Governors from Mid-Atlantic and Gulf Coast states, including Virginia’s Terry McAuliffe, urged Interior Secretary Sally Jewell on Monday to finalize rules allowing dramatically expanded offshore oil and gas drilling.
The effort is intended to draw new industry — and millions of dollars in new tax revenue — to a group of states that have been shut out of the U.S. energy boom.
Jewell and senior Interior Department officials met with McAuliffe, North Carolina Gov. Pat McCrory (R), Alabama Gov. Robert Bentley (R) and Mississippi Gov. Phil Bryant (R) on Monday. The department is expected to release an environmental impact statement within days that would allow energy companies to begin surveying the outer continental shelf for natural resources.
Once the impact statement is issued, seismic surveys for oil and gas deposits could begin within months.
“We want to find out exactly what’s out there, but we also want to do it in an environmentally sound way,” McCrory said in an interview. He called the meeting “very positive.”
McCrory heads the Outer Continental Shelf Governors Coalition, a group of mostly Republican governors pushing to expand offshore oil drilling. McAuliffe told The Washington Post that he would join the coalition — the first Democrat to do so — as he sped out of the meeting.
McAuliffe opposed offshore drilling when he ran unsuccessfully for governor in 2009, saying then that he would back “exploratory drilling for natural gas only.” But he supported it last year during his second bid, making a switch that his campaign spokesman attributed to “technological progress” that would allow drilling to be done “in a responsible fashion.” That did not stop billionaire environmentalist Tom Steyer from bankrolling ads attacking McAuliffe’s Republican rival, then-Attorney General Ken Cuccinelli II.
Shortly before McAuliffe took office, some environmentalists and smart-growth advocates said they were disappointed with his moderate choices for transportation and natural resources secretaries. The governor’s support for offshore drilling — a position also advocated by Sens. Mark R. Warner (D) and Timothy M. Kaine (D) of Virginia — was another letdown.
“We’re really disappointed but not surprised,” said Glen Besa, director of the Sierra Club’s Virginia chapter. “But we’re also disappointed with Senator Kaine and Senator Warner and congressman [Scott] Rigell. It’s just not consistent with their concern about sea level rise and climate change. When you consider the impacts of climate change and the risks associated with drilling, we just don’t need that in Virginia.”
Expanding offshore oil and gas production could lead to “tens of millions” of dollars in royalties on leasing agreements and production for states such as North Carolina and Virginia, McCrory said. McAuliffe made a point to ask Jewell how much money Virginia could expect from the new drilling operations.
The exact amount of revenue that states would get remains up in the air, subject to revenue-sharing agreements to be worked out between the states and the federal government.
Jewell told the governors that the revenue-sharing part of any new production would be out of her hands. She urged the governors to “make the case legislatively,” according to one person in the meeting.
Sen. Mary Landrieu (D-La.), chairwoman of her chamber’s Energy and Natural Resources Committee, has proposed legislation that would codify a revenue-sharing agreement. McCrory said coastal states are looking to revenue-sharing agreements between the federal government and inland states as models.
The new drilling could also mean thousands of new jobs for rural coastal communities. “There’s a potential to bring new industry closer in to our coast that is desperately needed,” McCrory said.
But before drilling or exploration can start, states will have to consider objections from environmentalists, who are concerned about the impact on wildlife. The states will also be required to work with the U.S. military, which conducts training operations and manages shipping lanes near areas that could be opened to drilling.
As new technology has led to an energy production boom in states such as North Dakota and Texas, coastal states that need federal permission to expand offshore drilling have lagged. Virginia produced 146 billion cubic feet of natural gas in 2012, according to the Energy Department, and no oil. North Carolina, too, has yet to begin setting rules for hydraulic fracturing and other new techniques that could expand oil drilling.
The Obama administration has been criticized as being slow to open new territory to oil and gas exploration, but the amount of energy produced in the United States has risen to record levels in recent years. Jewell, a former executive at REI and an avid environmentalist, assured the governors that the administration wouldn’t block future development.
“We’re not here to get in the way of energy development,” Jewell said, according to the person at the meeting.
The governors also urged Jewell to expand offshore wind power and to set concrete rules for producers who want to expand drilling operations in the Arctic. Alaska Gov. Sean Parnell (R), who faces reelection this year, sent a representative from his office to the meeting.