Lawmakers reach deal on offshore drilling bill - Yahoo! News

WASHINGTON (Reuters) - Republican and Democratic lawmakers on the House Resources Committee have reached a compromise on legislation that would allow oil and natural gas drilling in more offshore waters, the panel's chairman said on Monday.
The bill would allow energy companies to search for oil and gas beyond 50 miles of the coastlines of states where drilling activity is now banned, unless a state acts to continue the drilling prohibition.
The drilling ban would continue within the first 50 miles offshore, unless an affected state decides to allow energy exploration with the express approval of its legislature and governor.
Resources Committee Chairman Rep. Richard Pombo (news, bio, voting record) of California criticized the current drilling bans because they don't allow states that want to develop energy resources off their coasts the ability to do so, or give states that want to continue offshore production any assurances they can for the long term.
He said the legislation "creates a flexible framework that balances the interests of different states by putting the states themselves in the driver's seat with unprecedented authority over their coastal resources."
The committee is set to vote on the bill on Wednesday.
Under the legislation, states would have one year to decide whether to allow or deny natural gas drilling in the area from 50 miles to 100 miles off their shores. If a state takes no action, the federal government could lease offshore tracts for natural gas, but not crude oil, drilling.
States would have much longer until June 30, 2009 to enact bans on oil drilling from 50 miles to 100 miles offshore.
Drilling would be prohibited within 25 miles of the coastline of a neighboring state that does want drilling in its adjacent waters.
To encourage drilling, states would get a bigger share of royalties energy companies pay the government on their oil and gas production.
Currently, only the central and western Gulf of Mexico and limited areas off Alaska are open to drilling.
The committee's action would allow companies to search for gas in the Atlantic and Pacific Oceans and the eastern Gulf of Mexico off the Florida coast.
Environmental groups slammed the legislation.
Athan Manuel with the
Sierra Club' name=c1> SEARCHNews News Photos Images Web' name=c3> Sierra Club said the bill was "a product of secret backroom deals that undercuts decades of strong coastal protections."
He noted that similar bills to expand offshore drilling have been voted down by the full House of Representatives. Such drilling measures also face strong opposition in the Senate.
Energy companies have complained for years they need access to the oil and natural gas in federal waters where drilling is banned to get the supplies needed to meet growing U.S. energy demand.
The Interior Department estimates the areas subject to drilling bans hold between 94 and 164 trillion cubic feet of natural gas and 21.25 and 40.6 billion barrels of oil.
The legislation also gives the U.S. Interior Secretary authority to renegotiate lease contracts with energy companies that signed contracts in the late 1990s that accidentally left out language ending royalty relief when the price of oil averaged $40.50 a barrel and gas costs $6.75 per thousand cubic feet.
Energy companies that refuse to renegotiate those contracts, and agree to pay billions of dollars in royalties, would have to pay a new fee of $9 per barrel on oil and $1.25 per thousand of cubic feet of gas produced in the relevant leased tracts in the Gulf of Mexico.