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Summary of Energy Hearings: April/May 2001



Hearing on National Energy Policy and the Price-Anderson Act Renewal
Senate Committee on Energy and Natural Resources
May 25, 2001

The Bottom Line
This hearing reviewed the President's National Energy Policy (NEP) report that was released on May 17th.  Due to time constraints, only written testimony was submitted regarding the Price-Anderson Act, which provides liability relief for utilities with nuclear power plants.  Chairman Frank Murkowski (R-AK), opened the hearing by stating: "At long last we have a proposal for a balanced, national energy policy....The plan is built on a foundation of conservation, increased efficiency, and additional domestic production."  Oral testimony was heard from Secretary of Energy Spencer Abraham, and written testimony was provided by six other witnesses on S. 388, the National Energy Security Act of 2001; S. 472, the Nuclear Energy Electricity Supply Assurance Act of 2001; and S. 597, the Comprehensive and Balanced Energy Policy Act of 2001.

Hearing Summary
The May 25th hearing was the first Senate hearing since President Bush released the NEP report.  The report, entitled Reliable, Affordable, and Environmentally Sound Energy for America's Future, was created by the President's National Energy and Policy Development Group.  It addresses government policies regarding domestic energy supply, energy efficiency and conservation, renewable energy sources, and developing global energy resources.  Secretary of Energy Abraham presented testimony for the Administration.

The Energy and Natural Resources Committee received only written testimony concerning the Price-Anderson Act renewal.  Witnesses who were scheduled to speak included Mr. Eric Fygi, Acting General Counsel at the Department of Energy; Mr. Bill Kane, Deputy Executive Director for Reactor Programs at the U.S. Nuclear Regulatory Commission;  Mr. John Bradburne, CEO of Fluor Fernald; Mr. John Quattrocchi, American Nuclear Insurers; Mr. Marvin Fertel, Nuclear Energy Institute; and Ms. Anna Aurilio, National Association of State Public Interest Research Groups.

Secretary Abraham's testimony regarding the NEP report highlighted America's increasing energy demands over the next 20 years (from 98 quadrillion British thermal units (quads) now, to between 127 and 175 quads in 2020).  Improved energy efficiency will help, but the nation's energy supply must still be increased to meet the higher expected demands.  Abraham stated that the NEP report balances conservation, supply sources, and environmental concerns.  Some important recommendations of the report are repairing and updating the nation's energy infrastructure, streamlining the regulatory process, exploring energy resources on a global scale, increasing funding for the Low Income Home Energy Assistance Program, and encouraging competition for energy in a free market.

Written testimony regarding the Price-Anderson Act shows strong support for renewal without substantial changes (Ms. Aurillio's testimony is an exception). The Department of Energy, the US Nuclear Regulatory Commission, and the other organizations noted the value in providing indemnification (which currently is $9.43 billion) for the DOE and its contractors involved with nuclear activities.  The Nuclear Energy Institute and American Nuclear Insurers also emphasized the importance of the Act in handling potential liability claims for the public.  Some issue was raised as to how much the indemnification and liability should be increased relative to the last renewal of the Act in 1988.

-CLE


Hearing on National Energy Policy - Report of the National Energy Policy Development Group
House Science Committee
May 23, 2001

The Bottom Line
On May 23rd, the House Committee on Science held an overview hearing regarding the President's recently released National Energy Policy (NEP).  Committee Chairman Sherwood Boehlert (R-NY) was concerned with research, development, and demonstration programs in the areas of fossil fuels, alternative fuels, efficiency, and the environment.  Two of three expert witnesses and several Representatives expressed concern that the President's energy report did not adequately address the use of renewable energy sources, improved energy efficiency, and environmental conservation (e.g. concern over drilling in the Arctic National Wildlife Refuge).  Boehlert stressed that this hearing was the first of many to come on the issue.

Hearing Summary
The May 23rd hearing was the first by the House Science Committee to discuss the President's National Energy Policy (NEP) released on May 17th.  The NEP report, entitled Reliable, Affordable, and Environmentally Sound Energy for America's Future, was created by the President's National Energy and Policy Development (NEPD) Group.  It addresses government policies regarding domestic energy supply, energy efficiency and conservation, renewable energy sources, and developing global energy resources.  Chairman Boehlert feels the report is reasonably balanced and comprehensive, but like other representatives, is still against the proposed drilling in the Arctic National Wildlife Refuge (ANWR).

Testimony was heard from William F. Martin representing the Alliance for Energy and Economic Growth; Katherine H. Hamilton, Co-director of the American Bioenergy Association and a member of the Sustainable Energy Coalition; and David G. Hawkins, for the Natural Resources Defense Council.

William Martin commended the report for "proposing a mix of conservation and production, and for promoting new technologies that promise greater efficiency and environmental protection."  In particular, Mr. Martin highlighted the need for expanding the national energy infrastructure with regards to natural gas, electric transmission grids, power plants, and oil refineries.  According to his sources, more than $150 billion needs to be spent on natural gas infrastructure, and up to 1300 power plants will need to be constructed in the U.S. over the next 20 years.  Further, he noted that coal is America's most abundant natural resource and must be included in the country's energy future.

The Sustainable Energy Coalition (SEC) calls the NEP a "disaster from the perspective of advancing a sustainable energy future for America."  Katherine Hamilton stated the NEP should have included tax credits for renewable and alternative fuels that could go into effect in the near term, sustained funding for renewable energy research and development, and more renewable energy market incentives.  SEC compiled a NEP Scorecard (PDF),  that gives the plan 6 fails, 6 incompletes, and no passes.

David Hawkins stated that the President's energy plan did not place enough emphasis on improved energy efficiency and increased use of renewable energy resources.   Specifically, he found fault in the report's plan to create a $2 billion subsidy program for coal, it's plan to drill for oil in ANWR, the lowering of clean air standards, and increasing reliance on traditional fuel sources (which, according to NRDC sources, would increase CO2 emissions by 35% over the next 20 years).

Members of the House Science Committee questioned the panelists about funding research and infrastructure for renewable resources and whether the nation could change its base load power from coal.  Nuclear power and other newer alternative energy resources were also discussed.

-CLE


Oversight Hearing on Short-Term Solutions for Increasing Energy Supply from the Public Lands
House Resources Subcommittee on Energy and Mineral Resources
May 22, 2001

The Bottom Line
This oversight hearing focused on the issues concerning energy supplies from public lands, both onshore and offshore.  Rep. Jim Gibbons (R-NV) opened the hearing by stating the need to explore a wider selection of energy supplies from oil, gas, coal, and geothermal to the development of renewable supplies.  In his view, renewable resources are not very realistic for the short-term demand issue; therefore, fossil fuels are still the most reliable energy source to meet this demand, especially in California.  Witnesses gave testimony focusing on changes in regulations and exploration of onshore and offshore public land mineral reserves to best contribute to America's energy supplies, with particular interest in the short term (<5 years).

Hearing Summary
The witnesses included: Mark Rubin, General Manager, Upstream, American Petroleum Institute; Terry O'Connor, Vice President of External Affairs, Arch Coal, Inc.; Earl Sims, The Independent Petroleum Association of America; and Tom Fry, President, National Ocean Industries Association.

In light of the current increased interest in energy demand issues, the witnesses emphasized the importance of expanding the domestic energy supply by exploring resources on federal lands both onshore and offshore as important sources of natural gas, coal, and petroleum products.  Certain restricted federal lands -- particularly in the western states, outer continental shelf and Alaskan North Slope -- would increase the domestic supply of fossil fuels and aid in the increasing energy demands.  The Rocky Mountains and the outer continental shelf have a great potential of recoverable natural gas.  Coal is also predicted to continue to be a major domestic energy source, and large amounts are available on federal lands that have restricted access.  New technologies have allowed for an increased clean-coal generating capacity, but the usefulness of these technologies will depend in part on pending policy changes in coal exploration, development, and use.

The witnesses stressed that current restrictions on these federal land areas do not allow for exploration or utilizing these potentially extensive recoverable fossil fuels.  They argued that a change in policy with regard to these lands is a necessary step in addressing the current energy issues in the United States.  They also emphasized that those exploration and recovery projects would also be done in accordance with environmental standards and therefore with limited impact to the environment.

- MMW


Hearing to Consider National Energy Policy With Respect to Development of Domestic Oil and Natural Gas Resources
Senate Committee on Energy and Natural Resources
April 3, 2001

The Bottom Line
On April 3rd, the Senate Energy and Natural Resources Committee held a hearing to discuss the development of domestic energy supplies from public lands within the context of developing a national energy policy. Committee Chairman Frank Murkowski (R-AK) claimed that the nation will continue to be dependent on fossil energy sources and that in order to reduce the consumption of imported oil, domestic exploration must be encouraged. The witnesses described the ways that environmental restrictions and drilling moratoria prohibit production of domestic resources. Other senators stressed the importance of balancing the increase of energy supplies with improvement of transportation infrastructure, encouraging conservation, and increasing efficiency standards for cars.

Hearing Summary
The committee held this hearing to discuss the role that public lands with oil and gas potential play in a national energy policy. Committee Chairman Frank Murkowski (R-AK) was especially interested in determining what impedes development of domestic energy sources on public lands. Murkowski stated that because the nation will be reliant on fossil energy for the foreseeable future it is important that resources within the country are accessible for production. He noted that progress has been made in getting oil and gas from the outer continental shelf (OCS) in the Gulf of Mexico, but drilling moratoria on other OCS lands, restrictions to onshore development in Western states, long permitting times, and expansive use of the Endangered Species Act and other environmental policies have critically limited the extraction of fossil fuels from public lands.

Ranking Member Jeff Bingaman (D-NM) said that the the chairman was correct in stating that the OCS moratoria need to be examined but pointed out that three presidents have supported the moratoria and there are less controversial measures that could be taken to increase the availability of domestic energy resources, such as building a North Slope natural gas pipeline from Alaska to bring oil and gas resources down to the lower forty eight states. Senator Mary Landrieu (D-LA) highlighted the necessity of increasing electricity transmission capability and the importance of including a broad range of energy sources in a national energy policy. During the question period, automobile fuel economy standards were discussed at length.

Testimony was heard from USGS Associate Director for Geology P. Patrick Leahy; Matt Simmons, President of Simmons & Company International; David Hayes, Deputy Secretary of the Interior in the Clinton Administration; Mark Rubin representing the American Petroleum Institute; and Neal Stanley representing the Independent Petroleum Association of America.

Dr. Leahy reviewed the USGS onshore oil and gas assessment and the Minerals Management Service (MMS) estimates of undiscovered oil and natural gas resources of the OCS. The 1995 USGS assessment found that there are a total of 113 billion barrels of technically recoverable oil onshore and in state waters. Technically recoverable resources include proved reserves, reserve growth, and undiscovered resources that could be extracted without regard to expense. Economically recoverable resources are those that would be recoverable at a given market price. The technically recoverable natural gas resources on public lands totaled 1074 trillion cubic feet (tcf) including accumulations of coal-bed methane and gas hydrate. The MMS resource assessment found that there are 26.6 billion barrels of oil and 116.8 tcf of natural gas that are technically recoverable from OCS land.

Mr. Simmons contended that the nation's energy crisis cannot be solved solely through conservation, alternative energy sources, or reliance on one source of power. These measures along with increasing the domestic supply of natural gas and oil along with rejuvenation of the nuclear industry will be necessary to end the "energy crisis." Action must be swift from both public and private sectors to eliminate obstacles to exploration in the Arctic National Wildlife Refuge, expedite Lease Sale 181 in the Gulf of Mexico, and in finding ways to encourage oil and gas exploration on other public and private lands.

Mr. Hayes defended the Clinton Administration's record of allowing resource extraction from public lands. He cited the fact that royalty incentives were given to deep water oil producers, which led to a 65% increase in deep water oil production and an 80% increase in gas production in the deep water of the Gulf of Mexico. He also stated that the Clinton Administration opened up the National Petroleum Reserve and the Powder River Basin for leasing, and presided over 7,091 new leases on the OCS.  The administration also supported the construction of the North Slope gas pipeline from Prudhoe Bay. Restrictions in other areas of the country have long-standing bipartisan support. Only five of the twenty-one national monuments set aside by the Clinton Administration have been found by the USGS to contain moderate to high probability for the occurrence of fossil resources and of these five, only one is restricted from leasing. Given these statistics, Hayes did not think that it is necessary to increase domestic exploration activities. He argued that in creating a national energy policy, a balanced approach must be taken addressing both the supply and demand sides by promoting responsible development on public lands along with the use of alternative energy resources and conservation.

Mark Rubin, testifying on behalf of the American Petroleum Institute, said that the uncertain economy can only remain viable if the energy industry remains strong. The domestically produced oil and natural gas supply can only increase if public lands that have been set aside as multi-use in Alaska, the Rocky Mountains, and on the outer continental shelf become more accessible to producers. Rubin said that with minor boundary changes the Forest Service Roadless Initiative could have avoided restriction of great reservoirs of fossil energy. He recommended that the Royalty-in-Kind program be expanded to simplify the royalty collection process.  A national energy policy must be comprehensive in that it must promote responsible use of energy and increase supply of all fuels. There is no quick fix to the nation's current energy problems. It will take considerable investment and time to rebuild infrastructure and diversify fuel supply, therefore policy decisions must be made now.

Neal A. Stanley of the Independent Petroleum Association of America testified that the oil and gas industry has been ignored over the past fifteen years while the expanding economy was fueled by low energy prices. Public lands with fossil fuel potential have been put off limits to oil and gas producers and there is no clear policy for energy development on government land.  Permitting takes too much time and overlapping restrictions limit access even after leases are approved. The restrictions can be directly linked to higher energy prices. If producers have access to the public lands with high resource potential, then they can provide the nation with a less expensive supply of natural gas.

-MHP

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

Contributed by Spring 2001 AAPG/AGI Geoscience Policy Intern Mary H. Patterson and Spring 2001 AGI/AIPG Geoscience Policy Interns Michelle Williams and Chris Eisinger.

 Posted: July 9, 2001


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