Just as the U.S. House of Representatives prepared to end a quarter-century federal moratorium on offshore drilling for oil and natural gas, environmentalists and Gov. Mark Sanford expressed their concerns about how such a move would affect South Carolina’s coastline and the state’s $10 billion tourism industry.
They were joined by energy experts, economists and trade group officials who said they don’t know how much oil and gas can be found off the state’s coast.
They also aren’t certain additional supplies would bring down energy costs for consumers, who continue to guzzle fuel despite record $75-a-barrel oil prices and rising natural gas prices.
What’s more, additional supplies won’t replace the need for stronger conservation measures and more robust development of alternative fuels, the experts said.
Still, the House, by a 232-187 vote, passed the Deep Ocean Energy Resources Act, which would alter the nation’s energy policy by opening the Outer Continental Shelf to more exploration.
The measure would allow energy companies to tap natural gas and oil beneath waters off the Atlantic and Pacific coasts. It also would revamp how the federal government shares oil and gas royalties with states, providing financial incentives for development.
At the same time, the measure would allow states to keep offshore energy production 100 miles away from their coastlines. Currently, the federal government controls energy development starting three miles offshore, where state-owned waters end.
Oil prices are soaring and worldwide political tensions are rising, setting the stage for an intense debate over the future of U.S. energy exploration and the risks involved in drilling for oil and gas off coastal areas.
While prospects in the Senate aren’t certain, and international concerns with such countries as Iran could influence the outcome, the action brings South Carolina closer to significant offshore oil and gas drilling, according to lawmakers and industry experts.
Yet, despite the royalty sharing and extended-ban provisions, Sanford told each member of South Carolina’s House delegation in a recent letter that the measure “significantly weakens the vital protections that South Carolina’s coastline has enjoyed for the last 25 years against offshore drilling and could negatively impact the largest industry in our state.”
He was referring to tourism, which he said contributes more than $10 billion each year to the state’s economy and provides jobs for a sizeable portion of South Carolina’s population.
Sanford, a Republican, also said state officials view the legislation “as encroachment on this, or any other state’s right to continue to prohibit offshore drilling.”
South Carolina would have the option of imposing a ban on drilling 100 miles from the coast, but the state would have to take steps every five years to continue the moratorium, Sanford said. Even then, the secretary of the Interior could deny a state’s petition, he said.
In addition, the legislation would allow a neighboring state to drill off its coastline “without consideration for the protection of our waterways, marine life, or coastline,” Sanford said.
And it would do away with requirements for environmental impact statements, further limiting the state’s ability to regulate activity off its coast, Sanford said.
The South Carolina Department of Health and Environmental Control wouldn’t have adequate data for a thorough review of permits for proposed drilling off the coast and the energy resources act would leave to the federal government the ability to locate pipelines off the state’s coastlines, Sanford said.
But U.S. Rep. Henry Brown, a Republican from Hanahan whose district includes more than 75 percent of South Carolina’s coastline, supported the energy resources act, saying it “is an important part of the solution to fix the energy crisis that we are all facing today.”
Yet, in South Carolina’s coastal areas, where offshore energy development has been banned since the early 1980s, there are no proven reserves.
“The question right now is how much oil’s out there,” said Jason Schenker, an energy economist with Wachovia’s Economics Group.
“Right now we are so early in the learning curve, there are so many questions that need to be answered,” said state Rep. Harry Cato, R-Travelers Rest, and chairman of the House Labor, Commerce and Industry Committee.
Supporters said the federal legislation would help the nation compete in energy markets by acquiring more domestic oil and gas supplies and new technology makes such efforts safer than they used to be. That, in turn, could affect prices and potentially impact consumers, the supporters said.
“If you produce it, obviously that gets to the question of supply and demand,” said Tom Fry, president of the National Ocean Industries Association, a trade group supporting development of offshore oil and natural gas. “The more supply, the more opportunity you have to decrease prices.”
He also said, “The safety record of this (oil and gas) industry over the last 20-30 years has been extraordinary.
“There have been just innumerable technological advances which allow companies to not only drill in fairly hostile environments, but to drill and produce in a much safer way.”
A coalition of consumers, industrial and other energy users, including many from the Upstate, also favors greater domestic access to energy supplies, particularly natural gas, whose domestic industry has been producing at near capacity and which is not easily imported.
The Consumer Alliance for Energy Security termed the House bill “a major victory” for U.S. consumers.
“Finally, after three decades, Congress is sending the message to consumers that help is on the way — help to lower energy costs which have been crippling manufacturers, farmers, small businesses and seniors on fixed incomes,” the alliance said.
The outer continental shelf has enough natural gas to heat 100 million homes for 60 years and enough oil to drive 85 million cars for 35 years, the alliance said.
“It’s now time for the U.S. Senate to act,” it said.
South Carolina’s two senators — Lindsey Graham and Jim DeMint, both Republicans — said they are evaluating the House proposal.
“Sen. Graham has been quite clear that he views the South Carolina coast as an economic and environmental asset,” said Kevin Bishop, a spokesman for Graham. “He has expressed opposition to drilling for oil off our coast.”
“He wants to learn more about natural gas drilling. There are different drilling technologies involved in extracting oil and natural gas. If there is a way to extract natural gas in an environmentally sensitive manner, it would be something he could support.”
Wesley Denton, a spokesman for DeMint, said, “The senator’s position has been the same for a long time. He supports states having the right to opt out of the moratorium.”
But “it’s a little premature” to say how DeMint would vote until the House measure undergoes debate and possible amendment in the Senate, Denton said.
As the Senate considers the legislation, “There is a significant NIMBY factor” involved, said Schenker, the Wachovia economist, referring to the not-in-my-back-yard sentiment.
“There are a number of opponents for a number of different reasons to offshore drilling — environmental concerns, real estate-property concerns — and those are pitted up against the concerns of a free market eager to find more energy sources as well as the potential for states to garner revenue,” he said.