@NCCapitol

@NCCapitol

House gives first nod to drilling, fracking in NC

Posted June 13, 2011 10:45 p.m. EDT
Updated June 13, 2011 10:50 p.m. EDT

House lawmakers have tentatively approved the state’s first steps toward allowing offshore drilling in North Carolina.

Senate Bill 709, the Energy Jobs Act. sets out how drilling revenues and royalties would be apportioned, directs the governor to enter into a new offshore energy compact with other regional governors, and requires the Department of Environment and Natural Resources to report to lawmakers “on the commercial potential of onshore shale gas resources within the State as well as the regulatory framework necessary to develop this resource.”

The measure also rewrites the mandate of the state’s Energy Policy Council, created in 1975. It would become the Energy Jobs Council, focused on exploring and utilizing any energy resources available in the state.

To date, no research into NC’s offshore geology has suggested any oil deposits off the coast, but geologists say natural gas deposits are a possibility.

DENR would also be required to study onshore natural gas deposits that can be drawn out through hydrological “fracking,” a controversial procedure that involves forcing water into shale deposits. Deposits have been identified in counties to the west and south of the Triangle.

Still, backers of the bill argue it would help North Carolina rely less on foreign oil.

“It’s about economic growth, energy dependence, and job creation,” said Rep. Mitch Gillespie, R-McDowell, who says the bill could create “6700 new jobs once we get into the production of natural gas.” Gillespie said the measure could bring $500M a year into NC coffers.

The bill would set aside the first $500M in revenues toward an emergency response fund that would pay to clean up spills or damages caused by drilling.

Gillespie said the bill emphasizes “exploring natural resources in a pro-business-type manner. This bill is very aggressive, but it does have proper environmental protections in it. It sets a policy that we’re going to go after onshore and offshore energy.”

The House recently passed another measure sponsored by Gillespie, House Bill 242, which took a much more cautious approach to fracking.

Minority Leader Joe Hackney, D-Orange, tonight praised the earlier bill, calling it “a go-slow bill on fracking.” But he opposed S709.

“What we have here is a U-turn. It says, ‘Let’s get ready to go fracking,’ Hackney said. “We ought to be going a lot slower than this bill calls for.”

“It’s time we moved forward,” responded Rep. Mike Hager, R-Rutherford. “We ARE taking a U-turn,” he said. “We’re taking a U-turn back to creating jobs, creating revenue, and creating a stable, cheap fuel source.”

Some Democrats argued the measure doesn’t do enough to promote “green” alternative-energy jobs. Others argued it doesn’t adequately address problems with fracking being reported in other states, like PA, where the procedure is being blamed for ruining wells and poisoning groundwater.

Rep. John Blust, R-Guilford, wasn’t buying it. “It’s time to get cracking on fracking,” he said.

Gillespie took a big step back from Blust’s statement, denying that S709 would speed up fracking.

“It’s not going to make us come down here in 2012 and put forward a bill that will allow horizontal hydrofracking. If the Senate does do that, I’ll be one of the ones up here on this floor opposing it,” Gillespie promised. “That’s not how we need to proceed.”

But Gillespie didn’t deny that the measure “does set a new direction” for state energy policy, including adding “business-minded folks” to the advisory council. “It does put it more in favor of exploring.”

The measure passed by a vote of 67-44. The final House vote is set for Tuesday. After that, it goes back to the Senate for approval of the big changes made by the House.