McDonnell Takes Energy Fight to the Map

Governor seeking bigger offshore Virginia drilling map

By STEVE SZKOTAK
|  Friday, Mar 19, 2010  |  Updated 5:01 PM EDT
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McDonnell Takes Energy Fight to the Map

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Intent on making Virginia a national energy power, Gov. Bob McDonnell is lobbying for an expansion of the 2.9 million offshore acres the government has designated for possible oil and gas exploration.

McDonnell contends the offshore leasing map 50 miles off Virginia's coast should be redrawn to better reflect the state's coast and, by extension, encompass more energy reserves that ultimately could mean a bonanza for the state in royalty payments.

"The larger the area, the more leasing, and the more revenues for the state," said Erik Milito of the American Petroleum Institute.

The governor, who is promoting his vision to create an energy-based economy, said the mapmaking is secondary to convincing Interior Secretary Ken Salazar to allow East Coast oil and gas exploration for the first time, starting with Virginia. He is expected to announce his decision soon.

McDonnell's remapping effort illustrates his commitment to putting all the state's energy pieces in play, and how many regulatory and political challenges he must overcome to achieve that. He maintains his goal of making Virginia the East Coast energy capital is realistic.

McDonnell said his concern with the triangular map involves "some narrow confines as it extends from Virginia's shore."

"It seems to me all the lines ought to be pretty much drawn straight," he said in interview Wednesday. "I think that's what you've got in the Gulf Coast."

The map is a peculiar inverted pyramid, narrowing to a point as it moves farther into the Atlantic. The government estimates the area can produce 130 million barrels of oil and 1.1 trillion cubic feet of natural gas.

Minerals Management Service, an agency of the U.S. Department of the Interior, uses an internationally accepted formula to draw offshore energy maps. The system reflects the contours of a state's coastline.

The map is based on lines of an equal distance drawn out from points along a state's coast, so a concave coastline such as Virginia's will have a pinched end the farther it extends into the ocean. A state with a straight coast will tend to have a more boxy area.

McDonnell briefly mentioned his mapping concern during remarks at an energy summit March 11 in Richmond, attended by representatives from some of the nation's biggest oil companies such as Exxon Mobil and BP America.

"The map that's currently drawn by MMS is not particularly favorable for Virginia," McDonnell said. "It's got angles that are not correct so that's a battle we're still going to have to fight with Minerals Management Service to ensure that Virginia's lines are in fact reflective of Virginia's coast line."

The consequences of how the leasing map is drawn are large.

"You're limited as a state to revenues that flow from within your state offshore boundaries as they've been drawn by the government," Milito said. "From Virginia's perspective, their area was drawn rather small."

Milito said the map could be changed through rule making by the Interior Department or by the Congress, and redrawing a map is not unprecedented. Politically, he said, it could be a hard battle.

McDonnell said the congressional delegation shares his concerns, and a spokesman for Sen. Mark R. Warner, D-Va., said he supports "adjusting the existing map." Warner and Sen. Jim Webb, D-Va., as well as other members of the congressional delegation, have also urged Salazar to keep on track the sale of leases for the area.

The governor acknowledged the mapping issue is only one hurdle to overcome.

"There are many things we need to do," he said. "One is getting the lease sale approval. Secondly we need a royalty bill. Thirdly, we need to address the shape of the map."

Underscoring his quest to tap offshore energy reserves, McDonnell cited the nearly $1 billion in winning bids Wednesday for offshore energy leases of the coasts of Louisiana, Mississippi and Alabama. Some economists said the bids signaled increased industry investments in domestic petroleum as the economy improves and oil prices stabilize.

Seismic studies haven't been conducted in the Virginia region in decades and industry estimates forecast much higher gas and oil reserves.

"Analysis of historic U.S. assessments shows that there is a strong tendency for assessments to increase through time as more is learned about an area through exploration and development activity," according to an evaluation of Atlantic and other areas by the American Petroleum Institute.

Environmentalists, citing government estimates, contend offshore drilling isn't worth the environmental risks. They argue that the MMS estimates of oil and gas potential off Virginia represent a sip of the nation's big thirst for energy. McDonnell, they say, should emphasis renewable energy, such as offshore wind.

In response, McDonnell says they are also a part of his plan to create an energy epicenter.

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