By Bill McMorris

ALEXANDRIA–Those hoping to explore for oil off Virginia’s coast will have to wait after a proposal to ease federal restrictions on offshore drilling failed in the U.S. senate.

The bill, which passed the U.S. House on May 5 with heavy Republican backing, failed to reach the 60 vote threshold in the Democratic controlled senate. Virginia senators Mark Warner and Jim Webb were among the 57 no votes in the chamber.

Sen. Warner said he could not support the bill because it did not include a revenue sharing agreement.

“Senator Warner has long supported offshore energy, but this measure had no mechanism for revenue sharing for energy developed off of Virginia’s coasts,” Warner spokesman Kevin Hall said. “Virginia would not see a dime out of this bill.”

Offshore drilling contracts generally include a royalty system in which oil companies pay the federal government a portion of profits derived from exploration. The state share of those royalties can be a major issue. In 2006, former Louisiana Gov. Kathleen Blanco threatened to halt an exploration project if the federal government did not give the state a larger share of profits for gas and oil drilled more than six miles off of the coast.

The lack of royalties did not bother some local leaders along the coast. Virginia Beach Mayor Will Sessoms said he was disappointed by the senate’s vote.

“I respect their decision, though I disagree with it,” he said. “We’re a tourist destination and we realize the cost of fuel has an impact on people coming to see us; that is why we support all offshore energy: oil, gas and wind.”

Supporters say offshore drilling can alleviate the increasing cost of gasoline. In Virginia, a gallon of unleaded regular gasoline stands at $3.83, a $1 increase since 2010, according to AAA.

Mr. Sessoms acknowledged that state and local governments face risks associated with offshore drilling and should reap some benefit from the practice. He believes there are other ways to compensate the city and state aside from direct revenue sharing with oil companies, including increased revenue from lower gas prices and more visitors.

“Those benefits would outweigh Senator Warner’s argument,” he said.

But environmental activists say local sites of oil exploration may not benefit from the industry.

“Virginian’s are not going to get a hometown discount just because the oil is found in their state,” said Athan Manuel, Director of Lands Protection at the Sierra Club. “Drilling is not compatible with coastal economies; people are not going to see their economy improve, but they could see their land destroyed.”

President Barack Obama opened the door for offshore drilling in Virginia last April when he moved forward on a proposal to issue three new exploration leases in the Gulf and and one contract 50 miles from the Virginia Beach coast. The announcement proved ill-timed. The Deepwater Horizon oil rig exploded three weeks later, killing 11 and producing the largest oil spill in history.

In the wake of the disaster, Obama postponed the sale of the leases. The senate proposal would have resurrected those contracts. If passed, oil exploration would have begun as soon as June 2012 — the first drilling in the region in more than 20 years.

The legacy of the Gulf spill was evident in chamber.

“(Senator Warner’s) secondary concern is that there is adequate time to develop regulations to address any of the lessons of the Gulf Coast,” Mr. Hall said.

Mr. Sessoms said those lessons are never far from the minds of the Virginia Beach City Council, which passed a resolution backing drilling soon after Pres. Obama’s 2010 announcement.

“We’re concerned about (the chance of a spill), but we passed that resolution before the Gulf (disaster) and the council has not changed its position,” he said.

Henrico County Delegate Jimmie Massie, a Republican who spent time in Houston working on oil exploration for Bankers Trust Co. thirty years ago, said the Deepwater Horizon was likely a result of human error and that drilling can be done without incident with proper oversight.

“We can do it safely by using best practices,” he said.

Environmental activists are skeptical. The Sierra Club of Virginia, which represents more than 17,000 Virginians, has opposed any offshore drilling in the state.

“This industry has a history of spills and pollution,” Mr. Manuel said. “The technology may improve, but there’s still going to be human error and the oil companies have proved they’re not ready for a spill.”

Gov. Bob McDonnell lobbied hard for offshore drilling and praised the House of Representatives for passing the proposal 266-149. The governor reiterated his support for the bill, known as the Offshore Production and Safety Act of 2011, in a release two days before the senate vote.

“As families in Virginia face gas prices of nearly $4 per gallon, and international news highlights the instability in many oil-producing nations, we must explore and develop all of our available domestic energy sources to create jobs while protecting our economy and national security,” Gov. McDonnell said.

McDonnell’s office did not return calls for comment on Thursday.

Mr. Hall says that McDonnell simplifies the origin of high energy prices and the short-term impact of drilling.

“Tying offshore energy production and today’s gas prices is not a strong linkage,” he said. “It would be years, if not decades, before any energy would be harvested off of the mid-Atlantic coast.”

Mr. Massie accused Sen. Warner of skirting the issue.

“Senator Warner is basically saying, ‘I’m not going to take the first step on a great, prosperous, long journey because it’s too much trouble,” he said.

The 57-42 vote split along party lines with five Republicans — including Louisiana Sen. David Vitter — joining a unanimous Democratic caucus in opposition.