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COVER STORY ‌ Pumping the Coast

Will an energy crisis bring the oil industry to our shores?

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Every few years, when geopolitics or other factors suddenly drive the cost of crude oil through the roof, industry insiders start looking to America's coastal waters for new supplies of oil and natural gas. It happened in the 1970s. It happened in the 1980s. It happened again last October, when Hurricanes Katrina and Rita — along with other factors — conspired to push the price of a gallon of gasoline over three dollars for the first time.

Pump prices subsided briefly around the end of the year, but now they are headed back to the three-dollar mark. Crude oil is over $70 a barrel and setting records daily.

A recent Gallup poll showed that energy availability was a top domestic concern for Americans, just behind health care and Social Security. Political and industry leaders point to an estimate by the federal Minerals Management Service that the nation's Outer Continental Shelf (OCS) contains 420 trillion cubic feet of recoverable natural gas and 86 billion barrels of oil. These facts are the tip of an oil industry iceberg that has been drifting toward South Carolina's shore for years.

Even before last year's hurricanes, the oil and gas industries were taking a two-pronged approach to opening the OCS to drilling and to the building of new refineries. The first part of the strategy involves ending a 25-year moratorium on federal leasing of new offshore tracts for oil and gas exploration. Currently, federal offshore drilling is allowed only in Alaska, Alabama, Louisiana, and Texas.

The second strategy requires getting the coastal states on board with the idea that oil wells and refineries in our backyard are a good thing.

In February, Rep. Bobby Jindal (R-La.) introduced House Bill 4761 for the purpose of "exploration, development, and production activities for mineral resources on the Outer Continental Shelf..." ("Mineral resources" is a euphemism for oil and gas.)

The petroleum industry is afraid it will lose control of the House in the next election. They have to move within the next 30 to 60 days. The fate of the South Carolina coast will be determined in Congress in that time.  - Richard Charter, co-chairman of the National OCS Coalition
  • The petroleum industry is afraid it will lose control of the House in the next election. They have to move within the next 30 to 60 days. The fate of the South Carolina coast will be determined in Congress in that time.
    Richard Charter, co-chairman of the National OCS Coalition

H. 4761 has 71 co-sponsors, two of whom are backbench South Carolina Republicans, Henry Brown and Joe Wilson. Brown represents the first congressional district, covering all of Horry County (including Myrtle Beach), the coastal front of Georgetown County, and most of Charleston County. Wilson's second congressional district includes the coastal counties of Jasper and Beaufort, including the towns of Beaufort and Hilton Head Island.

Last October, when the issue of offshore drilling resurfaced, Brown told the Chicago Tribune, "If [oil and gas drilling] is OK for Alabama, Louisiana, and Texas, it should be OK for other states.... We are in an energy crisis and we should do everything we can to become more energy-independent — including offshore drilling."

Wilson's office declined a request for comment. Brown's communications director, Sharon Axson, also refused to comment, except to say, "This is not a new issue."

(It was news to Randy Maatta, Brown's chief Democratic opponent in the upcoming first district congressional race. "This is the most obscene thing I've seen in my lifetime by a South Carolina politician," Maatta said. He promised to "talk about this every day until the election.")

Rep. Brown also voted for H. 3893, a.k.a. the Gasoline for America's Security Act of 2005, a bill that relaxes many environmental standards for the petrochemical industry and — perhaps most importantly for South Carolina — allows the president to unilaterally designate federal land, including national wildlife refuges, on which to site new oil refineries. To some people that sounds a lot like the 26,000-acre Francis Marion National Forest, just north of Charleston.

U.S. Senators Lindsey Graham and Jim DeMint have said they oppose offshore drilling in South Carolina, but DeMint said last fall that he favors lifting the moratorium on oil and gas production and giving individual states the right to drill or not to drill.

That moves the issue from Washington to Columbia, and that's where state Rep. Harry Cato (R-Greenville) pushed a resolution through the House asking Congress to let states waive the moratorium on drilling. Rep. Michael Thompson (R-Anderson) introduced a bill to explore the building of a petroleum refinery on the coast (some speculate it would be in Jasper County). That bill is still alive in the House as the legislative session draws near an end.

Twenty-five years ago, a Democrat-controlled Congress placed a moratorium on congressional leasing of offshore tracts for oil and gas exploration on the Outer Continental Shelf. That moratorium is subject tocongressional renewal each year. In 1992, the moratorium was reinforced by an executive order by President George H.W. Bush, and extended by President Bill Clinton. That order is in effect until 2012.

To Jane Lareau of the Coastal Conservation League offshore drilling is too much of a risk
  • To Jane Lareau of the Coastal Conservation League offshore drilling is too much of a risk

It is the congressional moratorium which the big oil and gas industry is working to get lifted. A coalition of more than 100 corporations and trade groups is lobbying Republican congressional leaders to allow drilling in all OCS waters. "We're going to keep the pressure on," said John Engler, head of the National Association of Manufacturers.

At Engler's service is Rep. Richard W. Pombo (R-Calif.), the chairman of the House Resources Committee, who will introduce a bill in June allowing states to control any energy exploration within 125 miles of their shores.

According to The New York Times, Pombo and other lawmakers would also change the royalty distribution formula for drilling on the Outer Continental Shelf, allowing states to get a share of the royalties that now go entirely to the federal government. Senators from Alabama, Louisiana, and Mississippi are co-sponsoring a bill that would create a 50-50 split of royalties. In keeping with the oil industry strategy, such an arrangement would sweeten the pot for coastal states, leading them to challenge the moratorium on OCS exploration and leasing.

"The odds of letting coastal states opt out of coastal moratorium in return for a share of offshore royalties are much higher," energy analyst James Lucier, with the Prudential Equity Group, told Environmental News Network. "There is sufficient momentum behind this idea" that it is going to be difficult to stop.

Timing is critical, said Richard Charter, co-chairman of the National OCS Coalition, which supports the moratorium. Last year's storms opened the window for the oil and gas industries to rush in and demand new congressional favors. But that window may be closing fast. Big oil and its allies in the chemical, plastics, and other industries fear that Republicans may lose control of Congress in November and then "all bets would be off," Charter said. "The petroleum industry is afraid it will lose control of the House in the next election. They have to move within the next 30 to 60 days. The fate of the South Carolina coast will be determined in Congress in that time."

In the meantime, the petroleum industry is trying to peel off the South Atlantic states one at a time, Charter said. "If they can get just one to break ranks and ask to be released from the moratorium, they figure they can get all of them."

U.S. Sen. Elizabeth Dole (R-North Carolina) is leading the opposition to offshore drilling in her home state. "A seismic inventory is the first step toward drilling in areas currently under the OCS moratoria and will expose our nation's beaches and fisheries to unnecessary risks," Dole wrote to Senate colleagues considering last year's energy bill. "As you conference the energy bill, we ask that you do not include any provision that would in any way threaten the OCS moratoria."

Sen. Lindsey Graham has said he opposes offshore drilling in S.C.
  • Sen. Lindsey Graham has said he opposes offshore drilling in S.C.

The oil industry held a "trial balloon" conference in Dare County, N.C., last December, with a number of industry friends and heavy hitters such as Richard Pombo on hand to sell local officials on the benefits of drilling oil on the coast. But the North Carolina legislature didn't take the bait and no state drilling bill was introduced. In March, a bill was introduced in the Georgia legislature, similar to the one Harry Cato introduced in Columbia, but it was quickly killed.

Until a few weeks ago, it looked as if Virginia would be the first state to challenge the moratorium on drilling. Virginia's two Republican U.S. senators, John Warner and George Allen, have supported legislation allowing governors to ask Congress to waive the drilling ban on their coasts. Earlier this month, the Republican-controlled Virginia legislature passed a bill endorsing the idea.

On April 9, Democratic Gov. Tim Kaine vetoed the bill, preventing Virginia from becoming the first state to advocate lifting the moratorium. At the same time, he suggested that the state support a federal inventory of offshore energy reserves. Keane's action was just enough to give each side something to cheer about. The moratorium will stand for now, but the oil and gas industries seem to have a foot in the door.

What is at stake if oil wells andrefineries come to South Carolina?

Under the best circumstances, oil and gas drilling and exploration are a messy business, according to Richard Charter. Discharges of large volumes of drilling mud contributes heavy metals, benzene, toluene, and other toxic materials which accumulate in marine organisms. They move up the food chain until they arrive on your plate. "Produced water," discharged as it is pumped from below the seafloor, also contributes toxic materials to the pollution from each rig. In portions of the Gulf of Mexico, these produced waters contain elevated levels of radium, resulting in a radioactive plume extending down-current of the drilling operation and contaminating seafloor sediments and marine organisms. 

Air emissions from the massive machinery operating on each drilling rig can be the largest single contributor to the degradation of onshore air quality in nearby shoreline communities. But regulation of this offshore pollution source lies outside of the jurisdiction of affected states and localities, Charter said.

If there is an oil well blowout, the ecology can be disrupted for years. In 1979, a blowout of the Ixtoc I exploratory well, operated by the Mexican oil giant Petroleos Mexicanos (PeMex), poured 10,000 to 30,000 barrels of oil per day into the Gulf of Mexico, until it was capped 10 months later. By that time the damage was done. The ocean floor and coast for miles around Ixtoc I are still fouled from that disaster.

On April 30, 2005, the S.C. Sierra Club passed a resolution in support of the congressional drilling moratorium. The resolution warns of "a serious risk of oil spills, especially with the introduction of deepwater drilling technologies and floating oil storage and processing vessels, thereby threatening marine ecosystems, as well as onshore wildlife, such as birds and their habitats in the ocean, in estuaries and on the beaches..."

In June 2005, the South Atlantic Fishery Management Council, based in Charleston, issued a dire report on the risks associated with oil and gas development on the Outer Continental Shelf. Among the many findings in the study was the surprising fact that the impact of seismic surveys for natural gas can have adverse effects on marine mammals, including northern right whales.

Then there is the problem of oil and gas infrastructure — enormous offshore oil derricks, underwater pipelines, and onshore terminals and refineries.

"Where would we set up terminal operations on the South Carolina coast?" asked Jane Lareau, land use director for the Coastal Conservation League. "There is no place that would be safe. ... Think of the traffic. Traffic is bad enough on U.S. 17 already. And you are talking about putting a terminal and refinery somewhere on the coast that could be accessed only on U.S. 17? ... I think we should put [the refinery] near Henry Brown's house in Hanahan."

The most alarming thing about the prospect of oil and gas drilling is the potential danger to the state's number one industry. In the last 35 years, tourism has supplanted textiles and agriculture as the leading source of income in South Carolina. Each year 14 million people come to the Grand Strand and millions more to the other beaches, golf courses, and historic coastal cities. All of that would be at risk with a massive petrochemical industry based on our shore, said Doug Rader of the Chapel Hill-based Environmental Defense League.

While Sen. Jim Demint is against drilling off our coast, he has said states should be allowed to choose
  • While Sen. Jim Demint is against drilling off our coast, he has said states should be allowed to choose

"Our golden goose here is tourism," Rader said. "We don't want any heavy industry to threaten our golden goose."

Lareau agreed. "The risk to our state's coastal economy is not worth what we might find out there ... I cannot think of how in the world this could be an advantage to South Carolina."

Whether the oil and gas industries are invited into South Carolina remains to be seen. Environmentalists argue that conservation and greater use of renewable fuels would be a cheaper, cleaner, and quicker way of addressing problems of energy supply.

"You could drill holes in every county in the U.S. and not solve this energy crisis," Randy Maatta said.

(By contrast, Henry Brown says on his congressional website, "Conservation is fine, but it doesn't fill empty gas tanks.")

Lareau echoed Maatta's frustration. "This nation does not even pretend to use our resources wisely. As a nation, we have absolutely no energy policy or guidance from government."

The Coastal Conservation League will oppose drilling on the Outer Continental Shelf "with everything we have," Lareau said. "I suppose the people of South Carolina would do the same. I think [offshore drilling] is a nonstarter."

The Hilton Head Island Packet expressed similar resolve. In an editorial last October, the conservative daily wrote, "Energy industry lobbyists in Columbia and Washington should be drowned out by the voices of people who live and work in this state and whose livelihoods depend on clean beaches and pristine waterways and whose cultural heritage includes the area's thriving marine wildlife....

"State leaders, not just coastal residents, recognize what draws visitors to South Carolina and how critical tourism is to the state's financial well-being."

Indeed, Harry Cato and Michael Thompson, the two House members most visibly in support of coastal drilling and refining, represent districts in the Appalachian foothills. By contrast, Gov. Mark Sanford, Senate Majority Leader Glenn McConnell, and House Speaker Bobby Harrell bring far more political weight to the issue and all have been conspicuously cool on the idea of offshore drilling. Is it coincidence that they are also from Charleston County?

Perhaps Sen. Lindsey Graham had the best take on the whole controversy when he told the Greenville News last year, "If we're still using [oil] as the basis of our economy 30 years from now, shame on us."

Shame on us, indeed.

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