Commission on Energy and Environment
July 8, 2010
The Virginia Commission
on Energy and Environment, established to review and recommend steps to
implement the Virginia Energy Plan, held its first meeting of the interim
Resource Development and Job Creation
Matsen, Deputy Secretary of Natural Resources, Sr. Advisor to Governor
Matsen spoke about the Governor's "All of the Above" policy
towards energy use and resource development. Ms. Matsen noted the importance
of the energy sector to the Commonwealth's overall strategy to support
job creation and economic development. She emphasized the value of offshore
energy resources to the Commonwealth and noted that any drilling for oil
and gas would provide the opportunity for the creation of a supply chain
and support industry that could be used for both the development of Virginia's
resources and those of other states in the region. Such an economic development
pattern would occur with the growth of either the offshore oil and gas
industry or the offshore wind industry.
Paliria Energy, Inc.
spoke to the Commission on the details of an economic impact assessment
and a framework for project cost and supply chain development of offshore
energy development. His company estimated that Virginia manufacturers
would need to capture roughly one-third of the eastern U.S. supply chain
market to sustain 3,000 to 5,000 jobs annually. Most large-scale assembly
and maritime opportunities would be in the Hampton Roads region; however,
related production opportunities, including polymers and materials, electronic
systems and transformers, and drive train components, are measurable throughout
the state. Further opportunities would include installation vessel shipbuilding
and maintenance, component production for domestic onshore projects, and
potential entry for vessel and component supply into an increasingly open
and burgeoning European offshore market. Mr. Wilkins stated that the creation
of substantial supply chain infrastructure in the region coupled with
aggressive entry into the broader market could generate 7,500 to 10,000
jobs for Virginia annually in a growing sector.
Use Conflicts Between Offshore Energy Development and Military Operations
Deputy Assistant Secretary, U.S. Navy
Mr. Hicks spoke
to the Commission on the issues related to potential conflicts between
the military and offshore resource development. He began by speaking of
the gravity of petroleum and water supply to national security and the
resulting flexibility of operations that result when some of that dependence
is lifted. As a result, the Navy has taken steps towards a number of goals
including that of meeting a minimum of 50 percent of energy needs with
new renewable sources by 2020. Mr. Hicks also provided the Commission
with an overlay map showing both offshore blocks for wind energy development
that may be available for lease and the conflicts with military uses.
The conflicts include surface and helicopter transit, mine warfare countermeasures
training, and surface target live fire operations. Furthermore, the potential
blocks available for offshore oil and gas development conflict with the
debris impact zone for launches from NASA Wallops Flight Facility.
In response to a
question about the potential of interference between radar operations
and larger wind turbines, Mr. Hicks noted that the Office of the Secretary
of Defense is addressing that issue and developing a plan to coordinate
among agencies such as the Federal Aviation Administration.
Offshore Wind Energy Opportunities
Virginia Coastal Energy Research Consortium (VCERC)
Hagerman spoke to the Commission about the potential for offshore wind
energy development in the Commonwealth. Mr. Hagerman first explained the
critical cost savings that might be contributed to a project if the turbines
are manufactured domestically. He pointed out that the cost of production
and transportation from Europe could be prohibitively expensive in the
current economic climate, but that manufacturing in Virginia would make
such a project not only feasible, but desirable. In fact, as stated in
its final report published in April:
VCERC has identified
25 lease blocks with 3,200 MW of potential offshore wind capacity in relatively
shallow Class 6 waters beyond the visual horizon. Build-out of this potential
would require a total of 125,000 job-years, including direct, indirect,
and induced jobs, assuming that it can be supported by Virginia-based
turbine and power cable manufacturing plants. If sustained at a build-out
rate of 160 MW per year (equivalent to one 320-MW project being commissioned
every two years), this would support 6,200 jobs that could last for a
two-decade career. To this would be added operation and maintenance jobs,
which are estimated to accrue at 1.1 to 1.7 jobs per cumulative megawatt,
reaching 3,500 to 5,400 jobs after the first 3,200 MW of near-term commercial
potential off Virginia has been built out over the next 20 years. Thus,
within two decades, 9,700 to 11,600 career-length jobs can be created,
solely associated with developing the 3,200 MW of offshore wind potential
that VCERC has identified in shallow waters beyond the visual horizon
off Virginia Beach. Since offshore foundations and submarine power cables
are designed for a service life of 40 to 50 years, a second generation
of jobs could be created for simply repowering the first 3,200 MW. Beyond
this is a vast, deeper water potential that remains to be developed farther
Mr. Hagerman also
noted that a full-scale demonstration should be explored to address issues
with the U.S. Navy and Department of Defense. A National Offshore Wind
Test Center could be further used to examine issues under storm conditions.
Virginia Marine Resources Commission (VMRC)
spoke to the Commission about the study done in response to legislation
enacted in the 2009 Session of the General Assembly that required VMRC
to identify 100 acres suitable for use by the VCERC as a research site
and to determine whether sufficient and appropriate subaqueous land exists
in state territorial waters to support the generation and transmission
of electrical or compressed air energy from offshore wind. The first step
of the project aimed to classify offshore geographical areas as either:
- Excluded, such
as navigation channels.
- Major potential
for resource and use conflict, such as sensitive ecological lagoons.
- Moderate potential
for resource and use conflict, such as fishery management areas.
- Lesser potential
for resource and use conflict, such as blue crab and hard clam resource
The report concluded
that it is unlikely that there will be a sufficiently large area in state
waters with suitable wind resources for a large industrial scale project.
However, there may be opportunities in state territorial waters for smaller
community scale projects and possible research activities for turbine
and tower design. Any projects should utilize the existing joint permit
Offshore Oil and Natural Gas Exploration
American Petroleum Institute
Mr. Radford discussed the importance of oil and gas development to meeting
future global energy demand. He also explained that, in the Gulf of Mexico,
there is a long history of coexistence of military use and oil and gas
exploration. Mr. Radford noted the specific needs of production capacity
from deepwater resources, which are larger than typical onshore resources.
However, since the Deepwater Horizon accident, many offshore activities
have been postponed or cancelled. As a result of the accident, the Minerals
Management Service has been reorganized, a presidential investigation
commission formed, enhanced safety measures announced, and a moratorium
on deepwater drilling placed. Industry has also joined forces to examine
deepwater operations, equipment, and oil spill responses.
A member commented
that the cooperative military uses in the Gulf of Mexico are air space
uses and not surface uses, as is the case in the Norfolk and Virginia
Mr. Kibler spoke to the Commission about the importance of natural gas
and the meaning of vast new discoveries for domestic energy security.
Mr. Kibler also spoke in favor of exploration and production of natural
gas offshore of Virginia. New production areas will require a skilled
workforce and infrastructure to deliver the gas to market. Downstream
economic benefits to the Commonwealth would include stabilized natural
gas supplies, jobs, investment, tax revenues, and royalties.
In response to a
question about the estimates of natural gas available in the Marcellus
Shale formation, Mr. Kibler replied that estimates for the recoverable
quantities were dependent upon technology and the cost of petroleum.
Virginia Institute of Marine Science
Mr. Hobbs spoke
to the Commission about a number of the technical planning issues that
would need to be addressed in order to safely allow platforms and pipelines
and the environmental impacts of such structures.
For drilling and
production platforms, the regulator will need to consider:
- Hazards to navigation.
- Durability in
- The stability
of substrate for supporting equipment.
- The environmental
concerns associated with the platforms both during construction and
Similar issues and
onshore impacts arise when looking at pipeline construction and operation.
Any such efforts will require an environmental impact statement with federal,
state, and local participation.
addressed the Commission on the environmental risks of offshore drilling.
She noted the sensitive ecology off of Virginia's coast and the wildlife
that may be living in the area. Ms. Levandoski also commented that oil
spills are not as novel as might be believed and that thousands of spills
occur every year and that an extreme weather event could result in significant
dangers. She added that Hurricanes Katrina and Rita resulted in roughly
nine million gallons of oil spilled from six major spills and five medium
spills, in addition to oil released from over 5,000 minor spills.
Mr. Matthew LaRocque,
PJM Interconnection, spoke to the Commission about PJM's efforts to maintain
electricity service during the peak periods of summer usage during a heat
wave. The day prior to the meaning, PJM managed 135,000 MW—just
under the all-time peak of 145,000 MW.
Al Weed, Public Policy Virginia, encouraged the Commission to support
a mandatory renewable portfolio standard to create the markets necessary
to grow renewable industries in Virginia.
Kay Slaughter, Southern Environmental Law Center, clarified that there
were offshore spills during Hurricane Katrina. She also emphasized the
concerns that offshore energy would conflict with military operations
and that the spill response from industry is inadequate.
The next meeting
of the Commission is scheduled for Tuesday, September 21, 2010, at the
General Assembly Building in Richmond.
The Hon. Mary Whipple
Ellen Porter, DLS
of Legislative Services > Legislative
Record > 2010