Drill This

REVIEW SUMMARY
What. Energy exploration in the Gulf.
Issue. Will the need for new jobs and government revenue trump other issues?
Impact. Up to 5,000 new jobs could be created if the state allows oil and gas leasing.

The stakes just got higher for Florida to get into the multibillion-dollar oil-and-gas-leasing game.

So high that a recent report released by a prominent statewide think-tank holds some jarring projections: For example, by one count Florida could take in up to $3.5 billion and create at least 5,000 jobs over 20 years by opening up its coast to drilling. The work would be done in waters that extend from three to 10.36 miles from shore.

Of course, opposition to drilling remains fierce from many quarters. So fierce, that a bill coming out of Tallahassee that would allow that sort of drilling in the Gulf of Mexico is unlikely any time soon.

A special legislative committee in Tallahassee has already begun to review the report produced by the Collins Center for Public Policy, which has three offices in the state, including one in Sarasota. That report, “Potential Impacts of Oil and Gas Exploration in the Gulf,” is considered to be key in what will shape the debate over lifting the state and federal lease moratoriums for the eastern Gulf of Mexico.

And while that policy review work was going on, other Gulf Coast states were busy making money — hundreds of millions of dollars — by leasing oil and drilling spots. In fact, a major lease sale took place in New Orleans March 17.

That sale, called the Central Gulf Lease Sale 213, received 642 bids on 468 leases — 37% higher than last year's Central Gulf Lease Sale 208. Those leases cover 2.4 million acres off Louisiana, Mississippi and Alabama.

The percentage of leases with shallow waters increased from 27% to 32% since the last sale. That's notable in the Sunshine State, which has relatively shallow waters.

The sale made the governments of Louisiana, Mississippi and Alabama $949 million richer. That was the amount in high bids, up 35% from last year's $703 million. The states get a 37.5% share, divided up based on the distance from a state's coastline to the middle of leasing areas.

The three states and the federal government will share the proceeds, with 10% paid immediately and the rest within 30 days says David Mica, president of the Florida Petroleum Council. In 2008, those three states combined received $23 million.

Jack Gerard, president and CEO of the American Petroleum Institute, sees the broader implications of the reinvigorated demand for leases pushing up prices. In a posting on API's Web site Gerard says: “The U.S. government could replicate this success by providing leasing opportunities in unexplored areas of the Outer Continental Shelf - like offshore Virginia, the eastern Gulf of Mexico, and the Chukchi and Beaufort Seas off Alaska.”

'Evolving process'
The House Select Policy Council on Strategic and Economic Planning recently reviewed the Collins Center report. The 18-member council includes eight Representatives with constituents along Florida's Gulf Coast.

The report answers 31 questions, including regulations, environmental risks, permitting, economic benefits, opportunity costs and aesthetics. The report doesn't provide recommendations.

Instead, it aims to educate the public and legislators about potential risks and rewards of offshore drilling, unknowns, “and what assumptions, claims, and/or conclusions are reasonable...”

One estimate in the report takes into account the historic underestimates of recoverable oil and gas by factoring in the difference between original estimates from the 1970s and current higher estimates. “In many areas, the resource potential greatly, greatly, greatly exceeds expectations, but you have to drill holes too,” says Mica.

And with that seemingly reasonable adjustment, it greatly lifts Florida's revenue estimate by more than four times — from a range of $400 million to $800 million over a 20-year period to a much higher range of $1.75 billion to $3.5 billion for that timeframe. That leasing activity translates into between 2,000 and 5,000 new jobs in Florida.

State Rep. Gary Aubuchon, R-Cape Coral, says new technology such as horizontal drilling has driven new ways of finding and extracting oil and gas. Aubuchon is a member of the council studying the issue.

“The fact is we're finding more and more reserves and more ways to get at those reserves than ever before,” says Aubuchon. “To think that the lower [of $1.75 billion] number is accurate would be foolish. We need to look at the higher number because that number may prove to be lower than a higher future number as well.”

The report also explains that if the federal moratorium was lifted or relaxed, the state might be eligible for a portion of the 37.5% share of government revenue. Existing laws award each Gulf state a minimum of 10% of the percentage share allocated to states. Florida's exact share would be set by new legislation.

Dark soils
Clearly, it's not all about money.

Coastal residents and tourism interests are worried about the potential for oil spills fouling beaches and mangrove shorelines to the prospect of seeing a drilling rig while walking on the beach.

Aubuchon, whose district includes Sanibel, Captive and Pine Island, is sensitive to those issues. Numerous Gulf Coast local governments have already passed resolutions opposing any kind of drilling without willing to at least consider new information that the Council now has compiled in a two-inch thick binder.

New College professor Frank Alcock told the House committee, when he spoke before it March 15, that some of those concerns could be dispelled.

Alcock dismissed the notion of tar balls on Florida beaches, for instance, noting that those gooey inconveniences are a western Gulf phenomenon and a product of natural seepage of oil only in that area, not from tanker spills. He also points to the darker soils that make up Texas beach sand and which flow out of the Mississippi River drainage basin toward Texas.

The Collins Center report also addresses the aesthetics of oil rigs. According to a study done in Mississippi, “a 50-foot high production platform three miles from shore is visible enough to be identifiable as an oil platform. At six miles, it becomes a speck on the horizon. Generally speaking, for a 6-foot-tall person the visible horizon is 3 miles away.”

State Rep. Keith Fitzgerald, R-Sarasota, suggests the Legislature might consider requiring greater minimum distances from shore in both the most heavily developed areas — to address tourism interests' concerns — and in the most natural, undeveloped areas. Fitzgerald is a member of the committee and a colleague of Alcock's at New College.
Instead of allowing rigs three miles from shore, under that plan some areas might be limited to a minimum of six miles or more.

'Middle ground'
But that may not be good enough for Sarasota Mayor Richard Clapp. Representing the Manasota League of Cities, Clapp's written comment to the Council on the issue reads: “There should be no visible structures from the top of the highest condo on the adjacent shoreline. This should include night time lighting on the structures.”

If that becomes the criteria there can be no above surface drilling in state waters. Though new technology includes subsurface drilling equipment that may prove prohibitively expensive if required in all state waters, according to Council member Rep. Doug Holder, R-Sarasota.

Aubuchon recognizes such extreme positions deserve little consideration. He says the Council is looking for “middle ground” to balance competing interests. He supports reasonable environmental safeguards while also being sensitive to visibility issues.

Speaker-designate Dean Cannon, R-Winter Park, and chairman of the Council, continues to advocate a very deliberative, open process. Although a bill is being drafted and might be considered by the Council in early April, he says there's no need to rush it through this year.

With the Senate unlikely to take it up this session and Gov. Charlie Crist in a tough race for U.S. Senate against former House Speaker Marco Rubio, odds for passage this year seem low anyway.

So, for now drilling for oil and gas in state waters is little more than a speck on the horizon.

And it may prove too daunting a task to get a bill through both the Legislature and the next governor, whoever he or she might be.

But the reality that Florida needs drilling to create jobs and sustain much needed revenue could quickly make the drilling decision a cinch. With more revenue potential from leases, and a growing need for that revenue, the stakes are indeed getting much higher.

AT A GLANCE
GULF LAWMAKERS
Legislators representing the Gulf Coast on the 18-member House Select Policy Council on Strategic and Economic Planning:
• Rep. Gary Aubuchon, R-Cape Coral, District 74
• Rep. Keith Fitzgerald, D-Sarasota, District 69
• Rep. Denise Grimsley, R-Sebring, District 77
• Rep. Doug Holder, R-Sarasota, District 70
• Rep. Matt Hudson, R-Naples, District 101
• Rep. Paige Kreegel, R-Punta Gorda, District 72
• Rep. Seth McKeel, R-Lakeland, District 63
• Rep. Will Weatherford, R-Wesley Chapel, District 61