Energy Bill and Funding Recapped

American Association of Petroleum Geologists (AAPG)

The first session of the 110th Congress finished in December with few results. Partisan squabbling and the distraction of a presidential election cycle seemed to bring the legislative process to a halt.

Voters took note and registered their displeasure by handing Congress approval ratings even lower than the president’s. That got their attention.

So as lawmakers returned to Washington, D.C., after the Thanksgiving holiday – with oil prices at record levels and 11 of 12 appropriations bills unfinished – they decided to work on energy and appropriations, hoping to achieve something before Christmas.

And in fact, they did.

Energy Independence And Security Act of 2007

Congress has a habit of choosing titles for bills that promise more than any piece of legislation could ever deliver, such as the Energy Independence and Security Act of 2007. The odds are slim that this law will deliver either energy independence or energy security.

Even so, it does contain several provisions that could move the nation toward those goals.

Energy efficiency measures are a major part of the bill. It requires significant improvements in vehicle fuel economy by increasing the Corporate Average Fuel Economy to at least 35 miles per gallon between 2011 and 2020.

Electric appliances and light bulbs must use less energy. The bill requires increased energy efficiency in industry and buildings, including federal buildings, and encourages broad scale energy efficiency improvements in federal government operations.

In addition to increased efficiency standards, this bill mandates large increases in renewable biofuel production, ramping up to 36 billion gallons by 2022.

Initially, much of this fuel will be derived from corn (i.e., maize). There are, however, provisions to boost biofuel production from non-corn sources and generate biomass-based diesel by 2022.

There are several accelerated development programs for renewable energy sources in the bill, including geothermal energy. The bill directs the Department of Energy (DOE) to conduct geothermal R&D on a broad array of geothermal systems, including the recovery of geothermal energy in oil and gas fields, and from geo-pressured resources.

The bill further directs the U.S. Geological Survey to conduct a national assessment of geothermal resources.

Carbon capture and sequestration (CCS) also received strong support. The bill directs DOE to conduct R&D and large-scale demonstration projects. It includes provisions for the National Academies to conduct a work force study for CCS and directs the USGS to conduct a national assessment of carbon storage capacity.

The final bill does not include major tax revisions included in the House version – but it does revise the Internal Revenue Code to extend the amortization term from five to seven years for geological and geophysical expenditures incurred by certain major integrated oil companies as defined in the code.

Fiscal Year 2008 Appropriations

One thing Congress has to do annually is pass appropriations for federal spending in the coming fiscal year. The federal fiscal year runs from October 1 to September 30. Thus, ideally, Congress finishes its appropriations process by September 30.

Reality rarely matches the ideal.

This year the first of 12 appropriations bills was signed into law in mid-November. The others were rolled into a massive “omnibus” bill and signed into law by the president the day after Christmas.

The omnibus bill contained support for several programs of interest to AAPG members. For example:

  • The DOE’s petroleum-oil technologies program received $5 million. The administration had sought to terminate this program.
  • The natural gas technologies program received $20 million, much of that to fund methane hydrates research. The administration had sought to terminate this program, too.
  • The ultra-deepwater and unconventional onshore natural gas and other petroleum research and development program created by the Energy Policy Act of 2005 continues at a level of $50 million. These funds are not appropriated, but rather come directly from the U.S. Treasury.
  • Carbon sequestration received a strong boost with funding at $120 million.
  • The USGS received full funding for its mineral resources programs. Among other things, this program conducts the world petroleum assessments widely used in the industry.

The program faced significant cuts in the president’s budget, but both the House and Senate affirmed strong support for the work of the USGS mineral resources program.

  • DOE’s geothermal technologies program faced elimination in the president’s budget, but Congress provided funding at $20 million.

Having just finished FY2008 appropriations, it is hard to believe that the appropriations season for FY2009 is already under way – it began Feb. 4, with the president’s budget release.

Here we go again.

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Washington Watch

Washington Watch - David Curtiss

David Curtiss served as the Director of AAPG’s Geoscience and Energy Office in Washington, D.C. from 2008-11.

Policy Watch

Policy Watch is a monthly column of the EXPLORER written by the director of AAPG's  Geoscience and Energy Office in Washington, D.C. *The first article appeared in February 2006 under the name "Washington Watch" and the column name was changed to "Policy Watch" in January 2013 to broaden the subject matter to a more global view.

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AAPG Prepares Response to SEC Request

The AAPG Executive Committee has approved a response to the Security Exchange Commission’s Concept Release on possible revision to the disclosure requirement relating to oil and gas reserves.

The disclosure rule, first released in 1978, has drawn concern that the current requirements do not reflect the technological and investment realities of today’s market place.

The approved response was composed by an ad hoc committee chaired by past AAPG president Peter R. Rose that included Ken Mallon, Rusty Riese, John Ritter, Dan Tearpock, Creties Jenkins and Don Juckett.

All the committee members were involved in a June 2007 International Multidisciplinary Conference on Oil and Gas Reserves and Resources held in Washington, D.C., sponsored by AAPG and the Society of Petroleum Engineers with support of the World Petroleum Council, the Society of Petroleum Evaluation Engineers and the United Nations Economic Commission for Europe.

The SEC had requested specific comments to 15 questions.

“Based on public input, we expect that the SEC will develop a formal rule proposal, outlining the provisions of a new rule,” said GEO-DC director David Curtiss.

This final rule will be available for public comment and will be voted on by the Commission. If approved it will become part of SEC’s formal rules.

For the AAPG comments see the GEO-DC area of the AAPG Web site.

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