Gulf oil rig
Chris O'Meara  /  Reuters
There may be more Gulf of Mexico oil rigs like this one seen off the coast of Louisiana after the U.S. Congress on Saturday sent President Bush legislation opening up millions of acres for drilling.
updated 12/10/2006 2:57:08 PM ET 2006-12-10T19:57:08

Hours before adjourning for the year, the U.S. Congress on Saturday sent President George W. Bush legislation that would open 8.3 million acres in the Gulf of Mexico to oil and natural gas drilling and redistribute billions of dollars in royalties to four Gulf states.

The drilling measure was wrapped into a broad tax and trade package that the U.S. Senate approved by a 79-9 vote, hours after the House of Representatives approved it.

Rep. Bobby Jindal, a Louisiana Republican and one of the drilling measure's main supporters, said Bush will sign the bill into law.

The offshore legislation ends a 25-year ban on drilling in deep waters about 125 miles south of Florida's Panhandle, but extends a moratorium on drilling in other Florida waters until 2022.

The area known as "Lease Sale 181" holds an estimated 1.26 billion barrels of crude oil and 5.8 trillion cubic feet of natural gas.

In a statement, the White House said the bill "will help to reduce our dependence on imported sources of energy by increasing access to domestic sources of oil and gas."

But it will be years before the tracts are leased to energy companies and the new supplies actually hit the market.

More offshore areas would have been opened if Republican House leaders had won Senate support for a bill passed by the House earlier this year that sought to open nearly all U.S. Atlantic and Pacific coastal waters more than 100 miles offshore.

But with time dwindling before the 109th Congress adjourned, key House Republicans agreed this week to use the more limited Senate bill.

Key to winning support in the Senate was a provision that gives four Gulf Coast states -- Texas, Louisiana, Mississippi and Alabama -- 37.5 percent of the royalties collected from oil and gas production on federal leases off their shores.

Gulf Coast lawmakers had sought the money for coastal restoration projects to repair damage from storms like Hurricane Katrina.

According to congressional estimates, that provision could redistribute about $60 billion in federal leasing fees to states over the next 25 years. After taxes, drilling royalties are the government's second-biggest revenue source.

Natural gas users, from farmers to manufacturers, have backed the drilling bill because they hope the extra supplies will mean lower energy bills.

Environmental groups said U.S. consumers would be better served if Congress pursued measures to cut U.S. crude oil consumption, which is about 20 million barrels per day.

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