Subcommittee on Energy and Water Development FY 2009 Appropriations
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 19, 2008
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) 2009 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 (R&D), eliminates mandated direct spending of $50 million for unconventional onshore and ultra deep water offshore natural gas R&D, includes a decimating cut to hydropower R&D and does not fulfill some of the geothermal and carbon sequestration R&D funding authorized in the Energy Independence and Security Act of 2007.
Given the interest of the Administration and Congress to reduce the nation’s foreign oil dependence, reduce prices on fossil fuels and mitigate carbon emissions from fossil fuels, it seems like an inopportune time to eliminate or under fund programs that could help with these objectives. We hope that Congress will support wise investments for all energy resource programs and carbon sequestration R&D. AGI applauds the requested 18 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 applaud the request of $30 million for geothermal R&D and an increase of about $35 million for carbon sequestration R&D, both of which partially fulfill the Energy Act of 2007. We ask for the Subcommittee’s continued support for oil and gas, unconventional natural gas, geothermal, hydropower and carbon sequestration R&D so the nation can develop a diverse portfolio of energy resources while enhancing carbon mitigation strategies to secure clean, affordable and secure energy supplies for now and the future.
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 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 about 15 percent from about $3.9 billion last year to $4.7 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 24 percent from $1.27 billion in FY 2008 to $1.57 billion in FY 2009 in the President’s request. Within the BES, Chemical Sciences, Geosciences and Biosciences would receive a $75 million increase over their FY 2008 budget for a total of $297 million. The Geoscience program provides peer-reviewed grants to universities and DOE national laboratories for fundamental Earth science research in geochemistry, hydrology, rock mechanics, and geophysical imaging. The $7.5 million increase specifically for the Geoscience research program is focused on solid earth geophysics and geochemistry to understand the stability and transformation of deep carbon sequestration, nanoscale geochemistry, chemical imaging, experimental and theoretical studies of complex subsurface fluids and mid-scale instrumentation.
The President’s request for the Office of Science only partially fulfills the carbon sequestration R&D and large-scale demonstration project, which was authorized to receive $240 million in FY 2009 and the carbon sequestration university-based R&D which was authorized to receive $10 million in FY 2009. An additional $30 million is requested for carbon sequestration R&D and demonstration within the Office of Fossil Energy to partially satisfy the wise investments called for in the Energy Act of 2007. AGI requests that funding for carbon sequestration R&D in the Office of Science and the Office of Fossil Energy be increased to fulfill the intent of the Energy Act of 2007.
DOE Energy Efficiency and Renewable Energy
Within DOE Energy Efficiency and Renewable Energy, the President’s FY 2009 budget request would cut funding by 27 percent or $467 million. We are concerned about the cuts to alternative energy R&D programs, in particular the reduction of more than 70 percent (a cut of almost $7 million) for hydropower R&D which would decimate the program. A balanced portfolio of R&D across many promising energy resources should be maintained with steady funding to help ensure energy supplies in a changing world.
AGI applauds the $30 million requested for geothermal R&D and greatly appreciates previous support from Congress for this key alternative energy resource. The geothermal research program within the Renewable Energy account, which funds Earth science research in materials, geofluids, geochemistry, geophysics, rock properties, reservoir modeling, and seismic mapping, would receive an increase of 51 percent from FY 2008 enacted levels only one year after the Administration slated the program for termination. The new funds for geothermal satisfy in part an authorization in the Energy Independence and Security Act of 2007, which calls for $90 million for geothermal R&D in FY 2009.
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 2009 Energy and Water Development Appropriations bill. Over the past eight 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 28, 2007 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 2009 budget request continues the alarming reduction of energy R&D funding by eliminating all funding for our primary energy resources, oil and gas. 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 ultra deep 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 ultra deep 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 ultra deep 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.
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, firstname.lastname@example.org, or 4220 King Street, Alexandria VA 22302-1502.
Please send any comments or requests for information to AGI Government Affairs Program.
Posted: March 20, 2008