Modify your code to use the correct query_posts call. Use
query_posts('post_type=portfolio&offset=" . $offset);
instead of
query_posts("offset=" . $offset);
Below is your code modified:
<?php
/*
Template Name: 2 Column Blog Template
*/
get_header();
?>
<section class="container">
<!-- 960 Container -->
<?php
$counter = 1; //start counter
$grids = 2; //Grids per row
global $query_string; //Need this to make pagination work
$paged = get_query_var("paged');
$offset = 0;
if ($paged != 0 ) {
$offset = ($paged-1) * get_query_var('posts_per_page') ;
}
query_posts('offset=" . $offset);
if (have_posts()) : while (have_posts()) : the_post(); ?>
<?php
global $more;
$more = 0;
...
The complete codex manual for query_posts is here