CHARLOTTE, NC (Bruce Henderson/The Charlotte Observer) –
An Obama administration plan for drilling off the Atlantic coast could rekindle an old debate pitting the lure of oil and gas revenues against North Carolina’s environment and its tourist industry.
The Interior Department on Tuesday proposed offering one drilling lease for sale in 2021 in federal waters off the Carolinas, Virginia and Georgia, the first since the 1980s. The department plans 13 other sales in the Gulf of Mexico and off the Alaska coast.
With Tuesday’s announcement, Interior Secretary Sally Jewell said, the agency seeks to “build up our understanding” of deposits and environmental risks. Drilling would begin only after environmental studies, public comment and a finding that it is consistent with state coastal management policies.
The Obama administration reopened the East Coast from Delaware to Florida to offshore exploration last July, allowing seismic testing that can pinpoint deposits under the sea floor.
Most of the 10 testing applications before the federal Bureau of Ocean Energy Management include North Carolina, indicating that the industry views its coast as a sweet spot for drilling. Testing could begin this year.
“Generally speaking, we are geographically well positioned here in that a large portion of the Mid-Atlantic resource is off the North Carolina coast,” said David McGowan of the N.C. Petroleum Council.
The Obama proposal, he added, would go “hand in hand” with a measure U.S. Sens. Thom Tillis and Richard Burr introduced last week to allow Atlantic drilling in return for states receiving a share of oil and gas revenues.
Gov. Pat McCrory, like governors in the other three Atlantic states, had asked that North Carolina be included in the federal offshore drilling program for 2017-2022.
The state rejected oil and gas exploration a quarter-century ago. North Carolina said Mobil Oil didn’t offer convincing evidence a planned exploratory well 40 miles off Cape Hatteras wouldn’t harm the environment.
Mobil and Marathon Oil sued to recover the money already paid for their leases, and the U.S. Supreme Court ordered the federal government in 2000 to repay $158 million. Three companies gave up their interests in the last eight remaining oil and gas leases off North Carolina in 2000.
Environmental advocates now have fresh evidence of what can go wrong: BP’s massive 2010 oil spill into the Gulf of Mexico.
“Even when BP had its spill, we received some cancellations and more than a few concerned phone calls,” said Lee Nettles, executive director of the Outer Banks Visitors Bureau. “That’s 2,000 miles away, so can you imagine the impact any kind of spill here would have on us?”
Dare County, which covers 100 miles of the Banks, generates nearly $1 billion a year in tourist spending and 1 in 3 jobs. Towns on North Carolina’s tourism-dependent Outer Banks have passed resolutions opposing offshore drilling.
The Atlantic lease would limit drill rigs to no closer than 50 miles from the coast, making them invisible from shore. But oil or gas that’s piped ashore will need infrastructure to store or process it.
“That’s the part of this that no one ever wants to talk about much,” said Derb Carter of the Southern Environmental Law Center. “Which communities will have the pipelines, the transportation facilities, potentially the refineries and all the chronically polluting facilities that go with that? Go to Galveston and the Louisiana coast and and see what that looks like.”
McGowan, the petroleum official, said the ports of Wilmington and Morehead City are likely locations for whatever new infrastructure is needed.
But he said refineries might not be needed and that rigs might unload gas or oil directly into ships, avoiding the need for pipelines. The likeliest need, he said, would be for support facilities such as helicopter bases.
Charles Ebinger, a senior fellow in the Energy Security and Climate Initiative at the Brookings Institution, said he expects court battles and environmental groups to file lawsuits to stop the drilling.
“It will be a battle royale,” Ebinber predicted.
North Carolina would benefit more than any eastern state from offshore drilling, the American Petroleum Institute and the National Ocean Industries Association concluded in a report released in late 2013.
By 2035, the report said, the industry could employ more than 55,000 workers in North Carolina and pump $4 billion a year into the economy.
For now the estimates of what’s under the Atlantic sea floor are based on data collected in the 1970s and 1980s.
The Bureau of Ocean Energy Management estimates that 2.4 billion barrels of oil and 23.4 trillion cubic feet of natural gas may be recoverable in the mid-Atlantic from North Carolina to Delaware. At current consumption rates, that would be enough oil to supply the U.S. for about three months and natural gas for nearly a year.
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