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Virginia leaders watch eagerly as Congress expects to consider offshore drilling royalty bills

Anita Kumar

A few weeks ago, the General Assembly passed a bill that directs 70 percent of future oil or gas drilling royalties to state road improvements.

That was the easy part.

In order to actually receive any money, Congress would still need to pass a bill allowing Virginia to receive royalties. It's an uphill battle. Many members of Congress representing interior states oppose royalties for coastal states.

U.S. Sen. Jim Webb (D) expects to introduce a royalty bill later this year, according to his staff, but they did not yet have details on the proposal. Senators working on a massive federal energy bill are also considering royalties of 25 percent for coastal states, according to recent reports. And last week, U.S. Rep. Robert W. Goodlatte (R-Va.) introduced a bill known as the Virginia Access to Energy Act that would allow drilling offshore with proceeds being split equally between Richmond and Washington.

In 2006, Congress allowed the Gulf Coast states to have 37.5 percent of revenue -- an amount that Virginia leaders would love to take home. Two years later, Webb and then-Sen. John Warner (R) introduced a bill that would have allowed Virginia to explore for natural gas off its shores with 37.5 percent of any profits coming back to the state, but the bill did not pass.

As we recently reported, most Virginia leaders -- regardless of political party -- have expressed interest in joining Alaska, Texas, Louisiana and other states in setting up offshore platforms to drill for oil and natural gas.

News reports published today indicate President Obama is expected to release his updated plan for offshore drilling Wednesday, which could include drilling off the East Coast for the first time.

Gov. Bob McDonnell (R) and U.S. Rep. Eric Cantor (R) have both met with U.S. Interior Secretary Ken Salazar recently to encourage him to keep Virginia in the Minerals Management Service's five-year plan and begin soliciting companies to drill off the coast next year. Most members of the state's congressional delegation, including Webb and U.S. Sen. Mark Warner (D), back that proposal.

But U.S. Rep. James P. Moran Jr. (D) sent McDonnell a letter warning him not to expect too much from the General Assembly's royalty bill. Read Moran's letter.

Moran, who represents traffic-clogged Northern Virginia, argues that drilling will not occur for at least eight years and any royalties that come from offshore gas or oil must go to the federal government, not Virginia. Moran said Congress has repeatedly rejected attempts for Atlantic Coast states to receives royalties.

Virginia is in line to be the first Atlantic Coast state to drill off its shore, although it will probably be years before it starts, even if it receives the necessary approval from the Obama administration.

The 25-year-old federal moratorium on energy exploration and development off the coast of Virginia and other states expired in 2008. Virginia is the only state on the East Coast included in the Minerals Management Service's five-year plan.

By Anita Kumar  |  March 30, 2010; 9:25 AM ET
Categories:  Anita Kumar , Eric Cantor , General Assembly 2010 , House of Delegates , James P. Moran Jr. , James Webb , Mark Warner , Robert F. McDonnell , State Senate  
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Instead of blocking royalties to the more populous coastal states, why not encourage analogous royalties for renewable energy options for the interior states? Other than the benefits received by the corn-growing interior states, that is...

I moved from NoVa to the Upper Midwest - we have plenty of wind, sun and space. Why not look into building solar or wind farms?

Posted by: Chasmosaur1 | March 30, 2010 11:31 AM | Report abuse

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