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Environmental Groups: VA Bill Advocating Offshore E&P Sets 'Chilling Precedent'

A coalition of 23 environmental groups last Monday called on Virginia Gov. Mark Warner to veto a bill that advocates opening for the first time the state's coastal waters to natural gas exploration and production (E&P) activities.

It's believed that the geological formations offshore Virginia are similar to those found off the coast of gas-rich eastern Canada. The Department of Interior has estimated that potential natural gas resources could range from 30 Tcf to 50 Tcf based on the information currently available.

The environmental groups, which included Greenpeace, Sierra Club, Friends of the Earth, The Wilderness Society and the Natural Resources Defense Council, said the legislation would establish a "chilling precedent for the rest of the Eastern Seaboard and, indeed, for other areas of the nation's coast that are vulnerable to offshore development."

"Any support for drilling off Virginia's coast will set a dangerous precedent and have national consequences," noted Michael Town, director of the Sierra Club's Virginia Chapter, in a prepared statement.

The bill, which was sponsored by Sen. Frank Wagner, R-Virginia Beach, passed the state's General Assembly by a wide margin in late February (see NGI, Feb. 28). The governor has "some concerns" about the legislation, Wagner said at the time. But "I think we're in pretty good shape" to get the bill signed into law, he noted.

A spokesman for the governor said the drilling bill came up for discussion during a meeting last Monday between Warner and Virginia's congressional delegation in Richmond, VA, The Virginia-Pilot newspaper reported. The governor "still is crunching information, and has not made up his mind," the spokesman was quoted as saying. The governor has until March 29 to sign, veto or amend the legislation.

The Atlantic and Pacific coasts, as well as the eastern coast of the Gulf of Mexico, have been protected from drilling by federal moratoria that have been in place for more than 20 years. The Virginia bill directs the Virginia Liaison Office, the governor's lobbyist in Washington, DC, to work with the Virginia congressional delegation to secure an exemption from the moratorium.

In addition, the state measure supports congressional passage of the proposed federal State Enhanced Authority for Coastal and Offshore Resources Act (SEACOR), which would provide states with more control of their offshore oil and gas resources and more revenue from them. SEACOR is "starting to get a lot of traction" in states, including Virginia, Georgia and South Carolina, noted Thomas Moskitis, AGA's managing director for external affairs, at the 19th annual GasMart conference in New Orleans.

SEACOR is the brainchild of House Resources Committee staffer Jack Coleman, who spent more than a decade in developing the proposal, Moskitis said. Some congressional lawmakers have expressed an interest in introducing the measure on Capitol Hill, he noted, but "I'd rather not name names" at this point.

"Hopefully it will make it into the energy bill, but it's a long shot," he noted. Moskitis called on energy executives and consumers to pressure their statehouses to lobby Congress to take an interest in the measure.

Key parts of the SEACOR proposal are:

If gas production is allowed off their coasts, states would get 50% of the revenues for activity within three to 12 miles off their shores; 35% for activity within 20-80 miles of their coasts; and 20% for activity 80 miles and beyond.

"We're talking upwards of $50 billion of potential royalty revenues to be shared with the states," said Moskitis. He noted that all 50 states would benefit, but the coastal states would get the lion's share.

He acknowledged that the federal government isn't too happy with the SEACOR concept. "Not everybody in the Interior Department is thrilled with this concept. We're taking it [revenue] away from them and giving it to the states."

Moskitis believes the Atlantic Coast holds great potential for gas producers. It's a "very great natural gas play."

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