April 16, 2024

I.H.T. Special Report | Oil & Money: Virginia Tries to Circumvent Obama to Allow Energy Drilling

Mr. Domenech, Virginia’s secretary of natural resources, is undeterred. He and the state’s Republican governor, Bob McDonnell, have teamed up with Virginia’s two Democratic senators to try to do an end run around the president and put Virginia’s coast on the energy map through an act of Congress.

The state is trying to restore a lease sale for energy exploration that was canceled in 2010 after the BP oil spill in the Gulf of Mexico. Its efforts have made Virginia the new epicenter of a campaign by energy companies to gain a toehold in the potentially vast resources hidden beneath the Atlantic.

“The administration not only took away our sale, but they didn’t reinstate it into the next five-year plan. They booted us off to 2017,” Mr. Domenech said. “That’s what made us start pursuing other avenues in Congress.”

Oil companies and government officials think there is oil and natural gas off the East Coast. Exploration, however, has been blocked for more than 30 years after a devastating spill off the coast of California turned public opinion against offshore drilling.

That political environment changed over the last decade as oil prices soared and the American public and politicians weighed their fears of offshore drilling against the geopolitical threat of being dependent on oil from hostile nations or unstable regions.

Now seven companies, including Global Geo Services of Houston and WesternGeco, a subsidiary of Schlumberger, have applied for permission to conduct seismic studies along the East Coast from New Jersey all the way to Florida. Efforts are focusing on Virginia because the public, politicians in both parties and energy companies all favor opening the waters to drilling.

To proceed, the would-be explorers will need to bypass the vocal opposition of those who say that even the preliminary survey work would harm endangered whales, and of the Navy, which uses the waters off Virginia as training grounds for its base in Norfolk.

“It’s an important frontier, and it’s right next to a large market,” said Joe Gagliardi, vice president for marine programs at Ion Geophysical, a company in Houston that has applied to spend six months conducting two-dimensional seismic surveys from New Jersey to Florida. “The Eastern Seaboard market is huge.”

The Bureau of Ocean Energy Management estimates that there are 3.3 billion barrels of recoverable oil on the Atlantic’s outer continental shelf and 31.3 trillion cubic feet, or 886.3 million cubic meters, of natural gas. The estimates are based on two-dimensional seismic surveys that were done in the early 1980s.

While they are careful to say that they have no idea what energy resources might be hidden beneath the Atlantic, energy executives say they believe that the bureau’s estimates are low, noting the industry’s history in the gulf.

“Initial estimates in the gulf were five billion barrels of oil,” said Andy Radford, senior policy adviser at the American Petroleum Institute. “We’ve already produced over 20 billion, and current estimates are that there are 48 billion more.”

There are other indicators that drilling there could lead to big discoveries.

“We know there are oil seeps all along the East Coast of the U.S.,” Mr. Gagliardi said. “Naturally the earth is leaking oil on a daily basis. There’s a natural petroleum system out there.”

The Eastern Seaboard of the United States was once connected to the coast of West Africa before the continent split in two and the pieces drifted apart, creating the Atlantic Ocean. Nigeria alone has more than 37 billion barrels of proven reserves, much of it off the coast in deep water.

Tullow Oil, a company working on the same theory, struck oil last year off the coast of French Guiana. The company, which is based in London, said it had begun exploring in the area because it thought the geology mirrored its earlier successful discoveries across the ocean off the coast of West Africa.

“I personally believe that the East Coast of the U.S. does have the ability to be the prolific economic basin,” Mr. Gagliardi said. “However, there’s such a huge data gap that even the government doesn’t know the potential of the East Coast.”

Article source: http://www.nytimes.com/2012/11/14/business/energy-environment/after-years-of-waiting-virginia-wants-to-make-its-name-in-oil.html?partner=rss&emc=rss

States Lean on Public Workers for Bigger Pension Contributions

So far this year, eight states, including Wisconsin and Florida, have decided to require government employees to contribute more, sometimes far more, to their pensions. Governors and legislators in 10 other states, including California and Illinois, are proposing their own pension changes as they grapple with budget deficits and underfunded pension plans.

Government employees’ unions are not accepting these changes without a fight, complaining that the increased pension contributions often amount to a significant cut in take-home pay.

A burst of labor opposition in New Jersey is threatening a tentative deal between the Republican governor, Chris Christie, and Democratic legislative leaders that would require government employees to contribute at least one percentage point more of their pay toward their pensions. One powerful union warned Democratic lawmakers not to join Mr. Christie’s “war on the middle class.”

But even many of labor’s traditional allies are demanding pension changes. Last week, New York’s governor, Andrew M. Cuomo, a Democrat, proposed that all future state and New York City employees pay 6 percent of their salary toward their pensions, double the current 3 percent. Oregon’s Democratic governor is pushing state and local employees to contribute as much as 6 percent of pay, up from zero at present. Twelve states, including Arizona, Michigan, Minnesota and Virginia, imposed higher employee contributions in 2010. That leaves just a handful of states where employees do not contribute toward their pensions.

“You can call this an exponential increase in activity to have state employees contribute more,” said Ronald Snell, a pension expert with the National Conference of State Legislatures. “Before 2010, this hardly ever happened.”

States are demanding the higher contributions as they reach for new ways to cut budget deficits. The easy savings, like furlough days, have been achieved, and now lawmakers are tackling more complicated cost issues like the long-term shortfalls in their pension funds.

The Pew Center on the States estimates there is a more than $1 trillion funding gap for government employees’ retirement benefits in the 50 states. At the same time, many voters resent that public employee pensions are generally better than their own.

“States have less revenues coming in and higher bills for their pensions, and it’s really focused their attention,” said Susan K. Urahn, managing director of the Pew center, a nonpartisan research group that analyzes state policies.

Alabama, Arizona, Kansas, Maryland, Mississippi and Oklahoma have all acted this year to require employees to pay more.

In one of the most extreme proposals, a legislative committee in Illinois, daunted by the state’s estimated $80 billion pension shortfall, voted to have state workers either contribute 17 percent of their pay toward their pensions or accept less generous pension benefits.

According to the Pew Center, actuarial reports say the 50 states should have contributed $117 billion in 2009 toward their pension plans to help bring them to full funding, two and a half times more than they contributed a decade ago and well over the $73 billion they actually contributed in 2009.

Requiring employees to divert 3 to 6 percent of their paychecks toward funding their pensions will help, though it will not come close to solving the short-term budget problems in most states, Ms. Urahn said. But every bit helps. In Wisconsin, for example, Gov. Scott Walker said the state government would save $226 million a year from state employees’ paying a 5.8 percent contribution previously paid by the state.

Over time, the budgetary savings can be substantial. Because of New York’s constitutional restrictions against changing current workers’ pensions for the worse, Mr. Cuomo is proposing increased pension contributions for new employees only. But even so, his office says this change would save New York State and public employers outside New York City $50 billion over 30 years.

“The pension system as we know it is unsustainable,” Mr. Cuomo said last week. He added that his proposal would “bring government benefits more in line with the private sector while still serving our employees and protecting our retirees.”

Article source: http://feeds.nytimes.com/click.phdo?i=e8935f72bb9d18a6f0a14591e6d25805