1. OFFSHORE DRILLING: Talk of Senate energy deal, but are there 60 votes? (E&E Daily, 07/10/2008)

Ben Geman, E&E Daily senior reporter

Gasoline over $4 per gallon and oil in the $140-per-barrel range is prompting questions that few expected when Democrats regained a narrow Senate majority in the 2006 elections. Among them: Is wider offshore drilling on the table?

Current leasing restrictions largely cover both coasts and much of the eastern Gulf of Mexico. GOP leaders point to polls showing growing public support for oil drilling and see fresh chances to push for relaxing the bans as part of an energy deal that includes conservation and other measures.

Few believe that that any wholesale lifting of drilling bans could reach anywhere near 60 votes. In 2006, a House-passed bill that relaxed the bans and provided states discretion on allowing drilling off their coasts was untenable in the GOP-controlled Senate.

However, the high prices have prompted questions about whether an energy package that includes more modest expansions of offshore production could win the 60 votes needed for nearly any major Senate bill.

Democrats, said Sen. John Thune (R-S.D.), are "under a lot of pressure to come together around some kind of an energy policy that includes more domestic production."

Republicans have tailored their message by muting calls for drilling in the Arctic National Wildlife Refuge and emphasizing that wider offshore leasing should be coupled with new conservation measures and enhanced oversight of futures markets.

Sen. Kent Conrad (D-N.D.) thinks the economic toll of record energy prices is prompting some senators to reconsider their opposition to wider offshore oil drilling, although he would not name names. Conrad is part of a bipartisan Senate group that is seeking a political compromise on energy and believes it should include wider offshore leasing.

Sen. Robert Menendez (D-N.J.) said he is worried.

Menendez is a staunch foe of coastal drilling, and says it will not affect prices. But he adds there has been enough linkage between the two issues in the public debate to create new pressure on the leasing bans. "We are challenged with rising pressure and rising prices," he said. "I don't know if there is a critical mass, but there is greater uncertainty than we have had in the past."

Will Dems cross over?

To be sure, advocates of relaxing coastal leasing bans face major challenges winning floor time and enough Senate support. Democratic leaders in both chambers have deflected calls opening up new areas, frequently stating that they favor domestic production but that oil companies are failing to produce on leases they already have.

Senate Democratic leadership has been cool to expanded offshore drilling, although they have not shut the door on the idea either. Majority Whip Dick Durbin (D-Ill.) said oil companies have tens of millions of acres already that they should be developing.

"Beyond that, if someone has a suggestion of some new area to go into, I will look at it," he said. "But my vote has been consistently against expanding offshore drilling."

The level of support would depend on how many pro-drilling votes are out there among Democrats beyond some conservative Democrats from the Midwest and South such as Mark Pryor (D-Ark.), who are already favorable toward the issue.

"I do hear more questions [about offshore drilling] coming from the consuming public because gas prices are so high right now," Pryor said Tuesday. But Pryor does not see a tide of new support in Washington, at least not so far.

"I don't know if I can say it is really growing here," he said. "I would not be surprised if the sentiment grows here a little bit, but I have not picked up on it yet."

Moderate GOP members also could play a key role. Sen. Olympia Snowe (R-Maine) could be open to wider offshore leasing if it included appropriate environmental protections and was part of a "balanced" energy policy, spokesman Kurt Bardella said. Snowe opposes drilling off the Maine coast.

2006 revisited?

Two years ago, the Senate approved a bill that opened up 8.3 million acres of the eastern and central Gulf of Mexico and gave Louisiana, Texas, Mississippi and Alabama a major share of royalties.

That bill passed the Senate, 71-25, in August 2006 and later cleared both chambers -- and was signed into law -- when it hitched a ride on a tax policy bill in December of that year.

Sen. Tom Carper (D-Del.) said there might be support for opening more gulf areas, but not a broad relaxation of leasing bans. "I am not sure there is an appetite to open the outer continental shelf to oil exploration at this time. I am not prepared to go there," he said. "But there are opportunities in the gulf. ... There is a willingness to explore some of those options."

The 2006 bill gave Florida protections in the form of a 100-125 mile no leasing buffer for Florida until 2022. Asked if he could support further exploration in the gulf, Sen. Mel Martinez (R-Fla.) said, "it depends on how we do it, but I would honor the '06 agreement."

Another idea that had been bandied about includes allowing exploration off the coast of Virginia. The two Virginia senators -- Jim Webb (D) and John Warner (R) -- have sponsored a bill that would allow natural gas drilling off the Virginia coast with the state government's concurrence, and a share of the revenues.

Various state "opt-out" ideas have been floated in recent years. But Durbin told reporters Tuesday he does not favor the idea of allowing states to make decisions about drilling. "I think it should be a national policy as to those areas where we will declare things off-limits," he said.

Senate Democratic leaders face a series of pressures against allowing a vote on opening new coastal areas, including opposition from environmental groups that form an important constituency. Also, the party's presumptive presidential nominee, Sen. Barack Obama of Illinois, has attacked White House rival Sen. John McCain's (R-Ariz.) calls for relaxing the current moratoria.

Majority Leader Harry Reid (D-Nev.) yesterday told reporters that lawmakers should focus on steps he said could affect prices in the short-term. "There are very few things we can do to lower the price of gas immediately," he said. "There are some things we can do. Taking oil out of the [Strategic Petroleum] Reserve, doing something about speculation and doing something about renewables."

Across the Capitol, House Republicans see wider support and are pushing relentlessly for votes on expanded coastal drilling, which has prompted Democrats to pull back from moving spending bills that Republicans want to amend with offshore production measures (E&ENews PM, July 9).

Regardless of the outcome of the current Capitol Hill talks and attacks, the doubling of oil prices over the last year have altered the terms of debate.

"It is unclear what $140 oil will bring us, but it is clear that the higher the price goes, the greater the likelihood for a bipartisan compromise on both production and efficiency," said Paul Bledsoe of the bipartisan National Commission on Energy Policy.

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