CORRECTED -- Domenici, Colleagues Introduce Bipartisan OCS Bill, Anticipate Debate, Vote Next Week
New bill brings 5.8 tcf of gas, 1.26 billion barrels of oil to market; protects Florida coast; shares revenues
July 21, 2006
10:22 AM
CORRECTED CORRECTED CORRECTED
Washington, D.C. – Senate Energy & Natural Resources Chairman Pete V. Domenici today introduced the bipartisan Gulf of Mexico Energy Security Act, legislation that directs new oil and gas leasing in 8.3 million acres of the Gulf of Mexico.
The bill is cosponsored by Majority Leader Frist and Senators Cochran, Cornyn, Hutchison, Landrieu, Lott, Martinez, McConnell, Sessions, Shelby and Vitter. The bill was filed under Senate Rule 14. Debate is expected to begin on the bill next week.
The legislation directs the Department of the Interior to begin oil and gas leasing in designated parts of Lease Sale 181 no later than one year after the bill becomes law and directs leasing in 181 South as soon as practicable. It places a 16-year moratorium on oil and gas activity near the Florida coast and excludes certain parts of 181 and 181 South that are either used for military training activity or are near the Florida coast.
The Gulf producing states will receive 37.5 percent of the revenue from oil and gas development in the new areas with an additional 12.5 percent going to the Land and Water Conservation Fund for the state assistance program and the remaining 50 percent to federal coffers. After 2017, the Gulf producing states will also receive 37.5 percent of revenues from new leases in areas of existing development adjacent to Lease Sale 181.
Chairman Domenici:
“My top priority this year has been OCS legislation that makes a real difference in our energy supply. Every time the price of oil has climbed to a new high, I have intensified my efforts to do this bill. I thank my colleagues on both sides of the aisle for their hard work in crafting with me a bill that protects our environment while bringing enough oil and gas to market to ease supply constraints and stabilize energy prices. This bill strikes the balance I always strive for between our need for energy and our commitment to our environment. This legislation honors both priorities.”
Senator Cochran:
“This agreement represents some of the best work Congress has accomplished all year. This legislation will increase domestic oil and gas production and help the United States address the rising cost of energy by decreasing dependence on foreign sources of energy.”
Senator Cornyn:
“As an energy leader, Texas will play a strong role in this new offshore oil and gas exploration. My state also stands to benefit from a reasonable and fair royalty sharing program to help coastal states deal with the environmental effects of these activities,” Cornyn said. “And I’m encouraged that this bill will increase new domestic energy sources, decreasing our dependence on foreign supplies.”
Senator Hutchison:
“We can no longer stand by and neglect our own oil and gas resources in the Gulf of Mexico. This legislation will provide critical access to domestic energy supplies and help consumers with the price of oil and gas. It is a good step in the right direction as we work to become more energy independent.”
Senator Landrieu:
“This bill is a way to provide more energy to Americans to help lower and stabilize gas prices. At the same time, critical resources will be made available to Louisiana and the Gulf Coast states to rebuild our wetlands and strengthen our levees and hurricane defenses. It sets in place a partnership that works –for the nation and for the states; for the coast and its economies; and for the Gulf itself. None of this would have been possible without Senator Domenici, who has been a leader on energy issues for more years than most of us can count.”
Senator Lott:
“It is the Gulf states like Mississippi which accept, enable and support energy exploration near our shores,” Senator Trent Lott of Mississippi said. “At a time when our nation needs its domestic energy resources more than ever, fundamental fairness dictates that states and local communities who voluntarily sustain this important energy industry should receive part of these proceeds as coastal impact assistance.”
Senator Martinez:
"There's a delicate balance between developing our nation's natural resources and respecting the wishes of its individual states; this bill meets both and I thank the chairman for his hard work. I look forward to seeing this bill become law."
Senator McConnell:
“America needs to reduce its dependency on foreign sources of oil and this bipartisan legislation does that. This agreement provides for a substantial increase to America’s domestic energy supply, and strengthens our national and economic security.”
Senator Sessions:
“There’s nothing we can do this year that would have more impact in helping us to contain the price of gasoline and natural gas than passing this bill. When we buy our energy from abroad, we transfer our wealth to those foreign countries, many of which are not our allies and are not friendly to the United States. This legislation will keep that wealth at home, creating American jobs and revenues for the American treasury.”
Senator Shelby:
“We must continue to expand our domestic production capabilities in the United States while increasing research on new and alternative energy sources. This agreement will help reduce the burden throughout the country by bringing new production online and ultimately reducing the cost of oil and gas.”
Senator Vitter:
"The Gulf Coast has been one of the largest single sources of domestic energy for decades. In addition to providing the U.S. Treasury with over $160 billion, this region has literally powered this nation's growth and prosperity. This agreement should have been enacted 50 years ago. I appreciate the committee's efforts to move it now. It recognizes the tremendous contribution the Gulf States have made to America's energy security while providing new, abundant sources of safe, clean, environmentally sensitive energy to power our prosperous future.”
BILL SUMMARY:
Energy production:
This bill is the strongest energy-producing legislation filed in the Senate this year. According to the MMS, the 8.3 million acres being developed contain 1.26 billion barrels of recoverable oil and 5.8 trillion cubic feet of natural gas. The natural gas supply made available through this bill is enough to heat and cool nearly 6 million homes for 15 years.
Lease Areas:
¨ Directs leasing in the 181 Area, excluding:
areas East of the Military Mission Line; and
areas in the New Eastern Gulf of Mexico Planning Area within 125 miles of the State of Florida; and
areas in the New Central Gulf of Mexico Planning Area within 100 miles of the State of Florida.
¨ Directs leasing in the 181 South Area, excluding:
areas East of the Military Mission Line; and
areas in the New Eastern Gulf of Mexico Planning Area.
Leasing Prohibitions:
¨ No oil and gas leasing, pre-leasing and other activities within 125 miles of State of Florida in the New Eastern Gulf of Mexico Planning Area until June 30, 2022.
¨ No oil and gas leasing, pre-leasing and other activities within 100 miles of the State of Florida in the New Central Gulf of Mexico Planning Area, and east of the western boundary of the 181 Area until June 30, 2022.
¨ No oil and gas leasing, pre-leasing and other activities east of the Military Mission Line until June 30, 2022. After which the Department of Defense may veto leasing.
¨ Secretary of the Interior to establish within one year of enactment a regulation that provides for an option to exchange leases in areas unavailable for leases within 125 miles of Florida coastline in New Eastern Gulf Planning Area for leases in areas available for leasing in the Gulf of Mexico.
Revenue sharing:
¨ Revenue sharing on new areas of production made available by this agreement beginning in FY 2007 and each fiscal year thereafter (181 Area on the eastern Gulf side and 181 South Area):
37.5 % to Gulf producing states
12.5 % to Stateside LWCF
50 % to Federal Treasury
¨ Revenue sharing on new leases after date of enactment in existing planning areas beginning in FY 2016 and each fiscal year thereafter (Gulf of Mexico planning areas):
37.5 % to Gulf producing states
12.5 % to Stateside LWCF
50 % to Federal Treasury
There is a $500 million annual net spending cap on revenue. Net is spending in excess of receipts coming in from new areas opened up under this bill.
