House members revive bill to expand OCS activity with new wrinkle

US House members who tried to repeal offshore drilling bans in previous sessions introduced a bill to restore a five-year Outer Continental Shelf plan which US Interior Secretary Ken Salazar has delayed.

May 8th, 2009

US House members who tried to legislatively repeal offshore drilling bans in previous sessions introduced a bill on May 4 to restore a five-year Outer Continental Shelf plan which US Interior Secretary Ken Salazar has delayed.

Rep. Tim Murphy (R-Pa.) sponsored the bill, HR 2227, with Neil Abercrombie (D-Ha.), Shelley Moore Capito (R-W.Va.), Jim Costa (D-Calif.), Joe Wilson (R-SC), Timothy J. Walz (D-Minn.) and Lee Terry (R-Neb.) as cosponsors. It was immediately referred to the Natural Resources Committee.

Salazar announced on Feb. 10 that he would delay implementation for six months of a five-year OCS plan for 2010-15 which his predecessor, Dirk A. Kempthorne, launched the previous summer in response to record retail gasoline prices.

The current secretary said that he wanted the plan to include alternative and renewable energy sources. He ordered the US Geological Survey and US Minerals Management Service to prepare an evaluation of US offshore conventional and alternative resource potential, and held four public meetings to receive additional comments.

HR 2227's proposed offshore leasing provisions also provide jurisdiction for state royalty payments over a wider area by extending coastal states' boundaries to a uniform 12 miles from three miles. It would repeal the 125-mile moratorium on oil and gas production in the eastern Gulf of Mexico, establish an expedited inventory of offshore energy resources, and mandate procedures to expedite judicial reviews of oil and gas leases.

Other provisions

The bill also would prohibit surface occupancy within 10 miles of the shoreline and permanent surface occupancy within 20 miles. It would open offshore resources 20 miles and further out, and mandate mitigation of offshore facilities on coastal vistas. It would mandate federal agency coordination with adjacent states on construction of pipelines to move oil and gas from the OCS. The Interior secretary also would have to coordinate leasing with the US Defense secretary and refer any unresolved issues to the president for an immediate decision.

It also contains provisions to share OCS oil and gas revenues, including 30% to states directly affected by activity, 20% to pay for alternative energy and conservation tax incentives, 10% for clean coal technology development, 10% for environmental restoration, 10% for the general federal treasury, 8% for conservation programs, 5% for carbon-free technology including nuclear power, 5% for water programs, and 2% for low-income home energy assistance.

Its second title would modify the Strategic Petroleum Reserve to reflect current refining capabilities by exchanging 70 million bbl, or 10% of its content, and dedicating the projected $400 million of proceeds to existing conservation, assistance, and energy research and development programs.

The bill's third title would extend alternative and renewable energy tax credits to 2019, while its fourth would encourage development of electricity-powered motor vehicles.

Murphy, the bill's sponsor, said that he and Abercrombie met regularly with other cosponsors over several weeks to develop a comprehensive energy bill. "This legislation will be paid for: Developing our own resource will bring an estimated $2.2-3.7trillion in federal revenue," he said on May 5.

'Begin the path'

"With this bill, we truly begin the path toward a clean energy future by investing in clean energy, creating US jobs immediately and long into the future, and cleaning the environment, all without raising taxes," he continued.

Wilson said the bill was particularly important to South Carolina because it contains provisions to expand and develop nuclear power. Additionally, a sizable portion of the royalties and revenues garnered from offshore oil and natural gas exploration will be returned to the coastal states; and the tourism and hospitality industry that is so vital to our coastal communities will not be adversely affected because all off-shore activity will take place far beyond the line of sight," he said.

"Once again this group has demonstrated that bipartisan, or non-partisan, consensus on energy doesn't have to be out of reach. The American people have asked for common-sense, bipartisan solutions, and with this bill that's exactly what they will get," said Capito.

American Petroleum Institute President Jack N. Gerard reacted favorably to the bill's introduction, calling it a step in the right direction.

"This bipartisan bill recognizes the importance of increased access to offshore oil and natural gas resources not only to our nation's economy, in terms of generating federal, state and local revenues and new well-paying jobs, but also to America's energy security," he said.

Contact Nick Snow at nicks@pennwell.com

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