of the American public thinks of oil and gas production as a low-tech
with a connection to the industry knows that isn't true.
But a majority
still equates Big Oil with big iron, with drilling rigs and drillbits
and storage tanks, with rusted walking-beams seen from the highways.
ironic that the future of exploration and production would depend
so heavily on advanced technology.
U.S. government plans to create a Strategic Center for Natural Gas
and Oil (SCNGO), to manage federally funded E&P research projects.
on the point of view, that move could be seen as shrewd, perfectly
logical, almost meaningless or too little, too late.
funding for upstream research and technology transfer comes from
the U.S. Department of Energy (DOE), with a current budget of $23.3
of that money goes to the DOE's Office of Fossil Energy, which in
turn funds the National Energy Technology Laboratory (NETL).
a 2004 fiscal-year budget of $572.7 million, includes the National
Petroleum Technology Office (NPTO) in Tulsa and the Strategic Center
for Natural Gas (SCNG) in Morgantown, W. Va., and Pittsburgh. These
two agencies would be combined into SCNGO.
"strategic center" for oil and gas sounds impressive, but the new
agency's budget and impact may turn out to be trivial.
they do have are at risk every year. This administration and the
OMB (Office of Management and Budget) just don't think the fossil
energy people spend their money very well," said Scott Tinker, director
of the Bureau of Economic Geology at the University of Texas at
the White House once called the DOE's petroleum research subpar,
and it only later began rating the DOE's overall efforts in building
technologies as "adequate."
all of DOE's money goes into programs that have nothing to do with
oil and gas, including nuclear energy, clean-coal initiatives, renewable
energy sources, fuel cells and national security-related efforts.
are good things to think about, but at the same time there's a huge
support for coal -- about $40 million for oil and gas and $400 million
for coal," Tinker noted.
announced grants for six E&P-related projects:
Microhole coiled-tubing drilling rig -- $1,836,423, Schlumberger
IPC, Sugar Land, Texas.
steering and measurement tools -- $986,084, Baker Hughes Inteq,
drillbit steering tool -- $921,875, Stolar Research, Raton, N.M.
tractor tool for horizontal wells -- $645,420, Western Well Tool,
drilling technique -- $592,000, Bandera Petroleum Exploration,
system for low-pressure reservoirs -- $210,000, Gas Production
Specialties, Lafayette, La.
partners are expected to contribute more than $1.4 million to the
projects, part of an effort to reduce the environmental footprint
of oil and gas operations.
agreed that government-sponsored research projects should be directed
toward formal, national goals for energy use and development.
of a national energy plan or strategy -- or, God forbid, a National
Energy Policy -- that's an enormous challenge," he said.
seem to work is the federal effort at technology transfer for independent
producers through the Petroleum Technology Transfer Council (PTTC)
its 10th anniversary of operation earlier this year.
is president of David Petroleum Corp. in Roswell, N.M., and a former
president of AAPG. He's also a member of the PTTC Board of Directors
as AAPG's representative.
impressed with it," David said. "They're doing a real good job in
getting information out to independents on technology."
PTTC's executive director, attributed part of this success to the
agency's reach into oil and gas producing states. PTTC has 10 regional
offices and two satellite offices.
trying to get right to rural basins, right to where the primary
production from these fields takes place," he said.
standards, PTTC operates on less than a shoestring. Duttlinger said
PTTC received $2.6 million in annual federal funding this year,
through NPTO and SCNG (see figure, next page). Those funds are matched
in time-and-effort contributions from its regional operatives.
is best known for its petroleum-related workshops. Lance Cole, national
project manager for PTTC, said the agency will present or help sponsor
140 workshops this year, and has averaged over 100 workshops annually
for several years.
quickly adds that PTTC maintains an information-rich series of Web
pages, accessible through www.pttc.org. It also distributes case
studies and posts regular columns in industry publications.
In a new
direction, PTTC will begin analyzing technology applications and
"proactively stimulating research," he said.
a lot of ideas from what you might call 'garage inventors' all the
way to substantial R&D departments outside the oil and gas industry,"
those suggestions, and to help foster and pass along viable new
technologies, PTTC has created a Technical Field Trial Committee,
praised PTTC for bringing together and drawing on expertise from
all sections of the United States and all parts of the industry,
including majors and service and supply companies.
PTTC an important human resource and allows it to keep in touch
with the latest technology applications -- what works, where it
works and how it works, according to Cole.
a lot more than just an information repository. We ourselves don't
pretend to know all the answers, but we've got staff in all the
regions and other experts we can call on," Cole said.
independent asks us a question, we can have 25 to 30 knowledgeable
people in the industry looking for an answer," he added.
of its structure and the way it operates, PTTC considers itself
more of an industry effort than a federal agency.
really not DOE," Cole emphasized. "We're a contractor to them but
we're a separate, industry-led consortium working on this mission.
We're not the government."
to federal funding for E&P research and technology transfer
next year depends on the annual budget dance in Washington, D.C.,
according to Tinker.
the administration has consistently tried to reduce funds for upstream
research in the DOE budget, and Congress has regularly restored
most of that funding.
fiscal-year 2005 Office of Fossil Energy budget, DOE requested $26
million for natural gas technology research and $15 million for
oil technology research -- a total of $41 million.
budget process, the House of Representatives raised those levels
to $41.6 million for gas and $34.7 million for oil, a total of $76.3
unwilling to put more money back into it than there was before,
and it's usually a little less. The problem with that is, it isn't
even close. In the oil and gas business, $40 million is nothing,"
can suggest further changes to budget entries, then a final House-Senate
federal budget will go to the president for acceptance.
and Eugene Kim, BEG research associate, presented testimony to Congress
in March about DOE's budget request for oil and gas research.
research budgets should be directed toward three critical time scales
-- the long-term, the mid-term and the near-term," they said.
light, "the proposed budget is dangerously out of balance in its
under-funding of oil and gas research for the near- and mid-term,"
forward, Tinker holds out little hope for a workable National Energy
Policy. Too many special interests demand attention and no federal
agency or office wants to give up existing power, he explained.
ever fit everybody's needs," Tinker said.
oil companies still lobby against oil and gas R&D spending by
the DOE," even though they have reduced their own research spending
dramatically, he added.
does think industry will support more spending for research in government
labs and academia, eventually.
the private sector rallying. They're going to have to. They are
strategically hiring overseas, but they're going to need good education
here in the U.S.," he said.
hopeful about the response of government, in a nation where oil
and gas drives much of the economy but receives relatively little
federal funding for research.
like to see the federal government acknowledge this, but they're
driven by crises," he said, "and crisis-based policy is never the