A Commonsense Plan to Reduce Our Dependence on Foreign Oil While Creating Jobs for Our Region

Summary:

Unless reauthorized by Congress, the 25 year ban on offshore drilling will expire on October 1, 2008.  Experts believe large natural gas reserves sit off South Carolina’s coast, and we have a chance to lead the nation in reducing our dependence on foreign oil. At the same time, collecting royalties from these resources could move our economy forward and jumpstart job creation in our region. Unfortunately, state officials have stayed on the sidelines while other states like Virginia have actively petitioned to become part of the Department of Interior’s 5-year Plan.  It’s time we get to work.

Step 1: Demand an end to the ban on offshore drilling and oil shale recovery.

The 25 year bans on new offshore drilling in the Atlantic and Pacific Oceans and oil shale recovery in the Mountain West will end on October 1, 2008.  Experts estimate that offshore reserves at a minimum hold over 18 billion barrels of oil and 55 trillion cubic feet of natural gas.

With second rate technology, prior to the federal ban on exploration, studies were conducted off the coast of South Carolina indicating that one of the most significant natural gas deposits in the Atlantic Ocean may lie off our coast. These natural gas reserves could significantly decrease our dependence on foreign oil while producing state royalties that would jumpstart South Carolina’s economy.

Sadly, Washington politicians controlled by extreme environmental groups are working to keep the bans in place. Even in South Carolina these extremists groups are pouring money into campaigns in an attempt to buy legislative candidates who oppose offshore drilling.  These groups claim drilling will harm our environment and hurt South Carolina’s tourism industry.  They made the same, tired arguments years ago when Texas and Louisiana discussed exploring for oil in the Gulf Coast.  The truth is that with modern technology, today’s drilling can occur well out of sight from our beautiful beaches – up to 200 miles off our coast – and we can ensure the proper stewardship of our environment.

First, to decrease our dependence on foreign oil, we must urge Washington’s politicians to stand strong for Energy Freedom Day on October 1st and never renew the ban on offshore drilling.  Together we can make this a reality. All you have to do is call House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid and demand that they never renew the ban.  You can reach them through the US Capitol Switchboard at 202-224-3121.

Step 2: Immediately convene the special committee to study the feasibility of natural gas exploration off the coast of South Carolina.

A special committee to study the feasibility of natural gas exploration off the coast of South Carolina was created by the General Assembly in June 2007. The committee was supposed to meet in the Fall of 2007 and report to the General Assembly during the 2008 session, but it has yet to organize and hold its first meeting.  It’s time for the politicians to get serious about offshore drilling and immediately convene the committee so it can report to the General Assembly immediately in January 2009.

Step 3: Request that South Carolina be included in the Department of Interior’s five-year plan.

Offshore drilling falls under the jurisdiction of the U.S. Department of the Interior’s Mineral Management Service (MMS).  For drilling to occur, each area must be written into a 5-year plan. During the last 5-year plan process, Virginia petitioned MMS to be included in the plan despite the federal moratoria on the Atlantic Coast.  This would allow them to begin the drilling process immediately after the moratoria are lifted.  MMS granted Virginia’s request in the 5-year plan that was implemented last year.

When President Bush announced the repeal of the Presidential moratoria, MMS began rewriting the 5-year plan.  The process can take up to 24-30 months to complete and requires many steps, including public comment sessions, Environmental Impact Studies, and other consultations.  It is critical that South Carolina work with MMS immediately in order to be included in the next 5-year plan.

Step 4: Pass offshore drilling legislation in 2009 and negotiate with the federal government to ensure royalties be paid to the State of South Carolina.

Upon receiving a positive report by the special committee, the General Assembly must pass legislation allowing offshore drilling.  However, we must be careful not to be exploited by large companies or the federal government.  In return for allowing exploration of natural gas off our coast, South Carolina should receive significant royalties similar to the royalties the Gulf Coast States receive for drilling in the Gulf of Mexico.

In recent years we saw Louisiana being exploited and only receiving $41.4 million per year from the federal government for its oil and natural gas while New Mexico received $382.8 million in 2004 for its share. Louisiana was receiving 1 percent of the royalties while New Mexico was receiving 50 percent.

In 2006 Congress passed legislation increasing Louisiana’s percentage, and it is estimated by 2017 the state will receive $650 million and another $13 billion over 30 years. South Carolina has one of the largest reserves of natural gas in the Atlantic, and these statistics show that our residents can benefit greatly from access to these royalty payments.

Drilling occurs on federal land in 17 Western states, including Alaska. Each state, aside from Alaska, receives 50% of the royalties while 40% goes to a Bureau of Reclamation Fund for those 17 states.  The remaining 10% goes to the federal government.  Because Alaska is not part of the Reclamation Fund, the state receives 90% of all royalties, which in turn is passed onto the taxpayer.

Although the General Assembly can demand state royalties when passing offshore drilling legislation, the ultimate decision rests with the federal government.  Members of South Carolina’s congressional delegation will have a great opportunity to use their influence in demanding significant royalties be paid.

It’s vital that this issue does not get bogged down in party politics.  State royalties can jump start South Carolina’s economy, reduce unemployment levels, and help fix our underperforming education system. Republicans and Democrats at the state and federal level must work together for the future of South Carolina.

Step 5: Invest in alternative energy research at the Savannah River Site.

Royalties from offshore drilling could produce extra income for our state.  However, in order to be good fiscal stewards, we should dedicate these resources before we actually receive them.  The General Assembly must resist the desire to spend the money on pork projects and should instead return the money to taxpayers in the form of tax cuts while investing in alternative energy research.

As T. Boone Pickens states, natural gas is a “bridge” but not a solution. It will buy us what we need most – time.  To become truly energy independent, we must invest in alternative energy research.  Our region has a unique ability to capitalize on the investment.

As it transitions from its Cold War mission, the Savannah River Site is one of our region’s largest employers.  However, the Savannah River National Lab, in coordination with the Center for Hydrogen Research, Clemson University, the University of South Carolina, South Carolina State, Ft. Jackson, and the South Carolina Hydrogen and Fuel Cell Alliance, has been leading the way on the alternatives that could fuel the economy of the future.  We must make a serious commitment to support and expand the work South Carolinians are already doing for our nation.

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