US Govt pushes any drilling off Virginia past 2011

Tue Jan 26, 2010 5:07pm EST

Related Topics

* Earliest date for lease sale off Virginia coast is 2012

* Offshore lease area may hold 130 million barrels of oil

* New Virginia governor wants leasing plan to go forward

By Tom Doggett

WASHINGTON, Jan 26 (Reuters) - The federal government's controversial plan to allow oil and gas drilling off Virginia's coast will be delayed, frustrating energy companies who for years have pushed for access to more offshore areas.

The delay also derails a recent request from Virginia's new governor for the U.S. Interior Department to lease the offshore tracts to oil and gas companies as scheduled and creates more uncertainty over whether the drilling plan will ever be carried out.

The federal government's current five-year drilling plan, which was drawn up under the Bush administration, calls for leasing almost 3 million acres in a triangular area located about 50 miles off the Virginia shoreline in November 2011.

The Obama administration put that plan under review when it came into office, and U.S. Interior Secretary Ken Salazar says he will decide by this summer whether the prior Bush plan will go forward.

However, the department's Minerals Management Service, which oversees offshore drilling, said the proposed Virginia leasing plan will be delayed. The department may still decide against any energy exploration in the area.

Lars Herbst, MMS regional director for the Gulf of Mexico, announced the delay last week at an offshore industry workshop held in Texas, according to several people who attended the event, which was not open to the press. MMS spokeswoman Eileen Angelico confirmed Herbst's comments.

Herbst said the MMS staff was still reviewing whether to hold the Virginia lease sale. But if it is cleared, the earliest the area would be leased is in 2012, before the current five-year drilling plan ends on June 30 of that year. The leasing plan could also be delayed past that date.

"They're still analyzing whether they're going to be able to hold the lease sale then or not," said Angelico, who added that more time was needed to study the environmental impact of potential offshore drilling.

The proposed Virginia lease area may hold 130 million barrels of oil and 1.14 trillion cubic feet of natural gas.

Virginia would be the first state on the U.S. Atlantic seaboard to have offshore drilling since a congressional ban and a presidential moratorium against offshore energy exploration in Atlantic waters ended in 2008.

The area was included in the current five-year drilling plan at Virginia's request. The state's new governor, Bob McDonnell, wrote Salazar in late December and urged the secretary to allow drilling off Virginia in 2011 as scheduled.

"Any effort to remove or delay Virginia's participation in the lease sale would significantly hamper our efforts to create jobs, eliminate much-needed new revenue and undermine support for President Obama's stated commitment to make the United States more energy secure," McDonnell said in his letter.

The governor's office could not be reached for comment.

The American Petroleum Institute, the trade group for big oil and gas companies, criticized the department's move.

"This just demonstrates what remains a pattern with the Salazar Interior Department. Delay, delay, delay," said API spokeswoman Cathy Landry. "Instead of moving forward, and conducting environmental reviews so the sale could occur in 2011, Salazar stalled."

In a related matter, Salazar said the Interior Department will publish in the Federal Register this week a proposal on the environmental impact of allowing companies to conduct seismic testing in Atlantic Coast waters, which would help determine available oil and natural gas resources.

The proposal will open for public comment for 45 days. (Reporting by Tom Doggett)

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