Perdue leans toward offshore drilling

But governor says it also must be done responsibly.

Staff writerSeptember 24, 2011 

— Democratic Gov. Bev Perdue says she is leaning toward supporting offshore drilling for oil and gas if it is carefully done, as a high-powered panel she appointed ends a two-year study of the pros and cons of coastal energy exploration.

The 105-page draft report lays out the potential for the state to reap hundreds of millions of dollars of tax revenues, and the creation of an unknown number of jobs if energy companies are allowed to erect offshore platforms.

But it also notes the fragile nature of the state's barrier islands and sounds, and risks to the state's large tourism and fishing industry.

After the final touches are put on the report, it will go to Perdue, who her staff says is willing to move forward with offshore energy as long as there are adequate safeguards to the environment, tourism and fishing.

"We need an energy policy that creates jobs, lowers costs for businesses and generates revenue for our state," Perdue said in a statement. "I expect the final report to provide sound advice on how North Carolina can move ahead responsibly in developing offshore energy resources."

Nothing is likely to happen soon.

The federal government, not the states, is the major player in offshore exploration beyond the states' 3-mile territorial jurisdiction, where most of the oil and gas would likely be found.

Last year, President Barack Obama initiated plans to lift a decades-long moratorium on offshore drilling along the East Coast, although that was put on hold after the BP oil spill in the Gulf of Mexico.

"As it now stands, barring some change, it will be 2017 before anything can happen out there," said Willis Whichard, a former North Carolina Supreme Court justice who served as chairman of the 15-member panel appointed by Perdue to study offshore drilling. "But the president could change that. You could have a new administration in January 2013."

Perdue and the Republican-controlled legislature have clashed on the issue this year, with GOP lawmakers questioning the sincerity of her support for drilling.

The legislature passed an energy bill that would have required North Carolina to form a compact with Virginia and South Carolina to seek an agreement with the federal government to collect royalties for the oil and gas found off their coasts.

Perdue vetoed the bill, citing constitutional concern over the legislature instructing the governor to enter into compacts with other governors. The Senate overrode the governor's veto; the House has yet to attempt an override.

Perdue, a resident of the coastal town of New Bern, opposed offshore drilling when she ran for governor in 2008, but later softened her stand to say she would be willing to study it. Republican Pat McCrory, her opponent last time and likely next time, supports offshore drilling.

Perdue appointed the Scientific Advisory Panel on Offshore Drilling in September 2009. It is expected to issue its final report shortly. The panel included a senior oil and gas industry consultant, a marine scientist, a civil engineer and a coastal geologist.

Whichard said it was the panel's decision to provide neutral information. He said it was unlikely that it could have provided a unanimous report, if it had taken a position.

"We tried very hard to set forth the pertinent information and the pros and cons of the various kinds of offshore energy development."

The panel calls for creating a center to continue research and data collection.

Whichard said he envisioned the creation of an institution modeled on the N.C. Biotechnology Center.

How much oil and natural gas is out there is a matter of guesswork until wells are actually dug, according to the report.

The panel said that oil and gas would likely be found up to and more than 50 miles from the coast in deep water - greater than 1,000 feet - beyond the continental shelf.

The report notes that previous exploration off the North Carolina coast suggests that there is enough oil there to supply the United States for 36 days, and enough gas to supply the country for 246 days. But the report also said that it is possible that larger reservoirs of both could be discovered during more intense exploration.

"The truth is, nobody knows, and it will take drilling to ascertain that," Whichard said.

If oil or gas was found off the North Carolina coast, the report said, it would have no direct effect on prices at the pump at Tar Heel stations, because it would be part of the global market.

There would be some jobs created - although it is not clear how many. The offshore oil industry employs 150,000 people nationally.

"Some of those jobs probably will be taken by current North Carolina residents while others will be held by those currently living outside North Carolina," according to the report.

There's also no guarantee that the state would see any revenue from drilling. Under existing law, North Carolina would not get any royalties for any oil and gas outside the state's 3-mile jurisdiction - where the oil and gas is expected to be found.

Perdue has urged Congress to pass legislation to ensure that North Carolina received a share of the royalty payments. Louisiana currently receives 27 percent of the oil and gas revenue found off its shore. If North Carolina got a similar deal, the panel estimated the state would earn royalties of between $66 million and $400 million annually or a total of between $2 billion and $12 billion until the reserves give out.

The report also outlines the risks of offshore drilling, noting that North Carolina's coast is a unique series of barrier islands, with shallow and dynamic inlets, and a vast sound system. The coast supports a $2.6 billion tourism and travel industry with 40,000 jobs and a $116 million annual commercial and recreational fisheries industry with 27,000 jobs.

"Oil pollution from spills as well as normal drilling and production operations is a major concern," according to the report. "Operational spills can occur during transportation ... from equipment leaks where the required containment devices are not adequate, and by inadvertent opening of valves at the wrong time."

The committee also noted that the oil and gas were most likely to be found in steep canyons prone to major landslides and slumps and that the likely drilling area is the meeting ground for warm water from the Gulf Stream and the cold water from the Labrador Current, making the Cape Hatteras area a "primary breeding ground for small summer hurricanes and large fall and spring nor'easter storms." or 919-829-4532

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