Republican senators offer bill to increase US supplies

US Senate Republicans responded May 1 to near record-high oil prices with a bill to authorize leasing within ANWR and increase access to the Outer Continental Shelf.

May 2nd, 2008

Nick Snow
Washington Editor

WASHINGTON, DC, May 2 -- US Senate Republicans responded May 1 to near record-high oil prices with a bill to authorize leasing within the Arctic National Wildlife Refuge and increase access to the Outer Continental Shelf.

S. 2958, the American Energy Production Act, would produce as much as 24 billion bbl of oil from ANWR and the OCS, enough to supply domestic needs for 5 years, according to bill sponsor Pete V. Domenici (R-NM), who also is ranking minority member of the Senate Energy and Natural Resource Committee. Seventeen other Senate Republicans are cosponsors.

"For years now, I have been trying to develop more domestic production of oil and gas, and for years, with one exception in the Gulf of Mexico, I have been blocked for political reasons. Consumers are now paying the price for those years of obstruction," Domenici said.

The bill would allow governors of states on the Atlantic and Pacific coasts to petition for leasing and have federal moratoriums and withdrawals lifted. New federal leases would operate under a revenue-sharing agreement in which states would receive 37.5%, the federal treasury 50%, and the Land and Water Conservation Fund 12.5%.

It also would repeal the $4,000 fee for onshore drilling permit applications, a 2% reduction of states' shares of federal mineral royalties and a 1-year moratorium on funding formulation of regulations for commercial oil shale leasing. The three provisions were inserted into the Omnibus Appropriations Bill late last year.

Refinery permit provision
It also would grant the US Environmental Protection Agency authority to accept consolidated applications for permits required to construct new refineries. Financial assistance to states and Indian tribes for hiring employees to process permit applications also would be authorized. Application decision deadlines of 360 days for constructing new refineries and 120 days for expanding existing plants would be established.

S. 2958 also would suspend crude oil purchases for the Strategic Petroleum Reserve for 180 days. It also would repeal Section 526 of the 2007 Energy Independence and Security Act which bars federal agencies from contracting for alternative fuels with longer greenhouse gas lifecycle emissions than the conventional fuels they would replace. The provision's author, House Oversight and Investigations Committee Chairman Henry A. Waxman (D-Calif.), has said that it would apply to any contract for a coal-to-liquids or other alternative fuel or for "a fuel produced from a non-conventional petroleum source such as tar sands."

The bill also would authorize research to study transportation needs for renewable fuel blends, mandate that 6 billion gal of coal-derived fuels be produced by 2022, launch a study of diesel-fueled vehicles' environmental and energy attributes, and extend US Department of Defense contract limits for synthetic fuels to 25 years from 5 years.

'Produce more at home'
"Congress has spent billions to research and develop clean sources of energy," Domenici said, adding, "I've been a leader in those efforts and I will continue to be. However, we must face the fact that no matter what we do, America will still need oil, and without action, an increasingly large portion of that oil will come from unstable regions. With gas prices soaring higher and higher, we must produce more at home and this bill allows us to do that in an environmentally responsible manner."

Sen. John Barraso (R-Wyo.), one of the measure's cosponsors, said, "Record oil prices are a burden whether it is for transportation, home heating, or groceries. The issues of high prices and foreign dependence go hand-in-hand. This bill hits the nail on the head when it comes to addressing America's energy needs."

Another cosponsor, Sen. Lisa Murkowski (R-Alas.), said the US has the resources to produce more oil and gas. "We just need the policies that will allow us to develop those resources. We have the technology to not only safeguard the environment while developing resources, but also safeguard Americans' bank accounts at a time when they are struggling to meet rising energy costs," she said.

But the bill faces an uncertain future in the Senate and House since Democrats hold a majority in both and many have said they believe development of alternative fuels and renewable technologies would be more beneficial environmentally and economically.

Contact Nick Snow at nicks@pennwell.com.

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