As Congress decides whether to try to salvage the omnibus bill it has twice failed to pass, the oil and gas industry should recognize that with energy policy, good things can happen in small packages.
Two such good things have occurred recently—one through regulation and the other through legislation.
On Jan. 26, the US Minerals Management Service implemented royalty relief for production of natural gas from wells deeper than 15,000 ft in shallow waters of the Gulf of Mexico (OGJ Online, Jan. 26, 2004).
The action suspends royalty on the first 15 bcf of gas produced from 15,000-18,000 ft and the first 25 bcf of gas produced from depths exceeding 18,000 ft. It also suspends royalty for 5 bcfe of production from leases on which an operator drills a dry hole deeper than 18,000 ft.
The move is good for producers, consumers, and taxpayers. It will stimulate drilling of wells that wouldn't be drilled otherwise because of high initial costs. It will create gas supply, jobs, and tax revenue.
The good legislative thing on energy policy occurred last Nov. 10, just 2 weeks before lawmakers gave up trying to pass comprehensive energy legislation in 2003.
On that day, President George W. Bush signed a Department of the Interior appropriations bill that ended a moratorium on federal oil and gas leasing of Alaska's Bristol Bay (OGJ, Nov. 24, 2003, p. 27).
National Ocean Industries Association said the legislation "marks the first time in US history that the geographic scope of congressional leasing moratoria has been scaled back."
Congress in 1982 began blocking activity on the Outer Continental Shelf by omitting lease sales from Interior Department budgets. Presidential moratoriums have consolidated the practice, which now covers federal waters off the East and West Coasts and most of the eastern Gulf of Mexico.
In comparison with acreage still ludicrously unavailable for lease, lifting of the Bristol Bay moratorium is a small step. But at least it's a step.
What's significant is that the opening of Bristol Bay, like royalty relief for deep gas production, happened outside the destructive political homogenization of comprehensive legislation.