US officials hopeful for full federal oil and gas R&D funding

Strong support in Congress and within industry may help restore funding to oil and gas research programs that the US Department of Energy's budget proposal would cut, administration and industry officials said Monday. They spoke at the American Association of Petroleum Geologists' Washington summit on energy policy.


By Maureen Lorenzetti
OGJ Online

WASHINGTON, DC, Apr. 23 -- Strong support in Congress and within industry may help restore funding to oil and gas research programs that the US Department of Energy's budget proposal would cut, administration and industry officials said Monday.

"We still have moving targets," said Acting Assistant Secretary of Fossil Energy Robert Kripowicz on the sidelines of the American Association of Petroleum Geologists' Washington summit on energy policy.

Under DOE's proposed budget unveiled earlier this month, research funding for oil and gas falls by 50% from $112 million in 2001 to $51.5 million in fiscal 2002. The department acknowledged those numbers could change pending the outcome of anticipated recommendations from the vice-president's interagency taskforce, expected in mid-May (OGJ Online, Apr. 9, 2001).

Meanwhile, congressional staff representing both the Republican majority and the Democratic minority from the Senate Committee on Energy and Natural Resources endorsed funding oil and gas research at historic levels.

"Everyone has rookie mistakes," Bob Simon, minority staff director of the committee, told AAPG. "Like Clinton in 1993, this budget needs more analysis and thought put into it. We hope we can allocate more so we are not putting a lot of people [geologists] on the street."

Speaking at the same conference, US Geological Survey Director Charles "Chip" Groat reiterated the need for preserving oil and gas research.

"A sound energy strategy needs sound science -- not just geological but economic science too," he told the group. "The need has never been larger for smaller producers to have access to research," he said.

And someone must take a lead role -- whether it is DOE, a supporting university, or industry -- to keep the research going, or else the US may not have the scientific knowledge to exploit proven reserves to their fullest potential. Groat stressed industry has not taken an active role in R&D in the past, so it is important that government research continue.

Groat said the USGS's energy resource budget for 2002 was not "assaulted" as in years past, and he hoped that "2003 won't be defensive."

DOE officials also privately acknowledge they are counting on Congress to restore funding, as in the past.

But there are no guarantees what the department's research program will look like when the new fiscal year starts this October. How much money is put in the budget will ultimately represent a compromise between the White House and Congress, policymakers say. And what form pending energy legislation takes will also influence the budget talks.

To that end, Republican congressional staff said they expect the committee to report a comprehensive energy bill by July 4. Republican leaders are hoping to include provisions to open the coastal plan of the Arctic National Wildlife Refuge to drilling, although the administration has signaled it is willing to sign a bill without that provision.

Republicans also dismissed criticisms from environmental groups that the Republican proposal, introduced by panel chairman Frank Murkowski (R-Alas) is a "supply-only" bill while the Democrats plan, sponsored by Jeff Bingaman (D-NM) is "demand-only."

Bryan Hannegan, of the committee's majority staff, said, "In fact, much of the two bills are similar. There is lots of room for compromise." Simon also said the two bills had similar elements. "I would say there are differences in emphasis," he noted, but pointed out both bills offer counter cyclical measures to boost domestic oil and gas supplies.

Simon also supported the view that higher gasoline prices and electricity woes in California have given industry the "maximum opportunity to get input into the system."

AAPG called on lawmakers to move quickly on crafting an energy strategy. The group said a legislative initiative "is critical to promote sufficient domestic oil and gas exploration and production and to avoid future supply disruptions."

Contact Maureen Lorenzetti at maureenl@OGJOnline.com

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