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Panel votes to block new BP offshore leases

Bloomberg News / July 15, 2010

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WASHINGTON — A US House subcommittee voted yesterday to bar BP from new US offshore leases to drill for oil or natural gas because of past safety violations.

The House Natural Resources Committee adopted the provision by voice vote while considering legislation to toughen safety standards for offshore drilling after the BP oil leak in the Gulf of Mexico. The panel delayed a vote on the broader measure until today.

Companies with violations of federal or state safety standards more than five times the industry average going back seven years would be barred under the amendment. The measure also would ban leases to companies that have received Clean Water Act fines of $10 million or more, as well as those that have had more than 10 fatalities at their facilities over the period.

The House panel also approved yesterday an amendment by Representative Edward Markey, Democrat of Massachusetts, affecting companies with deep-water leases in the gulf that do not require royalty payments to the government. Holders of such leases would be barred from bidding on new tracts if they decline to renegotiate and pay fees.

The US Supreme Court last year rejected an Obama administration appeal and refused to allow the federal government to collect an estimated $20 billion in royalties from Anadarko Petroleum Corp. and other oil and gas companies.

The dispute turned on a 1995 law that limited royalties to promote drilling. “At $80 a barrel, we don’t have to provide incentives to drill for free on public lands,’’ Markey said. “It gives us a chance to collect this money and use it to reduce the federal deficit.’’