Bush administration to cut natgas R&D budget

04 February 2008 20:31  [Source: ICIS news]

WASHINGTON (ICIS news)--US energy producers and a top Senate energy leader warned on Monday that a cut in federal funding for gas and oil research and development (R&D) will jeopardise future domestic production.

 

The Independent Petroleum Association of America (IPAA) said it was disappointed in Bush administration budget plans for fiscal year 2009 that would eliminate $50m (€34m) in federal funding for oil and gas R&D that is carried out by various US universities.

 

The $50m was eliminated from President George Bush’s proposed $25bn spending proposal for the Energy Department, part of the massive $3,100bn budget plan delivered to Congress on Monday.

 

The Bush Administration recently cited high oil and natural gas prices as a reason the industry does not need government financial aid.

 

In cutting the $50m R&D programme, said the association, “The Energy Department is abandoning the future growth of America’s largest and most vital energy resource”.

 

The US chemicals industry is heavily dependent on natural gas as both a feedstock and energy source.

 

The association said it recognises that the Bush administration wants to encourage energy conservation and efficiencies and development of alternative energy sources, “but to jeopardise proven home-grown energy solutions such as oil and natural gas is a threat to this country’s energy security”.

 

The funding was to support research being done at several universities aimed at improving exploration and production technologies. Those R&D programmes in turn support “the independent producers who drill 90% of the nation’s oil and gas wells”, the association noted.

 

The budget cut for oil and gas R&D also was criticised by Senator Jeff Bingaman (Democrat-New Mexico), who chairs the Senate Committee on Energy and Natural Resources.

 

“The key players in developing new domestic natural gas resources are independent oil and gas producers,” Bingaman said.  “They aren’t big enough to have their own R&D departments to undertake the research needed to keep our natural gas supplies robust.”

 

“If DOE walks away from the R&D needed to keep natural gas flowing in an economic and environmentally responsible manner, then consumers will pay through higher prices and working families will pay through loss of manufacturing jobs that depend on natural gas,” Bingaman said.

 

He said he hopes Congress will restore the $50m in R&D funding as legislators work on amending the Bush budget proposal.

 

The Energy Department’s oil and gas R&D budget item was cut from last year’s fiscal 2008 budget but later was restored in the congressional appropriations process.

 

($1.00 = €0.68)

By: Joe Kamalick
+1 713 525 2653

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