Energy, chem leaders slam Democrat offshore bill

17 September 2008 20:19  [Source: ICIS news]

WASHINGTON (ICIS news)--US refining and chemical industry leaders on Wednesday criticised a Democrat-sponsored offshore energy bill as “nothing more than a political shell game that threatens rather than enhances the nation’s energy security”.


The US House approved late on Tuesday bill HR-6899, the Comprehensive American Energy Security and Consumer Protection Act, in an almost straight party-line vote of 236 for and 189 against.


Only 13 Democrats voted against the bill and only 15 Republicans supported it. A bipartisan bill to open the US outer continental shelf (OCS) regions to oil and gas development, HR-6709, was defeated in another party-line vote, 191 for and 226 against.


Even 24 Democrats who had earlier co-sponsored the bipartisan bill voted against it.


The bill approved by the House would close the first 50 miles of the 200-mile wide US OCS to exploration and development, leaving the second 50-mile segment open for drilling if the adjoining coastal state opted to permit development.


But unlike the bipartisan bill, the Democrat-sponsored bill denies revenue sharing to coastal states for oil and gas royalty revenues that would be generated by development of the second 50-mile section. 


Critics of the Democrat bill argued that without the incentive of revenue sharing no coastal state was ever likely to approve drilling, meaning that the most resource-rich first 100 miles of the OCS would essentially be closed to drilling permanently.


About 85% of the US Atlantic and Pacific OCS areas and much of the Eastern Gulf off Florida’s west coast have been closed to drilling for 27 years under a congressional moratorium that must be renewed each year.


Chemical companies and a broad array of other manufacturing industries dependent on natural gas as a feedstock or power source have been lobbying for years for renewed access to what are believed to be extensive oil and gas deposits off the US coasts.


Charlie Drevna, president of the National Petrochemical & Refiners Association (NPRA), charged that “no-one should be under any illusion that this [bill], in even the smallest way, is a pro-production bill”.


“With its hostility toward domestic producers and coastal states, this legislation is entirely counterproductive to its overarching intent: expanded production,” Drevna said.


The American Chemistry Council (ACC) said that while it supports “a clear developing consensus in Congress that America’s energy needs require expanded access to domestic sources, … ACC cannot support HR-6899”.


The ACC also criticised elements of HR-6899 that would raise taxes on oil and gas producers and force US electric utilities to burn more natural gas instead of coal, thus creating substantial new natural gas demand unmatched by new supply.


The bill is not likely to get approval in the US Senate, where even Democrat Senator Mary Landrieu of Louisiana, an offshore development supporter, said HR-6899 “will not even see the light of day in the Senate”.


Congress is due to adjourn around the end of this month, and legislation to open more US offshore areas to development is unlikely of approval in the few weeks that remain, according to Hill observers.


To discuss issues facing the chemical industry go to ICIS connect

By: Joe Kamalick
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