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) 2006 appropriations for geoscience programs within the subcommittee's jurisdiction. The president's budget requests significant cuts in the Department of Energy (DOE). In particular, the president's request would eliminate the Office of Fossil Energy oil and natural gas research programs, and we ask for restoration of those to their FY 2003 levels. Additionally, as the largest supporter of physical science research in the U.S., DOE's Office of Science deserves the subcommittee's full support and restoration of the proposed budget cut.

AGI is a nonprofit federation of 42 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), Natural Gas Technology R&D and Oil Technology R&D accounts as you prepare to craft the FY 2006 Energy and Water Appropriations bill. Over the past four years, Members of Congress have strongly emphasized the need for a responsible, comprehensive energy policy for the country. The growing global competition for fossil fuels has led to a repeated and concerted request by Congress to ensure the nation's energy independence. The president's proposal that these programs be eliminated is short sighted and will not allow us to achieve energy independence.

The research dollars spent by these programs go largely 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 conferees to restore these funds and bring these programs back to at least FY 2003 levels.

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 who are developing new technologies concentrated on our domestic resources. However, without federal monetary 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 for support. And even failed projects have proven beneficial, because they've often resulted in redirection of effort toward more practical exploration and production (E&P) 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 the industry.

In 2003, at the request of the Interior Appropriations Subcommittee, the National Academies of Science 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. Why not continue to fund oil and gas R&D so we can attain the energy independence we need for stable and continued economic growth?

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 both 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 this global and increasingly more expensive commodity.

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.

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 both 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 be cut by 3.8% from about $3.6 billion last year to $3.5 billion. AGI asks that you restore this cut.

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.

While the Basic Energy Sciences account is slated for an increase, the entire increase would be devoted to Materials Sciences and Engineering (MES) and the Chemical Sciences, Geosciences and Energy Biosciences (CSGEB) account would decline by 7.4%. The geosciences activity within CSGEB supports mineral-fluid interactions; rock, fluid, and fracture physical properties; and new methods and techniques for geosciences imaging from the atomic scale to the kilometer scale. The activity contributes to the solution of problems in multiple DOE mission areas, including reactive fluid flow studies to understand contaminant remediation; seismic imaging for reservoir definition; and coupled hydrologic-thermal-mechanical-reactive transport modeling to predict repository performance. In short, this account deserves your full support and well-rounded funding.

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.