Talks continue, but no breakthrough on drilling bill

Business groups last week voiced support for a Senate bill that would open fewer areas offshore to oil and gas drilling than its House companion, in hopes of breaking a legislative impasse before lawmakers return to the campaign trail.

Groups such as the American Chemistry Council, American Gas Association and National Association of Manufacturers, which collectively have formed the Consumer Alliance for Energy Security, favor the House bill because it allows drilling along the East and West Coasts.

The business groups say the federal moratorium on drilling over most of the Outer Continental Shelf has helped to drive up fuel prices by restricting domestic production.

But in a letter sent last week the groups said the Senate measure, which continues to limit offshore drilling to the Gulf, is good enough for now.

“We have come too far to go away empty handed,” the letter states.

“We think it is important to get something done this session,” said Jack Gerard, president and CEO of the American Chemistry Council. That group has argued high natural gas prices have forced its members to outsource thousands of jobs to areas with lower natural gas costs.

“The House has done yeoman’s work, but both bills produce gas,” Gerard said.

The basic difference is that the House would allow oil companies to drill 100 miles off the coast. States could also allow drilling closer to the shore. States would get a share of royalties paid on both new and existing oil leases, under the House bill.

During his trip to Capitol Hill last week, President Bush urged members to pass an OCS bill, congressional sources said.

The Senate measure, meanwhile, expands drilling in the Gulf, principally in an area known as Lease 181.

It would also allow Gulf states to share royalty revenue, but only on new leases. It also creates a 125-mile buffer along Florida’s coasts where drilling would not be allowed and extends the moratorium there until 2022.

Senate leaders have said that their bill is the only pro-production measure that could pass that body. But while business leaders are ready to accept the less ambitious Senate measure, House negotiators apparently continue to hold out for expansion beyond Gulf waters.

“We are not going to support a weak bill to score some political points,” said Chris Tucker, a spokesman for Rep. John Peterson, the Pennsylvania Republican who has taken a lead in pushing for drilling expansion.

Conferees have yet to be named but congressional sources said discussions have continued behind the scenes.

Gulf Coast senators met last week to discuss strategy. Later, Sen. Trent Lott, a Mississippi Republican, met with House Resources Chairman Richard Pombo (R-Calif.) to discuss the measure.

One House aide said a compromise that has been discussed would limit the states that can opt-out of the federal moratorium to Georgia and Virginia, which are thought to possess significant gas reserves offshore.

A Senate aide, however, said lawmakers from border states that could be affected by an oil spill have objected to that compromise.

The Senate bill is already a “carefully crafted compromise,” said the source.

Another House strategy, according to the Senate source, is to accept the Senate version and then try to open drilling along the East and West Coasts on another “must pass” measure,

But a House aide said that proposal has also been rejected.