Clinton budget hits SPR purchases, producers

Feb. 8, 1999
President Bill Clinton has proposed a $1.8 trillion budget for fiscal year 2000 that omits funding for further purchases of oil for the Strategic Petroleum Reserve. Independent producers have urged the U.S. government to buy crude for the SPR to help reduce the oversupply on the world market. Energy Sec. Bill Richardson said that, later this month, he may propose "some innovative ways" to acquire oil for the SPR off-budget.

President Bill Clinton has proposed a $1.8 trillion budget for fiscal year 2000 that omits funding for further purchases of oil for the Strategic Petroleum Reserve.

Independent producers have urged the U.S. government to buy crude for the SPR to help reduce the oversupply on the world market.

Energy Sec. Bill Richardson said that, later this month, he may propose "some innovative ways" to acquire oil for the SPR off-budget.

The administration also proposed to reduce the tax credits U.S. companies could receive on their foreign oil and gas extraction income. The adjustments would cost oil and gas producers $407 million over the next 5 fiscal years.

The administration has attempted to reduce the foreign income tax credit in previous years, but Congress has rejected the effort.

Climate change shift

The Global Climate Coalition said the Clinton administration's fiscal 2000 budget marks a shift toward voluntary energy efficiency programs and expanded research and development to reduce emissions of gases believed to contribute to postulated catastrophic global warming. It said, "It appears the Clinton administration is moving away from binding caps and restrictions and is emphasizing common sense, voluntary proposals that our members have advocated for years."

The Alliance to Save Energy noted the U.S. Department of Energy's budget requests $837 million for energy efficiency R&D programs, up 21% from the current fiscal year. The Environment Protection Agency seeks $216 million for climate change programs, up 80%.

DOE budget

DOE is asking for $15.76 billion, up $212 million from the current budget. Most of the funds would go for nuclear energy and weapons programs.

The Federal Energy Regulatory Commission would get $178 million, up from the current $167 million.

DOE asked for $317 million for fossil energy R&D programs, down from the $553 million approved by Congress for fiscal 1999. The primary reason for the sharp reduction is DOE's plan to defer $246 million for the final two clean coal technology projects into fiscal 2001.

The request for oil technology activities is $50.2 million, up from the 1999 appropriation of $48.6 million.

It said, "The majority of DOE's oil technology program continues to focus on providing independent producers with advances that can keep oil flowing from U.S. reservoirs that would likely be abandoned with conventional technology."

The budget would fund a new Petroleum Upstream Management Practices (PUMP) program that will focus on data management and effective environmental compliance. DOE also plans to revisit several high-priority oil reservoir classes where prior field tests have pointed to technological advances.

Natural gas R&D would get $105.3 million, roughly $10 million below current funding levels due largely to $5 million in fuel cell research being shifted to the coal R&D program and a funding reduction for high-efficiency, utility-scale gas turbines.

The supply portion of the gas budget, $25.9 million, will continue to focus on technologies that can locate and produce gas that otherwise would be bypassed or unmarketable. Also, an R&D program in methane hydrates is being developed with the goal of converting the large potential gas hydrate resource (estimated at up to 200,000 tcf) into gas reserves.

The $159 million SPR budget would be for normal maintenance, plus the decommissioning of the Weeks Island, La., site in December 1999.

EPA

EPA requested $7.4 billion, down $200 million from the current budget.

It includes $200 million for a new Clean Air Partnership Fund, which will finance partnerships among local communities, states, tribes, the private sector, and the federal government.

The partnerships are designed to finance projects that are locally managed and self-supporting and enable communities to achieve their clean air goals sooner.

The administration's budget would spend $216 million at EPA and $1.8 billion government-wide to help reduce emissions that are thought to contribute to the greenhouse effect. This program would offer tax credits for consumers who purchase fuel-efficient cars, homes, appliances, and other energy-efficient products. It also includes increased spending on research to develop new, cleaner technologies.

Interior

The Interior Department's fiscal 2000 budget request is for $8.7 billion.

Interior Sec. Bruce Babbitt said DOE would work with Congress to create a $1 billion Lands Legacy Initiative, which would restore parks and extend permanent wilderness protection to more than 5 million acres within 17 national parks and monuments.

The Bureau of Land Management would get $743 million for operating programs, a $26 million hike. Increases will be targeted at improving rangeland health and for other land conservation, evaluation, and restoration measures.

Minerals Management Service requested $240.2 million, up $16.2 million from 1999 appropriations. The request includes an additional $10 million for the Royalty Management Program (RMP) reengineering project, the agency's highest priority. MMS said reengineering will align RMP's multiple functions into two core end-to-end business processes, reduce RMP's auditing and collection cycle to 3 years from 6, and simplify regulatory reporting requirements.

Additional funding was sought for inspection activities in the Gulf of Mexico and MMS participation in international standards-setting organizations.

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