US chems hail offshore gas bill and ask for more

11 December 2006 20:24  [Source: ICIS news]

WASHINGTON (ICIS news)--US chemical industry leaders and energy producers hailed on Monday final action by Congress to open a small portion of the eastern US Gulf to oil and gas development but said they will press for broader offshore access next year.

 

Final Senate passage on Saturday of the modest offshore drilling package approved on Friday by the House means the measure can go to the White House for the president’s signature and enactment.

 

The bill opens some 8.3m acres of the eastern US Gulf to oil and gas development. Part of the new development area had previously been under a 25-year-old drilling moratorium imposed by Congress in the 1970s out of concern for possible beach pollution. 

 

Natural gas is the principal feedstock for US chemicals manufacturing and has been under heavy pricing pressure since 1999.

 

The chemicals industry and a broad array of other manufacturing interests wanted a much broader offshore development bill, such as a measure passed earlier this year by the House. That bill would have opened much of the outer continental shelf off the US East and West coasts to drilling, but it was effectively killed in the Senate.

 

The much smaller bill finally approved by Congress, “is an important first step toward eliminating artificial and unnecessary limitations on development of vital domestic energy resources,” said Bob Slaughter, president of the National Petrochemical and Refiners Association.  “We hope that additional action affecting other OCS [outer continental shelf] areas will eventually take place,” he said.

 

The American Chemistry Council also voiced support for the final congressional approval of the modest offshore access bill.

 

The congressional approval, said council president Jack Gerard, “is an enormous victory in the fight against a six-year-old gas crisis that has been killing American jobs and making the US less competitive.”

 

A council spokeswoman said the trade group would renew its effort in the new year to get the still broader access to vast reserves of oil and gas in federally owned offshore areas.  That task is thought by some to be a more difficult challenge for industry now that Democrats have won control of both the Senate and House.

 

However, Gerard indicated that the effort will be made. “Beginning early in 2007, we look forward to working with members of the 110th Congress to discuss and develop a comprehensive natural gas policy," he said.

 

A spokesman for the Natural Gas Supply Association, representing major gas producers, said his trade group also welcomed the congressional action but noted that “this is only a first step.”

 

“We will continue to highlight next year that access to our offshore energy reserves is key to US economic and business growth,” the spokesman said.

 

The gas producers association estimates that the first new gas from the eastern Gulf areas now open to development will not come onshore for perhaps two years.

By: Joe Kamalick
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