The latest volley in the energy war shaping up on Capitol Hill was fired in June when a senior House Democrat unveiled his “use it or lose it” plan that would charge energy companies for not immediately drilling on leased federal properties.

House Natural Resources Committee Chairman Nick Rahall (D-W.Va.) said his plan is in response to a Republican-backed attempt to open up the East and West coasts to E&P. Under his plan, oil and gas companies would pay $5 a year for every acre they hold but are not actively working, with the fee rising to reach a cap of $50. With a typical block in the Gulf of Mexico averaging about 3,000 acres, the proposed fee would increase a producer’s annual costs by about $15,000 per block in the early years.

The proposal has left industry advocates scrambling to respond to a plan that takes the incentive away from exploring and producing oil and gas, says Richard Ranger, senior policy advisor with the American Petroleum Institute.

—John A. Sullivan

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