Doug Domenech Secretary of Natural Resources VIRGINIA’S PERSPECTIVE ON OCS ENERGY DEVELOPMENT Governor’s Energy Conference | Richmond, Virginia | October 15, 2013

 A STRONG ADVOCATE FOR AN “ALL OF THE ABOVE” ENERGY SECURITY POLICY.  CONVENTIONAL AND RENEWABLE ENERGY  ON SHORE AND OFF SHORE  INCLUDING COAL, GAS, OIL, NUCLEAR, SOLAR, WIND, BIOMASS AND ENERGY EFFICIENCY  SIGNED 20 PIECES OF LEGISLATION TO STRENGTHEN AND EXPAND VIRGINIA’S ENERGY INFRASTRUCTURE AND EXPAND ALTERNATIVE ENERGY RESOURCES.

 BIPARTISAN  LOCAL AND STATE ELECTED OFFICIALS  CONGRESSIONAL DELEGATION  85% PUBLIC SUPPORT IN VIRGINIA

 November 2008: Moratorium Lifted. DOI Call for Information to Prepare an EIS.  March 2010: President Obama announces Virginia sale 220 would go forward as part of the year plan. Scheduled for March 2012.

“This is not a decision that I’ve made lightly. It’s one that Ken Salazar and I -- as well as Carol Browner, my energy advisor, and others in my administration -- looked at closely for more than a year. But the bottom line is this: given our energy needs, in order to sustain economic growth and produce jobs, and keep our businesses competitive, we are going to need to harness traditional sources of fuel…”

 November 2008: Moratorium Lifted. DOI Call for Information to Prepare an EIS.  March 2010: President Obama announces Virginia sale 220 would go forward as part of the year plan. Scheduled for March  April 20, 2010: Deepwater Horizon/Macando blowout occurs.  May 7, 2010: Interior indefinitely postpones the comment period and cancels the public meetings to scope the EIS for Lease Sale 220.  May 27, 2010: President Obama announces the cancellation of Lease Sale 220.  December 1, 2010: Interior announces that further east coast development would be postponed until the year plan.

 (1) A LACK OF EXISTING INFRASTRUCTURE  (2) POTENTIAL CONFLICTS WITH THE MILITARY. THESE CONCERNS WERE NOT RAISED INITIALLY WHEN THE SALE WAS APPROVED.

 SUPPORTS EFFORTS IN CONGRESS TO FORCE INTERIOR TO OFFER A LEASE SALE OFF VIRGINIA IN THIS 5-YEAR PLAN.  SUPPORTS AN EXPANSION OF REVENUE SHARING  SUPPORTS EFFORTS TO REVISE THE LEASE MAP

 ESTIMATED 3.3 BILLION BARRELS OF OIL AND 31.3 TRILLION CUBIC FEET OF GAS OFF VIRGINIA.  GENERATE UP TO 31,000 DIRECT AND INDIRECT JOBS BY 2020 AND WOULD GENERATE MILLIONS IN REVENUE TO BUSINESSES AND THE FEDERAL, STATE, AND LOCAL GOVERNMENTS.

ATLANTIC OCS DEVELOPMENT IS PROJECTED TO REACH OVER 1.5 MILLION BARRELS OF OIL EQUIVALENT PER DAY. ATLANTIC OCS DEVELOPMENT IS PROJECTED TO SUPPORT OVER 160,000 JOBS 15 YEARS AFTER INITIAL LEASE SALES. LEASE SALES COULD GENERATE $8 BILLION IN GOVERNMENT REVENUE OVER 16 YEARS.

WHERE DO WE GO FROM HERE?

ENCOURAGE CONGRESS AND THE OBAMA ADMINISTRATION TO PURSUE A SENSIBLE PATH THAT ALLOWS FOR ATLANTIC LEASING IN THE FIVE-YEAR PLAN. Coastal governors, legislators, and other stakeholders should play a lead role in delivering this message.

1. Continue to encourage and support federal legislative efforts to approve Virginia OCS leasing.

“Offshore Energy and Jobs Act” (H.R. 2231) “Fixing America’s Inequities with Revenues (FAIR) Act of 2013” (S. 1273) “OCS Transboundary Hydrocarbon Agreements Authorization Act” (H.R. 1613/S. 812) “Virginia Outer Continental Shelf Energy Production Act of 2013” (S. 1024) “Virginia Jobs and Energy Act” (H.R. 1782) “South Carolina Offshore Drilling Act of 2013” (H.R. 771) “Requiring new 5-Year OCS Leasing Program” (S. 176) “Infrastructure Jobs and Energy Independence Act” (H.R. 787) “Energy Production and Project Delivery Act of 2013” (S. 17) “Maximize Offshore Resource Exploration Act of 2013” (H.R. 1165) “Energy Production and Project Delivery Act of 2013” (H.R. 1881) “No More Excuses Energy Act of 2013” (H.R. 2081) “More Energy More Jobs Act” (H.R. 2265) “American-Made Energy and Infrastructure Jobs Act” (H.R. 2784) “Deficit Reduction, Job Creation, and Energy Security Act” (H.R. 70) “Alaska Adjacent Zone Safe Oil Transport and Revenue Sharing Act” (S. 199) “Offshore Fairness Act” (H.R. 1430) “Offshore Fairness Act” (S 681) “SAFEGUARDS Act of 2013” (H.R. 1820) “Gulf Coast Oil Recovery Zone Tax Relief and Economic Recovery Act” (S. 1506)

2. Continue to pressure the administration and members of Congress to expedite the completion of BOEM’s environmental review in a manner that facilitates the prompt issuance of scientifically and legally defensible seismic permits.

The Congress called on DOI to publish a timetable for completion of the PEIS and they produced a plan that said that a record of decision on a final PEIS would be issued on April 13, At the time, some claimed this nearly two and a half year timeframe demonstrated that the Obama administration sought to delay drilling in the Atlantic. As the agency began its scoping meetings in the spring of 2010, BOEM officials continued to state that a record of decision on the PEIS would be issued by “mid-2012”. However, in the wake of the Deepwater Horizon spill in 2010, the agency’s deadline began to slip, significantly, even though the PEIS concerned seismic activity, not oil and gas drilling.

PEIS Process Commenced: January 28, 2010 Draft EIS Completed: PLANNED July 15, 2011 ACTUAL March 2012 DELAY 229 Days 60-Day Comment Initiated PLANNED Oct 31, 2011 ACTUAL March 30, 2012 DELAY 151 Days Final EIS Published PLANNED February 1, 2012 NEW PLAN January 3, 2014 DELAY 702 Days Record of Decision Issued PLANNED April 13, 2012 NEW PLAN March 28, 2014 TOTAL DELAY: 714 Days

3. Include “potential” leasing in the Atlantic in the five-year plan, doing so in a manner that allows forthcoming seismic data (upon completion of the PEIS) to inform specific lease sale proposals.

Traditionally, the federal government proposes a lease sale based on a proper resource assessment. Statutes governing the development of a leasing program, however, do not require new seismic data before including a proposed lease sale in a five-year plan. DOI could produce a five-year plan for that includes broad areas for potential lease sales, to be made available contingent on seismic data that demonstrates a promising resource base. If the PEIS is competed quickly, then subsequent seismic data acquisition could still be used to inform specific lease sales in – as long as the five-year plan allows for this possibility.

4. Urge DOI to commence work now on the draft proposed plan in order to adequately address the input of elected officials, coastal communities, and others who support leasing in the Atlantic and to ensure that proposed Atlantic leasing is included in the next five-year plan, which must be finalized by the middle of 2017.

Under the Outer Continental Shelf Lands Act, the Administration can commence work on a new Draft Proposed Program (DPP) for offshore oil and gas leasing at any time. DOI can justify commencing work now on the DPP based on the need to adequately address the input of governors, Members of Congress, and others who support Atlantic leasing and to ensure that proposed Atlantic leasing is included in the next Five- Year Plan, which must be finalized by the middle of 2017.

5.Demonstrate Virginia is ready by initiating the Virginia OCS Readiness Project.

The project goal is to ensure that Virginia is prepared for the development of the oil and gas resources off of Virginia’s coast. Initiate and fund a study to identify the road blocks identified by DOI, and what Virginia needs to do to be ready.

These would include; (1) a detailed overview of the infrastructure needed to support oil and gas exploration and development, and (2) a plan to work around the objections of the military.

Review safety and environmental protection since the gulf accident, lessons learned and changes made. Review the federal standards, regulations and requirements of lessors and operators related to environmental protection and safety, with a particular emphasis on new regulations and technologies adopted in response to the Macondo spill.

Review the role of state and local regulations and state and local regulators, including in emergency response, and what a state should have in place to be adequately prepared. Review Virginia’s state and local regulatory schemes that would apply, organizations and communications teams already in place, as well as how same are kept current.

Review what sort of onshore space the industry needs to support its offshore activity, whether there are federal regulations that apply. Review what sort of manufacturing capacity and support services the industry makes use of and in what degree.

Continue the dialog with the military on issues that are of concern to them. Review operational protocols in place in other areas where OCS development and training activities co-exist. Provide an opportunity for appropriate decision makers to be briefed on the latest drilling technologies.

QUESTIONS?