Senate bill would open millions of acres in Gulf of Mexico to drilling

WASHINGTON -- The Senate began work Wednesday on an election-year bill that would open a large area of the central Gulf of Mexico to oil and gas drilling, but would fall far short of a broader offshore energy development measure already approved by the House.

By a vote of 86-12 the Senate agreed to proceed with the legislation that opponents fear could open the way to lifting a federal drilling moratorium that has protected 85 percent of the country's Outer Continental Shelf from New England to Alaska for a quarter century.

It directs the Interior Department to begin offering oil and gas leases for waters known as Lease Area 181, which lies 125 miles to 230 miles off Florida's coast. The bill would guarantee that much of Florida's Gulf coast would be protected from drilling until 2022.

Covering 8.3 million acres, the Lease Area 181 and an adjacent area together covers 8.3 million acres and is believed to contain 1.3 billion barrels of oil and 5.8 trillion cubic feet of natural gas, enough to heat 6 million homes for 15 years. The area has been off limits to development largely because of concerns from Florida that drilling could jeopardize its beaches and lucrative tourist industry.

Despite the wide margin on what was viewed as largely a procedural vote Wednesday, the bill's supporters said passage will be difficult. Senate GOP leaders were trying to limit any changes in the compromise legislation, fearing that might jeopardize passage.

Already, the legislation is likely to attract a filibuster from opponents. No final vote was likely before Monday as the Senate moves toward its summer recess next week .

"It's clear that anything that changes this very much won't pass the Senate," Sen. Pete Domenici, R-N.M., the bill's chief sponsor and floor leader, told reporters.

Some opponents of the legislation fear it's a first step to lifting a moratorium that for decades has prohibited drilling in 85 percent of the country's coastal waters from New England to Alaska. Others object to changes in revenue sharing in the legislation that would sharply increase money funneled to four Gulf states -- Alabama, Louisiana, Mississippi and Texas -- that already have offshore energy development.

A month ago, the House passed a much broader offshore energy development bill that would lift the ban on oil and gas drilling that has been in effect for 25 years in most waters outside the western Gulf of Mexico. That bill would still bar drilling within 50 miles of the shoreline, but it would open waters beyond that to energy companies unless a state specifically acts to protect waters within 100 miles of shore.

Senate Republican leaders said they didn't have enough votes to push such a broad measure through the Senate. Senate Majority Leader Bill Frist, R-Tenn., said Tuesday that if the bill passes he would work to keep it focused and limited to the 8.3 million acres in negotiations with the House.

That may be hard to do.

Rep. Richard Pombo, R-Calif., a key sponsor of the House bill passed last month, said Tuesday he saw no way the House would accept the limited Senate legislation as a substitute for its bill.

Another key player on energy issues in the House, Rep. Joe Barton, R-Texas, said Wednesday he looked forward the Senate passing its bill and to negotiations to resolve differences, but added: "We would certainly encourage (the Senate) to go broader" beyond the central Gulf.

Domenici argued that the additional oil and gas found in Lease Area 181 could "bring enough oil and gas to market to ease supply constraints and stabilize energy prices." He has said the offshore drilling measure is likely to be the only energy legislation that has a chance to emerge from Congress this year.

But the bill has its own political pitfalls. Senators from many coastal states worry about potential oil spills that could harm beaches and jeopardize tourist industries.

Several senators said they want to include a guarantee that the long-standing moratorium remain in place along the Pacific and Atlantic coasts until 2022. It is now approved by Congress annually. The bill gives such assurance for Florida's Gulf waters.

The legislation funnels tens of millions of additional dollars in royalties to Texas, Louisiana, Mississippi and Alabama that already have drilling rigs off their coasts. These states would get 37.5 percent of future royalties from oil or gas taken from federally controlled waters, compared with less than 2 percent today.

Sen. Jeff Bingaman, D-N.M., opposes the measure largely because, he said, "over the next 60 years this entitlement to the Gulf Coast states would have a total value of at least $170 billion."

The administration also has objected to the revenue changes. Energy Secretary Samuel Bodman said Wednesday he is pleased with "the general direction" of the bill, but that the administration still has concern about the revenue sharing changes.