U.S. Senate Approves Expanded Offshore Drilling in Gulf of Mexico

The energy bill in the current Congressional session has the most realistic chance of becoming law, took a huge step forward on Tuesday as the Senate voted to open 8.3 million acres of federal waters in the central Gulf of Mexico to oil and gas drilling. The vote sets the stage for a confrontation with House leaders who want to expand drilling even further. The Senate bill is hailed by its backers as the plan that can produce needed domestic energy which will in turn provide price relief for American consumers. The bill, passing with ease in a 71-25 vote, must now be reconciled with more far-reaching drilling legislation passed by the House in June. Negotiations, expected to be difficult, will begin in September.

Even if the bill can be reconciled with the House version, it will be many years before any oil or gas will be produced from the proposed areas. Additionally, some lawmakers complained that it did not go far enough. Although the bill was passed with broad bipartisan support, the prospect of final Congressional approval is, at best, uncertain. House versions allow exploration to areas well beyond the central Gulf waters specified in the Senate plan and also removes long standing restrictions on drilling on the Atlantic and Pacific coasts. A broader Senate bill, if crafted along the lines of House recommendations will likely result in a filibuster, effectively killing the drilling proposal.

The House bill would allow individual states to decide whether to continue the drilling bans. Meanwhile, millions of acres affected by the Senate measure remain untapped and may contain more than 1.2 billion barrels of oil and almost 6 trillion cubic feet of natural gas. Despite lobbying from environmentalists who argue that expanded drilling would threaten coastal beaches and marine life, broad opposition to the Senate version faded when Senate moderates agreed to go along if the Senate promised not to approve the House measure. The news that Cuba, with the assistance of other countries, is already drilling in close proximity to the U.S. coast probably weighed heavily on lawmakers minds, as well.

One of the more controversial provisions of the Bill stipulated that Gulf Coast states would increase their royalty revenues from 2% to a whopping 37%, with Louisiana expected to be the primary beneficiary of a windfall that could reach $10 billion annually. Critics decried the diversion of funds, but Senator Mary Landrieu (D-LA) responded that Louisiana and other states have long assumed the burden of producing 25% of the nation’s energy while receiving none of the rewards. Additionally, she added, “We will use the money to restore a great coastline and restore the great wetlands” off the Louisiana coast.