Congress turns to increasing natural gas production

Pipeline & Gas Journal, Jan, 2006

High natural gas prices were apt to be among the first issues Congress had to deal with when it returned to town in early January. With continuing shut-in Gulf production keeping upwards pressure on gas prices, key members of both the House and Senate were expected to re-introduce bills from the last session or introduce new bills.

Rob Minter, vice president, government & regulatory affairs, SUEZ Energy North America (formerly named Tractebel North America), says, "What I hear is everybody is positioning themselves to do something depending on the severity of winter." SUEZ owns and operates the LNG terminal in Everett, MA and delivers LNG to the Cove Point and Lake Charles terminals, too. SUEZ also owns power plants.

Senate Energy Committee leaders will introduce legislation to force the Bush administration to open additional sections of Lease Sale 181, an offshore gas bonanza off the Gulf Coast of Florida.

On Oct. 28, three Democratic senators sent a letter to Interior Secretary Gale Norton throwing their weight behind drilling in the entire Lease Sale 181 minus a buffer of 100 miles from the coast of Florida. The Clinton administration and then Florida Gov. Lawton Chiles had agreed to lease the entire 5.9 million acres which the Minerals Management Service estimates contains 11.69 Tcf of natural gas. But the Bush administration pulled back from that agreement tinder pressure from President Bush's brother, current Florida Gov. Jeb Bush.

Rep. Richard Pombo (R-CA), chairman of the House Resources Committee, will take a broader approach to off: shore natural gas development with his Ocean State Options Act, which would give coastal states control of energy production in the federal waters they border and generate nearly $900 million for the federal government in its first five years. That bill has considerable Democrat support, says Jennifer Zuccarelli, a spokeswoman for Pombo.

That was reflected by the fact that the House included the Ocean States bill in the first version of the budget reconciliation bill which came to the House floor in November, but failed to pass. The Pombo amendment, which was controversial, was bounced from the second version on the reconciliation bill, which did pass. "When people get their heating bills this winter, it will be clear that this is something America needs," says Zuccarelli. "'The chairman plans to see it through."

There is an outside chance there may be legislation forcing the Department of the Interior's Bureau of Land Management to move faster to clear up its a backlog of more than 3,000 applications for permits to drill (APDs) m the Rocky Mountain area.

"An analysis done for the Domestic Petroleum Council--and a similar analysis done far the Department of the Interior that has yet to be released--demonstrates that adequate funding and resources to process and clear out those backlogged pending APDs could increase natural gas reserves in the Rocky Mountain region by several trillion cubic feet some of which would begin flowing soon and would make a difference in today's tight market," Charles Davidson, chairman, president and CEO, Noble Energy, Inc. and chairman, Domestic Petroleum Council, told a House Energy & Commerce Committee hearing in November.