Virginia’s new Gov. Bob McDonnell delivered his State of the Commonwealth address Jan. 18, fleshing out the policy programs he mentioned in his earlier inaugural address. While he did not use the word “manufacturing” — the term we’ve been searching for in governors’ addresses this month — the Republican governor did talk about “industry,” e.g., the bio-tech industry, an industrial mega-site, the wine industry, and, with the most detail, the energy industry.

McDonnell’s prescription for economic growth via energy is an all-of-the-above approach, including offshore oil and gas development, nuclear power, coal and bio-fuels. The Virginia governor is giving the Republican response to President Obama’s State of the Union address Wednesday, but his vision of energy development is non-partisan and one that the President would profitably embrace in pursuit of jobs, growth and tax revenues.

From McDonnell’s prepared remarks:

I am committed to utilizing all of our vast, God-given natural resources to make Virginia the “Energy Capital of the East Coast.” We must do our part to promote American energy independence.

We have the opportunity to be the first state on the Eastern Seaboard to sell the leasing rights to explore and drill offshore for oil and natural gas in 2011. The federal moratoria have been lifted. The state that is first will reap an economic bonanza. We can lead or be left out. Four years ago you had the foresight to pass legislation giving us a critical advantage. We cannot now let Washington bureaucracy undermine the clear desires of the people of Virginia.

I have written to Secretary of Interior Ken Salazar, and have let our congressional delegation know that this is a priority for our Commonwealth, consistent with President Obama’s commitment to make our nation more energy secure. Several studies show that environmentally-safe offshore exploration and production will create thousands of jobs, put hundreds of millions into our depleted state coffers, and spur billions in capital investment in the Old Dominion. There are many unemployed Virginians who are ready to work in the oil and gas production industry.

Sen. Byron Dorgan (D-ND) participated in a conference call on energy and national defense issues today, and a strong case was made for policies that encourage U.S. energy security and economic growth. Reuters spots this news:

WASHINGTON (Reuters) - U.S. Senator Byron Dorgan said on Tuesday he did not think the Senate would pass climate change legislation this year, but instead would focus on separate energy legislation that would require more electricity supplies to be generated from renewable sources and expand offshore drilling into the eastern Gulf of Mexico.

This is newsy because Sen. Dorgan is making a prediction AND he’s a member of the Senate Democratic leadership. More coverage …

• The Hill (blog), “Dorgan calls climate bill unlikely in 2010, pushes for energy measure“
• New York Times, “Senate Not Seen Passing Climate Bill In 2010“

The impetus for today’s call was a new report issued by the group, Securing America’s Future Energy, “Eastern Gulf of Mexico Oil and Gas Exploration and Military Readiness.” The summary states:

The paper, produced in collaboration with Commonwealth Consulting Corporation, led by Col. Martin Sullivan, USMC (Ret.), concludes that there is no credible evidence that expanded oil and natural gas exploration and development in the Eastern Gulf would adversely affect military missions in that area.

Specifically, the report examines earlier claims of potential impacts (which were made prior to the Defense Department putting into place systems to evaluate such claims), assesses rates of usage by the United States military in the affected areas, explains current methods of controlling airspace and surface actions in the Gulf, and analyzes encroachment factors. It concludes that the Pentagon until very recently had no systematic tools for measuring the effect outside factors had on training and testing, and now that those tools are being put into place, they are clearly showing that oil and natural gas production will not encroach on the military missions in the Gulf.

The full report is here. Coverage:

• Tampabay.com, “Military brass: Gulf drilling won’t harm training“
• The Jacksonville Observer, “Dorgan, Military Officials to Release Pro-Drilling“

Rep. Nick Rahall (D-WV), chairman of the House Committee on Natural Resources:

There is little chance Congress will reinstate an offshore oil drilling ban that expired last year, the chairman of the House Natural Resources Committee told environmentalists Wednesday.

“I understand your desire to see the moratoria reinstated. However, we may be in a situation where the ship has already sailed,” Rep. Nick J. Rahall II , D-W.Va., said.

A longstanding ban on oil and gas production off the Pacific and Atlantic coasts ended last fall when Congress declined to renew it. President George W. Bush also lifted a corresponding executive moratorium, at a time of high gasoline prices when the industry was clamoring for more drilling.

That’s from CQ’s story on yesterday’s hearing by the committee on offshore drilling. However welcome the comments are from Chairman Rahall, an opponent of offshore drilling, the federal government can stop energy development through other means, which is why the Department of Interior’s extended review of OCS energy warrants close scrutiny and involvement from those who support prosperity and U.S. competitiveness.

The committee’s star power, Ted Danson, turned out to be not very interesting. Just another anti-oil company statist and global warming scold.

From U.S. News and World Report, “Cuba Plans New Offshore Drilling in Search for Big Oil Finds in the Gulf of Mexico“:

HAVANA—Cuban officials say that exploratory drilling to assess the potential for oil reserves in the Gulf of Mexico is likely to resume in the second quarter of this year, a sign that lower world oil prices have not derailed efforts by the Cuban government and its foreign corporate partners to keep moving toward offshore oil production.

Cuba believes it has major oil reserves in its waters. But the prospect of exploratory drilling—followed by likely future commercial drilling—in the Florida Straits has fired controversy in the United States, with the expectation that someday, foreign oil firms could be drilling as close as about 50 miles from parts of Florida.

Secretary of the Interior Ken Salazar has been supportive-to-ambiguous about OCS drilling.

A model for future leasing, now that the OCS moratorium has expired:

From the Minerals Management Service:

NEW ORLEANS - The Department of the Interior’s Minerals Management Service (MMS) has proposed that oil and gas Lease Sale 208 for the Central Gulf of Mexico Planning Area be held March 18, 2009. The Notice of Availability of the Proposed Notice of Sale (PNOS) was published in the Federal Register on Friday, October 3.

The proposed sale encompasses approximately 6,200 unleased blocks covering more than 33.5 million acres offshore Louisiana, Mississippi, and Alabama. This area includes 5.8 million acres, known as the 181 South Area, that will be offered for lease for the first time since 1988. “What makes Sale 208 noteworthy is the addition of the 181 South Area,” said MMS director Randall Luthi. “The states of Alabama, Mississippi, Louisiana, and Texas will share in all revenue from leases in this new area.”

The Gulf of Mexico Energy Security Act of 2006 mandated that the 181 South Area, approximately 5.8 million acres located in the southeastern part of the Central Planning Area, be offered for lease, and that the four Gulf producing states share in the revenues. 

According to MMS estimates, the proposed lease sale could result in production of approximately 0.807 to 1.336 billion barrels of oil and 3.365 to 5.405 trillion cubic feet of natural gas. But…

Two steps forward, six steps back, six steps back:

The darkening economic outlook may force lawmakers to delay some public policy priorities, but two House Democrats indicated Tuesday that curbing global warming won’t be one of them.

House Energy and Commerce Committee Chairman John Dingell (D-Mich.) and Energy and Air Quality subcommittee Chairman Rick Boucher (D-Va.) released a 461-page bill that seeks to cut greenhouse gas emissions by roughly 80 percent over the next four decades. Environmental groups welcomed that target, but criticized the bill, which Dingell and Boucher refer to as a “discussion draft,” for delaying dramatic emissions reductions until after 2020.

Tar sands, perhaps. That would be good.

Politico’s The Crypt blog has a report on the Democratic conference call yesterday, where energy was a major item of discussion.

Democratic leaders in the House discussed the possibility on Wednesday of offering a comprehensive energy package when Congress returns in the fall, according to leadership aides.

Details remain hazy from the Wednesday afternoon conference call, and one aide cautioned that “no final decision [was] made.”

But it seems clear party leaders are crafting a comprehensive energy package that would combine a Republican priority to open new offshore sites for oil and gas exploration with Democratic priorities, like tax subsidies for renewable sources of energy or new requirements for energy producers to generate more power from renewables, like wind and solar power.

Senate Republican Leader Mitch McConnell commented in anticipation of the call:

What we really need to have is a real debate like we used to have in the Senate where lots of different amendments were offered and you had a chance to offer whatever you thought would make a difference,” McConnell said.

Skepticism seems warranted, just as a matter of political reality. The absolutists among the environmental constituencies will not accept any additional OCS drilling under any circumstance, and so a “compromise” that met their standards would have to be political cover and nothing more. Even if some pro-consumer, pro-energy, pro-market bill passes like the progressively bipartisan Peterson-Abercrombie legislation, H.R. 6709, you don’t think the environmentalist left will immediately turn to the courts to block drilling? It’s what they do.

The Washington Post assesses three of the arguments used by opponents of OCS oil and natural gas drilling in a good editorial today, “Snake Oil.” We especially appreciate the rebuttal to “use it or lose it,” the specious argument that oil companies are just sitting on vast lands for drilling and refusing to develop them because…well, there the argument falls short. The Post’s explanation is clear and persuasive:

The oil companies aren’t using the leases they already have. According to the MMS, there were 7,457 active leases as of June 8. Of those, only 1,877 were classified as “producing.” As we pointed out in a previous editorial, the five leases that have made up the Shell Perdido project off Galveston since 1996 are not classified as producing. Only when it starts pumping the equivalent of an estimated 130,000 barrels of oil a day at the end of the decade will it be deemed “active.” Since 1996, Shell has paid rent on the leases; filed and had approved numerous reports with the MMS, including an environmentally sensitive resource development plan and an oil spill recovery plan that is subject to unannounced practice runs by the MMS; drilled several wells to explore the area at a cost of hundreds of millions of dollars; and started constructing the necessary infrastructure to bring the oil to market. The notion that oil companies are just sitting on oil leases is a myth. With oil prices still above $100 a barrel, that charge never made sense.

The Post does bow to the anti-energy shibboleth, ANWR, although it doesn’t really state an argument: “We agree that the Arctic National Wildlife Refuge, with its varied and sensitive ecosystems, should be preserved. In the quest for new sources of energy, there are trade-offs. That pristine area must remain off-limits.” We hope the member of the editorial board who elicited that concession appreciates it.

Elsewhere…

House Speaker Nancy Pelosi on CNN’s Larry King: “So there are things that Congress can do and we have voted on this over and over again. But the Republicans and the president have resisted. Instead, they have this thing that says drill offshore in the protected areas. Well, we can do that. We can have a vote on that. But it has to be part of something that says we want to bring immediate relief to the public and not just a hoax on them.” Some see in those comments a softening in the Speaker’s until-now resolute opposition to offshore drilling of any sort. That would be great. But we see a flexibile definition of “hoax” that could be called on to prevent action. 

As for “immediate relief,” an editorial in Investor’s Business Daily points to a report by Sanford C. Bernstein & Co. From “Don’t Ask, Don’t Drill“:

The Minerals Management Service estimates there are 10 billion barrels waiting off the California coast.

“California could actually start producing new oil within a year,” the Bernstein report said, because the oil is in shallow water, and drilling platforms have been there since before the moratoria.

Immediate enough?