US House panel maintains offshore drilling ban

11 June 2008 21:59  [Source: ICIS news]

WASHINGTON (ICIS news)--A key US House committee voted on Wednesday to continue the 27-year-old ban on drilling in 85% of US offshore areas in what a top chemical industry official called a “stunning missed opportunity”.


In a straight party-line vote, the House Interior Appropriations Subcommittee defeated an amendment that would have ended the nearly three-decades-old congressional prohibition on energy exploration and development off of the US East and West Coasts and along Alaska’s lengthy shoreline.


Those areas of the US outer continental shelf (OCS) are estimated to hold 86bn barrels of oil and some 420,000bn cubic feet (bcf) of natural gas.  Congress has maintained a ban on offshore drilling in those areas since 1982 on grounds that energy development might put recreational beaches and coastal states’ tourist industries at risk.


The only drilling allowed off US shores is in central and western areas of the US Gulf.


US chemicals producers and a broad array of other manufacturers have pressed Congress for years to lift the drilling ban, arguing that modern deep-sea drilling is environmentally safe and the US needs the energy resources.


The US chemicals industry is heavily dependent on natural gas as a feedstock, and the industry has seen plant shutdowns and production moving offshore since gas rose from $2/m Btu in 1999 to today’s price in the range of $12/m Btu.


The amendment voted down today was by Representative John Peterson (Republican-Ohio), who has championed an end to the congressional offshore moratorium for several years.  His amendment would have opened the areas from 50 miles offshore to the outer 200-mile limit of the US territorial claim in the shelf regions.


Jack Gerard, president of the American Chemistry Council (ACC), said Wednesday’s vote “represents a stunning missed opportunity for action that could have helped put America on a path toward a more affordable, secure energy future”.


Gerard said that because of the increased cost of natural gas, which in addition to being a major feedstock for the chemicals industry also is a crtical energy fuel, “American chemistry has gone from a $19bn [€12.4bn] trade surplus to becoming a net importer of chemicals, with substantial ‘ripple effects’ given that our products go into 96% of US manufactured goods”.


All nine Democrat members of the House panel voted to kill Peterson’s bid to lift the offshore ban while all six Republicans on the subcommittee voted in favour.


Peterson’s spokesman said the congressman had hoped to sway some Democrats on the subcommittee in light of $4/gal US gasoline prices and $140/bbl oil.


Peterson said he will put the amendment forward again next week when the full House Appropriations Committee meets to vote on the Interior Department’s fiscal year 2009 spending bill.


That department has authority over development of US offshore reserves.


($1 = €.65)


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By: Joe Kamalick
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