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Summary of S. 3711 -- The Gulf of Mexico Energy Security Act

**"Rising energy prices pose risks to both economic activity and
inflation." Ben S. Bernanke, Chairman, Board of Governors of the Federal
Reserve System, April 27, 2006.**

**"The steep increases in energy prices over the past several years have
had significant consequences for households, businesses, and economic
policy." Ben S. Bernanke, Chairman, Board of Governors of the Federal
Reserve System, June 15, 2006.**

**"Passing this bill is the most important thing we can do in the near
term to impact the price of natural gas and boost our domestic energy
supply.  The American consumer is increasingly burdened with high energy
costs.  This legislation will address that problem in a very real way by
providing greater access to American energy sources and lessening our
dependence on imports." Senator Pete V. Domenici, July 12, 2006**

**What the bill does:**

-   Provides for opening more than **8.3 million acres** on the outer
    Continental Shelf for oil and gas leasing. The bill calls for
    opening approximately **2.5 million** as soon as practicable, but no
    later than **one year** of the date of enactment. It calls for
    opening an additional **5.8 million acres as soon as practicable.**

-   **Resource estimates** for this area made available under this
    proposal are:

    -   **1.26 Billion Barrels of Oil**

    -   **5.8 Trillion Cubic Feet of Natural Gas**

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-   The natural gas supply made available by this agreement is enough to
    heat and cool nearly **6 million homes** for **15 years.**

-   On July 21, 2006, the price of natural gas was **\$6.15 per million
    btu**. Six years ago, the price of natural was 1/3 that amount. In
    countries competing for our nation's manufacturing jobs, such as
    Russia and Oman, the price of natural gas is about \$1.25 per
    million btu and \$1 per million btu respectively. In 2005, the price
    of natural gas reached **\$15 per million btu.**

-   Over a **six year period**, America's annual natural gas bill rose
    from **\$50 billion to \$200 billion**, thus damaging the U.S. job
    base and our industrial competitiveness.

-   On July 21, 2006 the price of crude oil closed **around \$75 per
    barrel**, with many Wall Street analysts anticipating an
    **above-\$80 price** if tensions continue in the Middle East. On
    July 14, 2004, the price of crude oil was approximately **\$35 per
    barrel.**

-   Policy-makers on both sides of the aisle have repeatedly advocated
    for **reduced dependence on foreign sources of oil**. The OCS
    bipartisan agreement reached provides for a substantial increase to
    access to America's domestic oil supply.

-   The EIA estimates that if we continue down our current path, North
    America's **petroleum imports** from the Persian Gulf will
    **increase by more than 40 percent** over the **next 25 years.**

-   This agreement opens access to 1.25 billion barrels of oil.
    According to EIA, in 2025, U.S. petroleum supply is projected to be
    10.4 million barrels per day, while our demand is expected to be
    26.1 million barrels per day.

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-   Directs leasing in the **181 Area**, excluding:

    -   areas East of the Military Mission Line; and

    -   areas in the New Eastern Gulf of Mexico Planning Area within 125
        miles of the State of Florida; and

    -   areas in the New Central Gulf of Mexico Planning Area within 100
        miles of the State of Florida.

    -   

-   Directs leasing in the **181 South Area**, excluding:

    -   Areas East of the Military Mission Line; and

    -   Areas east of the New Eastern Gulf of Mexico Planning Area.

-   Secretary of the Interior to establish within one year of enactment
    a regulation that provides for an option to exchange leases in areas
    unavailable for leases within 125 miles of Florida coastline in New
    Eastern Gulf Planning Area for leases in areas available for leasing
    in the Gulf of Mexico.

**What the bill doesn't do:**

-   No oil and gas leasing, pre-leasing and other activities within 125
    miles of State of Florida in the New Eastern Gulf of Mexico Planning
    Area until June 30, 2022.

-   No oil and gas leasing, pre-leasing and other activities within 100
    miles of the State of Florida in the New Central Gulf of Mexico
    Planning Area, **and** east of the western boundary of the 181 Area
    until June 30, 2022.

-   No oil and gas leasing, pre-leasing and other activities east of the
    Military Mission Line until June 30, 2022. After which the
    Department of Defense may veto leasing.

**How the bill benefits conservation efforts and compensates coastal
states:**

-   Revenue Sharing on **new areas** of production made available by
    this agreement and **new leases** beginning in **FY 2007** and each
    fiscal year thereafter (181 Area above the CBO baseline and 181
    South Area):

    -   37.5 % to Gulf producing states

    -   12.5 % to Stateside LWCF

    -   50 % to Federal Treasury

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-   Revenue Sharing on **new leases after date of enactment** in
    existing planning areas beginning in **FY 2016** and each fiscal
    year thereafter (Gulf of Mexico planning areas):

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-   37.5 % to Gulf producing states

-   12.5 % to Stateside LWCF

-   50 % to Federal Treasury

**[Overall spending cap]{.underline}**: There is a \$500 million annual
net spending cap on revenue. "Net" means spending in excess of receipts
coming in from new areas opened up under this bill.