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THE WALL STREET JOURNAL: Senators Push for Drilling In Gulf of Mexico

By JOHN J. FIALKA
February 17, 2006; Page A6
WASHINGTON — Hoping to ease gas prices and avoid an election-year fight over drilling off the Atlantic and Pacific coasts, leaders of the Senate Energy Committee are pushing to open 3.6 million acres for oil and gas exploration in the central Gulf of Mexico.
Chairman Pete Domenici (R., N.M.) said such a move would be the “single most important thing that Congress can do” this year to bring a substantial new supply of natural gas to market. Oil-and-gas industry experts consider the area prime territory for exploration because it is close to fields with proven reserves and near an offshore platform and pipeline network being built to bring more natural gas to shore.
The proposal by Mr. Domenici and the committee's ranking Democrat, New Mexico Sen. Jeff Bingaman, is an attempt to forge a bipartisan compromise that would avoid a much broader political fight. Some coastal states, led by Florida, California and New Jersey, want drilling on federal land off their coasts banned forever. A growing coalition of farmers, industries and interior states, who want more natural gas for fertilizer and as a feedstock for plastics and chemicals, want Congress to allow some states to waive existing bans on exploration off their shores and to obtain part of the royalties from production. The drilling moratoriums expire in 2012.
The portion of the Gulf that is in contention is called “Lease Sale 181 Area.” Arguing that potential leaks from oil wells could taint their beaches, Florida's senators want only 1.2 million acres to be opened, leaving a 150-mile “buffer zone.” The Interior Department recently proposed opening two million acres, allowing drilling to within 100 miles of Pensacola.
In testimony before the panel yesterday, Johnnie Burton, director of the Interior Department's Minerals Management Service, said the area has “a huge potential for natural-gas and oil resources.” She estimated production could begin within three or four years.
Sen. Domenici predicted the move to permit drilling would have a prompt impact on market prices. He said the area contains as much as six trillion cubic feet of natural gas and 13 billion barrels of oil. In 2005, according to the Department of Energy, the nation consumed about 20.6 million barrels of oil a day and 61 billion cubic feet a day of natural gas.
The test for his proposal will come later on the Senate floor, where Florida senators will attempt to cut the size of the access area and the industry-farm state coalition, led by Sens. John Warner (R., Va.) and Mark Pryor ( D., Ark.), will try to allow other states with an interest in drilling for natural gas, such as Virginia, to waive existing bans covering the Atlantic and Pacific coasts.
Sen. Robert Menendez (D., N.J.) said almost the entire New Jersey delegation would fight such an expansion which, he said, could create a “domino effect” along the mid-Atlantic coast. “Our beaches are too valuable to play Russian roulette with,” he said.
Shell Exploration & Production, a subsidiary of Royal Dutch Shell PLC, a major Gulf producer, applauded the committee leaders' move. However, the company warned in a statement that the area was “challenging” because of deep water and geological structures that are difficult to image with computerized seismic exploration equipment.
Write to John J. Fialka at [email protected]

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