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UPDATED: Senate reverses course, passes McDonnell's proposal on oil royalties

Rosalind Helderman

If you don't at first succeed ...

On a 21 to 19 vote, the Senate passed a House bill Monday that is also backed by Gov. Bob McDonnell (R). The bill declares that 70 percent of any future royalty money the state receives from drilling for oil off the coast would be devoted to transportation improvements. This bill is similar in concept to a Senate bill that the chamber had essentially killed on a party line vote Feb. 10 by shuffling it back to committee, where it was not going to be considered again this year.

The idea was a key part of McDonnell's transportation program during the campaign and he was fairly irked when Senate Democrats killed the bill a few weeks back. But on Monday, several Democrats who voted against the measure the first time voted for it on the second go-around.

Leading Democratic Sen. Charles J. Colgan (D-Prince William), who switched his vote, said he always supported the measure but he had decided to vote against it the first time because the Democratic caucus decided to use the issue to make a show of strength to the governor. "The Democrats were solid," he said. "It was political."

On reflection, Colgan said that he and a few others decided they had achieved little other than upsetting the governor with their message of unity. "A couple of us decided, why do it? What did we accomplish with that?"

Some Democrats don't like the bill because they do not favor oil drilling and they don't like supporting a measure that assumes a day will come when federal law is changed and drilling is allowed. Others, such as Senate Majority Leader Sen. Dick Saslaw (D), are convinced that the federal government will never change current law to allow Virginia to reap royalties from oil drilling. Passing the bill, he believes, would create the false expectation that money will soon flow to roads.

Of course, now that the bill has passed both chambers of the General Assembly, McDonnell has the opportunity to prove Saslaw wrong. He can negotiate with leaders in Washington and with the president and somehow wrangle oil royalties for the commonwealth.

In that sense, passage of the bill declaring how future royalties will be spent might be a curse disguised as a blessing for McDonnell: Now, getting oil drilling royalties to use for transportation improvements is up to him.

UPDATE 5:10 p.m.: McDonnell has released a statement in reaction to the bill's final passage. "I applaud the Republicans and Democrats who voted for this common sense measure that positions the Commonwealth to become the 'Energy Capital of the East Coast', and the first state on the East Coast to produce energy offshore," he said. "The foresight in passing this bill will ensure that when offshore energy revenues arrive, the Commonwealth will immediately direct them to two pressing areas: transportation and renewable energy research and development."

By Rosalind Helderman  |  February 22, 2010; 3:11 PM ET
Categories:  General Assembly 2010 , Robert F. McDonnell , Rosalind Helderman , State Senate  
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Next: UPDATED: Legislative black caucus opposes McDonnell's charter schools proposal

Comments

Teerific. Seventy percent of any FUTURE royalties! Just like the Future revenues generated by dot com startups in Virginia are going to pay for cat tax relief. Hooray! Fiscal sanity at last.

Posted by: dpcret93 | February 22, 2010 5:12 PM | Report abuse

I would have much preferred the bill to pass the first time than looking like McDonnell got "upset" and Democrats caved. What kind of message does THAT send?

Posted by: gretchenlaskas | February 22, 2010 5:30 PM | Report abuse

Drilling for oil off the coast of Virginia? FOR REAL? You see, people, this is why moderates like me can not EVER vote for Republicans. Their sole purpose, because it will take at least 2 decades before any oil can be found, drilled for processed and sold, is to enrich fat cat businesses. This is the most screw ball thing I've heard out of Va. legislature in years. What a disgusting red herring.

Posted by: DPoniatowski | February 23, 2010 7:07 AM | Report abuse

Are there any proven oil reserves off the coast of Virginia? Have oil companies already explored this area?

Posted by: Pensfans | February 23, 2010 8:07 AM | Report abuse

Answering my own question 130 million barrels of oil The US uses about 20 million barrels a day.

Virginia Lease Sale 220

The MMS has initiated the first step for a potential lease sale offshore Virginia. The sale will be held no earlier than 2011. The MMS has published a Call for Information and Interest/Nominations and Notice of Intent to Prepare an EIS (Call/NOI) for Lease Sale 220 in the Federal Register on November 13, 2008. The comment period closed January 13, 2009. The area covered by the Call/NOI is about 2.9 million acres offshore Virginia in the Mid-Atlantic Planning Area, and is at least 50 miles offshore.
The MMS estimates that this area may contain 130 million barrels of oil and 1.14 trillion cubic feet of natural gas.

This Call/NOI is the first step in the information gathering, evaluation, and public participation process. Lease Sale 220 offshore Virginia is scheduled for 2011 under the current Outer Continental Shelf (OCS) leasing Program 2007-2012. The area was included in the 5-Year plan at the request of the Commonwealth of Virginia.

Posted by: Pensfans | February 23, 2010 8:11 AM | Report abuse

Oil companies are not going to spend billions of dollars exploring for what amounts to a week's worth of product. So what is it they really want with the leases?

My best guess is that since they know it's unprofitable to get the oil and gas out, they will claim the millions of acres as private property, with further cases made that they should be able to use it for whatever reason they want.

Posted by: swatkins1 | February 23, 2010 8:36 AM | Report abuse

For those of you who don't think oil companies are going to jump at this, consider this.

130 Million barrels (bbls) of oil at around $80/bbl, plus 1.14 Million cubic feet of natural gas at $5/cu ft. That's about $16 Trillion dollars.

It's worth it for the oil companies.


Posted by: BubbaGump13 | February 23, 2010 10:25 AM | Report abuse

We can be developing Offshore Wind combined with Gas within 5 years, and install 700MW~1GW of Offshore Windmills per year after that. Energy Independence, Renewable Energy without Pollution, and the ability to create an Industry (Wind Blad Production) based in Hampton Roads that we can Export to other states (before Deleware & NJ do it first) is a better and faster Opportunity for VA to create Jobs and Tax Revenue for Infrastructure and other Renewable Energy investments.

Posted by: liveride | February 23, 2010 10:34 AM | Report abuse

Great. Now Virginia has to wait just 15 years before any road work gets done.

Posted by: jckdoors | February 23, 2010 12:05 PM | Report abuse

Now that we have this imaginary oil revenue, let's lower taxes. Common sense. Real leadership. Va. government at its best

Posted by: rcvinson64 | February 23, 2010 5:57 PM | Report abuse

DPoniatowski posted-
Drilling for oil off the coast of Virginia? FOR REAL? You see, people, this is why moderates like me can not EVER vote for Republicans. Their sole purpose, because it will take at least 2 decades before any oil can be found, drilled for processed and sold, is to enrich fat cat businesses. This is the most screw ball thing I've heard out of Va. legislature in years. What a disgusting red herring.
------------------------------
The soundings have already been made. Pre-built rigs can be dropped and assuming a 24/7 schedule, can be operational in 90 days. Factor in another 90 days before you hit oil / gas and start pumping it to the refinery.

The days of "20 years" before production starts, went out with mini-skirts, Disco Dancing and leaded gasoline.

Money for roads and transporation projects, via a "severance tax" is a brilliant idea. By the way, I blieve the first 12 miles is territorial waters belonging to the Commonwealth. Whether the Feds sign-up, is irrelevant.

Posted by: Computer_Forensics_Expert_Computer_Expert_Witness | February 23, 2010 11:00 PM | Report abuse

Now McDonnell can balance the budget using royalties that will (at best) come in 10+ years or (at worst) never. Wotta move.

And the Dems went along with this political grandstanding!

They should vote against it because it's stupid, not as a "show of force".

DOWN WITH STUPIDITY!

Posted by: MAL9000 | February 24, 2010 2:45 PM | Report abuse

"May contain 130 million bbls". So far, natural gas reserve has been proven; no oil reserves have been proven.

Even the 130 is just a week's worth of oil. How about cutting consumption and keeping our oceans a bit less oily?

Posted by: MAL9000 | February 24, 2010 2:50 PM | Report abuse

The comments to this entry are closed.

 
 
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