In Virginia, mixed reaction to decision to allow offshore drilling

By Anita Kumar
Washington Post Staff Writer
Thursday, April 1, 2010; A01

In Virginia Beach, the state's largest city and one that relies heavily on tourism, Mayor Will Sessoms welcomed the news Wednesday that Virginia will become one of the first East Coast states to drill offshore for oil and natural gas.

The city passed a resolution recently that supports drilling off its shore, in part because it would help the tourism industry by keeping the cost of gas down, Sessoms said.

The federal government will allow drilling off the coast, but not for 50 miles, where rigs, platforms and other equipment cannot be detected by the naked eye. "These things are miles offshore," Sessoms said. "They won't be seen."

Most Virginia leaders -- regardless of political party -- have expressed interest in drilling, saying production would bring thousands of jobs and millions of dollars to the financially strapped state.

But it's unclear what direct benefit Virginia would reap from the decision, because the federal government would receive the proceeds from any companies that drill off the state's coast, and the amount of oil and gas offshore is uncertain.

Environmental groups and some Democratic members of Congress say they worry that possible spills and new infrastructure on shore and off could harm plants, animals, tourism and the Norfolk naval base, the world's largest, and cost the state far more than it could ever make on drilling.

Still, many of Virginia's political leaders in Richmond and Washington who have spent months lobbying the Obama administration to let them join the Gulf Coast states in drilling off the coast praised the announcement.

"This is part of our plan to truly make Virginia the energy capital of the East Coast," Gov. Robert F. McDonnell (R) said at a news conference at the state Capitol. "This is a great day for Virginia. It's one that we will say that in the near future has generated a significant number of jobs. This is the breakthrough."

Companies could start bidding on contracts to conduct exploratory drilling in Virginia's waters in late 2011 or early 2012. Drilling would also be allowed off Maryland's shores, although years later.

Mike Ward, executive director of the Virginia Petroleum Council, part of a national group that represents 400 companies, said several companies have expressed interest in working off Virginia's coast.

"All you have to do is look at how much interest is in the Gulf of Mexico," Ward said. "This is a new frontier."

The last study of the Atlantic Ocean by the federal government, conducted two decades ago, estimates that at least 130 million barrels of oil and at least 1.14 trillion cubic feet of natural gas could be off Virginia's coast. That's equal to the amount of oil used in six days and the amount of gas used in less than a month in the United States.

But many experts think tests on similar geographic areas in other parts of the world and limited seismic work off Virginia's coast indicate that there is far more oil and natural gas offshore, although no one has been able to show accurately what is there because of federal restrictions.

McDonnell estimates that the amount of natural gas alone will produce 2,600 jobs, $8 billion in capital investments, $644 million in payroll and $271 million in tax revenue over 10 years. The oil, he said, could produce much more.

But the Virginia chapter of the Sierra Club disputes those numbers. It estimates that the supply of oil and natural gas is worth $3.7 billion -- an amount that would be dwarfed by the $13.55 billion in annual losses in the mid-Atlantic by industries, such as tourism, that depend on clean beaches and water and would be harmed by drilling.

"There are not only the risks of spills both chronic and catastrophic but also the industrialization of our coastal communities that would either debilitate or destroy Virginia's coastal economy," said Glen Besa, chapter director.

Both the Navy and NASA, which houses a facility on Wallops Island on the Eastern Shore, have sent letters expressing concerns about offshore drilling in recent years. McDonnell, who spoke to U.S. Interior Secretary Ken Salazar on Wednesday morning, said that he has set up a meeting with Navy officials and that he will make sure that their concerns are heard.

McDonnell campaigned last year on paying for road improvement in part with proceeds from oil and gas drilling. Congress would still need to pass a bill to allow Virginia to receive any royalties from offshore oil or gas drilling, as it did in 2006 when it allowed Gulf Coast states to begin taking home 37.5 percent of revenue.

U.S. Sens. James Webb and Mark Warner, both Democrats, expect to introduce a royalty bill this year, according to their offices. Last week, U.S. Rep. Robert W. Goodlatte (R-Va.) introduced a bill that would split proceeds equally between Richmond and Washington.

But U.S. Rep. James P. Moran Jr. (D), who represents traffic-clogged Northern Virginia, argues that Congress has repeatedly rejected attempts for Atlantic Coast states to receives royalties.

"Drilling will have no impact on Virginia's transportation crisis anytime soon, even if a majority in Congress were to agree to give up future federal revenue," he said. "Oil and gas development off Virginia's coast will be a long and drawn-out process whose results will not be known for close to a decade."

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