Moon and sky

It's likely Congress and the White House will be wrestling with energy policy all summer. Public lands access, environmental standards, and electricity price caps will all be battlegrounds. Yet one area of consensus appears to be oil and gas research.

It's likely Congress and the White House will be wrestling with energy policy all summer. Public lands access, environmental standards, and electricity price caps will all be battlegrounds. Yet one area of consensus appears to be oil and gas research.

The House Committee on Appropriations restored funding earlier this month after the White House proposed to cut the budget in half for the upcoming fiscal year (starting Oct. 1). Meanwhile, the Democratic-controlled Senate has also signaled that it wants to preserve programs now in place at the US Department of Energy. Industry officials anticipate that President George W. Bush will sign off on the DOE request even though budgetmakers did not support the programs at first.

Bolder steps

Some in industry want Congress and the White House to take even bolder steps. They are advocating a national technology program that would allow government to work closely with industry and academia on long-term energy issues.

Speaking before the House Committee on Science June 12, Alan Huffman, manager of seismic imaging technology for Conoco Inc. said that more, not less, government involvement is needed to help fix the energy "crisis." Drawing parallels with the space race of the 1960s, Huffman said that policymakers are at a critical juncture.

"The technological challenges facing the energy industry are enormous, and the technical and financial barriers to our success in supplying the nation's energy needs are even more severe than the barriers of space," he told lawmakers.

Huffman wants Congress to pass legislation creating a US Energy Center, a nonprofit corporation that would be modeled after the Joint Oceanographic Institutions that manage the Ocean Drilling Program. USEC would be administered by industry with interagency oversight. It would work closely with DOE's Gas and Oil Technology Partnership program at the National Laboratories "to assure maximum leveraging and transfer of technology."

Technology focus

USEC's first focus would be a technology effort aimed at aggressively developing deep water prospects in the Gulf of Mexico, Huffman suggested. His remarks come at a time when industry wants the White House to broaden deepwater royalty relief, saying that many new deepwater technologies are not being developed because of the enormous cost and risks involved. But extending relief is not that easy of a sell: the president, during his campaign, said that he does not support extending deepwater royalty relief. His advisors say those remarks were consistent with comments the president has made about widening corporate tax breaks. The White House energy blueprint does not suggest expanding tax breaks for even marginal well production.

But given the support in Congress for some kind of tax relief aimed at smaller producers, the White House could also be inclined to support deepwater technology research, industry officials suggest.

It's too early to tell how magnanimous Capitol Hill or the White House may feel, however. And it may happen that there is only enough support for expanded tax breaks, which benefit mainly independents instead of research that could benefit both majors and independents. USEC's budget is estimated at $400-500 million/year while various proposals to expand existing tax breaks for industry could be twice that amount.

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