Gabriel Nelson, E&E reporter
Published: Wednesday, April 18, 2012
The mild-mannered ranking member of the House Science Committee took an unusually pointed jab at her Republican counterparts yesterday, accusing them of treating fossil fuels differently from renewable energy research as they push for more unconventional oil production in the United States.
Rep. Eddie Bernice Johnson (D-Texas) questioned whether the call for more federal funding -- seen most clearly yesterday in House Republicans' energy budget blueprint for fiscal 2013 -- could be squared with claims by Chairman Ralph Hall (R-Texas) and his colleagues that renewable energy programs are "picking winners and losers" and "crowding out private investment."
"It does not get much more commercial, much more profitable, than oil and gas," Johnson said. "How many decades and how many billions of taxpayer dollars can we spend picking the same winners?" she added. "If sustained high oil prices are not enough to drive further innovation in unconventional oil, is it really the job of the taxpayer to buy down the oil industry's risk?"
Hall, who said yesterday that the Obama administration has tried to "regulate, delay and raise the costs" of fossil fuels instead of "unleashing technology innovation," took issue with his fellow Texan's remarks.
"We're neighbors and we're good friends, but we don't always agree," Hall said after Johnson finished speaking. The fiscal 2013 energy and water budget proposed yesterday by Republicans on the House Appropriations Committee includes $554 million, a $207 million increase from this year, for the Department of Energy to develop technologies for the use of coal, natural gas, oil and other fossil fuels. In a statement, the committee noted that these fuels provide more than 83 percent of U.S. energy.
That sum includes a new $25 million line item for the development of oil shale, which is still a long way from the marketplace despite the surging production of other unconventional sources, such as the tight oil in the Bakken formation of North Dakota.
Those types of unconventional oil plays, which also include oil sands from Alberta, made up about 2 million barrels of the 10 million barrels that North America produced on the average day in 2010, said Andrew Slaughter, an executive from Royal Dutch Shell PLC who recently led a National Petroleum Council task force on oil resources.
But that number could rise drastically in the next two decades, he told lawmakers, thanks in part to advances in the hydraulic fracturing and unconventional drilling technologies that have led to the recent boom in shale gas drilling. "Domestic shale oil resources, if recoverable, could be more than 10 times our conventional oil reserves," Republican appropriators said in a statement on their proposal. The energy and water appropriations bill will be marked up today by the House Energy and Water Development Appropriations subpanel.
Research for the long run
Johnson noted that DOE used to spend federal dollars on shale drilling techniques but pulled its funding in the 1990s, once exploration companies started working hard to commercialize it.Rep. Andy Harris (R-Md.) said other drilling programs now "need the help," and lamented during the hearing that DOE now spends just one-eighth of 1 percent of its budget on natural gas research. "What can the federal government do to help you and your companies develop unconventional oil?" Harris asked James Brown, president of Whiting Petroleum Corp. "Do you think that's an adequate amount for the DOE to spend on research in this field?"
Brown said that if the government is going to put money into oil drilling technology, it needs to focus on long-term research, because academia does not move fast enough to help the industry.
Denver-based Whiting took ownership of an oil shale position in western Colorado several years ago when it acquired another oil exploration company. But the company has stepped aside, for now, because it hasn't figured out how to generate the huge amount of heat needed to turn the underground kerogen -- an undercooked solid precursor to oil -- into a liquid. Royal Dutch Shell PLC is "actively pursuing" that technology, but Whiting is taking to the sidelines.
"Right now, we can't see a path forward that makes that an economic project in any reasonable time," he said.
Karen Harbert, the president of the U.S. Chamber of Commerce's Institute for 21st Century Energy, said people shouldn't get the impression that the oil industry wants more research funding. Companies want to ensure that they will be able to secure leases and drill wells without the government blocking their work, she said.
The Bureau of Land Management recently proposed limiting its oil shale leasing to 462,000 acres, a quarter of what the George W. Bush administration proposed. It also restricted the leases to research and development, not commercial production (EnergyWire, April 9).
"What the industry is asking for is some certainty -- knowing that I can have access to this resource base, so I can develop the technology, make it commercially viable and bring this resource to market in a reasonable time frame," Harbert said.
"If the opportunity is being closed down to access the resource base, they're not going to develop the technology." She added, "I don't think you'll find anybody in the industry that is saying, 'We need more money from the federal government.'"
Gas prices
The committee spent much of its time discussing high gasoline prices, and whether the administration could be doing more to lower them. House Republicans, who have sought to tie President Obama to high pump prices to seize on frustration in an election year, passed legislation yesterday that would block new regulations on refiners.
At one point, Johnson asked the panel whether Obama is to blame for the recent price spike. Slaughter and Brown, the two oil industry executives, said "no." The Democratic witness, Daniel Weiss of the Center for American Progress, also replied "no." Harbert and an oil industry consultant both replied "yes and no," saying the question was too complicated for a straight answer.