From: H. Josef Hebert, Associated Press
Published May 19, 2006 12:00 AM

House Votes to Keep Offshore Oil Drilling Ban; Debates Natural Gas Ban

WASHINGTON — The House rejected an attempt Thursday to lift a quarter-century congressional ban on offshore oil drilling in coastal waters outside the western Gulf of Mexico amid arguments that new supplies are needed to lower energy prices.


A proposal to end the long-standing moratorium as it applies only to pumping natural gas was expected to be voted on later in the evening as lawmakers moved toward late-night approval of a $25.9 billion Interior Department spending bill.


The proposal to allow oil drilling in waters off both coasts and in the eastern Gulf of Mexico -- areas off-limits to energy companies since 1981 -- was rejected by a 279-141 vote. It had been offered by Rep. Ted Poe, R-Texas, who called the drilling ban "an outdated policy" when the country wants to reduce its dependence on imports.


Separately, the House by a 252-165 vote passed a measure that would bar oil companies from receiving new oil leases unless they renegotiate past contracts that allowed them to avoid federal royalty payments even when oil prices soar.


The measure is aimed at correcting a mistake by the Interior Department that led to oil and gas lease contracts being issued in 1998-99 that did not include a suspension of royalty payments if crude prices reached a certain level. Since then, prices have soared well beyond that ceiling, but these companies still have been exempted from royalty payments, costing the government as much as $7 billion in lost revenues.


While the measure does not order these contracts renegotiated, the House action would put pressure on companies to do so, its supporters said. "Energy companies have been taking oil and gas from the American people for free and then selling it back to them at record prices," said Rep. Maurice Hinchey, D-N.Y., sponsor of the amendment.


Supporters of the drilling ban, first imposed in 1981 and renewed by Congress each year since, scrambled to restore the natural gas drilling ban that had been stripped from the Interior spending bill in committee.


Rep. John Peterson, R-Pa., argued that developing the offshore gas resources would pose none of the environmental risks -- mainly the prospects of a spill -- associated with oil drilling. Supporters of the ban argued that natural gas and oil drilling were too closely linked.


Lifting the moratorium for the first time in 25 years would allow energy development within three miles of shore along coastal areas "where tens of millions of our citizens have made it clear that they don't want any more drilling," said Rep. Lois Capps, D-Calif.


Capps planned to offer an amendment to continue the natural gas drilling prohibition.


Florida lawmakers -- both Democrats and Republicans -- said energy development off the state would threaten a multibillion-dollar tourist industry. Florida depends on tourism, "and we're going to protect it," vowed Rep. Alcee Hastings, D-Fla.


Opponents of the drilling prohibition argued that access to offshore oil -- and especially natural gas -- would drive down energy prices and help reduce the country's dependence on foreign sources of energy.


"We have lost millions of jobs already because of high energy costs, and we're going to lose millions more," said Peterson, who has tried unsuccessfully for two years to lift the offshore moratorium as it applies to developing natural gas.


Soaring natural gas prices, which have quadrupled since 1999, have forced companies -- especially in the chemical and fertilizer industries -- to consider moving overseas where fuel prices are much cheaper, he said.


Peterson's measure would lift the congressional ban that prohibits the Interior Department from offering gas leases in waters along both coasts and in the eastern Gulf of Mexico. But it would not affect a presidential ban on drilling, issued by executive order, that is in effect until 2012.


Drilling proponents also faced an uphill struggle to get the moratorium lifted in the Senate, where senators from coastal states likely could block any such action.


President Bush has said he has no plans to remove the drilling ban. But Capps said if Congress lifts its moratorium and declares that coastal waters should be opened to drilling, she fears the president "is going to revoke his moratoria" as well.


The offshore drilling issue has divided Congress largely along geographic lines.


Lawmakers from coastal states --both Republicans and Democrats -- worried that drilling offshore could threaten their tourist and fishing industries and bring risks of environmental damage.


"People don't go to visit the coasts of Florida or the coast of California to watch oil wells," said Rep. Sam Farr, D-Calif.


Source: Associated Press


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