Congress rushes to judgement on offshore drilling

Houston Chronicle:

Lawmakers are moving swiftly this week to pass broad legislation that aims to prevent a repeat of the Deepwater Horizon disaster by stiffening well design standards, barring BP from drilling offshore and getting rid of limits on what energy companies must pay after oil spills.

The House is set to vote on its broad drilling package Friday, and the Senate could launch debate on a separate spill-inspired energy bill by the end of the week.

Congressional Democrats cast the proposals as crucial to stitching up vulnerabilities revealed by the explosion of the Deepwater Horizon drilling rig and resulting spill in the Gulf of Mexico.

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Industry officials said the 238-page House bill and a smaller measure by Senate Majority Leader Harry Reid, D-Nev., represent a broad overreach that threatens to shut independent energy producers out of the Gulf, curb domestic oil production and quash American jobs.

Jack Gerard, president of the American Petroleum Institute, complained that Congress was rushing to make sweeping changes - and dictate new drilling standards - without knowing exactly what went wrong at BP's Macondo well.

"We're going into surgery without a complete diagnosis," he said. "This is the ultimate malpractice."

Both the House and Senate bills would get rid of a 20-year-old limit on what BP and others can be forced to pay whenever they are responsible for an oil spill from an offshore drilling facility. Companies must pay the entire price tag for cleaning up after spills, but a 1989 law caps their liability for natural resource and economic damages - such as lost profits and tax revenue - at $75 million.

Energy producers and their allies on Capitol Hill argue uncapped liability would force all but the richest companies out of the Gulf of Mexico. Dan Naatz, a vice president for the Independent Petroleum Association of America, said unlimited liability isn't realistic because independent oil and gas producers without other integrated operations couldn't get the required insurance.

"Even those that could self-insure operations would see costs skyrocket," said API's Gerard.

The issue is a major sticking point for Republicans and oil-patch Democrats, who already have signaled their votes are in doubt. Rep. Gene Green, D-Houston, said in an interview he would vote against the legislation unless the liability plan is changed.

"Lifting the liability cap would just take off any (chance) of our independents being able to produce," Green said.

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Republicans need to block this bill. This is a clear overreaction to a one time event that will hurt US oil production and endanger national security. We are already seeing evidence that the damage done by the BP well may have been significantly overstated. The administration already has a moratorium in place that blocks production so there is no need to rush the bill before their study is complete. I thing the moratorium is unwise, but this bill is even more unwise.

AFP has more on the ill effects of the moratorium on drilling.