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Witness Testimony
The Honorable Tom DeLay
Ultradeep Water Research and Development: What Are the Benefits?
Thank you very much, Chairman Hall, for holding this hearing on the benefits of Ultra-deepwater Research and Development. As you know, Mr. Chairman, I am here today to speak in support of the Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Supply R&D provisions of the comprehensive energy bill as included in the conference report passed by the House late last year. These important provisions would establish a new research and development program for these technically challenged domestic resource provinces - unconventional resources such as coal-bed methane, tight gas sands, and gas shales, as well as in the ultra-deepwater (1500 meters of water or greater) of the Central and Western Gulf of Mexico -- to help the US to meet its mid-term gas demand. And most importantly, they would put the United States on a path toward greater energy independence, which is the clearest reason we need a comprehensive energy policy in the first place. Natural gas, of course, is a critical component of the nation's energy security. Its use spans our entire economy. Natural gas has the broadest set of applications of any of the fossil fuels - it heats our homes and runs our appliances. It's an important feedstock for industry: it provides the United States with almost 20 percent of its electricity, it supplies heat and fuel for much of rural America, and it's a major energy source for the nation's commercial sector. Today, gas prices are at historic highs. Imports of products of which natural gas is a significant component - such as fertilizer and ammonia -- are up 50 percent over the last two years, and major industrial facilities are shutting down or moving overseas. These numbers are not theoretical: American workers and consumers are paying the price. The United States is at a critical energy crossroads. Everyday, we're growing more and more dependent on foreign sources of energy. Gas and oil supplies are tight, infrastructure is constrained, and domestic production is flat. At the same time, the Energy Information Administration says demand for natural gas will rise significantly in the next two decades. We need more natural gas. and we have it. Let's be clear about our supply: the United States is not running out of natural gas. We have a significant natural-gas resource base - more than 50 years of technically recoverable reserves at current found reserves and rates of consumption. But let's also be clear about the nature of these remaining reserves. Many of them are on federal lands and are off-limits to production by virtue of rules and regulations. These legal access restrictions are addressed elsewhere in H.R. 6. But almost all of these reserve regions - with the exception of the shallow and deepwater regions under various moratoria - are subject to technological access restrictions. Without new investment in research and development, physical access to these regions will not produce a single cubic foot of natural gas. We have an opportunity to address this challenge through the Ultra-deepwater and Unconventional Onshore Natural Gas Supply Research and Development program in HR 6. This program would establish a unique partnership between government and industry to help ensure we meet mid-term gas demand through development of technically challenged but potentially prolific provinces. Further, this new program would address the inadequacy of current research models, particularly in applied energy R&D. Too often, government research programs are limited by size and scope, by the vagaries of the budget cycle, and by the lack of adequate incentives for public/private partnerships. In the energy arena especially, industry leadership and input is critical. Modeling of the program by both EIA and the Bureau of Economic Geology at the University of Texas indicates a significant supply response from this investment, as well as a moderation in prices. Finally, the program is sunsetted after 10 years and would, at a minimum, pay for itself. The increased production as a result of this R&D program will generate significant increases in royalties to the federal treasury. A healthy royalty stream is critical to the future of other programs that rely on royalty funding, including those states - Wyoming, New Mexico, Colorado, and Utah, for example -- where there is significant production on federal lands. It is our job in Congress to help ensure that energy supplies will be abundant, responsible, and reliable. We owe this to our energy consumers - industry, commercial businesses, and individual households. It's also our job to make certain that every federal dollar is spent wisely and accountably. The Ultra-deepwater and Unconventional Gas Supply R&D provisions in HR 6 would, in short:
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