US House panels seek boost energy development, refinery capacity

Washington (Platts)--28Sep2005

In the wake of two powerful hurricanes in the US Gulf, two US House
committees Wednesday began readying for floor consideration a new energy bill
that their Republican chairmen said would fill gaps in comprehensive energy
legislation signed last month by President Bush.
    Republican leadership on the House Resources Committee is hoping that
Americans' concerns about high gasoline and heating prices will allow it to
authorize the Interior Department to lease 1.5-mil acres in Alaska's Arctic
National Wildlife Refuge within 22 months of the bill's enactment.
     Committee Chairman Richard Pombo (Republican-Californian) also wants to
give states authority to opt out of a federal moratorium on oil and gas
drilling in the Outer Continental Shelf, if the governor and the state
legislature approve. To incentivize drilling, the bill would provide increased
OCS revenues for coastal states with offshore production.
     During the mark-up -- or discussion and voting period to get the bill
ready for floor action -- the Resources Committee agreed by voice vote to an
amendment directing the US Bureau of Land Management to introduce price
benchmarks needed to reactivate a program to provide financial incentives for
producing from stripper wells, or wells that typically produce no more than 10
bbl/d of oil or 60 Mcf/d of gas. The panel also agreed to factor in regional
price differences and streamline the program so it could be reactivated within
months once BLM determined that price levels warranted the return of the
program. 
     Some Democrats called Pombo's bill a way to use the hurricanes to push
through measures that did not have support during last year's energy bill
process without adequate debate. They also argued that the legislation would
have the affect of deteriorating environmental safeguards.

     Meanwhile, the House Energy and Commerce Committee was marking up its own
energy bill, to try to encourage new refining capacity. The bill, proposed by
Chairman Joe Barton (Republican-Texas) makes the US Energy Department the lead
agency for siting and permitting refineries and authorizes the department to
provide financial assistance to state governments to facilitate their review
of applications to site, construct, expand or operate any refinery in the
state.  It also directs the president to designate sites on federal lands,
including closed military bases that are appropriate for siting a refinery.
     The president may authorize the design and obtain all necessary permits,
and solicit proposals for the design and construction of a refinery on federal
lands. If the president is unable to sell or lease the right to operate the
refinery, it may be operated by the Federal government.
     The bill directs the Energy Department to establish an expedited process
for all federal refinery authorizations and gives the US Court of Appeals for
the District of Columbia exclusive jurisdiction over any civil action related
to refinery siting and permitting.
     The legislation directs the Environmental Protection Agency to revise the
New Source Review program to allow refineries and utilities to undertake
"without hindrance" projects to "maintain, restore and improve their
efficiency."  It also would allow the president to waive provisions of the
Clean Air Act related to fuel or fuel additives in the event of an "extreme
fuel supply" emergency.
     The EPA is also directed to develop a "Federal Fuels List" to include one
diesel fuel, one alternative fuel blend, one conventional gasoline for ozone
attainment areas, one reformulated gasoline, and two gasolines with Reid Vapor
Pressure controls for use in ozone nonattainment areas.  Upon publication of
the list, the EPA would have no authority to approve any state implementation
plan if the fuel proposed is not on the list.
     The bill would make the Federal Energy Regulatory Commission lead agency
for all pipeline authorizations, including oil pipelines, and would require
the agency to set a schedule to ensure expeditious completion of the review
process. 
     The legislation would direct the Federal Trade Commission to investigate
gasoline prices nationwide in the wake of Hurricane Katrina, including
evidence of price-gouging. The bill also requires the FTC to study petroleum
prices on the New York Mercantile Exchange and the effect of NYMEX prices on
markets, gasoline grades, and the control of the storage and delivery market
infrastructure.

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