Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity.
-- Dr. Martin Luther King Jr, 1963, Strength to Love
Did you know that a wedge-shaped area near the mouth of the Chesapeake Bay is scheduled to be opened for offshore oil and gas leases in 2011? If not, let me introduce you to Lease Sale 220. The area in question (in yellow on the following map) begins 50 miles off of Virginia's portion of the Delmarva peninsula. The real question is how did this area wind up on the dirty energy auction block?
The story behind this lease sale is not uplifting. There are no heroes, but short-sighted politicians fill the waters like jellyfish. In addition to the unpleasant stinging sensation, reading about Lease Sale 220 may also give you a strong urge to shower.
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A little history of Drill, Baby, Drill off the Virginia coast
This is not first time the federal government has conducted lease sales off the Virginia coast. Leases were last offered from 1976 to 1983. These sales produced nothing of interest to the oil companies.
In the period between 1976 and 1983 when lease sales were conducted in the Mid-Atlantic Area, including the offshore Virginia program area, a total of 32 exploration wells were drilled resulting in no commercial hydrocarbon discoveries.
Minerals Management Service, 2008
The Energy Act of 2005 required a new assessment of offshore reserves. In response, the 2006 National Assessment estimated reserves in the area bounded by Lease Sale 220 to contain 130 million barrels of oil and 1,140 billion cubic feet of natural gas. The accuracy of government assessments of fossil fuel reserves are dubious no matter the government or the country. This one warrants similar suspicion. Moreover, since previous exploratory wells in the area were in the shallower waters, oil and gas reservoirs are likely to be in the deeper waters in the parcel, which exceed 10,000 feet. That means the technological requirements of recovery will be similar to that faced by the Deepwater Horizon in the Gulf of Mexico.
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Fingerprints of the Oval Office
Offshore drilling on the Atlantic coast was prohibited in 1990 by George H. W. Bush. His executive order covered the years from 1990 to 2000 and was extended by Bill Clinton to 2012.
Lease Sale 220 was the handiwork of the George W. Bush administration. It was included in the Minerals Management Service (MMS) leasing plan for the years 2007-2012. The decision to include the Virginia wedgie was announced in February of 2006 and the public comment period took place several months later. Bush rescinded Clinton's executive order in July of 2008 to pave the way for the lease sale.
The Environmental Impact Statement and other preparations for the lease sale were well underway before Barack Obama took office. The first troubling sign about Obama's position on offshore drilling was that he did not reinstate the executive ban, allowing the lease sale to move ahead. Then came his decision on March 31, 2010, to further expand offshore exploration and drilling on the Atlantic coast well beyond the Virginia wedgie.
Obama's temporary moratorium on offshore exploration in the aftermath of the oil spill in the Gulf of Mexico has delayed the public hearings required before Lease Sale 220 begins, but is nothing more than a speed bump.
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Fingerprints of Congress
The second obstacle to Lease Sale 220 was a Congressional moratorium. In 1983, Congress banned the Department of Interior from spending any money in support of any petroleum leasing or development in the Atlantic. The moratorium was reauthorized by every session of Congress until 2008.
The first attack on the drilling moratorium came in 2005, courtesy of Richard Pombo. He sponsored the State Enhanced Authority for Coastal and Offshore Resources (SEACOR) Act of 2005, which would give states the right to open their shores to drilling. Although it did not pass, the idea was attractive to some states, including Virginia.
The next attack came on the floor of the U.S. Senate in 2007 after the MMS had already developed plans for Lease Sale 220. Virginia Senator John Warner introduced an amendment to the 2007 energy bill to open the Virginia coast to oil and gas exploration. The amendment was defeated by a single vote.
In 2008, the Congressional moratorium was scheduled to expire on September 30 and it was allowed to die quietly without a vote. The final obstacle to moving ahead with the lease sale was now gone. From the MMS press release in November of 2008:
The area offshore Virginia was initially included in the Outer Continental Shelf Oil and Gas Leasing Program: 2007-2012 but leasing was prohibited due to an Executive withdrawal and a Congressional moratorium. In July 2008, President Bush lifted the withdrawal and the Congressional moratoria expired on September 30, 2008. Both of these actions allowed the option of the special interest lease sale.
In January of 2010, both U.S. Senators from Virginia petitioned Interior Secretary Salazar to move ahead with Lease Sale 220. Drill, baby, drill faster.
The senators, both Democrats, asked Salazar to complete the Interior Department's study on the environmental impact of drilling of the Virginia coast and publish rules to allow energy companies to conduct seismic surveys to determine the potential oil and gas resources in Atlantic waters.
"We would urge you to promptly commence these steps in order to ensure that the Virginia lease sale is conducted in a manner that is timely and consistent with the interests of the environment and our national security," wrote Senators Jim Webb and Mark Warner.
BP's catastrophic spill in the Gulf of Mexico has not changed the minds of the two Virginia Senators.
On March 25, 2010, members of the Virginia Congressional delegation introduced H.R. 4942. The purpose of this bill is:
To require the Secretary of the Interior to conduct proposed oil and gas Lease Sale 220 for areas of the outer Continental Shelf at least 50 miles beyond the coastal zone of Virginia, and for other purposes.
The other thing the bill does is change the revenue stream. Virginia wants 50% of the royalties, with the money going to:
(A) Education.
(B) Transportation
(C) Reducing taxes
(D) Coastal and environmental restoration
(E) Energy infrastructure and projects
(F) State seismic monitoring programs
(G) Alternative energy development.
(H) Energy efficiency and conservation.
(I) Hurricane and natural disaster insurance programs
The alternative energy development is particularly amusing. First on the list of alternative energy programs is "coal and related technologies."
Ironically, the bill in Congress comes after the Virginia Senate passed a bill authorizing the governor to spend the royalties for building roads. Nothing like allocating funds that have not been authorized to be given to the state for leases that may never yield royalties.
Revenue sharing has also been proposed as part of the Kerry-Lieberman-Graham clean energy and climate bill now under discussion. Instead of the 50% state share of revenues proposed in H.R. 4942, the Senate plan would only give the coastal states a 25% share.
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Fingerprints of the Governor
And now for the strangest piece of the puzzle. How did an area off of Virginia wind up being the first offshore drilling project on the Atlantic coast in almost 30 years?
According to the MMS in 2008, the Governor of Virginia petitioned the MMS to develop Lease Sale 220.
“At the request of the Governor, MMS included the area offshore Virginia based on the Commonwealth’s current energy policy and continued interest in knowing what resources may be off its coastline,” said MMS Director Randall Luthi. The sale, referred to as Lease Sale 220, is proposed to be held in 2011.
The question is which governor of Virginia was responsible. The lease sale was announced in February of 2006, suggesting that development steps must have taken place in 2005 when Mark Warner was in office. Yet here is what the Energy Department said about the leasing plan in 2005:
For the first few years after the Secretary’s announcement no State expressed interest in lifting the moratoria. Early in 2005, however, a bill was introduced to give States more control over their coastal zones. The proposed State Enhanced Authority for Coastal and Offshore Resources Act of 2005 (SEACOR) would expand the rights of States to approve or prohibit drilling activity up to 12 nautical miles from shore, as opposed to the 3-nautical mile limit that most coastal States now control. The bill would also allow States to veto oil drilling up to 100 miles offshore and drilling for natural gas up to 40 miles offshore, whereas under current law there is no distinction drawn between offshore oil and natural gas drilling. Some Mid-Atlantic States have expressed interest in the proposal. In late February 2005, Virginia’s General Assembly passed a bill advocating passage of SEACOR, which would potentially open the State’s coastal waters to natural gas and oil exploration and production activities. However, Virginia Governor Mark Warner vetoed the bill on March 29, 2005.
Here is what the MMS said in February of 2006 when Lease Sale 220 was proposed.
“The idea of leasing federal waters off the coast of Virginia comes in response to discussion in the state’s legislature about the potential of energy development off its coast,” Burton said. “However no offshore development will occur off of Virginia unless the state’s congressional delegation works to lift the moratorium.”
“MMS must have a leasing plan in place if Virginia seeks to end the moratorium and encourage offshore oil and gas development,” Burton said.
Did the MMS include the Virginia wedgie when the state legislature passed S.B. 1054 even though the bill was vetoed by Governor Mark Warner? It seems strange that Warner would veto the bill only to then quietly petition the MMS to include the parcel off the Virginia coast for a lease sale.
In 2006, the Virginia legislature again tried to pass a bill to support lifting the ban on drilling off the Virginia coast. This time around, it was Tim Kaine that vetoed the bill. A New York Times article noted that Kaine left the door open, but by this time plans for Lease Sale 220 were already developed.
On Friday, Gov. Tim Kaine of Virginia, a Democrat, rejected language in a state energy bill that asked Congress to lift the drilling ban off Virginia's coast. But he did not close the door to a federal survey of natural gas deposits.
A story in the Congressional Quarterly also seemed to finger Kaine as a co-conspirator in 2006.
Four months after the law went into effect, the Virginia state legislature — backed by Democratic Gov. Tim Kaine, Republican Sen. John W. Warner and Democratic Sen. Jim Webb — requested that the Interior Department lift the offshore exploration moratorium off Virginia’s coasts. The state’s lawmakers, meanwhile, said they hoped to duplicate the Gulf Coast formula and channel new money into improving strained infrastructure.
At the same time, Kaine was being heralded by the Sierra Club as a champion against drilling off the Virginia coast.
"We applaud Governor Kaine today for standing up to special interests and sending the message that Virginia is not for drillers," said Mike Town, Director of the Virginia Chapter of Sierra Club. "It’s time for Virginia to end the debate over auctioning off our valuable coastline to the oil and gas industry and high time we embrace energy solutions that will sustain our energy needs and our economy far into the future."
Kaine sent conflicting signals to MMS in 2007 during the initial comment period for 2007-2012 Program Plan. Here is a summary by the MMS of comments received from the Commonwealth of Virginia.
Virginia's Secretaries of Commerce and Trade and of Natural Resources, on behalf of the Governor, respond to the plan's option to hold a special interest sale in OCS waters offshore Virginia, by restating portions of the state policy as set forth in state legislation. Specifically, Virginia supports Federal efforts to determine the extent of natural gas resources 50 miles or more offshore. The Commonwealth finds the PP inconsistent with its policy in four respects. First, MMS should include areas in the whole of the Atlantic Planning area, not just off the shore of one state. Second, Virginia policy only addresses natural gas, not oil. Third, Virginia policy only addresses exploration, not production as set forth in the PP. Lastly, the PP excludes a 25-mile buffer zone, whereas the Virginia policy calls for a 50-mile minimum setback. Virginia urges MMS to modify its planning to be fully consistent with the Virginia policy or remove the Virginia planning areas from the plan entirely. Virginia also objects to the use of equidistance to determine the state administrative boundary.
By letter dated February 22, 2007, the Governor of Virginia reiterated the Commonwealth’s energy policy, but asked that the DOI consider keeping Virginia in the program in a way that comports with the Commonwealth’s policy.
Because the leases were not going to be limited to gas, Kaine wrote a letter opposing Lease Sale 220 in response to the MMS call in 2008 to prepare environmental impact statements and elicit interest for exploration.
The current governor, Tim Kaine, has expressed objections to the agency's plans. The Minerals Management Service has said it is acting at the behest of Governor Kaine. But in a letter to the agency in December 2008, the governor wrote, "The actions ... to start the leasing process could lead to drilling and production of natural gas and oil, and, for that reason, do not comport with Virginia's offshore energy policies."
After being rebuffed again by the MMS, Kaine petitioned Interior Secretary Salazar to delay the lease sale in 2009.
And what did Bob McDonnell run on in 2009? Drill, baby, drill. With Kaine out of the way in early 2010, it was pedal to the metal for the lease sale.
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Delusion or deception by Virginia lawmakers?
A thread that runs through most of the public statements by Virginia lawmakers, particularly Democrats, is that they only support natural gas exploration as part of Lease Sale 220. The MMS seems to think that the process is all-or-none, not one or the other. Here is their comment in the Federal Register announcing the next steps for Lease Sale 220 in November of 2008.
The MMS is aware of Virginia’s current Energy Policy, which states: ‘‘*** The policy of the Commonwealth shall further support the inclusion of the Atlantic Planning Areas in the Minerals Management Service’s draft environmental impact statement with respect to natural gas exploration 50 miles or more off the Atlantic shoreline.’’ The OCSLA does not include provisions that would allow gas-only leasing. The only potential avenue to allow for the exploration of gas resources is through the leasing process described in section 8 and section 19 of the OCSLA. This Call/NOI is the first step in the section 19 process.
Either Virginia lawmakers were ignorant of how the leasing process operated or knew that leases were not "gas-only" but presented their position to the public as only supporting natural gas exploration. Neither possibility speaks well of the lawmakers pushing Lease Sale 220.
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Bipartisan failure of imagination and leadership
The sad truth of the Virginia lease sale is that it has involved every level of government and both sides of aisle. Tim Kaine appears to be guilty of sincere ignorance, but everyone else engaged in conscientious stupidity.
For Virginia lawmakers, this is a case of unadulterated greed. It is all about revenue sharing. If Virginia gets a big slice of the royalties pie, they want exploration to begin tomorrow. Dirty energy companies have figured out that if they throw a few pennies in the public coffers, they can blow up mountains, destroy streams, plant gas wells on public and private lands, and drill off the coasts. They are used to paying bribes all over the world and these are tiny. In fact, the states are fighting to take the federal government share rather than increase royalties. The energy companies are laughing all the way to the bank.
Extraction-related royalties are nothing more than heroin or crack to state lawmakers. Easy money. It is a magical source of revenue that will help pay for services and infrastructure. It comes with all the same promises you hear about lotteries and gambling operations except there are infrastructure and oversight costs with mining and drilling, not to mention clean-up costs for polluted air, water, and land. And once addicted to revenue streams from dirty energy, politicians cannot be cured until the money runs out and they have to contend with the inevitable environmental mess left behind. A grade school child can understand that extraction is not a sustainable foundation for an economy.
And look at the effort and ingenuity that went into getting around obstacles to drilling off the Virginia coast. If public servants worked as hard at developing clean energy and a sustainable economic base, we would have a bright future to leave for future generations. Instead, future generations will pay the price for our greed and stupidity. No, Virginia, there is no Santa Claus. However, if you are not careful, something like this is entirely possible.
There is probably nothing to worry about. The oil companies can easily contain any accidents or spills. And the Chesapeake Bay is not a fragile ecosystem already under severe stress. Virginia Beach and the rest of the eastern shore do not generate billions in revenue from tourism. North Carolina would not mind tar balls washing up on the Outer Banks. NASA can find a new splashdown zone for launch vehicles from its Wallops Island facility. The U.S. Navy has no objections to drilling rigs near the mouth of the Chesapeake Bay, home to the Atlantic Fleet. Oh wait, none of that is true.
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