Leaders in the Republican-led US Congress say they want a comprehensive energy bill to become law before Labor Day (Sept. 1). Last year, a bill died after being mired in election-year maneuvering.
Earlier this month, Senate Energy and Resources Committee Chairman Pete Domenici (R-NM) said he still wants an energy bill, and he wants it ready for floor consideration by June. Of key interest to him will be provisions that remedy what he sees as unnecessary delays in oil and gas development on federal land.
Land access
"I am committed to passing energy legislation that helps ensure clean, reliable, and affordable energy for every American. Part of that strategy has to include provisions that streamline and modernize our maze of federal rules and regulations that, in some cases, haven't been updated for 20 or 30 years," he said Feb. 28.
Domenici's focus on public land access promises to be controversial. Environmentalists argue that most resource-rich federal land is already available to producers with little to moderate restriction. They cite a recent Department of the Interior study that found producers face few restrictions on most energy-rich federal lands in five western basins (OGJ, Jan. 27, 2003, p. 30.)
Domenici and industry counter that the study's emphasis looked only at the leasing stage and did not consider broader perspectives. At a hearing last month, industry witnesses claimed that as much as 95% of federal land is unusable because of costs and delays that make development prohibitive.
An early test of how the closely divided Senate will vote on these issues may come later this spring. Republican leaders may seek to include an Arctic National Wildlife Refuge coastal plain leasing provision within the upcoming budget resolution.
House action
In the House, Energy and Commerce Committee Chairman Billy Tauzin (R-La.) is on a faster timetable. He released a discussion draft in late February and started hearings.
One new proposal would authorize $1.5 billion to expand the 700 million bbl capacity Strategic Petroleum Reserve to 1 billion bbl. A 1998 government study estimated that the extra storage would cost $1.2 billion in 1996 dollars, with development taking up to 16 years. Crude costs would vary depending on market conditions, the study said.
One option US officials may consider is further expanding an existing royalty-in-kind program currently filling the SPR with oil from federal leases.
Another expected change from last year's bill concerns taxes. Provisions in this year's bill are expected to be far less generous than last year's proposal. The House Ways and Means Committee is considering $9 billion in tax incentives recommended by the White House; only a small portion is oil and gas-related.
Last year, lawmakers informally agreed to a $20 billion tax package, with about $6 billion earmarked for new oil and gas production over 10 years.
The White House last year endorsed extending some marginal well provisions that were due to expire but never sought to expand drilling incentives to the extent industry sought.
