Energy Policy:

Rep. John Peterson of Pennsylvania makes the case for offshore natural gas bill

The Senate Energy and Natural Resources Committee recently passed a bill to open more of the Gulf of Mexico to energy exploration. But do House lawmakers favor broader legislation on offshore drilling instead? During today's OnPoint, Rep. John Peterson (R-Pa.), a member of the House Resources Committee, talks about the need to boost domestic supplies of natural gas. He describes how his bill would lift offshore natural gas leasing bans to within 20 miles of the coast. Peterson also addresses about the outlook for his legislation this year and Florida lawmakers' opposition to new drilling measures.


Brian Stempeck: Hello and welcome to OnPoint. I'm Brian Stempeck. Joining me today is Congressman John Peterson, Republican of Pennsylvania. Congressman thanks a lot for being here today.

John Peterson: I'm glad to be here. Thanks for the opportunity to talk about this important issue.

Brian Stempeck: Now you're the sponsor of a major bill to allow more natural gas drilling on the outer continental shelf. Explain for us, briefly, why is a congressman from a landlocked state so interested in offshore drilling?

John Peterson: Well, many years ago I began to realize the shortage of natural gas we were developing in this country, when we started using natural gas in an unlimited fashion for power generation and did not open up supply. There were those who were predicting that this situation would be involved. And what a lot of people in America don't realize is that when we pay $60 or $70 for oil the whole world does. But we've had the highest natural gas prices in the world for a long time now. And that puts us at a terrible economic disadvantage in the global economy. And all of the companies that use a lot of natural gas, like people who melt products, you know, aluminum and steel companies, petrochemical, use it as an ingredient and they use it as a fuel. Polymers, plastics use huge amounts of natural gas. And fertilizer business, we've lost over half the fertilizer business in this country because they use a huge amount of natural gas. So anybody that uses a lot of natural gas is just not going to compete in the world marketplace. And what will happen over a period of time is we will lose all of the industries I've just mentioned. They will not do it in this country. We won't make glass in this country. We won't make bricks in this country, because all of them use a huge amount of energy and usually its natural gas. And so, and homeowners, this year, you know, we have people struggling to pay their natural gas bills. Sixty percent of Americans heat their homes. Small businesses, many of them use it to heat their businesses. So anybody who uses a lot of natural gas has really been disadvantaged. And there's no need for it because natural gas is the one fossil fuel, number one it's the cleanest. It's odorless. It's colorless. It's lighter than air. It evaporates into the air if it escapes. It's not a dangerous thing. It's not an environmentally, a gas well has never polluted a beach. A gas well has never polluted the shoreline. It's not something we should be fearful of. It's not something we should be closing up the production of. In fact, I think natural gas can be the bridge to our future. It can get us to where renewables are a bigger player. Or we can get more ethanol and more biodiesel and more wind and more solar and more hydrogen and all of the other fuels that are out there, biomass. Those are, it's going to take time to develop them, but natural gas is here.

Brian Stempeck: Now your bill would basically open up the coastlines to within 20 miles and a lot of states the ability to basically lobby and open up even beyond that.

John Peterson: That's correct.

Brian Stempeck: The bill we just saw move from the Senate energy committee this morning, just as we're, right before we taped this interview, is basically a lot more limited than that. It just deals with the lease sale, 181 area in the Gulf of Mexico. By all accounts Senator Domenici says he wants to work on a much more narrowly focused bill in the Senate. Is that something you're willing to compromise on? Your bill is a lot broader than that.

John Peterson: Well I think Domenici is very interested in my bill. If we could pass my bill with big numbers in the house, he told me that he might be able to get the Senate to move on it. He's very supportive of what I want to do. I'm very supportive of what he's doing, because his bill will open up Tract 181. I mean in my view it was a terrible mistake of this administration not to lease Tract 181. It's not property of Florida. Florida has been in the way. This is not their land. They now are using a new system of international standards to draw the lines. That releases 181 from Florida's control. It's not their territory. They should never have had veto power with this administration to not lease 181. And the reason 181 is so important and why I support it so strongly is the production there. If they would drill for both gas and oil there, its right, the infrastructure's there. They can immediately get it into the pipeline. It'll be the quickest access to get more gas and more oil than we have anywhere. Mine will take longer, but I don't think it will take as long as the other proposals that would leave it up to the states, where you'd have the states the right to opt out of the moratorium. We think we should just relinquish the moratorium.

Brian Stempeck: What do you think is the most likely outlook this year? This bill seems to have strong support in committee from some Democrats. It seems to be headed towards the Senate floor and then over to the House. What is your opinion in terms of what should happen next? I mean if that bill doesn't pass, are you going to offer your broader bill as an amendment to this very narrow 181 bill?

John Peterson: Well we'll negotiate with Mr. Domenici and see what he thinks he can win over there. We've been promised by the House that my bill will get marked up, that my bill will get considered on the floor this spring. So we want to do that. Then we have two bills and then we'll discuss. But we meet somewhat regularly with Senator Domenici. We think he's the champion over there that can bring energy to this country. And we're very supportive of what he wants to do. I don't see them as competitive. I think he has, this bill is what the Senate can do right now. A strong vote in the House, the more we debate the natural gas issue the more likely we are to fix it because there's not a good argument against it, in my view. This is not rocket science. This is not complicated. Every nation in the world drills offshore for both gas and oil, both. So I'm just offering up gas, which should be the least controversial. And for us not to pass this will be a major policy mistake in this country. And will cost us millions of jobs that we will, we will do it sooner or later. Sooner or later we'll open up the OCS because everybody uses it. That's the least problematic area to produce both gas and oil.

Brian Stempeck: Just talking about the politics alone, do you really think it's realistic that you are bill can pass this year? I mean it seems like the reason Senator Domenici pared his proposal down so narrowly was to get the support of Democrats, to get something done. If that's the case, if that's the only thing they can get through in the Senate, is that something you're willing to support or is that not ...

John Peterson: Well, I'll support his bill, but I will not let up on pushing my bill. And he told me if we could pass our bill with a strong margin he'd consider it over there. He would try to bring it up over there. Now you know the Senate is the harder, more difficult body to do things in. You know it's just, with their rules it's very difficult. But I believe, personally, I believe that when the American public understands, in fact, I'd make a bet that if you did a poll today off of the Florida coastline the majority of Floridians would support offshore drilling. That's my personal opinion. I hope somebody will do that. And I've talked to members of Florida who support me, or at least one member of Florida who supports me, he believes that's true too. I think the American public will support production of natural gas. I don't get any resistance at all from groups I speak to. They all say pretty compelling. Why aren't we doing it?

Brian Stempeck: Is it feasible though? We had the director of Minerals Management Service on our program a few months ago and she said that the idea of gas only drilling, well, it's not totally proven. I mean the, what happens if you come across oil reserves? What happens if, I mean, she said she wasn't totally sure how feasible that really was.

John Peterson: Well, the producers tell me it's feasible and they're the people that produce gas and oil. They say, yes, it's very feasible. Independents have come to me and said John, keep pushing. You're, it's very feasible. Well I understand. I grew up within 5 miles up Drakes well, that's the first oil well ever. When you drill for oil you go through different oil sands, sands that produce gas. You know some produce gas. You can drill right by them. You can case them off. You don't have to produce them. So you can go by two layers of oil and then hit major gas and produce the gas only because you put your casing all the way down. You cement the bottom. You're not, you're no longer in that oil sand. You just went right by it. So that happens back home. They'll have five different sands and they may hydrofrac two of them because those are the two they think are most likely to be productive. That is not a problem. It would be nice, I mean, there was some resistance from the big oil companies when I split it because it's never been split before. And it was we're putting oil in a bad light. I don't think we're putting oil in a bad light. We're just saying that natural gas is the crisis. We can't drill our well. We can't, with our drilling in this country we can, we can't measurably change oil prices. We can measurably change the gas prices. We can make gas an affordable commodity. That's our bridge to the future. It's the clean fuel and we ought to be doing it.

Brian Stempeck: At the same time, in a lot of hearings I've seen you at, Interior appropriations, a lot of times you bring up how a certain policy affects your constituents. If you were a member, a lawmaker in Florida, wouldn't you be voting the same way they are? Would you be fighting this proposal? I mean ...

John Peterson: No, no.

Brian Stempeck: The major concern seems to be there's been some studies that MMS has commissioned that say if there was an oil spill, even a small one, that oil could end up on the Panhandle beaches within 24 hours. If you were a Florida lawmaker, wouldn't you vote that way as well?

John Peterson: No, because I believe that the good of this country is far more than the good of one state. No one state should be setting energy policy in this country and Florida is misguided in their fear of drilling. People who are, you know, we haven't had an oil spill in offshore oil production since '69. How long do you have to do it right? I mean I, those who are afraid of natural gas, when you're 20 miles offshore no one knows you're there. You're out of sight at 12 miles. This is the most, this is the best place to produce energy. Everybody, you know Canada drills in our Great Lakes and sells us the gas, gas only. They drill gas only in our Great Lakes. They drill gas and oil off the coast of Maine and off the coast of Washington and sell it to us. I mean we are, you know our only other major import of natural gas is Canada. Now there are those who think this gas issue is solved with LNG, with great differential in price when we had $15 gas and one and two dollar gas in foreign countries. We imported less LNG in '05 than we did in '04. Why? Because we couldn't get it.

Brian Stempeck: One last question for you Congressman, because we're running out of time. I saw your remarks after the White House, President Bush gave his State of the Union address. And I also saw your remarks criticizing the MMS proposal when it comes to the Gulf of Mexico and what they're going to do with offshore drilling there. What, in your opinion, should the administration be doing? It seems like you don't feel like the White House is really doing enough on energy. You wanted to see more details from the State of the Union. What would you like to see President Bush come out and do?

John Peterson: Well I was for his plan of alternatives, that we need to juice that up. We need to fund those. But the answer is production in this country. You know that's the, there's no reason not to produce in this country. And there's certainly, absolutely, no arguable reason not to produce natural gas. I'm for both, but I'm just for natural gas now because I think I can get that. Our chance of doing natural gas only is greater than if we do both. I'd prefer to have both, but natural, I'm going to tell you, if the president doesn't step forward on this he is, it's going to be on his time, on his watch, that major industries leave this country, not for cheap labor, because of cheap energy in other countries.

Brian Stempeck: Congressman thanks so much for being here today. We appreciate it.

John Peterson: Oh it's a pleasure. Thank you for the opportunity.

Brian Stempeck: I'm Brian Stempeck. This is OnPoint. Thanks for watching.

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