DOE ACCENTS CONSERVATION, RENEWABLE ENERGY

The U.S. Department of Energy's fiscal 1992 budget request seeks sharply higher spending for conservation and renewable energy programs, reflecting the forthcoming National Energy Strategy. The strategy is expected to be released this month. Meantime, the Interior Department's new budget projects only two offshore lease sales in fiscal 1992-both in the Gulf of Mexico-and thus estimates a $634 million drop in Outer Continental Shelf rentals and bonuses. The budgets, for the fiscal year

Feb. 18, 1991

4 min read

The U.S. Department of Energy's fiscal 1992 budget request seeks sharply higher spending for conservation and renewable energy programs, reflecting the forthcoming National Energy Strategy.

The strategy is expected to be released this month.

Meantime, the Interior Department's new budget projects only two offshore lease sales in fiscal 1992-both in the Gulf of Mexico-and thus estimates a $634 million drop in Outer Continental Shelf rentals and bonuses.

The budgets, for the fiscal year beginning Oct. 1, now go to Congress, which usually changes them.

DOE PROGRAMS

DOE's overall budget proposal totals $18.6 billion, two thirds of which is for nuclear weapons production, research, and cleanup activities.

Energy Sec. James Watkins said, "Our work on the NES has allowed programmatic and budgetary decisions to keep pace with changing priorities."

As a result, spending for conservation and renewable energy research and development is budgeted at $494.3 million, up 17%.

Watkins said critical items included in the 1992 budget also are designed to enhance energy security and reduce U.S. vulnerability to potentially unreliable oil supplies.

"In addition to conservation," he said, "we seek greater energy security in two ways, through a targeted R&D program to increase domestic oil production and reduce the transportation sector's near total dependence on petroleum and by enhancing our emergency response capability."

The oil R&D program is budgeted at $542.2 million and the gas program at $8 million. DOE said in fiscal 1992 it will encourage companies to join in groups for near and midterm research projects and provide at least 50% of the costs.

For the first time in years, no money is allocated for oil shale research.

DOE said, "The oil shale program has focused on reduction of economic and environmental constraints to industrial development of U.S. resources. Those objectives have been largely achieved. DOE believes oil shale development should be the sole responsibility of industry in the future."

The budget proposes to resume filling the Strategic Petroleum Reserve in the second half of fiscal 1992 at a rate of as much as 50,000 b/d with oil acquired by long term lease or other suitable alternatives rather than direct purchase.

DOE also plans a petroleum products reserve on the Gulf Coast as part of a 3 year test.

Rather than sell the Elk Hills Naval Petroleum Reserve, which Congress has declined to do, DOE again proposes to put it up for lease. It estimates industry will bid $2.6 million in bonuses to lease and produce Elk Hills, $1 billion more than it anticipated in the fiscal 1991 budget (OGJ, Feb. 5, 1990, p. 28).

The Federal Energy Regulatory Commission, which regulates oil and gas pipelines, is budgeted at $141.1 million. All of that expense would be offset through fees and annual charges.

LOWER OCS REVENUES

Interior's fiscal 1992 budget is $8.7 billion, up $162 million. Total revenues will be $5.4 billion, down more than $900 million, mainly the result of declining revenues from OCS leasing.

The 1992 budget assumes Congress will approve leasing of the Arctic National Wildlife Refuge Coastal Plain, and the first lease sale will occur in 1993 and generate $1.9 billion for the government.

The budget estimates that OCS lease rental and bonus payments will be $468 million, down $634 million, and royalty payments will be $2.219 billion, down $408 million.

Onshore oil and gas rentals and bonuses are estimated at $106 million, up $28 million. Royalties are projected at $624 million, down $134 million.

The Minerals Management Service's OCS program is budgeted at $131.9 million, up $34.3 million. Major spending increases are planned for environmental studies, resource evaluation, additional inspections, and oil spill research. MMS's royalty management program is up $500,000 at $66.6 million.

The U.S. Geological Survey is budgeted at $564 million, down $7.1 million. The budget includes $900,000 for expanded research on marginal to uneconomic and unconventional oil and gas resources. Data bases used in making new assessments also will be upgraded and expanded.

The Bureau of Land Management is allocated $1.137 billion, up $114 million.