in the new bill's third title would open more eastern Gulf of Mexico acreage for leasing by moving the boundary from 125 miles to 45 miles off the coast. The sponsors said this would still keep activity beyond sight of the coast while maintaining environmental protection and leaseholder liability provisions enacted as part of EPACT.

Both Florida senators, Republican Mel Martinez and Democrat Bill Nelson, immediately criticized this provision. Martinez played a major part in securing the 125-mile limit as a compromise for their support of a catch-all bill late last year which included the provision reopening the so-called Sale 181 area in the eastern GOM that President George W. Bush closed in 2001 at the request of his brother, Florida Gov. Jeb Bush. The compromise also authorized leasing in deeper water south of the previously closed tracts.

Martinez also criticized the Cuba-related provisions in Dorgan and Craig's new bill, introducing one of his own on Mar. 14 that would deny US visas to any foreign agent or entity that contributes to the development of Cuba's oil exploration program. His bill also would impose sanctions on any individuals or entities that invest $1 million or more to develop Cuba's oil and gas resources.

"Supporting the Castro regime in the development of its petroleum is detrimental to US policy and our national security. It would be contrary to the direction of US policy to place the future of America's energy resources in the hands of an anti-American dictator with a record of expropriating US oil company assets," Martinez said.

Contact Nick Snow at nsnow@cox.net.

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