Federal officials prepare to sell drilling rights off Virginia

Federal officials announced Wednesday they are moving ahead with plans to sell drilling rights for oil and natural gas off the Virginia coast. If approved after environmental study and public comments, the offshore activity could begin in 2011, led by energy companies that buy government leases.

The decision is a first step toward possible drilling at least 50 miles off the coast on about 2.9 million acres of the Outer Continental Shelf, said Randall Luthi, director of the federal Minerals Management Service, a branch of the U.S. Interior Department.

Under existing rules, Luthi said, Virginia would not directly share in any royalties from an estimated 130 million barrels of oil and 1.4 trillion cubic feet of natural gas that may lie beneath the target area. But he said the local economy would benefit from new jobs and business linked to offshore production and on-shore handling of raw fuels.

"This is an important day," Luthi said during a conference call with reporters.

The intent of the proposed sales, he said, is to encourage more domestic production of oil and gas, decrease reliance on foreign sources and "help bring about our energy independence."

Environmental groups said they oppose the move and vowed to lobby a more Democratic-leaning Congress, along with the incoming Obama administration, to block the sale and leave the Virginia coast closed to drilling.

"It's about choices," said Glen Besa, state director of the Sierra Club. "Do we want to continue making investments in fossil fuels, which would exacerbate global warming? Or do we want to invest in alternative fuels and efficiencies?"

The Navy has expressed concerns about offshore drilling because it might interfere with training exercises and security. NASA and the Wallops Island spaceport on the Eastern Shore, too, have criticized the plans.

One spaceport official jumped onto Wednesday's conference call to complain. "We have serious reservations with this," he said

Chris Isleib, a spokesman for the Department of Defense, released a statement Wednesday that pledged to continue working and negotiating for "a proper balance of our nation's energy and national security goals."

President Bush lifted an executive ban on coastal drilling in July that had been imposed by his father in 1990.

Congress followed suit months later by allowing a two-decade-old moratorium to lapse.

President-elect Obama was opposed to offshore drilling at the start of his campaign. But as gas prices bumped up against $5 a in the summer, the Democrat shifted positions and said drilling should be part of a new, larger energy portfolio focused on American independence.

The Minerals Management Service first proposed exploration and drilling off Virginia two years ago as part of its 2007- 12 leasing program, a move that has drawn interest from as many as 17 energy companies.

Since then, the state has taken center stage in a national debate about renewing offshore production, about energy policy and about protecting the environment.

The debate included political campaign chants of "Drill, baby, drill!"

Gov. Timothy M. Kaine has tried to walk a fine line during the debate, saying he supports exploration of natural gas potential, but not for immediate drilling and not for oil. Also, Kaine has insisted the activity stay 50 miles from shore.

The federal proposal Wednesday respects the 50-mile buffer but would allow both oil and gas drilling, and does not address royalty sharing.

The state will evaluate the proposal, Kaine's secretary of natural resources, Preston Bryant, said, and is especially interested in where the Obama administration takes the issue.

"If they're likely to halt Bush's outgoing regulation change, then this discussion is merely academic," Bryant said.

The announcement Wednesday triggers a 45-day public-comment period and starts an environmental impact study of the proposed Virginia sale.

The government has no immediate plans to press forward with drilling along the coastlines of other states, Luthi said, though he noted that more announcements are expected in early 2009.

Scott Harper, (757) 446-2340, scott.harper@pilotonline.com