Members of Congress Eye Offshore Drilling in U.S. Budget Bill

Members of Congress plan to try and open new U.S. offshore areas to oil and gas drilling in a move that would bring in billions of dollars in new revenue.

The plan will face stiff opposition from environmental groups as well as from influential California, Florida, and New York lawmakers, who fear offshore drilling's impact on tourism. The move could come when the U.S. Senate and House of Representatives return from summer recess Sept. 6 and try to craft a package of federal spending cuts and tax reductions that Congress outlined last spring.

Opening more of the Gulf of Mexico and all areas of the Outer Continental Shelf (OCS) to energy exploration and production could raise billions of dollars in revenue for the U.S. government from the auctioning of federal leases. A similar effort to expand drilling failed earlier this year during congressional debate of the recently enacted energy law. This law, in contrast, offers billions in tax breaks for expanding drilling in existing onshore and offshore areas.

"The government is looking at considerable dollars coming from OCS lease sales," said one oil industry source, who asked not to be identified. The source added that, while figures were not yet firm, $3 billion in potential revenue was possible.

Currently, federal offshore drilling is allowed only in four states: Alaska, Alabama, Louisiana, and Texas. Already attached to the budget legislation is a Republican plan to open the Arctic National Wildlife Refuge (ANWR) to drilling, which should raise $2.4 billion over five years.

According to government estimates, the Outer Continental Shelf running along the U.S. coasts may hold as much as 76 billion barrels of oil and 406 trillion cubic feet of natural gas that can be recovered with existing technology.

On Monday, the U.S. Interior Department asked interested parties, including the energy industry and environmentalists, for suggestions on how to develop a leasing plan through 2012. That move would dovetail with efforts in Congress to lift the moratorium on offshore drilling.