OFFSHORE DRILLING:

Pair of bills from GOP, Dems seek to spur production

The chairman of the House Natural Resources Committee today announced he will introduce legislation to accelerate oil and gas development in the Gulf of Mexico and expand opportunities for industry to lease other federal waters.

Rep. Doc Hastings (R-Wash.) at a hearing this morning on the pace and impact of permitting in the Gulf said he would base his legislation on the testimony of local regulators, officials, industry and businesses in states along the Gulf Coast.

"I intend to introduce legislation to put the Gulf of Mexico back to work, and I intend to advance that legislation through this committee," Hastings said. "The Obama administration seems unmoved by thousands of lost jobs, rapidly rising gasoline prices and the threat these high prices pose to our economy. But this committee will not sit idly by."

The chairman did not provide additional details on the legislation, but a spokesman said it will be introduced by the end of the month.

A trio of Senate Democrats, meanwhile, introduced legislation of their own this morning that would force oil companies to accelerate the pace of drilling on federal lands they already lease.

The measure from Sens. Robert Menendez (D-N.J.), Charles Schumer (D-N.Y.) and Bill Nelson (D-Fla.) would require drillers to develop federal leases in "a diligent manner" or give them up for other companies to develop.

The lawmakers say 19 million acres of federal lands and waters are currently under development, while 60 million acres have been leased.

"We cannot afford a structure that allows companies to keep oil for a rainy day when they could be producing now," Menendez told reporters in the Capitol this morning.

The industry says it takes time to develop oil and gas plays on the federal leases. But the Democrats say there is no excuse.

"We don't know why these oil companies sit on their leases -- maybe they prefer to inflate their oil reserve numbers and therefore their stock prices, maybe they horde the leases because they want to keep competitors from producing on their land -- whatever their motive, it's clear one of the quickest ways to increase domestic fuel production is to push these companies to use or lose these leases," Schumer said, adding that Democratic leadership fully supports the measure.

"It's like the oil companies want to be taken out to dinner when they have a kitchen of full of food that's going to waste," Schumer added. "Maybe if we smack an expiration date on the unused groceries, they'll start cooking."

Oil industry advocates immediately blasted the legislation, calling it "pointless."

"It is especially ironic that Sens. Menendez and Nelson would introduce [this bill] at a time when the energy industry and the American people are begging our political leaders to issue permits to develop our abundant natural resources," said Consumer Energy Alliance President David Holt in a statement.

Gulf regulators warn of impacts

Hastings' comments came during a hearing this morning in which state regulators from Louisiana and Texas testified that the Obama administration is dragging its feet on the issuance of new drilling permits in the Gulf, costing local communities much-needed jobs and threatening an increasing dependence on foreign supplies of oil.

"Louisiana understands that it should not be business as usual and cannot be business as usual," in the Gulf, said Scott Angelle, secretary of the Louisiana Department of Natural Resources. "But we also understand that we can have regulation without strangulation."

Angelle called the government's safety reforms in the Gulf as a result of the BP PLC oil spill last year a "one size fits all" for deepwater oil and gas drilling. He argued that deepwater exploration remains at a "near standstill" and shallow water activity remains "crippled."

Republicans and some witnesses said the two deepwater permits issued in the past month for activities that had been banned under the Interior Department's moratorium, which was lifted last October, were for drilling that had already been permitted prior to the BP spill.

Angelle also warned that seven deepwater drilling rigs have since left the Gulf and that all earlier economic recessions were predated by a rise in the price of global oil and the price of gas.

Interior Secretary Ken Salazar in a conference call yesterday fired back at such criticism and cited statistics that offshore oil production increased by more than a third over the past two years.

"There's a lot of political hot air," Salazar said, cautioning again that the price of oil and gasoline is determined by factors beyond his agency's control. "This is one of those sound bites that makes it easy for critics of the administration to latch onto."

Interior has permitted 24 additional drilling activities in deepwater since the moratorium was lifted last October. The agency in March received 11 shallow-water and 10 deepwater permit applications, a rate of increase that suggests industry is becoming more confident in the new regulations established since the BP spill, Interior said.

Democrats fire back

Democrats on the panel accused Interior critics of massaging statistics and neglecting the devastation caused by the Deepwater Horizon tragedy, which included the loss of 11 lives and spilled 4 to 5 million barrels of oil.

"This hearing is apparently taking place in a parallel universe," said Rep. Ed Markey (D-Mass.) the ranking member on the committee, who pointed to the "systemic" problems with the offshore drilling industry identified by the presidential Oil Spill Commission earlier this year.

Four of the rigs that have left the deepwater are scheduled to return to the Gulf with five new rigs scheduled to arrive, Markey said. "They are returning, so it represents a confidence in the oil industry in what is happening," he said, adding that Republicans were living in a "rabbit hole of unreality."

Republican Rep. Louie Gohmert of Texas said some of the returning rigs were coming back to have repairs.

Republicans and witnesses this morning indicated they are also concerned that new deepwater exploration and drilling plans will be subject to additional National Environmental Policy Act reviews, as promised by Bureau of Ocean Energy Management, Regulation and Enforcement Director Michael Bromwich last August.

Angelle said ceasing the use of categorical exclusions for some activities will lead to "a very, very cumbersome and very slow process" and represents a break from the policy of Republican and Democratic administrations alike.

BOEMRE, which is under pressure from environmental groups that have already filed lawsuits designed to force better compliance with NEPA, has said it will temporarily cease the use of categorical exclusions for activities similar to that conducted on the Deepwater Horizon rig.

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