Democrats may allow drilling off south Atlantic, Gulf coasts

From staff and wire reports

WASHINGTON

With public opinion shifting toward offshore drilling, Democrats are looking to defuse the volatile election issue by allowing oil companies for the first time to explore off the Atlantic and Gulf coasts from Virginia to Florida - but only if they also foot the bill for new alternative energy programs.

House Speaker Nancy Pelosi, who not long ago staunchly opposed lifting any of the offshore-drilling bans, said Tuesday that she now supports an energy package that would including drilling in federal waters off the southeastern coast. She is planning a vote that could come as early as Friday.

"If they (the oil companies) want to drill offshore, we'll say OK," Pelosi told reporters. But she said the bill also will require oil companies to give up $13 billion in tax breaks and agree to pay billions of dollars in back royalties that were avoided because of an Interior Department contracting error in deep-water drilling leases in the late 1990s.

The money would be used to subsidize investments in solar, wind and other renewable energy sources.

While key details are still being resolved, Pelosi confirmed that the Democratic legislation will call for lifting the drilling moratorium off Virginia, North Carolina, South Carolina and Georgia.

That's less than Republicans sought but represents a major disappointment for environmental activists, who until recently thought they could depend on Democrats to fight off any GOP plan to open new oil fields offshore.

Glen Besa, Virginia director of the Sierra Club, said other provisions expected to be in the legislation, including federal investments in renewable energy supplies and tougher conservation measures, might represent a net gain for environmentalists.

"The legislative process requires compromise," Besa said. "What we had before was a bill for more drilling without any commitments for renewable energy."

Rep. Thelma Drake, R-2nd District, part of a bipartisan group that has been pushing a comprehensive energy bill since July, took a cautious approach to the Democratic plan. Drake wants to see details of the new proposal, said Travis Burk, her press secretary.

The proposal supported by Pelosi mirrors ones being pushed in the Senate - one by the Democratic leadership and another by a bipartisan group known as the "Gang of Ten" that calls for limited offshore drilling from Virginia to Georgia and off Florida's Gulf coast, areas that have been off-limits to energy companies for decades because of environmental concerns.

The proposals would open federal waters beyond a 50-mile coastal buffer.

Senate Majority Leader Harry Reid reiterated Tuesday his intention to take up the drilling measures next week.

Republicans in both the Senate and House, meanwhile, are pushing for broader drilling.

House Republican leader John Boehner of Ohio called Pelosi's proposal "just more of the same.... It leaves most American energy under lock and key when we should be doing everything possible to expand energy production."

Off-limits areas of the Outer Continental Shelf on both coasts are believed to have at least 18 billion barrels of oil, but more than half is off the West Coast, mainly off California, according to the Interior Department.

Mid-Atlantic waters, however, are believed to have large reserves of natural gas as well as some oil.

Offshore drilling has gained political momentum since GOP presidential nominee Sen. John McCain made it a central part of his energy plan. At the just-concluded GOP convention, McCain vowed to push for ending the drilling moratoriums as soon as possible. Sensing a shift in public sentiment toward more domestic energy development, Democratic presidential nominee Sen. Barack Obama also has said he is open to limited expansion of offshore drilling.

Congressional Republicans want to lift all of the drilling bans that cover the Outer Continental Shelf waters 50 miles from shore from New England to Washington states.

Oil and gas drilling has been allowed for decades in the western Gulf of Mexico where U.S. offshore energy production has concentrated.

But Republican leaders are adamantly opposed to more taxes on oil companies.

They repeatedly have blocked proposals that would rescind oil industry tax breaks, arguing that would inhibit domestic oil production.

A possible compromise worked out in the Senate by a group headed by Democratic Sen. Kent Conrad of North Dakota and Republican Sen. Saxby Chambliss of Georgia - the Gang of Ten as it is dubbed - calls for both limited offshore drilling and taxing Big Oil, while funneling billions of dollars into renewable energy.

Republican leaders have not embraced the compromise.

This story was compiled from reports by The Associated Press and Pilot writer Dale Eisman.