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Chairman CALVERT. Thank you, Doctor, for your testimony. Patricia Godley. STATEMENT OF THE HONORABLE PATRICIA FRY GODLEY, AS

SISTANT SECRETARY FOR FOSSIL ENERGY, U.S. DEPART. MENT OF ENERGY

Ms. GODLEY. Thank you, and I'm also glad to be back before you all again today. My remarks focus on the investments we are proposing in the area of fossil energy research and development as I've detailed more fully in prepared testimony. Meeting our increasing energy requirements creates formidable challenges especially if we're going to sustain economic growth while we continue to protect the environment.

Since I appeared before you last year, the Office of Fossil Energy has made significant progress towards meeting these challenges. In the area of power generation R&D, for example, this past October, an advanced gas turbine compressor—the largest, highest pressure ratio utility combustion turbine compressor ever built-passed a major performance test. This compressor is a critical component in an ultra-clean, high efficiency turbine power plant being developed to meet clean power market demand in the post-2010 time frame.

We have completed tests of the first pre-commercial prototypes of advanced fuel cells, and we have moved four more of our major clean coal technology projects into test operations demonstrating advanced power generation technologies, yielding up to 45 percent efficiencies as compared to conventional plants that convert only 33 to 35 percent of the fuel they burn-consume to electric power.

In the area of oil and gas resource R&D, three dimensional seismic imaging uses today's computer technology to convert large quantities of data into a depiction of the height, width, and depth of an oil and gas reservoir. Within the last year, a DOE industry co-sponsored field test has shown how time can be included in the geologic portrait in effect adding a fourth dimension to seismic imaging. The result is an entirely new way to examine a reservoir with fewer wells drilled; less environmental impact, and higher finding rates.

And we are managing taxpayer dollars more efficiently. Our administrative costs have decreased by more than $22 million since Fiscal Year 1996, and we have reduced our federal staff at headquarters and in the field by more than 80 full-time equivalent positions. We remain on track to complete the privatization of our petroleum research lab in Oklahoma which will save an additional $25 million over the next 5 years, and I'd like to mention as well that outside of the R&D program, we have completed the largest divestiture of federal property in government history and provided $3.65 billion for deficit reduction from the sale of the Elk Hills field in California.

Looking to the future, we have developed a long-term strategic plan that more clearly focuses our work on defined goals and measurable outcomes. To highlight a few activities in particular, new activities in this plan, we believe it is technologically possible to develop a future energy concept that continues to use coal and yet has virtually no environmental impact outside of the footprint of the plant. No air emissions; no solid or liquid wastes, and, poten

tially, with carbon sequestration, no net release of greenhouse gases. That would represent a true breakthrough in the way we use coal. We call the concept Vision 21, and it accounts for the major portion of the increase in our Fiscal Year 1999 budget. Vision 21 builds on and refines our current advanced power generation R&D program. It builds on it, and refines it, and with goals targeted for the Year 2015 and beyond when our power generation industry will be replacing its current fleet of plants. Vision 21 is a good example of long range, high risk research that this Committee has advocated.

We're proposing two new areas of natural gas research in 1999. One is an initiative recommended by PCAST to resume examining the potential for gas hydrates, methane molecules encased in an ice latticework. We know from earlier research that vast quantities of natural gas exist in hydrate deposits beneath the ocean floor and in arctic regions. Some place the size of this resource at 46,000 trillion cubic feet to as much 400 million trillion cubic feet; that's compared to the current estimate of total worldwide gas reserves of just under 5,000 trillion cubic feet. The potential of this resource is immense, and we believe that technology advances warrant a new look.

The other new effort will be the R&D to reduce the cost and enhance production from gas stripper wells. These wells account for about 5 percent of the gas produced in the United States, but they are being abandoned at an increasingly alarming rate. Rather than waiting for this to become the widespread problem that it is today for nearly 17,000 domestic oil wells we abandoned each year irretrievably, we think a well focused R&D program will keep many of these gas wells in production.

In summary, Mr. Chairman, our Fiscal Year 1999 budget for fossil energy R&D reflects the result of better management and better planning, and I am pleased, therefore, to appear today in support of our proposed budget and answer any questions the Committee may have. Thank you, sir.

[The prepared statement and attachments of Ms. Godley follow:]

Statement of

Patricia Fry Godley
Assistant Secretary for Fossil Energy
U.S. Department of Energy

Before the
Subcommittee on Energy and Environment

Committee on Science

February 25, 1998

Mr. Chairman and Members of the Subcommittee:

We are pleased to present a budget for fiscal year 1999 that squarely addresses the major challenges facing the fuels that are the energy mainstays of our economy.

Fossil fuels are, and will continue to be for many years into the future, our dominant suppliers of energy. Today, Americans rely on coal for more than 55% of their electricity, on oil for nearly 97% of their transportation fuel, and on natural gas for 27% of the primary energy they consume in their homes and businesses. The relatively low cost of these fuels and, particularly for coal and natural gas, their domestic abundance are major reasons why our Nation's economy remains strong.

No credible energy forecast predicts that the United States or the world will turn away from fossil fuels in the foreseeable future.

The Energy Information Administration (ELA) 1998 Annual Energy Outlook projects an energy mix in the year 2020 that is barely different from today's. In fact, in the ELA projections, the fossil fuel share of the domestic energy market increases from 85 percent in 1995 to 90 percent in 2020. Alternative energy sources will accelerate their entry into the market during this time, but because economic growth is projected to remain strong, energy demand will increase. By 2020, unless energy growth slows significantly, the United States could be consuming almost a third more total energy than it did in 1995. Fossil fuels will supply the largest portion of this additional demand.

International projections tell a similar story. Already, fossil fuels account for almost 85% of the world's energy use, and over the next two decades, global energy consumption is likely to rise even faster than in the United States, perhaps by as much as 54% by 2015. The great majority of this increase will be supplied by fossil fuels. The United States has a significant economic and environmental stake in the type of technologies used, how clean they are, and who supplies them.

The dominance of fossil fuels creates both remarkable opportunities and daunting challenges. Americans want our nation to realize the economic benefits that the relatively low cost of fossil fuels offer. But they also want fuels that are secure and do not compromise the quality of the environment. Our FY 1999 budget has been developed specifically to accomplish these

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The budget we are proposing for FY 1999 addresses the two major challenges confronting the continued use of fossil fuels:

Environmental Protection
As the world demands more energy, we have increasing concerns about greenhouse gases
from energy processes. Building on the success of earlier technologies that have brought
solutions to other air emission problems, we are developing higher-efficiency processes
that minimize the carbon dioxide released from fossil fuels and innovations that
potentially could capture and sequester greenhouse gases released from energy use. At
the same time, we continue to develop better methods for reducing smog and acid rain-
causing emissions to almost negligible levels. Our view is that Government has a role to
work side-by-side with industry in developing better ways to meet Federal and state
environmental regulations. Only through this partnership can future energy costs be kept
as low as possible for our Nation's consumers and ratepayers and our environment
protected for future generations.

Energy Security
We continue to confront the challenge of declining domestic oil production. Continued
diligence in maintaining a viable Strategic Petroleum Reserve can give us the security of
an immediate response to foreign energy supply disruptions. Over the longer term, new
technologies which have already helped slow production decline in many of our oil fields,
can increase the flow of crude oil and natural gas from known fields and perhaps, lead to
exciting new discoveries.

Technological innovation and creativity have served us well in the past. They are proven routes. And if we continue to follow them in addressing the twin challenges of environmental protection and energy security, fossil fuels will be for us not fuels of the past, but fuels of the future.

Spocial Note: In reviewing federal energy programs in the past, Members of Congress have asked legitimate questions about the results of the raxpayers' investment. To help answer these questions, we have included throughout this statement vignettes of specific accomplishments emerging from the DOE Fossil Energy program in just the past year.

Industry Honors Found Energy Accompliatements The technologies and tools emerging from the Office of Fossil Energy's cost-shared program with industry, universities and national laboratories are reshaping the future of our key energy industries. There is no better indication of this than the awards that industry itself conveys to these innovations. In 1997 the Tampa Electric Co.'s Polk Power Station, with its coal gasification combined cycle rechnology, became the Sth Clean Coal Technology project in the last 7 years to win one of Power magazine's prestigious “Powerplant of the Year" awards. Another clean coal technology, the gas reburning technology for controlling nitrogen oxides, was cited is the 1997 winner of the "J. Deanne Sensenbaugh Award" by the Air and Waste Management Association. And three petroleum technologies developed in DOE's National Laboratory-Industry Partnership program were recipients of "R&D 100% Awards given by the editors of R&D magazine to the most significant technical

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The FY 1999 Fossil Energy Budget

Our budget proposal increases funding where we believe additional R&D is necessary, such as in the environmentally acceptable use of coal, and decreases funding where programs have passed peak expenditure periods, e.g., the Strategic Petroleum Reserve, or where federal functions have been returned to the private sector, c.8., the Naval Petroleum and Oil Shale Reserves, as shown:

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