Iogcc: U.S. oil and gas R&D threat looming

The Interstate Oil and Gas Compact Commission has warned that oil and gas research and development, once a showcase for U.S. scientific and technical excellence, is threatened with second-rate status.

Iogcc released a Coopers & Lybrand study that charts a dramatic decline in R&D spending by both government and private industry.

What it means

Wyoming Gov. Jim Geringer said, "The report means that it is time to start thinking of oil and gas research in a new light. The next generation will rely on oil and natural gas as a primary energy source. Can this country, in truth, promise an adequate supply for their future? Right now, the answer is no."

Geringer co-chairs an Iogcc task force with Sen. Jeff Bingaman (D-N.M.).

Iogcc said joint government-industry R&D is a cost-effective tool to prolong production from existing wells, lower finding costs, and conserve a non-renewable resource.

The report said leadership from both industry and government will be required to turn the downward trend around.

Bingaman said, "It is our belief that our network of national laboratories, the preeminent research institutions in the world, is fully capable of working with industry to provide the long-term development of technology to improve oil and gas recovery and lower finding costs."

Iogcc said economists believe increased R&D spending by government could provide sustained economic growth. "In a nationwide survey, a clear majority of economists cited increased spending on R&D and education as the most important contributor to growth, ranking far ahead of other government options that included reducing government spending, replacing the income tax with a consumption tax, and spending more on infrastructure."

R&D successes

Geringer, in testimony before Congress regarding the Energy Department's budget, pointed to a number of striking successes in the development of new technologies and the opportunities in the future.

"The development of 3D seismic imaging, horizontal drilling, waterflooding, in situ combustion, inert gas flooding, and other enhanced recovery operations have revolutionized oil production.

"These developments did not happen by accident; they required a tremendous commitment of capital, time, and knowledge that DOE helped fund.

"Time after time, oil and gas R&D performed with the help of the federal government proves to be economically and socially successful. The contributions to the health of the economy and the wealth of the nation are enormous."

Funding concerns

Iogcc said the proposed 1998 DOE budget of $52.2 million for developing oil production technologies is 45% less than the 1995 expenditures.

Research into new technologies for natural gas extraction and storage is $25.3 million. The combined request of $77.5 million represents less than 0.5% of DOE's $19.2 billion budget.

The Coopers & Lybrand study confirmed the rapid loss of funding both in the public and private sectors for oil and gas R&D.

The report said, "There is a definite need for a renewed leadership effort on behalf of both the government and industry, if research to lower finding and recovery costs is to survive.

"Both the industry and government have confirmed the benefits of research and collaboration. There needs to be a champion to provide the needed direction so that neither resource, funding nor domestic reserves, will be wasted," it said.