Lift OCS leasing bans to increase US supplies, Bush tells Congress

President George W. Bush urged Congress to lift oil and gas leasing bans on the Outer Continental Shelf as the first of four steps to increase domestic supplies in response to soaring prices.

"Experts believe that the OCS could produce about 18 billion bbl of oil. That would be enough to match America's current oil production for almost 10 years. The problem is that Congress has restricted access to key parts of the OCS since the early 1980s," he said on June 18.

"Since then, advances in technology have made it possible to conduct oil exploration in the OCS that is out of sight, protects coral reefs and habitats, and protects against oil spills. With these advances, and a dramatic increase in oil prices, congressional restrictions on OCS exploration have become outdated and counter-productive," Bush maintained.

He also asked Congress to authorize oil and gas leasing within the Arctic National Wildlife Refuge, remove a moratorium on the development of a federal oil shale leasing program, and expedite permitting for new US refineries or expansion of existing plants. But Bush's call to end OCS drilling bans produced the strongest responses.

Congressional Democratic leaders weighed in immediately. Senate Majority Leader Harry M. Reid (D-Nev.) called Bush's OCS proposal and a similar recommendation a day earlier by Sen. John McCain (R-Ariz.), the presumed 2008 Republican presidential nominee, "nothing more than a cynical campaign ploy that will do nothing to lower energy prices and represents another big giveaway to oil companies already making billions in profits."

'Same old ideas'

Oil companies aren't even using half of the federal lands they have leased already, and domestic refined product output actually has dropped despite incentives Bush and Republican Congresses provided to invest in new domestic refineries, he continued. "President Bush and John McCain are not serious about addressing [gasoline] prices. If they were, they would stop offering the same old ideas meant to pad the pockets of Big Oil and work with Democrats to reduce our dependence on oil, invest in the renewable energy sources, crack down on excessive speculation and stand up to countries colluding to shake down American consumers," Reid said on June 18.

In a statement issued the night before Bush's speech, House Speaker Nancy Pelosi (D-Calif.) said that the president's proposal "sounds like another page from the administration's energy policy that was literally written by the oil industry: give away more public resources to the very same oil companies that are sitting on 68 million acres of federal lands they've already leased."

House Natural Resources Committee Chairman Nick J. Rahall (D-W.Va.) said that 81% of estimated oil and gas resources on federal onshore and offshore lands are available for development, or will be pending completion of land-use planning or environmental reviews. "If the oil industry would drill these areas now – areas that are available for them to drill in now, today – the amount of oil produced would represent over 14 years of domestic consumption and 30 years of current domestic natural gas consumption," he said in a statement posted at the committee's website on June 18.

Sen. Frank R. Lautenberg (D-N.J.) said that Bush and McCain's calls to expand federal OCS leasing are "a gift to the oil companies that endangers the economic and environmental health of the Jersey Shore and our entire state. The Bush-McCain drilling scheme chooses Big Oil over American consumers and does nothing to immediately reduce [gasoline] prices. While we have offered real solutions to reduce prices at the pump, the Bush-McCain Republicans have blocked our efforts at the behest of the oil companies."

'Move beyond rhetoric'

But one congressional Democrat broke with most other House and Senate members in her party. "President Bush's attempt today to expand energy production off our coasts is very welcome, and is a wise position he should have taken earlier in the seven years we've been pushing this White House to get engaged," said Sen. Mary L. Landrieu (D-La.). She added that she plans to immediately re-introduce her bill to allow states to opt-in to offshore production and share federal revenues. "I hope President Bush is prepared to move beyond rhetoric and work with me to build the coalition we will need to get the job done," Landrieu said.

In his speech, Bush said that congressional Republicans have proposed "several promising bills that would lift the legislative ban on oil exploration in the OCS. I call on the House and Senate to pass good legislation as soon as possible." He acknowledged that there also is an executive prohibition against OCS exploration which he will lift as soon as Congress lifts its moratoriums.

The moratoriums have been part of the US Department of Interior's annual budget for more than 25 years, initially renewed annually but recently made permanent. Rep. John E. Peterson (R-Pa.) tried to get them removed on June 11 when the House Appropriations Committee's Interior and Environment Committee marked up DOI's fiscal 2009 budget, but his motion failed in a 9-6 vote along party lines. Peterson planned to try again when the full committee dealt with the DOI budget on June 18, but the hearing was postponed early that morning.

Other congressional Republicans immediately endorsed Bush's plan. "With gasoline at $4.07/gal, the American people cannot afford to wait any longer for Congress to act to produce more American energy. When a state chooses to allow environmentally sound deep sea exploration off its coast, they should not be blocked by a decades-old ban that makes no sense today," said Senate Minority Leader Mitch McConnell (R-Ky.).

"The president's proposal kills one of the Democratic Party's sacred cows – the ban on offshore energy exploration – and is both overdue and very welcome. It must be clear to nearly everybody by now that Congress cannot tax or conserve its way out of the $4/gal swamp that's stalling economic growth and forcing working people to pick between driving and eating. Using American resources to help Americans out of this mess is a good idea, and I hope Speaker Pelosi will not simply reject it again because she's a Democrat and the president is not," said Rep. Joe Barton (R-Tex.), the House Energy and Commerce Committee's ranking minority member.

'People are demanding action'

"Thus far, the other side has shown no willingness to work with us to increase production. However, other the next several weeks, I will continue to push forward with all or some of these ideas because the American people are demanding action. For instance, a new poll released just yesterday found that 67% of Americans support deep sea exploration offshore," said Pete V. Domenici (R-N.M.), the Senate Energy and Natural Resources Committee's ranking minority member.

The telephone survey by Rasmussen Reports, an electronic publishing firm specializing in public opinion polling, also found that 18% of the respondents oppose more offshore US oil and gas activity while 15% were undecided. Conservative and moderate voters strongly backed the idea but liberals were more evenly divided (with 46% in favor and 37% opposed), the company said on June 17. "Nearly all voters are worried about rising [gasoline] and energy prices, with 79% very concerned and 16% somewhat concerned," it added. Rasmussen conducted its survey before McCain and Bush's announcements.

"The problem for Democrats in the House is this: What two-thirds of the American people support, a staggering 87% of their caucus has consistently voted against. The result is the continuation of a 27-year-old policy that has locked away 420 trillion cubic feet of American natural gas, and kept off-limits enough American oil to end our reliance on [the Organization of Petroleum Exporting Countries] for the next 40 years," House Minority Whip Roy Blunt (R-Mo.) said on June 17 following McCain's address in Houston.

In that speech, McCain noted that the United States produces 5 million bbl of oil per day and consumes 20 million b/d, or 25% of the world's daily demand. "A reasonable observer, presented only with these numbers of consumption and production, might draw the conclusion that America has accepted this fate because we have no choice in the matter, or because we have no resources of our own. But just the opposite is true: We do have resources, and we do have a choice," he said.

The United States has enormous oil, gas and coal deposits, and the means to produce and consume them in environmentally responsible ways, McCain continued. "As for offshore drilling, it's safe enough these days that not even Hurricanes Katrina and Rita could cause significant spillage from the battered rigs off the coasts of New Orleans and Houston. Yet for reasons that become less convincing with every rise in the price of foreign oil, the federal government discourages offshore production," he said.

Efforts by OGJ Washington Pulse to get a response from the presidential campaign of Sen. Barack Obama (D-Ill.), the presumed 2008 Democratic nominee, to McCain and Bush's calls for more OCS oil and gas leasing were not successful.

'Dysfunctional at best'

Oil and gas and other business associations applauded the president's message and endorsed Peterson's amendment. "Our current federal energy policy is dysfunctional at best. We have policies that favor gas use because of its clean-burning properties but yet also restrict the exploration and production of natural gas. These two conflicting policies have contributed substantially to the price increase our consumers have suffered and simply cannot coexist in a coherent energy plan," Jack Rogers, vice president of the Florida Municipal Natural Gas Association, said in a June 17 letter to Rep. Debbie Wasserman Schultz (D-Fla.).

"An enormous amount of natural gas is recoverable from the Outer Continental Shelf. Opening up that area would send a strong message that Congress is serious about doing what it can to reduce energy costs. The American public is with us on this issue and we're hoping members of Congress catch up," said Natural Gas Supply Association President R. Skip Horvath.

"We applaud President Bush for supporting a repeal of the moratorium on drilling for natural gas and oil on the Outer Continental Shelf (OCS). His decision reflects the reality that America is in the midst of an energy crisis. Despite protests from some sectors, natural gas exploration is in fact an environmentally safe process that will increase our nation's domestic energy supply and lower prices from today's record-breaking levels, providing much-needed financial relief for consumers," said American Gas Association President David N. Parker.

"Today, President Bush outlined clear and crucial steps forward in strengthening our nation's energy security. Allowing safe, environmentally responsible development of our domestic energy resources will help ease volatile global supply conditions, lessen our dependence on foreign sources of energy, and increase supply and stability for American consumers. Additionally, further expansion of domestic refining capacity will help ensure stable supplies of transportation fuels and other refined products critical to our economy as demand for those products continues to grow," National Petrochemical and Refiners Association President Charles T. Drevna said.

"This Congress can reverse decades of energy policy failures and help end the long-term energy crisis by taking steps to enact comprehensive energy legislation that encourages diversity, including lower-emission sources and technologies, efficiency and expanded domestic supply. Public opinion surveys show a solid majority of Americans support offshore energy development. This summer, we encourage the entire Congress to lead the national toward a more affordable, secure energy future," American Chemistry Council President Jack N. Gerard said.

Contact Nick Snow at nicks@pennwell.com

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