The People of America's Oil and Natural Gas Indusry

Energy Tomorrow Radio: Episode 102 - Development off Virginia's Coast

Jane Van Ryan

Jane Van Ryan
Posted March 9, 2010

In today's episode, I interview Brett Vassey, president and CEO of the Virginia Manufacturers Association, about the state's energy summit scheduled for March 11 and the importance of accessing oil and natural gas resources off Virginia's coast.

Use the audio player below to listen to information about the article and follow along with the show notes. I hope you find the podcast informative.

Show Notes:

00:18 This week several officials and organizations are coming together in Richmond, Va., to examine the state's energy future. Gov. Bob McDonnell wants Virginia to become the first state with offshore oil and natural gas development on the Atlantic Coast. As studies have shown, drilling off Virginia's coast could have a very significant impact on the state's economy.

00:40 To discuss this week's Energy Summit and the potential benefits of Virginia's offshore development, we have Brett A. Vassey, the president and CEO of the Virginia Manufacturers Association, on the telephone with us today.

00:59 Please tell our listeners about your organization. Who do you represent?

01:03 Brett Vassey: Well, the VMA [Virginia's Manufacturers Association] has represented manufacturers and industrial businesses since 1922 in the commonwealth. We focus on issues of production and productivity related to plants and operations in the commonwealth. And we've done that as industry's advocate for 88 years.

01:22 Recently, Virginia's General Assembly took up a bill signaling that the state is ready for offshore oil and natural gas production. Can you explain why that's important to you and your membership? What happened?

01:35 Brett Vassey: Absolutely, this issue has been going on in Virginia since 2005. In fact, the very first bill where our legislature voted on offshore development was in 2006, and we have been working through that process since then--all the way up to today. We do have language already in our code, dealing with Virginia's development of offshore resources. This year, we had Bill 756 carried by Delegate Chris Stolle from Virginia Beach, a freshman delegate I should also mention, that actually wanted to start thinking about how we allocate royalties. And that bill in particular would have invested 70 percent to our trust fund, 10 percent of royalties to local governments for transportation and infrastructure, and then the remaining 20 percent towards renewable energy and alternative energy research and development. We thought that was a very positive step, so we're very excited to have that bill moving.

02:35 And when you talk about the trust fund, you're talking about the Transportation Trust Fund?

02:39 Brett Vassey: We have a very serious need in Virginia for new sources of revenue and I think, as your listeners will know, it doesn't matter what state you're in, it's very difficult to get any bill passed in this economy that deals with new revenue, because all that means is new taxes.

02:54 Right, but there's no question then in your mind that offshore oil and natural gas production could indeed generate significant revenues for the commonwealth?

03:03 Brett Vassey: We think so. We based our very first work in this area, and I was appointed by then Gov. Warner to his Offshore Study Commission, and we had a little analysis done by Dr. James Koch, who is president emeritus of ODU [Old Dominion University], and he used some modeling of the Gulf states. And even at that time we estimated we were looking somewhere around 2,500 new jobs, around $7.8 billion in capital investment, and I think, fast forward to today, Pricewaterhouse Coopers has done a study recently where they estimated about 1,900 jobs--just in Virginia alone, on top of the pretty substantial 143,000 jobs that are already supported by oil and gas.

04:10 Is it accurate to say at this point that offshore energy development has broad bipartisan support in Virginia? 04:17 Brett Vassey: We think so. In fact, if you go back all the way to 2006, the first vote, the House voted 74 to 21 in favor, and the Senate voted 36 to 1 in favor. And if you come all the way fast forwarding to today, you still see a lot of that bipartisan support. And the public polling shows that it's not a Republican or Democratic issue, that the whole issue of domestic energy production, job creation and energy independence, it's something that everyone knows you have to have, an "all of the above" strategy--it can't just be renewables, it can't just be traditional--you have to have it all. And this is our good opportunity to do that, and for Virginia to be part of that next wave.

05:03 The Interior Department is considering a program that would offer an area about 50 miles off Virginia's coast to leasing by oil and natural gas companies. Now originally, those leases were scheduled to be offered for bidding in 2011, but now it appears they might be delayed. What are your thoughts on the delay and what do you know about that?

05:22 Brett Vassey: The Virginia 2020 lease sale is, as you said, scheduled to begin in 2011 and Virginians have worked very hard to get part of that process moving. It's terribly disappointing to us to see the administration delay on this. We don't understand it because we've gone through all of the public hearing processes over the last, again, almost three years. It's an amazing process. I think if most people understood the depth at which these public hearings dive. It's substantial and you don't hear any of the opponents saying that the process didn't give everybody an opportunity to have their voice heard. What we see now is just, quite frankly, we think that it may be a conscious delay. Nevertheless, it's not something that we'd like to see continue. We think they have all the tools they need to allow Virginia to move forward with this lease and this is what we'd like to see.

06:29 Is that one of the things that you hope to accomplish by holding this Energy Summit on Virginia's energy future this week?

06:37 Brett Vassey: We do. We think this is an opportunity for bipartisan business policy people and the new administration to communicate fresh, in a new way to our friends in Congress and our friends in the administration, that now is the time, this is the place, and we want to be partners in this process, but they have to act now.

06:59 And who do you expect to attend this event?

07:02 Brett Vassey: We have a real exciting panel group, where it's going to, again, with our focus being broader than just the traditional. We have some of the nuclear experts from Virginia, we have the Chief Nuclear Officer of Dominion Resources. We have the head of the new joint venture between Northrop Grumman and Areva. We also have the head of Honeywell for Virginia. All good manufacturers, all good producers of energy, doing things pretty creatively. We also have API just doing a fantastic job getting this issue out in front of the public. We also have the Governor, and we have invited on the slate our Lieutenant Governor and the entire administration and legislature. So this is a great opportunity for Virginia to have all the key leaders talking about the issue of energy in general, but also using this as a launch pad to talk specifically about the lease sale and our need to get that back on track as soon as possible.

08:07 One final question--that really gets to the heart of the lease sale--in his State of the Union Speech, President Obama said, "It's time to make some tough decisions about offshore oil and natural gas development." What do you make of that statement? Do you think this would be a tough decision to decide to drill off Virginia's coast?

08:27 Brett Vassey: Well, I think the decision for the president is a tough decision no matter how he goes, but the tougher decision is to not make one at all. Virginians have done everything they need to do. We are waiting for the opportunity and there are good paying jobs and there are significant amount of opportunities for revenue development, both to the commonwealth and to the country. We expect that the tough decision beforehand is to go ahead and move forward with a very balanced approach for this lease sale, and let the cards fall where they may.

09:00 Very good. Brett Vassey, thank you so much for joining us today on Energy Tomorrow Radio.