US chems, manufacturing hail new offshore bills

01 August 2008 23:30  [Source: ICIS news]

WASHINGTON (ICIS news)--The US chemical industry and general manufacturing leaders hailed on Friday new bipartisan offshore energy bills introduced in Congress, urging other Senate and House members to act quickly on the country’s energy crisis.


A bipartisan group of House members, known as the Energy Working Group and led by Representatives John Peterson (Republican-Pennsylvania) and Neil Abercrombie (Democrat-Hawaii), introduced HR-6790, the National Conservation, Environment and Energy Independence Act, just before the House adjourned for the five-week congressional recess.


The bill would repeal all congressional and administrative moratoria on energy development in the US outer continental shelf (OCS) regions but would bar drilling within 25 miles of shore. About 85% of US coastal shelf regions, thought to hold vast reserves of oil and natural gas, have been closed to drilling since 1981 under a congressional ban.


The measure would allow states that oppose offshore drilling to keep a further 25 miles (40 km) of their coastal waters off limits to development, giving them a 50-mile wide buffer. However, the remaining 150-mile breadth of the 200-mile wide US OCS territory would be open to drilling regardless of individual state policies.


Those coastal states that allow drilling up to 25 miles from their shores would get 30% of energy company royalties.


Another 30% of the offshore energy royalties would go to the US Treasury, and the 40% balance would be portioned out to environmental, conservation and alternative energy projects.


Jack Gerard, president of the American Chemistry Council (ACC), said the House measure “includes the building blocks of sound energy policy - efficiency and conservation, diversity and expanded access to domestic energy supplies”.


The US chemicals industry is heavily dependent on natural gas as a feedstock and energy resource and has seen margins erode and capacity move offshore as gas prices increased five-fold since 1999.


“We strongly urge House members to review the legislation carefully and discuss it with their constituents during the August recess,” Gerard said.


Republicans and Democrats in Congress have been at odds in recent weeks on how to meet the US energy crisis. Democrats generally wanted to advance bills targeting market speculators, oil company profits and conservation, while Republicans have pressed for more production of US domestic oil and gas supplies.


John Engler, president of the National Association of Manufacturers (NAM), said the bipartisan House bill “is an important step forward to help lower energy costs for manufacturers, their employees and consumers”.


“This country is facing an energy crisis,” Engler said, citing retail prices for gasoline in the $4/gal range. 


He said the House measure “is a clear sign that a growing, bipartisan group of lawmakers is heeding the call by American consumers to increase supplies of domestic energy”.


The House bill also was hailed by the US Chamber of Commerce, which said its 3m member firms will back the measure because it “addresses the fundamental energy supply and demand imbalances causing high fuel costs”.


The trade groups also welcomed a bipartisan bill unveiled in the Senate on Friday called the New Energy Reform Act of 2008. Although not yet formally introduced, the bill sponsored by five Republicans and five Democrat senators - known as the Gang of Ten - would put more federal funding into conservation and efficiency and development of passenger vehicles using non-petroleum fuels.


The Senate bill also would repeal congressional drilling bans along wide areas of the US east coast and in the eastern US Gulf region, areas now closed to development.


Congress will return from its August recess on 8 September.


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By: Joe Kamalick
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