Senators Reach Compromise on Offshore Oil, Gas Drilling Proposal

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Senate leaders produced a compromise on offshore oil and gas drilling Wednesday that they hoped would satisfy lawmakers in Florida and other coastal areas who fear for their tourist-based economies.

The deal would limit new offshore development — outside the central and western Gulf of Mexico — to an area of the eastern Gulf known as Lease Area 181 and protect waters within 125 miles of the Florida coast.

To gain support from states that already allow offshore oil and gas development — Texas, Louisiana, Mississippi and Alabama — it would substantially increase the royalty revenue that would be funneled to those states.

This "will protect our shoreline," said Sen. Mel Martinez, R-Fla., who negotiated the compromise with GOP leaders and had insisted that protection be extended to at least 125 miles off Florida's shore.

But Sen. Bill Nelson, D-Fla., said he's not yet convinced and still held open the possibility he would filibuster the legislation, meaning supporters would have to get 60 votes to get it through.

Nelson called the compromise "very promising" but said he was reserving judgment until he looks at the details. And he said he also wants some assurance that the delicate compromise would not be shattered in negotiations with the House, which has approved a much broader offshore drilling bill.

The House-passed bill would end, beyond 50 miles, the quarter-century drilling moratorium that has been in effect in virtually all waters outside of the central and western Gulf of Mexico, although it would give states a way to maintain the drilling ban if they chose.

In contrast, the Senate proposal, expected to come up for floor consideration later this month, would keep the current drilling ban intact and extend it by 10 years to 2022.

The Lease Area 181, which is 100 miles south of the Florida Panhandle, is not formally under the congressional drilling moratorium, but there have been no lease sales under an agreement between the Bush administration and Florida.

Senate Majority Leader Bill Frist, R-Tenn., who announced the compromise at a press conference joined by eight senators mostly from the Gulf coast region, called it a "bipartisan compromise" that will provide "historic protection to the state of Florida."

The Senate measure would open about 8 million acres including 1.6 million acres of Lease Area 181 that government geologists believe contains significant amounts of both natural gas and oil. It also would make available about 6.3 million acres to the south, an area less likely to be leased or developed soon because of the water depths and distance from infrastructure.

"This is the best single energy arrangement we can make this year. ... The leases are ready to go," said Sen. Pete Domenici, R-N.M., who worked out much of the compromise. He said the area contains 1.25 billion barrels of oil and at least 5 trillion cubic feet of natural gas.

Domenici said he believes there is enough support in the Senate to get the 60 votes needed if it becomes the target of a filibuster by Nelson or another senator.

Dealing with the House may be another matter. The House bill, approved two weeks ago by a 232-187 vote, goes much further in allowing offshore drilling than many senators are willing to accept.

Nelson said his support hinges on Frist getting assurance from House Speaker Dennis Hastert, R-Ill., that the House will take up the more limited Senate bill separately. Frist said he has no such assurance, but he planned to discuss the matter with Hastert.

The House bill also would dramatically alter the revenue sharing from both existing and new offshore leases, giving states where there is offshore development 50 to 75 percent of the royalties. Such a revenue shift is opposed by the White House.

The Senate bill offers a more modest revenue sharing program, giving the four oil and gas producing Gulf states 37.5 percent with another 12.5 percent to go into a conservation fund and 50 percent to the U.S. Treasury.

Sen. Mary Landrieu, D-La., who fought for the revenue sharing changes, called it a fair partnership with the producing states. "Currently we get less than 2 percent," she said.