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Energy Bill Revised; Delivered to Senate/House

Posted on: Saturday, 1 October 2005, 03:01 CDT

By Anonymous

U.S. House of Representatives and U.S. Senate energy bill negotiators recently completed their work on the energy bill, paving the way for a final House passage and approval from the Senate. Despite two amendments that sought to strip this provision from the final version, the energy bill includes a section calling for the Minerals Management Service to conduct an inventory of oil and natural gas resources on the Outer Continental Shelf. The energy bill also calls for a coastal assistance compromise, giving $1 billion in direct spending over a four year period for coastal protection to states that currently allow oil and gas exploration off their shorelines. The measure, according to the National Ocean Industries Association (NOIA), is specifically aimed at the state of Louisiana, which would receive nearly 54 percent of the funds for its sinking coastline.

In addition, the Senate legislation gives the federal government the right to approve the location of liquefied natural gas terminals in order to encourage the construction of such facilities and increase the supply of natural gas. The energy bill also contains a number of royalty relief provisions. The bill permanently authorizes the use of royalty-in-kind payments where, according to NOIA, companies fulfill their royalty obligations with physical commodity rather than cash payments.

The conference also made some changes to offer a third tier of royalty suspension volume for a lease on the first 35 billion cubic feet of deep gas production on new wells drilled and completed from 20,000 feet or deeper subsurface. The energy bill addresses the Coastal Zone Management Act's consistency provision by specifying a time frame of 270 days within which the secretary of commerce must make an official decision on appeals to consistency determinations.

In addition, the energy bill excludes from regulation, under the Safe Drinking Water Act. the use of hydraulic fracturing, a practice that involves pumping a high-pressure fluid normally a mixture of water and a high-viscosity fluid additive-into a well with sand. This process is used to create fractures in the rock that allow oil and gas to flow more readily through the rock, therefore, increasing well production. /st/

Copyright Compass Publications, Inc. Sep 2005

Source: Sea Technology

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