McDonnell talks up energy initiatives at B&W event

Gov. Bob McDonnell used a Lynchburg event, where he came to dedicate nuclear-engineering offices Wednesday, to boast about Virginia’s opportunity to be the first East Coast state to drill for oil and natural gas.

“I feel like this is energy day for me,” McDonnell told a gathering of local leaders and Babcock & Wilcox officials outside a building on Ramsey Place in Lynchpin Industrial Park. Inside, B&W engineers already were designing the company’s mPower small reactor.

McDonnell talked as much about President Obama’s announcement earlier in the day to allow offshore drilling as he did about B&W’s contributions toward making Virginia “the energy capital of the East Coast,” a goal the governor mentioned often on the campaign trail.

“Virginia will be the first state on the East Coast to actually drill,” McDonnell said.

His visit with U.S. Energy Secretary Ken Salazar several weeks ago, coupled with support from Virginia senators and representatives, influenced Obama’s decision, McDonnell said.

The decision could mean “a tremendous amount of future royalties coming to Virginia for our state’s use” on highways and green-energy projects, the governor said. But he acknowledged there is no current requirement that the federal government share royalties with Virginia.

“Our next success is to get the U.S. Congress to pass a royalty or revenue-sharing bill,” McDonnell said. “It will literally take an act of Congress to do that.”

Rep. Bob Goodlatte, R-6th District, introduced a bill in the U.S. House last week that would give Virginia a 50-percent share of royalties that energy companies would pay the government. Louisiana and other Gulf Coast states get 37.5 percent of royalties produced off their shores.

Goodlatte said he plans to work with representatives from other East Coast states, but he wasn’t sure which ones yet.

“Some are interested, like Virginia is, and some are not as interested,” Goodlatte said. “We are in the process of taking their temperature and figuring out how we want to proceed,” he said.

In some states, many residents oppose drilling. In most of them, environmental groups object because of pollution possibilities.

The federal action Wednesday included states from the northern tip of Delaware to the central coast of Florida. McDonnell said he was ready to work with those states to support royalty sharing.

Goodlatte said his bill is “even more important now that the administration is throwing itself behind these efforts.” Obama’s measure “doesn’t kick in until 2012, and we want to accelerate this process because Virginia is ready to go,” Goodlatte said.

“And for those who are concerned about going to Virginia Beach and seeing drilling rigs off the coast, they won’t see it,” Goodlatte said. “The drilling areas are 50 miles out, and beyond view because of the curvature of the earth.”

McDonnell said B&W’s prospects with its modular-reactor concept for generating electricity were a key part of Virginia’s energy capabilities.

“In the nuclear field, we really do have more core competencies in Virginia than any other state, by far,” McDonnell said, citing Areva’s large reactor designs and fuel-processing operations, the U.S. Navy’s nuclear-powered carriers and submarines, and Dominion’s nuclear generating stations at North Anna and Surry.

Being in Lynchburg on Wednesday, McDonnell said, “really is an example of accomplishing my goal of being the energy capital of the East Coast.”

McDonnell said Virginia is supporting B&W by helping train employees through the Virginia Jobs Incentives program.

John Fees, chief executive officer of B&W parent company McDermott International, said Virginia also is giving the company some help with test and development facilities that are being developed in the Lynchburg area.

Later, as McDonnell and Fees examined a model of the mPower reactor, they talked about opportunities for marketing it.

“We have money in the state budget to open trade offices in India and China,” McDonnell said.

Fees said B&W hopes to sell the reactor in India, because its smaller size would allow it to be used in interior parts of the country where large power plants are harder to build.