US Senate committee restores oil, gas research funding

July 21, 2003
The Senate Appropriations Committee (SAC) July 10 unanimously voted to expand federally sponsored oil and natural gas research beyond what the White House says it wants for the upcoming fiscal year (FY) that begins Oct. 1.

The Senate Appropriations Committee (SAC) July 10 unanimously voted to expand federally sponsored oil and natural gas research beyond what the White House says it wants for the upcoming fiscal year (FY) that begins Oct. 1.

The Department of Energy plan reduces spending aimed at improving exploration and production techniques sharply below historical levels (OGJ, Feb. 10, 2003, p. 21). President George W. Bush's pending oil research request is $15 million; his natural gas research request is $26.5 million, with $6.5 million to be applied toward the White House's $1.7 billion "Freedom Fuel" hydrogen program. Current DOE E&P funding includes $23.4 million for oil and $47.3 million for gas.

DOE's oil and gas research programs are one small part of a much larger annual spending measure called the Interior Appropriations bill.

Congress boosts budget

Congress aims to do more, just as it has done in years past. President Bush, in his 2002, 2003, and his latest 2004 budget, proposed cuts in oil and gas research. Much of the research DOE performs can be duplicated by industry, the Office of Management and Budget has often argued. The administration is also keenly aware that it is often viewed by critics, especially within the environmental community, as being too friendly with industry, and the proposed budget cuts reflect that concern, congressional sources say.

The administration is also "fully" aware that many of the programs DOE funds are popular with lawmakers from oil-producing states, they added. DOE's programs typically are designed to encourage domestic production from marginal fields operated by small independent E&P firms.

In FY 2002, Congress restored funding to historical levels, and did so again in FY 2003.

This time, SAC's plan trims the gas budget by about 12%, earmarking $41.9 million for FY 2004. But oil research, at $34.5 million, increases a dramatic 30% from current levels.

A pending House budget mark proposes $36.48 million for gas and a $32.2 million oil budget. Final budget numbers will be determined when the two versions are reconciled in a conference committee expected in September. Congressional sources expect the final figures to be closer to the Senate numbers. They also predict there will be little or no opposition from the White House, given the recent push by both Capitol Hill and the administration to focus on US natural gas supplies.

In fact, given that there is concern that higher prices may be the norm rather than the exception over the near to midterm, some congressional observers say DOE's natural gas research budget may be further expanded, either as part of the annual appropriations process or under a pending energy bill due to be finalized in late spring or early fall.