House moves to open Gulf area to oil and gas drilling; Senate action expected

Friday, December 8th 2006, 3:52 pm

By: News On 6

WASHINGTON (AP) The House approved oil and gas drilling Friday in a vast area of the Gulf of Mexico south of Florida's Panhandle and agreed to steer hundreds of millions of dollars in royalty payments to Gulf states to restore coastal wetlands and repair hurricane damage.

The drilling provision was attached to a package of popular tax breaks that were approved by vote of 367-45 as lawmakers scrambled to adjourn and end of the 109th Congress.

The tax legislation, including the drilling provision, was expected to be combined with a trade bill and then sent to the Senate in hopes of prompt approval, assuming last-minute roadblocks can be avoided in the Senate. It wasn't clear late Friday when the Senate might take up the legislation.

The House bill opens to energy companies 8.3 million acres in the east-central Gulf of Mexico that is currently off-limits to drilling. The Interior Department is required to issue its first leases for the area within a year and tap what is believed to be 1.3 billion barrels of oil and 6 trillion cubic feet of natural gas.

The country uses about 21 million barrels of oil a day. The gas believed in the area would be enough to heat 6 million homes for 15 years.

It was the revenue sharing provision that prompted the sharpest debate Friday.

It calls on the Interior Department to provide Louisiana, Mississippi, Texas and Alabama with 37.5 percent of future royalties collected from Gulf oil production. Louisiana would get about half. The states' share is anticipated to be several hundred million a year initially, and grow into the billions of dollars a year after 2017 because of increased production and expansion of the royalty sharing to all Gulf production.

Rep. Ed Markey, D-Massachusetts, called it "a raid on the federal Treasury" that could amount to as much as $170 billion over the next 50 years.

Rep. Lois Capps, D-California, said she could not understand funneling billions of dollars in royalties from oil and gas taken from federal waters to four states "when this country has record deficits as far as the eye can see."

The Gulf Coast states, which now get less than 2 percent of all the royalties collected from offshore production, have argued that new revenue sharing is long overdue.

For years "the Louisiana delegation has been asking for help and it's been like the tree falling in the woods, unheard," complained Rep. Charlie Melancon, D- Louisiana.

An attempt by Markey to sidetrack the tax measure by adding an amendment that would have upended the delicate agreement with the Senate failed 207-205.

The royalty recovery effort has broad support in both the House and Senate.

But Rep. Bill Thomas, chairman of the Ways and Means Committee, said any change in the bill could undo the informal agreement reached with the Senate and kill any chance of getting the legislation through because of the time constraints before adjournment. Under Senate rules, a single senator can force considerable delay once a bill comes over from the House.

The new drilling area was crafted to gain support of Florida's lawmakers, with its eastern edge more than 200 miles from state beaches.

"This protects Florida," said Sen. Mel Martinez, R-Florida.

The drilling provision is identical to a bill passed by the Senate earlier this year. House GOP leaders had sought much broader offshore energy development that would have lifted drilling bans that have been in place as long as 25 years across 85 percent of the U.S. coastline, essentially everywhere except for the western Gulf of Mexico and off Alaska.

Senate leaders said the House measure couldn't pass the Senate. So, after suffering losses in last month's election, House GOP leaders accepted the Senate-passed bill that was limited to the Gulf region.