Senate Approves Bill to Expand Oil, Gas Drilling

Gulf States Would Get Share of Royalties

The Senate approved yesterday a bill that would open more than 8 million acres in the Gulf of Mexico to oil and gas drilling, but it must be reconciled with a vastly more permissive House measure that would end a 25-year-old moratorium on drilling off the nation's Atlantic and Pacific coasts.

The bill passed 71 to 25 with the help of Gulf Coast senators whose states would receive a big share of the federal royalties on new production, and with the support of Minority Leader Harry M. Reid (Nev.) and other Democrats who are seeking to do something in response to high energy prices.

"Now, more than ever, America needs American energy," said Majority Leader Bill Frist (R-Tenn.). He said the bill would substantially reduce U.S. reliance on foreign oil and gas.

But many lawmakers complained that, under the bill, four coastal states -- Louisiana, Texas, Alabama and Mississippi -- would receive revenue that belongs to the entire nation, and that Congress should not open more of the Outer Continental Shelf to drilling without taking action to increase energy efficiency. Republican leaders blocked an effort to attach an amendment to the bill that would have gradually raised U.S. automobile fuel economy standards.

House Resources Committee Chairman Richard W. Pombo (R-Calif.) contends that the Senate version does not go far enough. The House measure would end the moratorium and permit drilling 50 miles or more from coastlines. States would have the option of passing legislation to bar drilling up to 100 miles from shore or to permit it to take place closer than 50 miles.

Coastal states would also get a share of the royalties from future and existing oil and gas production in federal waters, a clause that the Office of Management and Budget said could cost the Treasury hundreds of billions of dollars over 60 years. The administration favors the Senate bill.

Both Florida senators, Mel Martinez (R) and Bill Nelson (D), indicated that they would oppose a bill that would not protect their state's shorelines.

"This is it," said Reid, who opposes the House version. "Now, we'll be happy to look at whatever they propose, but I say . . . just feel good about the vote . . . and don't go back to the 'drill, drill, drill' theory."

Sen. Pete V. Domenici (R-N.M.) said House negotiators should beware of a possible filibuster. "We don't want to lose what we've got," he said.

The Senate measure would open 8.3 million acres in Lease 181 and an area south of there, considered promising natural gas prospects. It would also provide a 125-mile buffer zone for Florida. And it would channel 37.5 percent of the royalties to Gulf Coast states and 12.5 percent to the Land and Water Conservation Fund.

But it would not alter a moratorium on oil and gas drilling off the Pacific and Atlantic coasts, which has been in effect since 1981, after an oil spill that marred the beaches of Santa Barbara, Calif.

The heat wave, which drove up natural gas prices late last week and Monday, helped bolster the case for more drilling. Unusually high inventories helped ease supply concerns yesterday, but prices were still higher than they had been for weeks.

Many lawmakers supporting the bill cast it as a national security issue. Sen. George Allen (R-Va.), for example, said enactment of the bill would "makes us less dependent on the Middle East for energy."

The United States imports most of its natural gas from Canada, with Trinidad a distant second. Less than 1 percent comes from Egypt and Algeria combined.

The United States uses 21.9 trillion cubic feet of natural gas a year. Domenici said the new area might hold 6 trillion cubic feet of natural gas, which the bill's opponents said would have only a modest impact on U.S. supplies and prices.

Big industrial consumers of natural gas hailed the bill's passage.

"For the first time in 25 years, the U.S. Senate understands what the American public has known for the past four or five: that we're in a natural gas crisis and Congress has the ability to fix it," said Jack N. Gerard, president of the American Chemistry Council, an association of chemical companies that has led the business push for more drilling.

Environmental groups, however, continue to oppose drilling off U.S. shores, arguing that the country has not exhausted alternatives such as increased energy efficiency.

"At a time when Congress should be helping America create a whole new economy by pursuing faster, cheaper and cleaner solutions to our energy needs, it is absurd we are still talking about threatening our shores," Tiernan Sittenfeld, the League of Conservation Voters' legislative director, said in a statement. "It is far past time for Congress to support simple steps like making cars and trucks go further on a gallon of gasoline and increasing our use of renewable energy."