DATE: Thursday, November 6, 1997            TAG: 9711060482

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY CATHERINE KOZAK, STAFF WRITER 

DATELINE: RALEIGH                           LENGTH:   84 lines

OFFICIALS WARY OF CHEVRON SEEKING OIL OFF HATTERAS

The place where the Labrador Current meets the Gulf Stream could be teeming with more marine and bird life than any place on Earth.

Less than 50 miles from the coast of Hatteras Island, the steep ocean floor is riddled with canyons and gullies frequently rearranged by storm-maddened currents.

The northern end of hurricane highway, it's also the area where northeasters intensify fast and furiously. It is here, near the elbow of the Outer Banks, that Chevron Corp. hopes to find a massive reserve of oil or natural gas.

In a presentation to state lawmakers Wednesday, coastal scientist Neal Blair, associate professor at the Department of Marine, Earth and Atmospheric Sciences at North Carolina State University, said the lease block where in two years Chevron wants to drill an exploratory well lies on the wall of the Gulf Stream, which he said makes it a ``complicated system.''

Blair said he began studying the offshore waters near the Outer Banks in 1989, shortly before Mobil told the state it intended to seek a permit to drill off the Hatteras coast. Mobil and Chevron, along with six other oil companies, own portions of the 21-block Manteo Exploration Unit.

The Manteo units are attractive to oil companies because the extensive continental shelf reef is highest in that area.

The spot also is attractive to sea birds, said David Lee, a seabird expert at the state Museum of Natural Science. Again, the scientist said bird populations there are more diverse than any place in the North Atlantic - probably anywhere.

Wednesday's briefing by scientists and state coastal managers to the Joint Legislative Commission on Governmental Operations was the first taste representatives from around the state were given on the proposal.

``Probably for the first time they have seen a different perspective of the Outer Banks,'' Sen. Pro Tem Marc Basnight said after the meeting. Basnight, who represents Dare County, was asked last month to provide the committee with an overview of the drilling proposal.

The senator said he is opposed to Chevron looking for oil or gas near the pristine fishing and tourism-dependent barrier islands, where he has lived his entire life.

At least one committee member seemed to be convinced that Basnight is right.

``Would the policy of North Carolina be to be against?'' Sen. Austin Allran, R-Catawba, asked. ``Because there's no reason to be for it.''

North Carolina would receive no portion of lease fees or oil profits - unless the U.S. government or the oil companies feel generous. And most jobs would be for skilled oil company workers who would come from out of state.

But the state cannot forbid drilling outright; it can only make the oil firm's proposal meet its coastal rules and policies. Federal government policies generally encourage domestic oil production, and because the lease blocks are in federal water, North Carolina has limited power to stop exploration or production if it wants to.

In the 1988 Mobil exploration proposal, which fizzled in the wake of two lawsuits, the state spent several million dollars in the review process, said Kim Crawford, ocean policy specialist for the state Division of Coastal Management.

Crawford said a new law is expected to be drafted soon that would allow states a share of the lease revenues. The federal government makes billions from the lease fees, second only to tax revenue in the budget.

On Monday, Gov. Jim Hunt signed an executive order that immediately put tighter coastal policies into effect. The U.S. Department of Commerce is expected to approve the policies, Crawford said.

The new rules incorporate important changes from the ones in effect when Mobil was looking to drill, including:

Identification of areas of high biological significance, like offshore reefs or primary nursery areas.

Protection of scenic and visual qualities of the coastal areas.

Mitigation of any spills.

Identification of a drilling ship as an energy facility.

Requirement for the state to specify the information it needs from an applicant to review the proposal.

Crawford cautioned that although the new policies might offer more protection to the state, it still has little control over the outcome.

``The policies don't prohibit drilling,'' she said. ``A lot of it will say they have to comply to the maximum extent possible.''

Basnight said he knows he has a responsibility to listen to Chevron, and if the company can assure him that the Outer Banks would be protected, he may change his position. ILLUSTRATION: Color map KEYWORDS: OFFSHORE OIL DRILLING

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