McCrory promotes natural gas development onshore, energy exploration offshore

Dec. 04, 2013 @ 06:27 PM

North Carolina waited “far too long” to get into energy exploration, Gov. Pat McCrory said at an energy conference in Durham Wednesday.

McCrory advocated for inland natural gas production, off-shore energy exploration and a review of state energy subsidies, including for renewable energy producers, at the N.C. Chamber’s second annual conference.

“In fact, one of my goals for energy exploration regarding natural gas exploration inland is we hope to get a permitting process started in 2015,” McCrory said at the Sheraton Imperial Hotel and Convention Center.

Overriding a veto from former Gov. Beverly Perdue, state lawmakers passed a law last year that tasked the newly constituted N.C. Mining and Energy Commission with creating new rules for oil and gas development.

The rules would allow horizontal drilling and hydraulic fracturing, or “fracking,” in the state, however, no permits can be issued until state leaders approve new rules. The commission is targeted to wrap up that rulemaking process next year, and the legislature is expected to review the proposed rules in 2015.

Jamie Kritzer, a department spokesman, said in an email that testing has already begun. In the Piedmont, rock samples from existing cores and cuttings in the Deep River and Dan River basins have been used to determine that basins contain total organic carbon, which is a requirement for the existing of oil and gas resources.

Using rock cores gathered decades ago, the U.S. Geological Survey estimated that there’s potential for 1.7 trillion cubic feet of natural gas in the Deep River basin, according to the email. That’s enough to meet the state’s demand for natural gas for more than 5 years.

The Deep River basin includes the Durham sub-basin, but the testing has been done in the Deep River’s Sanford sub-basin in Lee County and in part of Chatham County.

The focus has been on testing in Lee County in the Deep River basin and in Rockingham County in the Dan River basin, Kritzer said in the email, because that's where the department had data already. Starting in the early 1970s, companies explored for oil and natural gas there, he said.

This year, Kritzer said rock samples from both basins have been sent for analysis to determine the strength of rock there to help determine what’s needed for hydraulic fracturing.

In addition, he said they’re prepared to start drilling to evaluate the potential for resources in the Sandhills region in Robeson, Scotland, Hoke, Cumberland, Sampson and Wayne counties.

“We have to get into the exploration business in North Carolina, and we’ve waited far too long to begin that process and we’ve wasted a lot of time,” McCrory said at Wednesday’s conference.

Regarding off-shore energy development, McCrory said he’s accepted the role of vice chair of the OuterContinental Shelf Governors Coalition. He said the group is advocating for federal permission for energy exploration off the coast of Virginia and the Carolinas. The coalition also includes Louisiana, Texas, Mississippi and Alabama.

The current five-year drilling plan, which dictates where oil and gas resources are available for leasing through 2017, does not allow for offshore drilling off the East Coast.

“This is what the offshore coalition is going to work on – to put pressure on the government to let us explore what’s there,” he said. “The sad news is, the oil companies are just moving elsewhere in the world, and they’re moving their equipment elsewhere and they’re moving their jobs elsewhere,” he said.

He also called for a “long-term and honest” review of state government subsidies related to energy generation, including for renewable energy sources.

“One of North Carolina’s No. 1 recruitment selling points is our low energy cost,” he said. “We have to make sure that we don’t have an impact on that selling point while at the same time, promoting renewables, which is another selling point for investing in North Carolina.”

John Morrison, chief operating officer for the Chapel Hill-based solar developer Strata Solar, said at Wednesday’s meeting that solar farms are built “at a fraction of the cost” today. However, he said there’s still work to be done to bring that down further.

He said the company expects it will be able to build past 2015, which is when state’s tax credit for renewable energy installations is set to expire. While he said they can see the finish line, they’re not there yet.

He advocated for diversity of energy production, including renewable energy production.