Although Virginia Gov. Mark Warner has vetoed a bill that advocates lifting the ban on natural gas exploration and production (E&P) off the state’s coastline, the debate on the issue is far from over, industry sources say.

“I think it would be a mistake for people to assume the debate is over because the bill has been vetoed [in Virginia]. In my view, the debate has only begun,” said Jim Kibler, vice president of government relations for AGL Resources (see Daily GPI, March 30).

The Virginia Senate on Wednesday is expected to attempt to override last week’s veto by the governor. It will require a two-thirds majority in the Senate before the measure can be sent to the House for a vote, sources said.

But the chances are slim for a Senate override, they noted. “I believe that in all history, governors’ vetoes have been overridden only twice,” said a legislative expert in Richmond, VA.

Still, proponents of the legislation, which was sponsored by Sen. Frank Wagner, R-Virginia Beach, pointed out that Warner’s veto was based primarily on separation of powers’ concerns rather than on merit. They claim the governor’s position on offshore gas E&P was pretty closely linked to that of the General Assembly, where the bill passed handily in February (see Daily GPI, Feb. 25).

The Virginia measure (SB 1054) supported congressional passage of the proposed federal State Enhanced Authority for Coastal and Offshore Resources Act (SEACOR), which would give states more control over their offshore oil and gas resources. The SEACOR proposal would give Virginia and other coastal states 50% of the revenues from leasing activities up to 12 miles off their coasts, 35% of leasing revenues out to 80 miles and 20% beyond 80 miles. The Virginia legislation directs the Virginia Liaison Office, the state’s lobbying group, to work with the state’s congressional delegation to enact SEACOR legislation.

In vetoing the measure, Warner said the Virginia bill had two “fundamental deficiencies” — it encroached on the governor’s oversight of the Virginia Liaison Office, and it directed the state to advocate federal legislation that has yet to be formally introduced in Congress.

Nevertheless, proponents of Wagner’s legislation believe the bill has been a “tremendous victory for consumers” because it “has started this debate” over whether to open closed coastal areas to natural gas E&P activities.

Thomas Moskitis, managing director for external affairs at the American Gas Association (AGA), noted that on Monday a resolution (HJR 289) was introduced in the Tennessee General Assembly by State Rep. Eddie Yokley urging Congress to enact comprehensive energy legislation, including measures that are contained in the federal SEACOR proposal or similar legislation that “enhance states’ authority over coastal and offshore resources, [provide] an exemption to the moratorium that prevents until 2012 any surveying, exploration, development or production of potential natural gas deposits in areas off the Atlantic shore that are under federal jurisdiction, and incorporate revenue sharing between the federal and state governments for leasing activity.”

The resolution is being forwarded to House Speaker Dennis Hastert (R-IL), the president of the U.S. Senate (Vice President Dick Cheney) and the members of the Tennessee congressional delegation, “so that they may be apprised of the sense of the General Assembly of Tennessee in this matter.”

Sen. Lamar Alexander (R-TN), chairman of the Senate Energy and Natural Resources Subcommittee, is expected to include some SEACOR-lite provisions in a stand-alone natural gas bill that will be unveiled Wednesday, said AGA’s Moskitis. This will be a “more limited version of SEACOR, but it achieves the same results,” he noted.

Moskitis also said that several members of the Senate Energy and Natural Resources Committee have taken a keen interest in the SEACOR proposal, including Sens. George Allen (R-VA), James Talent (R-MO) and James Inhofe (R-OK), as well as senators representing the Gulf coastal states.

SEACOR is the brainchild of House Resources Committee staffer Jack Coleman, who spent more than a decade in developing the proposal, according to Moskitis. He has called on energy executives and consumers to pressure their statehouses to lobby Congress to introduce the measure.

“There needs to be the drive from the states [to get Congress] to introduce SEACOR,” Moskitis said. At this stage, “I suppose Congress isn’t convinced that the will of the people is there.” Congress will not act “until there are very, very clear signs of support” for SEACOR.

Moskitis estimated that the SEACOR bill could mean upwards of $50 billion of potential royalty revenues going to the states, with the coastal states getting a larger portion and lesser portions for non-coastal states.

He believes the natural gas potential of the Atlantic Coast areas is tremendous. The Interior Department has estimated that potential gas resources off the coast of Virginia alone could range from 30 Tcf to 50 Tcf, Moskitis said.

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