Despite what he sees as excessive federal government regulation and unnecessarily lengthy permitting processes, Virginia Gov. Bob McDonnell still believes his state will become "the energy capital of the East Coast" and an offshore energy leader.

"Even 20 years ago we knew we had trillions of cubic feet of natural gas and hundreds of millions of barrels of oil [offshore]," McDonnell said Wednesday on the second day of the Governor's Conference on Energy in Richmond. "The studies are more reliable now, and what we're hoping is that new studies being done in the exploration process will find that we've got considerable resources off the coast."

The Obama administration in April published a notice of intent to prepare an environmental impact statement for the 2012-2017 oil and gas leasing plan that called for expanding development of the entire Gulf of Mexico (GOM), and increasing exploratory activity in new frontier areas including offshore Virginia and South Atlantic regions and Alaska OCS areas (see Daily GPI, April 1). Those plans were stalled by the administration's reluctance to promote offshore drilling following the rig explosion and oil spill in the Gulf of Mexico (GOM) last spring, but with the lifting of the moratorium on deepwater drilling in the GOM this week (see Daily GPI, Oct. 13), McDonnell expects better days ahead for Virginia's offshore aspirations.

McDonnell, a Republican, initiated his call to make Virginia "the energy capital of the East Coast" during his 2009 campaign to become the state's governor. Before taking office he made it clear that he would push for exploration and development of oil and natural gas resources off the Atlantic Coast, urging Interior Department Secretary Ken Salazar not to delay further the Virginia offshore lease sale scheduled for next year.

"We have virtually every God-given natural resource that we would want in order to provide that energy security -- gas, coal, nuclear, offshore, alternatives -- all in big numbers, and I think it's critically important as we become more energy independent to focus on an all-of-the-above strategy using all of those resources in order to achieve energy security," McDonnell said.

Virginia is currently the second largest importer of electricity in the country, purchasing more than 30% of its electricity off the grid, and will need to expand generation capacity by an estimated 7,000 MW over the next 10 years, McDonnell said. "We've got to find a way, working together on the production front, to expand supply and capacity of energy here in our state."

The goal, he said, should be "a commercially practicable power generation source using the maximum number of Virginia natural resources."

Included in that mix should be everything from coal -- the state has been called "the Saudi Arabia of coal" -- to solar, biomass, animal waste and biofuel, McDonnell said.

But decisions -- or, in some cases, indecision -- at the federal level are hampering the advancement of some energy sectors, he said.

Lynchburg, which is home to AREVA commercial nuclear fuel manufacturing facilities, "should be the nuclear capital of America," but the Obama administration's decision to dismantle operations at the planned nuclear waste repository at Yucca Mountain, NV, and "the failure of this congress to come out with a reasonable loan guarantee program to support the nuclear industry is putting us farther and farther behind what's going on in other countries."

Offshore wind could bring thousands of jobs and billions of dollars in capital investments to the state, but that industry is also being held back by regulatory red tape, McDonnell said.

"We have told [Salazar] that the only way this is going to work is they've got to do a lot better job of cutting down on permitting time. Seven to nine years? Unacceptable. Capital will not flow to this industry if we don't do a better job."

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