TRI WESTERN Research Institute The University of Wyoming Research Corporation March 19, 1996 The Honorable Ralph Regula Chairman Subcommittee on Interior and Related Agencies Committee on Appropriations U.S. House of Representatives Dear Mr. Chairman: On behalf of the Western Research Institute (WRI), I request that the following statement be submitted as part of the record of proceedings for the subcommittee's consideration of the Department of Energy's Fiscal Year 1997 fossil energy research and development budget request. At the outset, WRI strongly requests that you support the cooperative agreement program that provides both basic and jointly sponsored research funding assistance to WRI. As we submit this statement, the fiscal year 1996 appropriations remain to be finalized. However, we hope that the conference report funding level will be enacted into law, providing at least $3,000,000 for WRI programs. This agreement represents a substantial reduction, but we recognize the severe constraints Congress was under as it developed the 1996 energy research budget. As you begin the 1997 appropriations process, we urge you to support the cooperative research program at a total level of $11 million and to the maximum extent possible avoid further budgetary erosion of the WRI cooperative agreement. Although we have not had the benefit of reviewing the Administration's fiscal year 1997 budget request, we take this opportunity to urge you to support a fossil energy research and development budget that has as a central component the cooperative research program, which relies on cost-shared and noncost-shared research assistance. Since its inception several years ago, this program has proven to be an unqualified success. WRI employs 90 people. Our scientists are involved with energy and environmentally related research and development issues. Over the past several years, we have also focused on serving as an incubator of new technologies that address the needs of the energy industry. At a time of diminishing federal resources for research and development, the cooperative agreement program has leveraged available federal resources with industry partnerships to maintain progress in developing new fossil energy-related technologies and processes. The availability of this program has also permitted our basic, noncost-shared research program to continue in areas that carry too high a risk for industry, but hold the potential of attracting partners once additional research findings have been evaluated. P.O. Box 3395, University Station, Laramie, WY 82071-3395 • Phone: (307) 721-2011 • Fax: (307) 721-2345 The Honorable Ralph Regula The success of this program can be recognized through our goals. Specifically, WRI uses the cooperative research program to: Increase the production of U.S. energy resources including petroleum, coal, natural gas and renewable energy resources. Ensure timely technology transfer. Decrease the environmental consequences associated with energy exploration, recovery and utilization. Respond to energy sector's research needs to enhance energy recovery, production and utilization activities. Conduct high risk fundamental research that holds the potential for future costshared research. Address the country's dependence upon foreign energy supplies and provide energy production alternatives to relieve unforeseen disruptions to our energy supplies. WRI uses the cooperative research program by melding the base and Jointly Sponsored Research Program activities. Recognizing that research must meet industry needs, as well as addressing issues that remain to be fully developed, the base program explores innovative concepts that ultimately promise to attract industrial participation. This approach is vital to the long-term relevance of our nation's fossil energy research priorities. Research for research sake is a luxury that we cannot afford. At the same time, the nation's energy security is grounded in advancing technologies that enhance recovery, production, and utilization. The public consensus on the importance of being good stewards of our natural resources while producing energy supplies requires the development of technologies that either mitigate adverse consequences associated with production or that can be used to minimize, reuse or recycle waste by-products. This approach guarantees that our initiatives meet two objectives. First, research is focused in areas that can quickly evolve into the development and demonstration phase that will lead to full scale commercialization. Second, that research is directly tied to industry priorities. This ensures that when research priorities evolve into the technology development and demonstration phase a cost-sharing partner will be there to follow through on the commercialization requirements. Since the inception of this program, WRI's cooperative research program has been a success. All available funding has been obligated with more than eighteen projects underway. Each project has at least fifty percent cost-sharing with some projects supported by a sixty percent industry cost share. This is above the congressional mandate of fifty percent. WRI believes that given current level of industry interest and demand, we could easily match at least another $5 million in jointly sponsored research projects if Congress were to appropriate additional resources to this program. In fact, since 1993 when The Honorable Ralph Regula WRI entered into a cooperative agreement with DOE, we have matched $8.811 million of DOE assistance with $12.291 million in industrial funding. It is important to highlight that this program is not a one way street. It provides several benefits to the government. First, it requires industry to share the financial risk of research and development that is of direct benefit to the industry. Second, with the oversight of DOE staff, WRI's management of the program is able to stretch limited fossil energy research funding beyond traditional purchasing capability. While this program will never substitute for a comprehensive fossil energy research program, it provides critical seed money to new technologies that would otherwise be precluded from an opportunity to be developed and moved toward commercialization. Third, it demonstrates that meaningful cost-sharing is a realistic approach to promote technology development. And fourth, it helps to maintain our competitiveness in the international fossil energy sector. In Fiscal Year 1996, WRI intends to move aggressively to transfer technology into the commercial sector. At this writing we have seven technologies that have gone through the incubation and research and development phases of the program and are being readied for full scale development. One technology has entered the marketplace and is, commercially speaking, a success. Following on these successes, we hope to start a new cycle of projects that will address the energy and environmental needs of industry and meet our rigorous technical, scientific and commercial value criteria. However, the recent history of the cooperative research program has been one of significantly declining budgets even as other programs within the Office of Fossil Energy have held steady with the rate of inflation. In the event that Congress is unable to foster increased industry partnerships through increased support, WRI will be forced to perform project triage. Since many of our projects are multi year efforts, simply stated, we will continue to support our ongoing projects, but will be unable to accept a number of worthy projects that could enhance our nation's energy recovery, production and environmental priorities. To this end, we strongly encourage the subcommittee to reverse course and provide increased levels of funding of the cooperative research program that will support both basic and jointly sponsored research programs under the Cooperative Research Program account. We believe that increased program funding should be viewed as an effort to support a program that has borne a disproportionate share of the deficit reduction efforts over the past several years but that has nonetheless produced important results. Our request for this program is based on proven results. Our accomplishments are numerous and we are especially proud of our ability to meet the congressional mandate to transfer several technologies to the demonstration phase that will in turn lead to commercialization of the technologies. These activities will mean jobs creation and enhanced competitiveness for energy recovery, production and The Honorable Ralph Regula utilization companies as well as environmentally related mitigation technologies and processes. Among the successes we have delivered through this program and which we expect to become commercial are: subsurface cleanup of hydrocarbon contaminants, surface cleanup of contaminated waters, and · enhanced recovery of oil using downhole steam generators. Additionally, we are extremely proud to have successfully moved a remote sensing technology for contaminant monitoring into the marketplace. This success means that industry will have real time information on the nature of environmental contaminants. This success also establishes the credibility and importance of the Cooperative Research Program. We, again, strongly urge the subcommittee to support this important program at increased funding levels and specifically provide the WRI cooperative agreement with $5.5 million to support both the basic and jointly sponsored research programs at WRI Sincerely yours, J Speight Dr. James G. Speight Western Research Institute THURSDAY, APRIL 25, 1996. DEPARTMENT OF ENERGY WITNESS HON. HAZEL R. O'LEARY, SECRETARY OF ENERGY, DEPARTMENT OF ENERGY Mr. REGULA [presiding]. Okay, we'll call the committee to order and get started here. We're happy to welcome the Secretary of Energy, Ms. O'Leary. Before we start, I'd like to set the stage. What is the energy situation in the world and in the United States as you look at the next twelve months. I guess what prompts my question is that I noticed the price of gasoline creeping up rather significantly. Is there a message in all of that? INCREASE IN GASOLINE PRICES Secretary O'LEARY. Well, I think that there are always messages, and the message that I read this week and this month, just after the sale of the government's portion of SPR to pay for our retrofits in the Strategic Petroleum Reserve, is that the market has been moving up all through this season in terms of price. Normally one would expect this. It's the rebound preparing for the early spring requirements for motor gasoline, and it always comes after harsh winters. What we see in this very dramatic price spike and this certainly was true with respect to spot prices all this week—is a further reduction in what would be traditional stocks at this time of year actually caused many people keeping their stocks low because they thought that the negotiation between the UN and Iraq to allow the sale of oil for food and medicine would cause the price of petroleum to be reduced because of that influx of new supplies into the marketplace. One point of fact that we all ought to know now is that the negotiation between the UN and Iraq blew up two days ago, and there will not be new negotiations for another thirty days or more. That means that most of those who bet on very low stockpiles now have to make a decision whether to go back into the market. The interesting thing is that over the past three days, when there were indicators that the Iraqis would walk away from the table at the UN, we've seen the price dissipate, go down just a little in the last two days. This is true for futures as well. Futures for West Texas intermediate crude were at about $22 and some change per barrel two days ago. I think that West Texas is down to $21 per barrel now simply because it's as though we've done "just in time" with our stocks of petroleum, and it is clear now |