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OTC panel: Coastal governors want more offshore drilling

BY ALISON SIDER

HOUSTON -- Governors of coastal states say the shadow cast by Deepwater Horizon has loomed too large and lingered too long--now they want more drilling off their coasts and they want to reap more of the benefits, they told an audience at the Offshore Technology Conference in Houston.

Governors of states that already see offshore activity such as Texas and Alaska said they want the federal government to loosen its hold on regulation of the industry and for the states to share more of the revenue oil and gas leasing generates. Governors of some East Coast states where offshore drilling isn' t currently allowed said they want their waters opened up to the energy industry.

"States know how to harness our natural resources," Texas Gov. Rick Perry, a Republican, said.

The governors of states bordering the Gulf of Mexico, including Texas, Alabama, and Mississippi, said lessons have been learned from the 2010 Deepwater Horizon disaster, but the federal permitting process is still keeping a lid on offshore activity around the country. Gov. Sean Parnell of Alaska, a Republican, cited a slow permitting process as one factor that has kept Arctic drilling from ramping up. Royal Dutch Shell has said it won' t try again to drill in the Arctic this summer after the troubled 2012 drilling season was marred by bad weather, mechanical failures and regulatory challenges.

"I' ve got to say that one company had its own issues during one year of operational work," Gov. Parnell said, referring to Shell. "But there were six years of permitting and operational delay to bring it to that point."

ConocoPhillips has also said it won' t drill in Alaskan waters this summer, saying it is hesitant to commit resources to the plan amid uncertainty about its ability to obtain permits.

The governors said states have the resources and the know-how to oversee offshore drilling activity, and should have more authority to work directly with oil and gas companies to encourage more drilling.

They also want a bigger stake in the revenue generated by oil and gas royalties. The federal government already distributes some oil and natural gas royalties to the states, but the setup is limited in scope.

Earlier this year Sens. Lisa Murkowski (R., Alaska) and Mary Landrieu (D., La.) were drafting a bill to expand the current revenue sharing arrangements.

Governors of some Atlantic states said they want the jobs and economic activity that come along with offshore activity, which has been banned there for more than 20 years.

A lease sale had been planned about 50 miles off the coast of Virginia in 2011, but was canceled amid concerns from the Navy after the Deepwater Horizon explosion in the Gulf of Mexico. The Interior Department says there are about two billion barrels of recoverable oil and 21 trillion cubic feet of natural gas in U.S. waters off the central and southern U.S. Atlantic Coast, but the department is still evaluating whether to allow seismic studies that would give an updated idea of the scope of the resource.

"We want to open up leasing agreements. Give us the opportunity. Give us the chance," said South Carolina Gov. Nikki Haley, a Republican.

North Carolina Gov. Pat McCrory, also a Republican, said it isn' t just oil--he wants companies to develop wind and solar resources offshore as well.

Gov. Haley said she believes new U.S. Interior Secretary Sally Jewell is "willing to listen" to Atlantic states that want drilling off their coasts.

Governors of Mississippi and Alabama also spoke Monday, along with representatives for the governors of Louisiana and Virginia.

Dow Jones Newswires

05/06/2013

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