By Dan McCue
Staff Writer

A plethora of bills now before Congress could open South Carolina’s coast to offshore drilling for crude oil, an issue that has begun to percolate in at least one local congressional race.

The bills, in one way or another, lift or ease the longstanding federal ban on new offshore drilling on the continental shelf.

Congressman Henry Brown, who represents South Carolina’s 1st Congressional District, and Congressman Joseph Wilson, who represents the 2nd Congressional District, are among the 71 co-sponsors of one of the bills, H.R. 4761.

Environmentalists and those who would like to make political hay of the issue have described that sponsorship as a betrayal of the Palmetto State’s natural areas and tourism areas.

But others believe the devil is in the details.

“In a very real sense, what’s being discussed and argued about is a matter of tradeoffs,” said Frank Hefner, chairman of the College of Charleston’s Economics Department. “If money the state raised through oil leases was used for protecting onshore native lands and cleaning up others, that might be a tradeoff I could live with.”

Past efforts failed

Although efforts to lift the ban have been raised before and died in the past, a number of the proposals being floated in Congress this year give states the option of opting into an offshore leasing program and collecting royalties that then could be invested in economic development and other often cash-starved programs.

That prospect alone has caused the coalition of coastal states that have fought off such efforts in the past to fracture. While Virginia and North Carolina are maintaining a strong stance against such drilling, Florida has indicated some willingness to at least consider drilling in some locations.

In the meantime, the state of South Carolina has remained mostly mum on the issue.

Joel Sawyer, a spokesman for Gov. Mark Sanford said, “our focus is on exploring alternative forms of energy rather than those that have the potential to damage our number one industry, which is tourism.”

Economic incentives aren’t the only factor behind the drive to lift the moratorium.

Drilling proponents are trying to build support by citing recent surges in oil and gas prices, which they describe as an enormous threat to the economic competitiveness of states such as South Carolina and an impediment to industries expanding or relocating.

The drilling limits are costing jobs and taxing family budgets, they argue. A recent Gallup poll showed that energy availability was a top domestic concern.

But it’s an argument that the College of Charleston’s Hefner finds at least a bit perplexing.

“According to people I’ve spoken too, South Carolina is sitting on a pile of natural gas reserves that have gone untapped and would seem to be far more readily accessible than those offshore,” he said. “Instead, we get into these arguments—these morality plays, if you will—in which everyone starts pointing the finger at each other. Is it the SUV crowd that’s to blame for our high gasoline prices? Is it the Chinese and their rising productivity? That’s a large part of it. Is it our reliance on Arab oil? Or a conspiracy by the major oil companies?

“I think the honest answer is all of those things played a role it what’s happened and so have regulatory issues,” he added. “People forget that since the oil crisis in 1973, the United States has had price controls in place and inadvertently engineering our reliance on foreign oil.”

And now in some places, particularly in the Midwest, there’s talk of shortages.

“But it’s not gasoline that’s in low supply, but a particular additive that part of the country requires to be in gasoline,” Hefner said.

Using renewable fuels

The federal Minerals Management Service estimates that the 200-mile area covered by the U.S. moratorium, known as the Outer Continental Shelf, contains 420 trillion cubic feet of recoverable natural gas and 86 billion barrels of oil.

Environmentalists counter that conservation and wider use of renewable fuels would be a cleaner, safer and less expensive way to address energy supply concerns.

“You’ve got to imagine that there is some risk involved in opening up these areas to drilling,” said Melinda Price, an offshore-drilling specialist at the Sierra Club. “South Carolinians should care because as we’ve seen in the past, waters know no boundaries and, as a result, even the routine pollution associated with drilling will have an economic impact.”

Price went on to describe the lease royalty scheme put forward in some of the bills before Congress as a “bribe” and “enticement” to induce states to accept development off their shores.

“But that kind of money runs in the face of vital coastal economies, like the world class and thriving beaches of South Carolina, which would be jeopardized by this activity,” she said.

A 2003 report by the National Research Council concluded that offshore drilling and exploration causes spills averaging 880,000 gallons of oil a year.

While that’s a small percentage of the total petroleum leakage into North American waters, it’s “not trivial” and “can pose significant risks to sensitive coastal environments,” the study said.

Offshore drilling moratorium

Former President George H.W. Bush issued the first executive order placing a moratorium on new leases offshore of California, Oregon, Washington, Maine, Massachusetts, New York, New Jersey, Maryland, Virginia, North Carolina, South Carolina and Florida. President Bill Clinton extended it to 2012.

Congress also has continued a moratorium every year since 1982 by putting language in appropriations bills that prohibits spending money on conducting leasing activities.

H.R. 4761 and similar legislation in the House and the Senate would lift all limits on natural gas drilling 20 miles off the U.S. coast. States also could allow drilling closer to shore.

This legislation extends each state’s zone of revenue sharing from the edge of its state waters to the 12 nautical mile mark, providing each state with 75% of all royalties generated within that zone.

A representative of Congressman Brown said he supports the legislation because he believes the nation needs to do everything in its power to be less dependent on foreign oil.

His opponent in this year’s election, Randy Maata, describes Brown’s support of the bill as “a betrayal of the commercial and environmental assets of the 1st Congressional District.

“We live on an earthquake fault line and stand in the path of numerous hurricanes,” Maata said. “An oil spill could irreparably damage the state’s maritime commerce industry, its $414 billion tourism industry and its multi-million dollar shrimp and fishing industry.”

To date, President George W. Bush has indicated that he backs the drilling moratorium. But the Minerals Management Service recently announced a five-year plan for coastal energy management that could lead to more drilling in the Gulf of Mexico and off the coasts of Alaska and Virginia.

Other legislation

In the Senate, Energy and Natural Resources Committee Chairman Pete Domenici is pushing legislation that would open the central and eastern gulf to oil and gas development.

Virginia senators John Warner and George Allen, both Republicans, support legislation that would allow governors to ask the federal government to waive the natural gas drilling ban off their coasts.

Environmentalists fear such legislation eroding the moratorium could have a domino effect and significantly increase the odds of offshore drilling off the Carolina coast.

But no bills are so threatening, Price said. Sen. Bill Nelson, D-Fla., and Sen. Mel Martinez, R-Fla., have introduced legislation that would extend the current moratorium on the rest of the Atlantic and Pacific coasts to 2020.

Critical issues

While lawmakers, lobbyists and political candidates debate offshore drilling, they’re missing some critical issues, Hefner said.

“One very critical one is this: When was the last time a refinery was built in this country? It was decades ago. So even if we drew more oil from the continental shelf, we might not have the capacity to refine it,” he said. “Where are you going to build that refinery? Aiken? I don’t think that would fly. Every time you start a debate like this you wind up with this kind of dynamic tension.”

Hefner also can’t understand why more isn’t being done to take advantage of nuclear power and other forms of alternative energy, he said.

“The French generate almost all of their power in this way and through the use of a tidal generator on the English Channel,” he said.

Hefner also said it’s an open question whether lease royalties would really do much to spur further economic development in the state.

“That’s for the General Assembly and ultimately the voters to decide,” he said. “You can find lots of uses for that money in the state of South Carolina. What about investing in education? What about investing in the state’s infrastructure?

“There’s no economic principle that says money from land leases should be used for economic development. Again, it all comes down to tradeoffs. There are all kinds of things out there that this money could be invested in that would enhance the lives of South Carolinians,” Hefner said.

Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.

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