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Written Testimony Submitted by
Linda Rowan, Director of Government Affairs
American Geological Institute
to the U.S. House of Representatives
Subcommittee on Energy and Water Development Appropriations
March 16, 2007

To the Chairman and Members of the Subcommittee:

Thank you for this opportunity to provide the American Geological Institute's perspective on fiscal year (FY) 2008 appropriations for geoscience programs within the Subcommittee's jurisdiction. The President's budget request for Department of Energy (DOE) research programs provides no funding for oil and gas research and development. Not only would the request terminate basic research for oil and gas, it would also repeal the ultradeep water and unconventional natural gas and other petroleum research funding proposed in the Energy Policy Act of 2005. Given the interest of the Administration and Congress to reduce the nation's foreign oil dependence and reduce prices on oil and natural gas, it seems like an inopportune time to eliminate programs that could help with these objectives. We hope that Congress will support funding for all energy resource programs. AGI applauds the requested 7 percent increase for the largest supporter of physical science research in the U.S., DOE's Office of Science, and encourages the Subcommittee's full support for this increase. We also support increased funding requests for clean energy research, which focuses spending on solar, biomass/biofuels, hydrogen fuel, FutureGen and nuclear power, however, spending for other clean energy alternatives, such as geothermal, could be included in appropriations while remaining consistent with national needs and objectives.

AGI is a nonprofit federation of 44 geoscientific and professional associations that represent more than 100,000 geologists, geophysicists, and other earth scientists. The institute serves as a voice for shared interests in our profession, plays a major role in strengthening geoscience education, and strives to increase public awareness of the vital role that the geosciences play in society's use of resources and interaction with the environment.

DOE Fossil Energy Research and Development

AGI urges you to take a critical look at the Department of Energy's Fossil Energy Research and Development (R&D) portfolio as you prepare to craft the FY 2008 Energy and Water Development Appropriations bill. Over the past seven years, Members of Congress have strongly emphasized the need for a responsible, diversified and comprehensive energy policy for the nation. The growing global competition for fossil fuels has led to a repeated and concerted request by Congress to ensure the nation's energy security. On February 28th, this subcommittee held a hearing on the "10-Year Energy Research and Development Outlook" in which the Energy Information Administrator Guy Caruso noted the nation's need for fossil fuels over the next 30 years and the other expert witnesses noted the critical need to continue R&D on fossil fuels and all other energy resources. The President's proposal, which provides no funding for oil and gas R&D, is short sighted and inconsistent with congressional concerns and expert testimony presented to your subcommittee. No funding for oil and gas R&D will hinder our ability to achieve energy stability and security.

The research dollars spent by Fossil Energy R&D go primarily to universities, state geological surveys and research consortia to address critical issues like enhanced recovery from known fields and unconventional sources that are the future of our natural gas supply. This money does not go into corporate coffers, but it helps American businesses remain competitive by giving them a technological edge over foreign companies. All major advances in oil and gas production can be tied to research and technology. AGI strongly encourages the subcommittee to ensure a balanced and diversified energy research portfolio that does not ignore the nation's primary sources of energy, fossil fuels, for at least the next 30 years.

Today's domestic industry has independent producers at its core. With fewer and fewer major producing companies and their concentration on adding more expensive reserves from outside of the contiguous U.S., it is the smaller independent producers developing new technologies concentrated on our domestic resources. However, without federal contributions to basic research that drives innovation, small producers cannot develop new technologies as fast, or as well, as they do today. The program has produced many key successes among the typical short-term (one to five years) projects usually chosen by the DOE. And even failed projects have proven beneficial, because they've often resulted in redirection of effort toward more practical exploration and production solutions. Ideally, DOE and private sector participants share the programs R&D funding on a 50-50 basis, with the government contributing actual dollars and the company contributing dollars or "in kind" products and services. To justify the use of public funds, new technology developed from such projects is made available to industry.

In 2003, at the request of the Interior Appropriations Subcommittee, the National Academies released a report entitled Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000. This report found that Fossil Energy R&D was beneficial because the industry snapped up the new technologies created by the R&D program, developed other technologies that were waiting for market forces to bring about conditions favorable to commercializing them and otherwise made new discoveries. In real dollars from 1986 - 2000 the government invested $4.5 billion into Fossil Energy R&D. During that time, realized economic benefits totaled $7.4 billion. This program is not only paying for itself, it has brought in $2.9 billion in revenue.

Unfortunately, despite this success, the President's FY 2008 budget request continues the alarming reduction of energy R&D funding by eliminating all funding for our primary energy resources, oil and gas. At the subcommittee's February 28th hearing, all of the witnesses and several subcommittee members voiced their concern about the 85 percent drop in renewable, fossil and nuclear energy R&D funding at DOE since 1978. Federal funding for renewable, fossil and nuclear R&D has decreased dramatically from $5.5 billion in 1978 to $793 million in 2005 according to a Government Accountability Office (GAO) report entitled Key Challenges Remain for Developing and Deploying Advanced Energy Technologies to Meet Future Needs. Such significant under-investment in energy R&D over many decades hinders progress on cost-effective and environmentally-sound exploration and extraction of raw energy resources and clean and efficient development, production and use of energy products.

The federal investment in energy R&D is particularly important when it comes to longer-range research with diversified benefits. In today's competitive markets, the private sector focuses dwindling research dollars on shorter-term results in highly applied areas such as technical services. In this context, DOE's support of fossil energy research, where the focus is truly on research, is very significant in magnitude and impact compared to that done in the private sector, where the focus is mainly on development. Without more emphasis on research, we risk losing our technological edge in the highly competitive global market place.

As we pursue the goal of reducing America's dependence on unstable and expensive foreign sources of oil, we must continue to increase recovery efficiency in the development of existing domestic oilfields, conserving the remaining in-place resources. Since the 1980's, 80 percent of new oil reserves in this country have come from additional discoveries in old fields, largely based on re-examination of previously collected geoscience data. These data will become even more important in the future with development of new recovery technologies.

Perhaps one of the most promising areas of R&D for domestic oil supplies are in the ultradeep waters where drilling is allowed in the Gulf of Mexico. The Energy Policy Act of 2005, set aside $50 million annually from collected offshore royalties for ultradeep water and other unconventional oil and gas R&D to support clean and efficient exploration and extraction in the Gulf. The President's budget request would repeal this program and provide no funding for ultradeep water and other unconventional oil and gas R&D. AGI asks that you consider R&D spending or other incentives to encourage the private sector to invest in clean and efficient technological advances to enhance our unconventional fossil fuel supply in offshore regions where drilling is allowed and significant infrastructure already exists.

The research funded by DOE leads to new technologies that improve the efficiency and productivity of the domestic energy industry. Continued research on fossil energy is critical to America's future and should be a key component of any national energy strategy. The societal benefits of fossil energy R&D extend to such areas as economic and national security, job creation, capital investment, and reduction of the trade deficit. The nation will remain dependent on petroleum as its principal transportation fuel for the foreseeable future and natural gas is growing in importance. It is critical that domestic production not be allowed to prematurely decline at a time when tremendous advances are being made in improving the technology with which these resources are extracted. The recent spike in oil and natural gas prices is a reminder of the need to retain a vibrant domestic industry in the face of uncertain sources overseas. Technological advances are necessary to maintaining our resource base and ensuring this country's future energy security.

DOE Office of Science

The DOE Office of Science is the single largest supporter of basic research in the physical sciences in the United States, providing more than 40 percent of total funding for this vital area of national importance. The Office of Science manages fundamental research programs in basic energy sciences, biological and environmental sciences, and computational science and, under the President's budget request, would grow by 7 percent from about $4.1 billion last year to $4.4 billion. AGI asks that you support this much needed increase.

Within the Office of Science, the Basic Energy Sciences (BES) program supports fundamental research in focused areas of the natural sciences in order to expand the scientific foundations for new and improved energy technologies and for understanding and mitigating the environmental impacts of energy use. BES also discovers knowledge and develops tools to strengthen national security.

The Basic Energy Sciences (BES) would remain the largest program in the office with an increase of 5.5 percent from $1.420 billion in FY 2007 to $1.498 billion in FY 2008 in the President's request. Within the BES, Chemical Sciences, Geosciences and Biosciences would receive a $15.4 million increase over their FY 2007 budget. About half of this increase would go toward nanoscale science research ($8 million) and about $6 million would be focused on the President's Hydrogen Initiative. AGI strongly supports the requested increases for all of these programs.

DOE Energy Efficiency and Renewable Energy

Within DOE Energy Efficiency and Renewable Energy, the President's FY 2008 budget request would not support any R&D in geothermal technology. AGI asks that the subcommittee consider supporting geothermal R&D at the FY 2006 level of $23 million.

Thank you for the opportunity to present this testimony to the subcommittee. If you would like any additional information for the record, please contact me at 703-379-2480, ext. 228 voice, 703-379-7563 fax, rowan@agiweb.org, or 4220 King Street, Alexandria VA 22302-1502.

Please send any comments or requests for information to AGI Government Affairs Program.

Posted: March 16, 2007

 


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