Why Offshore Drilling Is Good for Virginia

By Mark Greene

According to a recent study, safely tapping Virginia’s offshore natural gas and oil reserves could provide nearly $1.8 billion of private investment annually in the Commonwealth. While many are quick to judge this initiative, all of the facts should first be considered.

For example, federal revenue sharing could help transform the state economy by sending billions in royalties, rentals and fees to our state coffers. By putting revenue-sharing programs in place -– like those already working for the states of Alabama, Louisiana, Mississippi and Texas -–Virginia could benefit from offshore energy development to the tune of $235 million per year, according to the study. And that’s in addition to industry spending and high-paying jobs created that would help boost our economy.

“So, what’s trying to stop a reasonable exploration of what job creating resources might be available off our coast?,” asks former delegate Chris Saxman in a Roanoke Times editorial. “Fear. Fear accelerates order to disorder and hinders economic growth that will pay for the promises we have made.” He goes on: “Done properly, offshore exploration can create thousands of jobs that pay an average over $100,000 a year while providing tax revenue to also pay our hard working public employees like teachers, police, fire, and rescue personnel or we can dedicate that revenue to fixing interstates like I-81.”

To elaborate on Saxman’s point about the kinds of economic benefits offshore access could bring – here’s the picture of the Virginia projections if we were to develop oil and natural gas off of our coast, recently released by API:

Virginia

  • $2.1 billion in federal revenue sharing over the forecast, reaching $236 million per year at the end of the forecast.
  • $19 billion in industry spending over the forecast, reaching $1.8 billion by the end of the forecast.
  • $22.3 billion added to state GDP over the forecast.
  • 24,664 jobs gained by the end of the forecast.

Numbers likes these illustrate big economic opportunity for the whole state if we are included in a new federal offshore leasing plan now under development. Despite any kneejerk reactions that may have taken place initially, economic benefits of this size should compel policymakers to consider the needs of entire states when discussing offshore development.

At a House hearing last fall, former U.S. Sen. Mary Landrieu of Louisiana said natural gas and oil industry employment long has benefited her state. “We have men and women graduating from high school that are going to work in the oilfield and they don’t make minimum wage,” Landrieu said. ”They can make $80, $90, $100,000 a year. And that means a lot to their families, and it sends a lot of kids to college from south Louisiana.”

Offshore energy would be privately financed – reflected in the industry spending numbers above. That’s spending throughout state economies by natural gas and oil companies and their employees. It’s a boost to economic growth for portions of our state, like Southwest Virginia, that haven’t seen much growth for years.

Offshore energy is compatible with other ocean uses, including the military. It is safer than it has ever been and is always improving, thanks to technology, industry standards, safety management systems and employee training. No human enterprise is without risk, but industry’s premium on technology and safety – to protect its workers and the environment – properly manages this risk while producing energy and national security benefits for today and decades into the future.

“Interior’s offshore proposal is a critical first step to advancing a strong energy future for Virginia,” said Miles Morin of the Virginia Petroleum Council. “Not only can offshore energy exploration and development help provide reliable and affordable energy for Virginia’s consumers, but it can also be the cornerstone for economic growth and investments in our state.”

This is American energy that should be safely harnessed to benefit all Virginians – both on the coast and all across the Commonwealth.

Mark Green is editor of Energy Tomorrow, a publication of the American Petroleum Institute.

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16 responses to “Why Offshore Drilling Is Good for Virginia

  1. I am all for this, great idea, if we can keep rigs over the horizon. Out of sight. Out of mind. But with all the great advantages you list. Is it still doable, if over the horizon when viewed from shoreline?

  2. How about this? A TRULY independent study is done by a company that has no ties to the industry and no ties to environmental groups and that study completely looks at ALL the potential damages from a worst case scenario? The cost of a bond to cover it is also calculated.

    It would requires the costs to clean up all shorelines including the marshes, rivers/tributaries, inlets, etc, damage to all property, economic development losses, etc.

    The problem I have with these proposals is that those who want to drill don’t want to do an honest study of the potential damages and costs and agree to be directly responsible for the cost of the damages.

    Witness the long drawn out process in response to the Deepwater Horizon spill which was more than 60 billion dollars and not agreement that the 60+ billion is actually fair and adequate to those harmed – which includes many hundreds/thousands of acres of islands and shoreline that cannot actually be cleaned up.

    3,850 The square-mile spread of the leaked oil, which had landed along 125 miles of Louisiana’s coast by 4 June. Three weeks later, oil began to wash up on Pensacola Beach in Florida and at the nearby Gulf Islands National Seashore nature reserve.

    some folks think it’s worth the gamble. Others not.

    My supposition is – if you do a real study and develop factual information about the potential extent of the damage – the number of folks who support the “gamble” will , in the face of potential realities, no longer be so confident.

    So , of course the proponents want wide and deep PR campaign to counter the negative information – and you can bet dollars to donuts, the industry and the individual companies who want to drill will want no part of a real study to actually assess the potential impacts… they’ll go directly to the General Assembly with “free speech” money contributions ,herds of lobbyists and their own industry-generated “studies” .. no doubt, using the Dominion “model” for “working” with the General Assembly.

    • I agree, if Virginia does allow offshore drilling, it needs to implement measures to ensure that public damages are covered if a spill (or spills) occur. The public needs to be held harmless. If drillers aren’t willing to shoulder those risks, then, OK, no drilling.

      But most foes of offshore drilling don’t seem willing to have that conversation. They seem to be adamantly opposed to drilling under any circumstances.

      • I think there is a trust factor in play. When people perceive Dominion to be able to directly influence the General Assembly with money and their own written legislation to exempt them from regulation – there’s a problem.

        And you’re not going to fix it by pointing at the opponents as the reason why .
        Ordinary Virginians with no particular leaning to environmental issues are concerned with how the GA deals with companies and regulation these days.

  3. This is a mature industry with a long history and the risks and benefits are well known. I’ve said earlier that on balance I wouldn’t do it off Virginia’s shore, but I’m not passionately opposed. However if I lived on or near the beach or made my livelihood on the beach I might feel differently, and I’m not going to impose my ambivalence on them. I’m not opposed at all to doing the exploration to see what is out there and the answer may be – not enough to make this worthwhile. I agree much of the opposition is irrational but so is the opposition to many other things – childhood vaccines, GMO food stocks, evolution of species, fluoride in water….science and facts don’t always control these discussions.

    And greed can also overwhelm reason. Fear is a problem, but greed cannot be ignored.

  4. This is a divisive issue. But let me ask Mark Greene, what are we expecting to find out there: oil or gas? If we found natural gas, I presume the risk of oils spills could be smaller.

    I would advise those outside of Virginia, Virginia seems to have a extremely vocal progressive left. In the words of former Rep. Tom Davis (Repub-Ffx) we are trending to look more like NJ , and unless we are careful we may blow right by the NJ stage to the Ca. stage of liberalism.

  5. How do you transport natural gas from an offshore rig to shore? Pipeline? Ships?

    Wouldn’t it be startling if there is offshore gas off Virginia and it was transported via pipeline to Newport News obviating the stated reason for the Atlantic Coast Pipeline?

  6. RE: Virginia is trending “liberal”.

    On this particular issue – up and down the East Coast , how about naming the states that are also not in favor of drilling and thus “trending liberal”?

    How about North Carolina, Florida.. Georgia?

    Are they about to join Virginia in slipping away to progressive hell?

    It’s OKAY to take positions or hold views but for GAWD sake – how about dealing with the realities?

    Virginia is sorta “purple” that’s true – but on issues like drilling offshore.. it’s really not much different than many conservative red states..

    • …not much different than Red States? Excepting maybe that all of our statewide major office holders Senators, Govs, Lt. Govs, Attorneys General, etc. are all Dems?

      In any case we agree the drilling proposal sounds like a non-starter, in the current political environment.

  7. I’m talking about the Red States along the east coast… like NC, Georgia, SC and Florida.. THEIR major office holders…

    do you think they are all Dems?

    yes Va IS DEM .. but MY POINT is that Virginia’s POSITION on the drilling is not much different than those Red states.

    and if they are similar – how in the world do you make this a Dem issue?

    • North Carolina is the “Tar Heel” state..never hurt anybody…messy though I must admit. I seem to recall first-hand experience, or should I say, “first-foot”.

      DJR- Come to think of it, I believe off-shore natural gas is done in some parts of the world. So that could be a hypothetical option to allow North Carolina to keep the Tar Heel state designation.

      • The exact etymology of the nickname is unknown, but most folklore believe its roots come from the fact that tar, pitch, and turpentine created from the vast pine forests were some of North Carolina’s most important exports early in the state’s history.

  8. on the NYT today:

    Offshore Oil and Gas Operators Want Less Regulation, but Surprise Inspections Find Serious Safety Problems

    More than 50 inspectors, traveling on helicopters, conducted surprise inspections on about 40 offshore platforms and drilling rigs, said Jason Mathews, the head of offshore safety management for the Gulf of Mexico at the department’s Bureau of Safety and Environmental Enforcement.

    The results were still being compiled, he said, but the inspectors found serious problems, including some that were potentially life threatening. “There are still some major incidents that are occurring, and we need to figure out why,” Mr. Mathews said Friday.

    https://goo.gl/4M3eg4

  9. Mr Green touts the big economic opportunity Virginia has if it allows drilling for oil off her continental shelf. His company, API, estimates over $43 Billion, to which he adds that spill risk is now contained by the “industry’s premium on technology and safety – to protect its workers and the environment” – and to properly manages any risk.

    A few important pieces are missing from the conversation … what about the future of the oil market? Offshore oil has a particularly long development horizon. Will demand and therefore price hold up? Price is important because offshore oil is expensive to bring to market, much more so than oil from standard drilled wells or even shale oil.

    Do we really want to take the risks for a commodity we are already using less than we used in 1998? Electric cars are poised to cut the US demand for oil by 40% in the next ten years. That is 2.2million less barrels daily. Vehicle redesign, already underway, will yield another 50% increase in fuel efficiency. By 2050 we could need only 10% of the oil we use today, an astonishing reduction in demand. Do we want risk drilling our coast whose barrels we could do without?

    How much money could we save by accelerating the path away from oil? Throughout the G20 institutions and the multilateral development banks over $71.8 billion was spent annually to support the industry between 2013 and 2015. In the US fossil fuel production on federal lands – onshore and offshore territories – was subsidized to the tune of at least $7 billion in 2014, and Oil Change Intl. has calculated an annual expenditure of $20+ billion in support of various kinds for fossil industries, $8 billion of which was for oil.

    Then there is the ability of the industry to offload costs onto the taxpayers. Not included in the subsidy totals are U.S. taxpayers’ contingent liability for decommissioning and cleanup of oil and gas. Projects in the Gulf of Mexico alone are estimated to be $35.3 billion by the Bureau of Ocean Energy Management. (BOEM) Lets subtract those numbers from the proposed economic benefits of drilling our coast.

    Finally there are the costs of climate change, costs that will continue to accelerate everywhere as we continue to drill. Most people now agree that the real costs of carbon emissions must be incorporated into economic decision-making in both the public and private sector. Advocates of offshore drilling don’t even mention climate change and the future very costly effects. In Virginia we are on the leading edge of rising seas effects.

    To get a sense of how much it will cost the nation to save itself from rising seas over the next 50 years, consider Norfolk, Virginia. In November, the Army Corps released a proposal for protecting the city from coastal flooding that would cost $1.8 billion. Some experts consider the estimate low. And it doesn’t include the Navy’s largest base, which lies within city limits and likely needs at least another $1 billion in construction. How can we continue to discuss expanding fossil fuel exploration when Virginia stands at such risk?

  10. That last paragraph needs quotes … from … http://www.dailypress.com/news/science/dp-nws-offshore-virgnia-oceana-dod-20171101-story.html
    The electric car numbers come from BNEF

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