Under the Dome

NC energy policy shifts attention from fracking to offshore drilling

The state House approved an energy policy Monday that looks beyond fracking in the short term and turns its focus to offshore energy exploration, which could proceed on a scale of decades.

The legislation’s focus on offshore oil drilling, and its effect on tourism-dependent areas, is a shift that could transform North Carolina's coastal region with the promise of jobs and the threat of an accident, as well as the certainty of heated disagreement. Drilling in the Atlantic Ocean remains under prohibition but is slowly being revisited as the nation looks for future sources of energy.

Gov. Pat McCrory has signaled his support for such a policy during his election campaign last year and throughout his tenure. This weekend he emphasized his commitment at an energy summit at Appalachian State University.

“North Carolina needs to get into the energy production business in a much bigger way than we ever have before,” McCrory said, citing a study that offshore energy could create thousands of jobs. “The vast majority of those jobs would be in support services such as banking, health care and all types of logistics.”

In a separate vote, the House also rejected House Bill 74, an environmental package that would have restricted the public’s ability to review the chemicals that energy companies use in fracking. The omnibus legislation, containing dozens of provisions, will now be negotiated by House and Senate members to come up with a compromise, which will have to pass both chambers to become law.

The offshore legislation, which passed the House with a mere 5 minutes of debate, had originally proposed lifting the state's fracking moratorium and other measures to speed up shale gas drilling here. But those controversial measures were set aside in favor of focusing on the bigger energy payoff in the Atlantic Ocean.

As a result, Senate Bill 76 leaves in place a fracking policy set a year ago. That means the state's fracking moratorium won't be lifted until the legislature votes on rules now being written by the Mining and Energy Commission, which is expected to take more than a year.

Instead, the bill instructs Gov. Pat McCrory to form a regional energy compact with South Carolina and Virginia to promote offshore energy development in federal waters, which lie 3 miles in the ocean and beyond.

The bill also directs this state to join other coastal states, including Alaska, to explore offshore energy development. To appease environmental concerns, it also creates a $250 million fund for emergency cleanup efforts.

The brief debate about the risks and benefits of offshore derricks and pipelines foreshadowed the issues ahead. Supporters said setting a broad policy is merely the first step in a long process that will afford ample opportunity to address concerns.

But Rep. Paul Tine, a Democrat who represents four eastern counties, warned that the economic benefits of offshore drilling would flow to Virginia, which has major port in Norfolk.

Rep. Pricey Harrison, a Democrat from Guilford County, also said the risks are too great and the payoff too remote.

“Despoiling our coast for a couple of months of oil supply that may reduce the cost of gas by a penny is just not worth it,” Harrison said.

Offshore drilling remains a far-off prospect that is largely a decision of the federal government. It would require the preliminary step of seismic testing, which is currently not allowed. The industry is awaiting a federal environmental impact study that's due out later this year, and the results of which could lead to a federal decision to allow preliminary testing to get underway.

Gov. McCrory has embraced all forms of energy development, including solar power, wind farms and offshore drilling. The offshore energy policy would include wind farms as well, but proposals in recent years to build wind farms in this state have gone nowhere.

One of the issues yet to be resolved is the amount of money North Carolina would receive from lease royalties paid by energy companies to drill in federal waters.

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