Friday, May 11, 2012

House Hearing On Oil Shale & Oil Sands Development

May 10: The House Committee on Science, Space, and Technology, Subcommittee on Energy and Environment held a hearing entitled, "Challenges and Opportunities of Unconventional Resources Technology." Witnesses testifying at the hearing included representatives from: Department of Energy; U.S. Government Accountability Office; Office of Energy Development, State of Utah; U.S. Seismic Systems, Inc.; U.S. Oil Sands, Inc. and National Oil Shale Association. The hearing was designed to examine challenges and opportunities associated with expanding development and use of unconventional oil and gas production technologies. The hearing continued the Science, Space, and Technology Committee's ongoing efforts to consider key components of a true "all of the above" energy strategy.
    The Subcommittee Chairman Andy Harris (R-MD) said, "The Green River Basin, located in Colorado, Utah, and Wyoming, may contain up to three trillion barrels of oil -- more potential oil than the rest of the world's current oil reserves combined. If this energy -- which is overwhelmingly on Federal lands -- made available, I am confident American ingenuity will find ways to responsibly explore and produce this resource." According to a release from Republican committee members, the International Energy Agency (IEA) projects conventional crude oil production will significantly decline in the coming decades. In order to meet projected global demand for energy, the world will need to expand production of unconventional oil, natural gas liquids, biofuels, and other substitutes.

    Republican Members said, ". . .the Administration's fiscal year 2013 budget request for the Department of Energy (DOE) proposes to eliminate almost all oil and gas research and development (R&D)." Republicans repeatedly questioned the Administration for what they called "anti-fossil fuel actions against the backdrop of President Obama's stated goal in his most recent State of the Union address to pursue an 'all of the above' approach to energy." Chairman Harris specifically asked Charles McConnell, DOE's Assistant Secretary for Fossil Energy, whether oil shale and oil sands are part of the President's "all of the above" strategy.  McConnell stated that both resource bases are part of the President's energy mix, but later acknowledged that the Administration does not request funding to advance production technologies. Harris said, "It's disturbing that the Administration claims these vast resources are part of the President's approach, when in fact the budget provides no support for their development. This further confirms the President's 'all of the above' rhetoric is hollow and misleading, if not downright false."

    Full Committee Chairman Ralph Hall (R-TX) raised similar concerns with respect to the Administration's support for shale gas production. He said, "I would just note for the record that in his State of the Union speech, the President said 'it was public research dollars…that helped develop the technologies to extract all this natural gas out of shale rock.' It is troubling that he is suggesting the Federal government made hydraulic fracturing possible while at the same time trying to kill R&D within the same program that he says deserves credit for the current oil and gas boom."

    Democrats on the Subcommittee indicated in their release on the hearing that oil shale refers to a fine-grained sedimentary rock containing organic matter known as kerogen, from which oil and gas can be extracted. To extract the oil, the shale must be intensely heated over long periods of time, either on the surface or deep underground. The resultant liquid must then be separated before it can be collected. The majority of oil shale resources in the United States are located in the Green River Formation in Colorado, Utah, and Wyoming. Democrats said, "Despite a century of government support and industry attempts to develop oil shale, there are no commercial oil shale projects in the U.S., and many industry experts agree that years of research and development will be needed to develop commercially ready and environmentally sustainable technologies and processes."

    Ranking Member of the Investigations and Oversight Subcommittee, Representative Paul Tonko (D-NY), standing in for Ranking Member Brad Miller (D-NC), said in his opening statement, "Every time oil prices have spiked or that we have become concerned about a major disruption in oil supplies, oil shale gets a new look. Why we continue to use public funds to pursue this energy source is truly a subject for research. The oil companies and the federal government have poured millions of dollars into research, demonstration projects, and subsidies to find an economically viable way to develop this resource. Yet it is still years, if not decades away from being economically, technologically, and environmentally viable. I have listened as many of my Republican colleagues questioned the wisdom and need for public investments in renewable energy resources either through support of research or through tax incentives. But when it comes to offering subsidies to one of the wealthiest and most profitable industries in the world -- the oil industry -- their generosity knows no bounds."

    Anu Mittal, the Director of Natural Resources and Environment at the U.S. Government Accountability Office (GAO) testified about an October 2010 GAO report on oil shale development. She described a number of environmental concerns and uncertainties that need to be addressed prior to commercial development of oil shale, highlighting the impact on water quantity and quality. She said, "Developing oil shale and providing power for oil shale operations and other associated activities will require significant amounts of water, which could pose problems, especially in the arid West where an expanding population is already placing additional demands on available water resources."  She also pointed out that industry experts believe that oil shale development is at least 15-20 years away. 

    Rep. Tonko said, "There is no greater indicator of a region's economic potential – its ability to sustain human life and industry – than its access to clean water… Given the current and looming shortages of water in many areas of the West, I cannot imagine why we would consider trading water – a renewable, vital resource for which there is no substitute, for a non-renewable resource that we can only obtain with very costly, highly damaging and destructive methods.  Land and water are not – or should not be – treated as disposable goods." 

    Samantha Mary Julian, the Director of Utah's Office of Energy Development, highlighted the State's efforts to develop its unconventional energy, noting "Despite the lack of efforts of some federal agencies, the unconventional energy industry is alive and growing in Utah." She praised the benefits of expanded unconventional energy development on employment and education and said, "Utah actively manages its lands to promote the responsible development of its energy resources as it produces the main source of funding for our schools. Simply put, Utah educators and students depend on responsible energy development."

    The President and CEO of US Seismic Inc., Jim Andersen, discussed how the new technology his company is developing will enable shale oil and gas producers "to improve efficiency, increase output, and enhance safety, all at a lower cost." The CEO of US Oil Sands, Inc., Cameron Todd, further highlighted his company's anticipated pilot project to produce oil from oil sands, noting their innovative process uses "far less water, energy, surface area, and generates less greenhouse gas than any project to date."

    Tony Dammer, the former Director of the DOE's Office of Naval Petroleum and Oil Shale Reserves, noted the Department of Energy has not implemented the policies contained in the Energy Policy Act of 2005 with respect to its responsibilities to develop oil shale. Dammer said that if the sections of the law "were implemented and the unconventional fuels development program was initiated within the DOE, uncertainty and inconsistency in policy would not exist today."

    Access a Republican release on the hearing with links to testimony and a webcast (click here). Access a Democratic release on the hearing (click here). Access the Republican hearing website with background and opening statements (click here). [#Energy/OilShale, #Energy/Unconventional, #Energy/OilSands]

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