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June 30, 2006
Also appeared in print July 10, 2006, p. 6


House Approves Offshore Drilling Plan

Chemical manufacturers say bill will boost natural gas supply and make energy affordable

Glenn Hess

Chemical industry officials are hailing House passage on June 29 of legislation that would lift a quarter-century federal ban on most offshore drilling for oil and natural gas. They say the measure will help save U.S. jobs and put the nation on a path toward energy independence.

The House voted 232 to 187 to approve the Deep Ocean Energy Resources Act of 2006 (H.R. 4761), a measure that would open up waters off the east and west coasts and in the eastern Gulf of Mexico off Florida, where trillions of cubic feet of natural gas and billions of barrels of oil have been off limits for exploitation.

"Today's strong bipartisan vote was one of the most important of the past two decades," says Jack N. Gerard, president of the American Chemistry Council. "Affordable energy is inextricably linked to America's economy, jobs, competitiveness, and security. Now it's up to the Senate to act to put America on a path toward a stronger, more secure future."

Robert Slaughter, president of the National Petrochemical & Refiners Association, notes that the chemical industry, which relies on natural gas as a feedstock, has been particularly hard-hit as plants and jobs migrate to areas of the world with significantly lower feedstock prices.

"This legislation, allowing states the option of accessing offshore resources, will provide signals to the energy markets that future energy supplies are available, potentially easing some of the upward price pressure on oil and natural gas markets," he says.

Slaughter says studies indicate that natural gas from the outer continental shelf could provide the U.S. with 633 trillion cu ft of natural gas, which is about 25 years' worth of natural gas supply.

The bill gives states the authority to prohibit or allow energy production within 50 miles of their coastline, while allowing the Department of the Interior to authorize energy exploration from 100 miles out.

For waters 50 to 100 miles from shore, the bill includes language that would give coastal states one year to pass legislation requesting that the ban remain intact. If they do not, natural gas could be produced immediately. States would have three years to pass legislation extending the ban on oil production.

The bill still must be reconciled with a narrower plan pending in the Senate that would allow drilling in nearly 3 million acres of federal waters in the eastern Gulf of Mexico off the Florida panhandle.

Chemical & Engineering News
ISSN 0009-2347
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