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Lawmakers Pass Offshore Energy Bill in North Carolina

Lawmakers in the North Carolina General Assembly have ratified and sent to the governor a bill allowing offshore natural gas drilling and calling for the state to form the Governors' Regional Interstate Offshore Energy Policy Compact with its neighbors, Virginia and South Carolina.

The bill, S709, encourages Democratic Gov. Bev Perdue to join the governors of Alaska, Texas, Louisiana, Mississippi and Virginia in the Outer Continental Shelf Governors Coalition (see Daily GPI, June 14).

S709 -- also known as the Energy Jobs Act -- was passed in the Senate by a 35-10 vote on Thursday and ratified 69-42 by the House of Representatives on Saturday.

"This is the initial step to provide a consistent and affordable source of energy to fuel a growing North Carolina economy," Sen. Bob Rucho (R-Raleigh), one of the bill's sponsors, told NGI on Monday. "It also is the potential beginning of a future energy industry for our state. Not only [will this create] 6,700 high-paying jobs, but [there will also be] a new source of state funding through revenue sharing -- $500 million annually -- from the sale of lease holdings and oil and gas royalties. This is a critical step toward energy independence for America."

Mark Johnson, a spokesman for Perdue, told NGI the governor's office had no comment on S709 or H242, another energy bill that was ratified on Friday. The latter bill directs the Department of Environment and Natural Resources (DENR) to conduct a review of oil and gas exploration in the state, and to also look at where hydraulic fracturing may occur. The DENR is to report its findings and make recommendations by May 1, 2012.

"The bills are being reviewed," Johnson said Monday. "She's got more than 200 on her desk that she has to deal with in 10 days. They'll be coming pretty fast and furious."

Rep. Mitch Gillespie (R-Marion) also applauded the passage of S709.

"It's a first step in a long process to move us toward energy independence," Gillespie told NGI on Monday. "We will try to encourage [Perdue] to get up with the other states and start looking at offshore drilling. We can move forward and have a very good plan for North Carolina that is safe for the environment, and at the same time we will be able to extract this natural resource."

S709 would also create an Energy Jobs Council, which would serve in an advisory role within the state Department of Commerce. The panel would have 12 members: the Commerce secretary and 11 state citizens from various energy-related industries. Perdue would appoint three members, while the president pro tempore of the state Senate and the speaker of the state House of Representatives would each appoint four members. Panel members would serve four-year terms beginning Oct. 1.

Under the bill, 24% of the state's share of royalties and revenue from both offshore and onshore energy production would go to the general fund, 10% to highways and 10% to community colleges. Additionally, the University of North Carolina would receive 15% for energy research and development, the Department of Environment and Natural Resources (DENR) 30% for coastal conservation and the state Department of Commerce 1% for bringing energy-related industry to the state. Lastly the State Ports Authority and the Rural Center would each receive 5% for energy infrastructure.

The federal government estimates that nearly 30 Tcf of natural gas lies off the coast of North and South Carolina and Virginia. Active offshore leases in North Carolina -- which comprise two individual lease blocks, each about nine square nautical miles in size -- reportedly contain about 5 Tcf of economically recoverable natural gas.

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