Senate Pushes Expanded Oil Drilling in Gulf of Mexico

In the 1980s, Senators and Representatives introduced legislation to protect the Gulf of Mexico, to restrict drilling. This Congress plans to expand drilling. This week the Senate quadrupled the President's request (map - pdf) for new acreage in the Gulf of Mexico.

Less than two weeks after S. 3711 was introduced, the Senate voted 71-25 to open up an additional 8.3 million acres of east-central Gulf of Mexico to drilling, ostensibly "to provide relief for consumers."

However, no new crude will hit the market for 4-5 years -- and when it does, it will be a dribble: reserves are an estimated 1.1 billion barrels. The US consumes 7.3 billion barrels a year -- this is hardly equivalent to two months at current rates.

As constructed, this bill will significantly put a dent in the income side of the federal balance sheet, because "one of the largest revenue streams flowing to the Treasury" will now be shared 50-50 with states.

Only one Republican voted against the measure: Snowe (R-ME). Bunning (R-KY) did not vote.

Democrats voting yes: Carper (D-DE), Clinton (D-NY), Conrad (D-ND), Dorgan (D-ND), Inouye (D-HI), Johnson (D-SD), Kohl (D-WI), Landrieu (D-LA), Levin (D-MI), Lincoln (D-AR), Nelson (D-FL), Nelson (D-NE), Pryor (D-AR), Reid (D-NV), Rockefeller (D-WV), Salazar (D-CO), Schumer (D-NY), Stabenow (D-MI). Not voting: Baucus (D-MT), Kerry (D-MA), Lieberman (D-CT).

Bill Details
Specifically prohibited: drilling within 100-125 miles of the coastline of the State of Florida. Half of the lease revenue goes into the federal general fund; half is disbursed to Gulf states and states eligible for Land and Water Conservation Fund monies.

According to the Congressional Budget Office, royalties are estimated at $1.55 billion over the first 10 years. From 1982 - 2001, the US collected $110.4 billion from onshore and offshore leases.

The Senate bill differs dramatically from the House version, which is more liberal. The House would open all shores to oil drilling unless a state objects.

Back Story
Area 181, about 1.5 million acres of this plan, was first proposed for drilling in 1997. In 2001, the Bush Administration backed off a plan that would come within 10 miles of the Florida coast, in part because brother Jeb (Governor of Florida) objected. From a 2001 press release:

"We have listened and worked carefully with officials and affected citizens around the 181 lease area. The outcome is a balanced and common sense proposal," said [Interior] Secretary [Gale] Norton. "Our modified 181 area has been adjusted from 5.9 million acres to 1.5 million. The adjusted area is at least 100 miles from any portion of the Florida coast. For example, it's northern border is more than 100 miles from Pensacola, Florida and the eastern edge is 285 miles from the shores of Tampa Bay.

From 1954 - 1990, the federal government leased 63,512,799 acres in four regions -- Alaska, the Atlantic, the Gulf of Mexico, and the Pacific. The first production was in the Gulf of Mexico. In 1990, 25% were producing oil and gas.

From 1982 - 2000, the Department of Interior has managed ocean leases that generated more than 10.9 billion barrels of domestic oil and 133 trillion cubic feet of gas; 97% came from the Gulf of Mexico. The oil data is at the most optimistic end of estimates from the Arctic National Wildlife Refuge.

Perspective
The area contains a quarter of the lowest estimate of reserves in the controversial Arctic National Wildlife Reserve. So this new area will provide no more than one percent of our current daily consumption.

The combined second quarter profits of the number one and number three oil companies is about $18 billion. "Exxon Mobil, BP Shell and Conocophipllips had profit of almost $230,000 a minute during the second quarter."