Va. gov McDonnell signs offshore energy bills

RICHMOND, Va. - Gov. Bob McDonnell signed into law Wednesday offshore drilling legislation intended to realize his goal of making Virginia the East Coast's energy superpower.

The bills supporting offshore oil and gas exploration and directing royalties from drilling back to Virginia each hinge on actions by the federal government and Congress.

Interior Secretary Ken Salazar is expected to announce his decision soon whether the government will move forward with the sale of oil and gas leases in a triangular tract 50 miles off of the Virginia coast. The 2.9 million acres has an estimated 130 million barrels of oil and 1.1 trillion cubic feet of natural gas.

McDonnell said the bill backing offshore exploration is intended to signal to Salazar the state's official endorsement of gas and oil exploration.

"We're sending an important message that Virginia is ready to go - and there should be no reason for Washington to delay approval of the offshore lease sale and eventually exploration and drilling," McDonnell said.

McDonnell wants Virginia to be the first East Coast state to tap oil and natural gas in Atlantic waters. He has proposed incentives, as well as tax credits for creating jobs tied to renewable energy sources such as solar and wind power.

The proposals are part of his stated goal of making Virginia the "Energy Capital of the East Coast" through offshore resources, as well as nuclear and coal, creating thousands of jobs and billions of dollars in revenue.

Environmentalists are with McDonnell on promoting renewable energy such as wind power but they part ways on offshore drilling. Opponents argue it poses pollution risks offshore and along the coast, where a refinery infrastructure would be developed to support the industry.

They contend the limited offshore reserves are not worth the environmental risks.

"We are very encouraged by signs that he is willing to consider 'green and clean' as part of the portfolio for Virginia," Cat McCue of the Southern Environmental Law Center said of McDonnell. "However it's a question of balance and it's a question of rhetoric. His actions so far have focused much more on the fossil fuel end of things."

Environmental groups argue Virginia should be promoting offshore wind, which by some estimates state could ultimately provide all of Virginia's electricity needs. Two energy providers have already filed applications to build wind turbines 12 miles off of Virginia Beach.

The business community has widely embraced McDonnell's energy initiative, and petroleum and nuclear interests have scheduled a summit Thursday. McDonnell is scheduled to speak.

Brett A. Vassey, president and chief executive officer of the Virginia Manufacturers Association, said Virginia has the resources and McDonnell has taken the right steps to establish the state as a player in the energy market.

"If you add the nuclear component, you add the oil and gas and you add the offshore renewable coupled with what we've done, we really do have an advantage over many states," said Vassey, whose association is sponsoring the energy summit.

One of the bills signed by McDonnell would direct royalties from the drilling back to Virginia, with 70 percent going to a transportation trust fund. The remaining royalties would go a renewable energy consortium and to localities.

Congress rejected legislation last year to direct oil and gas royalties back to Virginia, and its prospects of passing in the future are uncertain.