Washington, 30 July (Argus) – The US House of Representatives today is poised to approve a far-reaching oil spill bill that offshore operators fear could seriously disrupt US oil and gas production.

The House is expect today to pass the Consolidated Land, Energy and Aquatic Resources (Clear) bill, a measure that would respond to BP's massive oil spill in the US Gulf by hobbling BP's ability to operate offshore.

The bill would block any company with a safety and environmental record comparable to BPs from being able to lease acreage or obtain a drilling permit. BP is the largest leaseholder and biggest producer on the US outer continental shelf.

But the bill's reach would go well beyond BP. The legislation would eliminate the $75mn liability cap for economic damages stemming from a spill, require that offshore facilities be built in the US, try to recoup deepwater royalties, charge new “conservation” fees and impose new standards for blowout preventers and well designs.

House resources committee chairman Nick Rahall (D-West Virginia) says the legislation “directly responds to the Deepwater Horizon disaster, while also looking forward and attempting to prevent the next catastrophe.”

The House bill has caused great consternation in the oil sector. Rahall dismissed the industry's concerns as “sheer hyperventilation”, but Republicans argued it would be a job killer.

ConocoPhillips chief executive Jim Mulva told investors this week eliminating the liability cap for economic damages would force all but the largest oil companies out of US waters. Hess chief executive John Hess proposed a $1bn liability cap, supplemented by a co-operative insurance agreement among smaller companies.

Shell has been warning lawmakers the bill's “Build America” requirement for offshore facilities would force more than 20pc of US oil and gas production to cease, since most existing mobile oil drilling units and production platforms were built elsewhere. The interior secretary would have the authority to waive the provision if equipment would not be brought in a timely fashion, but Shell describes that waiver as unworkable.

Shell predicts new construction costs would rise 30-100pc under this requirement. And a provision requiring vessels operating in the US exclusive economic zone to be US-flagged and owned would force many essential vessels out of US waters.

The bill would attempt to circumvent a US Supreme Court ruling from last year and force producers to pay royalties on deepwater leases issued from 1996-2000 when oil prices reach specific thresholds. Producers who have benefitted from flawed lease agreements issued in 1998 and 1999 would also get captured by that requirement.

The bill would impose new “conservation” fees totaling $2/bl of oil or 20¢/mn Btu of gas on existing leases. The Congressional Budget Office estimates the fee would raise $22.2bn 2011-2020, but the government would have to spend $14.3bn administering the fee and fighting the inevitable lawsuits.

And it would impose tighter requirements on blowout preventers and well design, as lawmakers attempt to address some key concerns that arose from the Deepwater Horizon accident.

The Clear bill is one of the last bills the House will take up before members leave for their August recess.

The Senate plans to reconvene next week, to take up a more modest energy proposal that would eliminate the liability cap, raise fees for the Oil Spill Liability Trust Fund and force oil service firms to disclose the content of their hydraulic fracturing fluids.

It remains unclear whether Senate majority leader Harry Reid (D-Nevada) can muster the 60 votes needed to bring that bill to a vote.

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