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Incoming Virginia Governor Continues Lease Sale Push

Virginia Gov.-elect Bob McDonnell has again urged Interior Department Secretary Ken Salazar not to delay further the Virginia offshore lease sale scheduled for 2011 (Lease Sale 220). In a recent letter to Salazar McDonnell outlined what will be his administration's position on offshore energy activity.

"More than 15 months have passed since the United States Congress allowed the federal moratorium on exploration and development of oil and natural gas resources off the Atlantic Coast to expire, and President Bush repealed a similar executive order banning such action," McDonnell wrote. "This cleared the way for Virginia to be the first state on the Atlantic seaboard to explore and drill beginning in 2011. Virginia is eager to get started."

McDonnell, a Republican, wrote that he wants his state to remain in the current five-year [2007-2012] plan and for the federal administrative process for Lease Sale 220 to progress immediately. "Any effort to remove or delay Virginia's participation in the lease sale would significantly hamper our efforts to create jobs, eliminate much-needed new revenue and undermine support for President Obama's stated commitment to make the United States more energy secure," he wrote.

Last summer Virginia House Speaker William J. Howell, a Republican, wrote to Salazar in support of Sale 220 (see NGI, Sept. 7, 2009). American Petroleum Institute President Jack Gerard recently wrote Salazar to criticize the "fast-tracking" of renewable energy projects while oil and gas exploration, such as that proposed offshore Virginia, remains stalled (see NGI, Nov. 16, 2009). Last month he called on the Interior Department to allow leasing of federal oil and gas leases off the Virginia coast.

"The governor -- and the majority of Virginians -- want such action," Gerard said. "They understand that development of domestic resources will create good jobs for Virginians, help strengthen America's energy security and generate billions of dollars in federal, state and local revenues, which will help pay for schools, public services, roads and safety."

Criticism has also come from North Carolina. That state's governor, Beverly Perdue, in a letter to Salazar criticized the Obama administration for its failure to provide more information on its draft five-year leasing program for the Outer Continental Shelf (OCS) and to reach an agreement with coastal states on the sharing of royalties from offshore production (see NGI, Sept. 28, 2009).

Royalties also are on the mind of McDonnell. "...[I]t is critically important as a matter of equity that the Commonwealth [of Virginia] receive the same royalties, rentals and bonus bid payments as do all the other states which currently allow energy exploration and production off of their coasts," he wrote Salazar.

"I ask you today to do everything in your power to ensure Lease Sale 220 stays on schedule, including the prompt completion of an environmental impact statement and the processing of all other administrative steps necessary for holding the lease sale in 2011. I am aware of several major energy companies that are ready to bid for the leasehold rights, generating hundreds of millions of dollars for the state and federal governments."

McDonnell, Virginia's former attorney general, is to take office Jan. 16. He replaces Democrat Tim Kaine, who had urged a delay of offshore leasing. Their divergent views on offshore leasing was an issue in the gubernatorial campaign (see NGI, March 9, 2009).

The Virginia lease sale would be the first lease sale conducted off the East Coast in nearly three decades (see NGI, Nov. 17, 2008) . The proposed sale area, which is at least 50 miles offshore and covers 2.9 million acres in water depths of 100 feet to 10,000 feet, is believed to contain 1.14 Tcf of natural gas and 130 million bbl of crude oil, according to Interior's Minerals Management Service.

National Ocean Industries Association President Tom Fry voiced his support for keeping Virginia in the federal government's five-year leasing plan and accelerating leasing offshore Virginia. "America cannot have increased energy supply without increased access, and new areas of the Outer Continental Shelf cannot be leased unless they are included in [the] Five-Year Leasing Plan and sales are scheduled. None of this can happen until the necessary environmental reviews are conducted, and we urge the Interior Department to begin this important work as soon as possible."

The start of the process for leasing offshore Virginia became possible when Bush in July 2008 lifted the presidential ban that placed the East and West coasts and parts of the eastern Gulf of Mexico off limits to leasing and drilling activity, and the congressional moratorium on leasing in those areas expired on Oct. 1, 2008, leaving the OCS free of restrictions for the first time in decades (see NGI, Oct. 6, 2008).

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