White House again cuts oil, gas R&D from DOE budget

The administration of President George W. Bush increased its request for fossil fuels by 33% to $863 million as it released its fiscal 2008 budget proposals on Feb. 5.

Nick Snow
Washington Correspondent

WASHINGTON, DC, Feb. 6 -- The administration of President George W. Bush increased its request for fossil fuels by 33% to $863 million as it released its fiscal 2008 budget proposals on Feb. 5. But the money would be directed toward doubling the Strategic Petroleum Reserve's size, developing technologies to significantly cut greenhouse gas emissions from power plants and industrial facilities, and proceeding with a plan to combine electricity and hydrogen production in a single plant.

Oil and gas technology research and development would be eliminated, as it was in the White House's fiscal 2007 budget request. The US Department of Energy said its oil and gas group would manage the ultradeep and unconventional gas research program mandated by the 2005 Energy Policy Act, but the administration would propose legislation to terminate the program, which is funded from federal oil and gas lease revenues.

Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) immediately protested that the budget proposal effectively leaves coal as the only fuel on which DOE now proposes to carry out research.

"Even though the price of oil and gas are near record highs, we won't be able tap new domestic oil and gas resources without additional R&D," he said. "The key players for natural gas onshore in the United States are independent producers, they don't have R&D departments, and they are too small to be able to afford to start ones, regardless of the price of oil and gas," he added.

"If the government abandons the field of oil and gas research, where is the new technology going to come from to keep domestic natural gas flowing in an economic and environmentally responsible manner? This is a wrongheaded decision that I hope the Congress reverses," said Bingaman, who added that elements of the fiscal 2008 budget request for DOE, such as increases for biomass and biofuels R&D, are positive.

Strategic reserve
In his 2007 State of the Union address on Jan. 23, Bush said he would ask Congress to double the strategic reserve's size "to further protect America against severe disruptions to our oil supply." DOE's fiscal 2008 budget request includes $354.2 million to operate the nation's crude oil and heating oil reserves and increase the crude oil reserve's capacity to 1.5 billion bbl by 2027.

Specifically, the request includes $163.5 million to develop SPR facilities and adds $168.1 million to buy more crude for the reserve. The process would begin immediately by filling it to its current 727 million bbl capacity and continue in fiscal 2008 by adding capacity at current and new sites, DOE said.

Another $5.3 million would be used to operate the Northeast Home Heating Oil Reserve, and an additional $17.3 million would go to operations of the Naval Petroleum and Oil Shale reserves.

Bingaman questioned the administration's rationale for doubling the strategic reserve's capacity. "I am a strong supporter of the Strategic Petroleum Reserve, but the administration has never given us a clear idea of what—short of a total calamity like Hurricane Katrina—it would take to put it to use," he said.

"Also, the same budget undercuts domestic production of oil and gas by terminating the R&D programs that support our other strategic petroleum reserve, the onshore oil and gas formations that we will have to continue to produce. It does not look like there is a consistent policy here," he said.

US Sec. of Energy Samuel W. Bodman is scheduled to go before Bingaman's committee on Feb. 7 in DOE's first budget hearing before the 110th Congress.

Contact Nick Snow at nsnow@cox.net.

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