[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

TAPPING AMERICA'S ENERGY POTENTIAL
THROUGH RESEARCH AND DEVELOPMENT

=======================================================================

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND
ENVIRONMENT

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

FRIDAY, NOVEMBER 30, 2012

__________

Serial No. 112-108

__________

Printed for the use of the Committee on Science, Space, and Technology

Available via the World Wide Web: http://science.house.gov

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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

HON. RALPH M. HALL, Texas, Chair
F. JAMES SENSENBRENNER, JR., EDDIE BERNICE JOHNSON, Texas
Wisconsin JERRY F. COSTELLO, Illinois
LAMAR S. SMITH, Texas LYNN C. WOOLSEY, California
DANA ROHRABACHER, California ZOE LOFGREN, California
ROSCOE G. BARTLETT, Maryland BRAD MILLER, North Carolina
FRANK D. LUCAS, Oklahoma DANIEL LIPINSKI, Illinois
JUDY BIGGERT, Illinois DONNA F. EDWARDS, Maryland
W. TODD AKIN, Missouri BEN R. LUJAN, New Mexico
RANDY NEUGEBAUER, Texas PAUL D. TONKO, New York
MICHAEL T. McCAUL, Texas JERRY McNERNEY, California
PAUL C. BROUN, Georgia TERRI A. SEWELL, Alabama
SANDY ADAMS, Florida FREDERICA S. WILSON, Florida
BENJAMIN QUAYLE, Arizona HANSEN CLARKE, Michigan
CHARLES J. ``CHUCK'' FLEISCHMANN, SUZANNE BONAMICI, Oregon
Tennessee VACANCY
E. SCOTT RIGELL, Virginia VACANCY
STEVEN M. PALAZZO, Mississippi VACANCY
MO BROOKS, Alabama
ANDY HARRIS, Maryland
RANDY HULTGREN, Illinois
CHIP CRAVAACK, Minnesota
LARRY BUCSHON, Indiana
DAN BENISHEK, Michigan
VACANCY
------

Subcommittee on Energy and Environment

HON. ANDY HARRIS, Maryland, Chair
DANA ROHRABACHER, California BRAD MILLER, North Carolina
ROSCOE G. BARTLETT, Maryland LYNN C. WOOLSEY, California
FRANK D. LUCAS, Oklahoma BEN R. LUJAN, New Mexico
JUDY BIGGERT, Illinois PAUL D. TONKO, New York
W. TODD AKIN, Missouri ZOE LOFGREN, California
RANDY NEUGEBAUER, Texas JERRY McNERNEY, California
PAUL C. BROUN, Georgia
CHARLES J. ``CHUCK'' FLEISCHMANN,
Tennessee
RALPH M. HALL, Texas EDDIE BERNICE JOHNSON, Texas

C O N T E N T S

Friday, November 30, 2012

Page
Witness List..................................................... 2

Hearing Charter.................................................. 3

Opening Statements

Statement by Representative Andy Harris, Chairman, Subcommittee
on Energy and Environment, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 20
Written Statement............................................ 21

Statement by Representative Ralph M. Hall, Chairman, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 21
Written Statement............................................ 23

Statement by Representative Brad Miller, Ranking Member,
Subcommittee on Energy and Environment, Committee on Science,
Space, and Technology, U.S. House of Representatives........... 24
Written Statement............................................ 25

Witnesses:

Dr. Anthony Cugini, Director, National Energy Technology
Laboratory, Department of Energy
Oral Statement............................................... 27
Written Statement............................................ 30

Mr. David Martineau, Chairman, Texas Independent Producers and
Royalty Owners Association
Oral Statement............................................... 36
Written Statement............................................ 39

Dr. Daniel Hill, Interim Department Head, Professor and holder of
the Noble Chair in Petroleum Engineering, Texas A&M University
Oral Statement............................................... 46
Written Statement............................................ 48

Mr. Michael Hagood, Director of Program Development, Energy and
Environment Science and Technology, Idaho National Laboratory
Oral Statement............................................... 56
Written Statement............................................ 58

Appendix I: Answers to Post-Hearing Questions

Dr. Anthony Cugini, Director, National Energy Technology
Laboratory, Department of Energy............................... 80

Mr. David Martineau, Chairman, Texas Independent Producers and
Royalty Owners Association..................................... 81

Dr. Daniel Hill, Interim Department Head, Professor and holder of
the Noble Chair in Petroleum Engineering, Texas A&M University. 82

Mr. Michael Hagood, Director of Program Development, Energy and
Environment Science and Technology, Idaho National Laboratory.. 83

Appendix II: Additional Material for the Record

Letter submitted by Chairman Ralph M. Hall from the American
Geosciences Institute in support of H.R. 6603.................. 90

``The new Boom: Shale gas fueling an American industrial
revival,'' Article, Washington Post............................ 92

``Oil and Natural Gas Generate EMPLOYMENT and TAX REVENUE,''
submitted by Mr. David Martineau............................... 97

TAPPING AMERICA'S ENERGY POTENTIAL
THROUGH RESEARCH AND DEVELOPMENT

----------

FRIDAY, NOVEMBER 30, 2012

House of Representatives,
Subcommittee on Energy and Environment,
Committee on Science, Space, and Technology,
Washington, D.C.

The Subcommittee met, pursuant to call, at 9:34 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Andy
Harris [Chairman of the Subcommittee] presiding.

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Chairman Harris. The Subcommittee on Energy and Environment
will come to order.
Good morning, everyone. Welcome to today's hearing entitled
``Tapping America's Energy Potential through Research and
Development.'' In front of you are packets containing the
written testimony, biographies and Truth in Testimony
disclosures for today's witness panel. I now recognize myself
for five minutes for an opening statement.
Let me begin by noting that this is expected to be the last
Energy and Environment Subcommittee hearing of this Congress. I
would like to thank Ranking Member Miller and the members of
the Subcommittee for working together to consider and address
issues of great importance to the future of our country.
As we have highlighted throughout this Congress, the United
States has a wealth of untapped unconventional energy
resources. In fact, the International Energy Agency recently
predicted the United States will overtake Saudi Arabia to
become the world's largest oil producer by 2020, largely due to
the potential for development of U.S. unconventional energy
resources. The significant positive economic benefits
associated with development of unconventional energy resources
are widely acknowledged. Tapping America's unconventional oil
and gas resources will additionally provide sorely needed
stimulation of our economy, restore our manufacturing sector
and create high-paying middle-class jobs. Citigroup predicts
the cumulative impact of new oil and gas production could
create as many as 3.6 million new jobs by 2020. Unfortunately,
the degree to which the United States will pursue and realize
these much-needed benefits remains in doubt, primarily due to
politics.
Under Chairman Hall's leadership, the Science, Space, and
Technology Committee and this Subcommittee in particular have
explored a broad range of energy production-related issues,
from the lack of transparency and weak scientific foundations
underlying EPA's job-killing regulations to the waste and
imbalance in Department of Energy's research and development
activities. Unfortunately, time and again, a massive disconnect
between the President's words and his Administration's actions
are evident. While President Obama continues to claim he
supports an all-of-the-above energy strategy, the plain facts
tell a different story. This was clearly illustrated in May
when DOE's Assistant Secretary for Fossil Energy testified to
this Subcommittee that oil shale was a component of the
Administration's all-of-the-above energy strategy. Yet when
pressed, he acknowledged that DOE was not spending any funding
on oil shale R&D, and could not identify anything the
Administration was doing to actively advance oil shale. In
fact, despite the President's prominent call for an all-of-the-
above energy strategy in this year's State of the Union speech,
just recently the Administration finalized a plan effectively
reducing lands available for oil shale production by two-
thirds.
Unfortunately, the Administration's rhetoric on energy
production is similarly empty when it comes to shale gas and
hydraulic fracturing, where the EPA is leading 13 federal
agencies and offices in pursuit of new ways to regulate this
incredibly beneficial and safe technology.
Chairman Hall's legislation, the ``Tapping America's Energy
Potential Through Research and Development Act of 2012,''
addresses the obvious imbalance in DOE research priorities. It
restores a true all-of-the-above R&D focus at DOE through
authorization of limited and targeted research and development
activities that develop key technologies relating to oil shale,
shale oil and gas, and produced water utilization.
[The prepared statement of Mr. Harris follows:]

Prepared Statement of Subcommittee Chairman Andy Harris

Good morning and welcome to this morning's hearing entitled Tapping
America's Energy Potential Through Research and Development.
Let me begin by noting that this is expected to be the last Energy
and Environment Subcommittee hearing of this Congress. I would like to
thank Ranking Member Miller and the Members of the Subcommittee for
working together to consider and address issues of great importance to
the future of our country.
As we have highlighted throughout this Congress, the United States
has a wealth of untapped unconventional energy resources. The
International Energy Agency recently predicted the U.S. will overtake
Saudi Arabia to become the world's largest oil producer by 2020,
largely due to the potential for development of U.S. unconventional
energy resources. The significant positive economic benefits associated
with development of unconventional energy resources are widely
acknowledged. Tapping America's unconventional oil and gas resources
will additionally provide sorely needed stimulation of our economy,
restore our manufacturing sector and create high-paying middle class
jobs. Citigroup predicts the cumulative impact of new oil and gas
production could create as many as 3.6 million new jobs by 2020.
Unfortunately, the degree to which the U.S. will pursue and realize
these benefits remains in doubt, primarily due to politics.
Under Chairman Hall's leadership, the Science, Space, and
Technology Committee--and this subcommittee in particular--has explored
a broad range of energy production-related issues, from the lack of
transparency and weak scientific foundations underlying EPA's job-
killing regulations to the waste and imbalance in Department of
Energy's research and development activities. Unfortunately, time and
again, a massive disconnect between the President's words and his
Administration's actions are evident.
While President Obama continues to claim he supports an ``all-of-
the-above'' energy strategy, the plain facts tell a different story.
This was clearly illustrated in May when DOE's Assistant Secretary for
Fossil Energy testified to the subcommittee that oil shale was a
component of the Administration's all-of-the-above energy strategy. Yet
when pressed, he acknowledged DOE was not spending any funding on oil
shale R&D, and could not identify anything the Administration was doing
to actively advance oil shale. In fact, despite the President's
prominent call for an all of the above energy strategy in this year's
State of the Union speech, just recently the Obama Administration
finalized a plan effectively reducing lands available for oil shale
production by two thirds.
Unfortunately, the Administration's rhetoric on energy production
is similarly empty when it comes to shale gas and hydraulic fracturing,
where the EPA is leading 13 Federal agencies and offices in pursuit of
new ways to regulate this incredibly beneficial and safe technology.
Chairman Hall's legislation, the ``Tapping America's Energy
Potential Through Research and Development Act of 2012,'' addresses the
obvious imbalance in DOE research priorities. It restores a true all-
of-the-above R&D focus at DOE through authorization of limited and
targeted research and development activities that develop key
technologies relating to oil shale, shale oil and gas, and produced
water utilization.

Chairman Harris. At this time I would like to yield to the
Chairman of the Science, Space, and Technology Committee for
three minutes for him to describe his legislation. Chairman
Hall.
Chairman Hall. Mr. Chairman, I thank you very much, and you
have done a very good job of your opening statement. You just
about said it all. I say to you good morning, and I thank you
for yielding the time you have given me.
I want to thank the witnesses for being here to talk about
an issue that is very important to me and to all of us, and in
particular, I would like to recognize and thank Dr. Daniel
Hill, the Chair of Texas A&M Petroleum Engineering Department,
and I had a good visit with your president two Saturdays ago, I
think, when they created Johnny Football down there and we are
waiting to see what they do with it, and Dr. Martineau, the
Chairman of the Texas Independent Producers and Royalty Owners
Association, TIPRO, a great organization that I am very
familiar with, and I think that you started out with Frank and
Shelby Pitts and they are still with the Pitts organization. Is
that correct?
Mr. Martineau. Yes.
Chairman Hall. How many?
Mr. Martineau. Forty years.
Chairman Hall. Well, you are probably getting old to do
things like that.
But energy policy is and has always been one of my very top
priorities, both as a Member, and as Chairman of this
Committee. I believe strongly that for young people today, the
importance of energy and how important energy is and the fact
that nations including our Nation will fight for energy if we
don't have energy and we shouldn't have to because we have
plenty, and I am very hopeful for this next two years that we
can use what we have and be users of our own and salespeople of
some will have in addition if we just do what we ought to do
like all of the above. A lot of people talk all of the above
and do none of the above, and that is what our problem is. I
think after ``prayer'', ``energy'' is probably the most
important word in the dictionary to youngsters that are
graduating from high school, grade school or college. It is the
foundation upon which our Nation has prospered, and the key to
our quality of life and standard of living.
That is why I introduced H.R. 6603, which would increase
energy security through support for research and development to
enable prudent development of U.S. domestic energy resources.
The legislation builds on the record of the Science, Space, and
Technology Committee during our tenure here this last two
years.
The United States is blessed with a wealth of
unconventional energy resources and we are currently
experiencing a revolution in oil and gas production thanks to
those resources. This increased production is not only
increasing our energy security, it is stimulating our economy
and creating much-needed jobs. In 2010, unconventional natural
gas development alone supported over a million jobs in this
country, and this number is expected and could more than double
by 2035.
This bipartisan legislation promotes the development of oil
shale instead of restricting it, and ensures that we maximize
the benefits of our unconventional oil and gas resources. The
bill directs the Department of Energy to undertake R&D
activities to address the scientific and technological barriers
to oil shale development. It also supports R&D to minimize
water use and maximize efficiency in shale oil and gas
operations. The legislation includes language from the Produced
Water Utilization Act, a bill I sponsored and others that was
sponsored in the 111th Congress and passed through the House
with unanimous consent.
In 2005, we worked together on and I authored Section 999
of the Energy Policy Act, which created a very successful
Department of Energy unconventional oil and gas research and
development program. The bill before us today is intended to
complement the ongoing 999 program, which is a program that we
knew energy was there in the Gulf but we couldn't get it up,
couldn't get it to the top. We needed technology to get it to
the top. We traded with a lot of universities. They would give
us the technology, and we would pay them with the energy they
got to the top. If we didn't get their technology, it didn't go
to the top. If we did get their technology, it did, and it has
worked very well. They take shots at it every year but it is so
valuable that I am hoping--it is currently set to expire in
2014 and I hope they are going to continue it beyond that, and
I think they will, as well as provide direction for the DOE oil
shale R&D activities and the Administration's proposal for an
interagency R&D collaboration on unconventional energy
resources. The only thing that can stop this amazing story from
continuing is politics, specifically, the Environmental
Protection Agency's thinly veiled campaign to restrict access
to these resources.
In closing, I will just say the bill I am introducing today
will help to provide a check against EPA's war on energy by
addressing environmental challenges through technological
solutions instead of job-killing regulations.
I would like to ask unanimous consent to enter into the
record a letter from the American Geosciences Institute in
support of H.R. 6603, and I look forward to hearing from our
witnesses today, and I yield back, and Mr. Chairman, I ask
unanimous consent to enter into the record that letter.
[The prepared statement of Mr. Hall follows:]

Prepared Statement of Committee Chairman Ralph M. Hall

Good morning and thank you Chairman Harris for yielding me time. I
want to thank the witnesses for being here to talk about an issue that
is very important to me. In particular, I would like to recognize and
thank Dr. Daniel Hill, the Chair of Texas A&M Petroleum Engineering
Department, and Mr. David Martineau, the Chairman of the Texas
Independent Producers and Royalty Owners Association (TIPRO).
Energy policy is and has always been one of my top priorities, both
as a Member, and as Chairman of this Committee. I believe strongly
that, after prayer, energy is the most important word in the
dictionary. It is the foundation upon which our nation has prospered,
and the key to our quality of life and standard of living.
That is why I introduced H.R. 6603, which would increase energy
security through support for research and development to enable prudent
development of U.S. domestic energy resources. This legislation builds
on the record of the Science, Space, and Technology Committee during my
tenure as Chairman.
The U.S. is blessed with a wealth of unconventional energy
resources and we are currently experiencing a revolution in oil and gas
production thanks to those resources. This increased production is not
only increasing our energy security, it is stimulating our economy and
creating much needed jobs. In 2010, unconventional natural gas
development alone supported over a million jobs in this country, and
this number is expected to more than double by 2035.
This bipartisan legislation promotes the development of oil shale
instead of restricting it, and ensures we maximize the benefits of our
unconventional oil and gas resources. The bill directs the Department
of Energy to undertake R&D activities to address the scientific and
technological barriers to oil shale development. It also supports R&D
to minimize water use and maximize efficiency in shale oil and gas
operations. The legislation includes language from the Produced Water
Utilization Act, a bill I sponsored in the 111th Congress and passed
through the House with unanimous consent.
In 2005, I helped author Section 999 of the Energy Policy Act,
which created a very successful Department of Energy unconventional oil
and gas research and development program. The bill before us today is
intended to complement the ongoing 999 program-which is currently set
to expire in 2014 but I hope will continue beyond that-, as well as
provide direction for the DOE oil shale R&D activities and the
Administration's proposal for an interagency R&D collaboration on
unconventional energy resources.
The only thing that can stop this amazing story from continuing is
politics-specifically, the Environmental Protection Agency's thinly
veiled campaign to restrict access to these resources. The bill I'm
introducing today will help to provide a check against EPA's war on
energy by addressing environmental challenges through technological
solutions instead of job-killing regulations.
I would like to ask unanimous consent to enter into the record a
letter from the American Geosciences Institute in support of H.R. 6603.

I look forward to hearing from our witnesses today, and I yield
back.

Chairman Harris. Without objection.
[The information appears in Appendix II]
Chairman Harris. Thank you, Chairman Hall, and Mr.
Chairman, it is of course been a pleasure to work with you the
last two years, and I realize that the room has been brightened
up a little bit by a new picture hanging on the wall opposite
the Chairman's podium here. Yeah, that is appropriate.
Chairman Hall. Can I tell you something about it?
Chairman Harris. I will yield to the Chairman.
Chairman Hall. I don't know how long it took him to do it,
but he looked at me for about an hour and a half and took a
thousand pictures and then he brought the picture in a box down
to my house in Rockwell and he opened it up, and I said ``Oh,
my God.'' I looked at it, and I said ``It's terrible.'' He
said, ``Well, I have my things here. I can touch it up. What is
your problem with it?'' I said, ``Well, I don't think you can
improve on it.'' He said ``I can do whatever you ask me to do.
What is the problem with it?'' I said, ``The main problem, it
looks just exactly like me.'' Anyway, he eased up a little bit,
but he did a good job, and thank you, Mr. Chairman.
Chairman Harris. Thank you, Mr. Chairman Hall.
I want to again thank the witnesses here today and now
yield to the ranking member, Mr. Miller, for an opening
statement.
Mr. Miller. Thank you, Mr. Chairman.
Before I begin, I would like the opportunity to welcome our
newest member, David Curson. Congressman Curson occupies the
seat left by Thaddeus McCotter representing the 11th District
of Michigan. He will not be a Member of the new Congress so he
will probably not have the opportunity Thad McCotter had to
impress us with his distinctive personality. He brings long
experience as a member of the United Auto Workers leadership
and has a technical background in manufacturing, which is a
welcome addition to this Congress. So we do welcome him.
Mr. Chairman, we obviously have some disagreement about
what would constitute an all-of-the-above energy policy. The
lesson for today's hearing is from the Book of Matthew: ``For
to the one who has, more will be given, and he will have in
abundance, and from the one who has not, even what he has will
be taken away.'' Or as many Americans put it colloquially, them
that has, gets. That has certainly been the Republican policy
on energy research.
Our efforts to assist emerging energy technologies like
solar, geothermal, wind, and technologies to make our energy
use more efficient are considered ``green pork'' to House
Republicans. They have opposed efforts by the Department of
Energy to promote research, demonstration projects, and
commercialization of emerging technologies as picking winners
and losers. The Republican's Views and Estimates for Fiscal
Year 2012 gave deeply principled reasons for opposition to
government investment in emerging energy technologies, and I
quote: ``Fundamentally, the act of providing individual firms
with government money for the purpose of commercializing
profitable technology is an inappropriate intervention in the
market that may crowd out or discourage a greater amount of
private investment.''
So for emerging technologies that have not the economic and
political power of incumbent fossil fuel and nuclear
technologies, even what they have will be taken away. But
incumbent technologies, which are already enormously
profitable, will be given more, and will have in abundance,
with none of the navel-gazing discussion about picking winners
and losers or inappropriate interventions in the market.
The incumbent technologies have benefited from government
research for generations, government subsidies for generations,
including research. Hydraulic fracturing is the combination of
technologies developed by federally funded research. We will
obviously continue to depend on fossil fuel technologies for
most of our energy well into the future. Many Democrats,
including me, have supported government funding for fossil
fuels research, and will likely support this legislation as
well. The section of Chairman Hall's legislation on produced
water is almost identical to legislation passed by the
Democratic majority in the last Congress. The industries and
yes, the specific individual firms that will benefit most
directly from this legislation, already have far more public
and private investment in applied research and
commercialization of technologies than do firms developing
alternative energy technologies, some of which may dramatically
alter our energy future and some of which may never be
commercially viable.
Even more important, continued support in abundance for
incumbent technologies, often to the exclusion of alternative
technologies, continues to base our energy future almost
exclusively on hunting fossil fuels to extinction, leaving us
woefully unprepared for our longer-term energy needs.
Mr. Chairman, I suspect that most Democrats will support
this legislation if it comes to a vote, but I hope that
Republicans will consider whether the arguments in support of
this legislation will be equally applicable to research for
alternative energy sources so that we can have truly an all-of-
the-above energy policy.
I yield back the balance of my time.
[The prepared statement of Mr. Miller follows:]

Prepared Statement of Subcommittee Ranking Member Brad Miller

The lesson for today's hearing is from the Book of Matthew: ``For
to the one who has, more will be given, and he will have in abundance,
and from the one who has not, even what he has will be taken away.'' Or
as many Americans put it more colloquially, them that has, gets.

That has certainly been the Republican policy on energy research.

Our efforts to assist emerging energy technologies like solar,
geothermal, wind, and technologies to make our energy use more
efficient are considered ``green pork'' to House Republicans. They have
opposed efforts by the Department of Energy to promote research,
demonstration projects, and commercialization of emerging technologies
as ``picking winners and losers.'' The Republican's Views and Estimates
for Fiscal Year 2012, gave deeply principled reasons for opposition to
government investment in emerging energy technologies: ``Fundamentally,
the act of providing individual firms with government money for the
purpose of commercializing profitable technology is an inappropriate
intervention in the market that may crowd out or discourage a greater
amount of private investment.''
So for emerging technologies that have not the economic and
political power of incumbent fossil-fuel and nuclear technologies, even
what they have will be taken away.
But incumbent technologies, which are already enormously
profitable, will be given more, and will have in abundance, with none
of the navel-gazing discussion about picking winners and losers or
inappropriate interventions in the market.
The incumbent technologies have benefited from government subsidies
for generations, including funding for research. Hydraulic fracturing
is the combination of technologies developed by federally-funded
research. We will obviously continue to depend on fossil fuel
technologies for most of our energy well into the future. Many
Democrats, including me, have supported government funding for fossil
fuels research, and will likely support this legislation as well. The
section of Chairman Hall's legislation on ``produced water'' is almost
identical to legislation passed by the Democratic majority in the last
Congress.
The industries and yes, the specific ``individual firms'' that will
benefit most directly from this legislation, already have far more
public and private investment in applied research and commercialization
of technologies than do firms developing alternative energy
technologies, some of which may dramatically alter our energy future
and some of which will never be commercially viable. Even more
important, continued support in abundance for incumbent technologies,
often to the exclusion of alternative technologies, continues to base
our energy future almost exclusively on hunting fossil fuels to
extinction, leaving us woefully unprepared for our longer-term energy
needs.
Mr. Chairman, I suspect that most Democrats will support this
legislation if it comes to a vote, but I hope that Republicans will
consider the arguments in support of this legislation as arguments for
a truly ``all of the above'' energy policy.

I yield back the balance of my time.

Chairman Harris. Thank you very much, Mr. Miller, and I
join you in welcoming Mr. Curson to the Science, Space, and
Technology Committee, and I welcome him sitting in on the
Subcommittee hearing today.
If there are Members who wish to submit additional opening
statements, your statements will be added to the record at this
point.
At this time I would like to introduce our witness panel.
Our first witness today is Dr. Anthony Cugini. Dr. Cugini is
the Director of the National Energy Technology Laboratory for
the Department of Energy. He previously served as Director of
the Office of Research and Development at the National Energy
Technology Laboratory. Before that position, Dr. Cugini served
as the Focus Area Lead for NETL's Computational and Basic
Sciences Focus Area. He has been at the laboratory since 1987.
Our next witness is Dr. David Martineau. Dr. Martineau is
the Chairman of the Texas Independent Producers and Royalty
Owners Association. Mr. Martineau has worked in the oil and gas
industry for more than 50 years. He is an active member of the
American Association of Petroleum Geologists, the Interstate
Oil and Gas Compact Commission, and the Barnett Shale Water
Conservation and Management Committee.
Our third witness is Dr. Daniel Hill, who is the Interim
Department Head, a Professor and holder of the Noble Chair in
Petroleum Engineering at Texas A&M. Previously, he taught for
22 years at the University of Texas at Austin after spending
five years in industry. He is the author of the Society of
Petroleum Engineering monograph ``Production Logging:
Theoretical and Interpretive Elements'', co-author of the
textbook ``Petroleum Production Systems'', co-author of an SPE
book, ``Multilateral Wells'' and author of over 150 technical
papers and holds five patents.
Our final witness is Mr. Michael Hagood. Mr. Hagood is the
Director of Program Development for Energy and Environment
Science and Technology at the Idaho National Laboratory. He is
responsible for developing programs advancing energy innovation
and also for designing and implemented INL's regional energy
sector strategy, notably the western energy corridor concept.
Mr. Hagood joined INL in 2003 and previously has also supported
INL national and homeland critical energy infrastructure
programs.
Thank you all for appearing before the Subcommittee today.
As our witnesses should know, spoken testimony is limited to
five minutes each after which the members of the Committee will
have five minutes each to ask questions.
I now recognize our first witness, Dr. Anthony Cugini, the
Director of the National Energy Technology Laboratory at the
Department of Energy, for five minutes.

STATEMENT OF DR. ANTHONY CUGINI, DIRECTOR,

NATIONAL ENERGY TECHNOLOGY LABORATORY,

DEPARTMENT OF ENERGY

Dr. Cugini. Thank you. Chairman Harris, Ranking Member
Miller and members of the Subcommittee, I appreciate the
opportunity to discuss the role that the Department of Energy's
Office of Fossil Energy and National Energy Technology
Laboratory continue to play in the safe and responsible
development of the Nation's unconventional oil and natural gas
resources.
As you know, since 2008, U.S. oil and natural gas
production has increased each year. In 2011, U.S. crude oil
production reached its highest level in nearly a decade.
Natural gas production grew in 2011 as well, the largest year-
over-year increase in history. Overall, oil imports have been
falling since 2005, and our dependence on imported oil declined
from 57 percent in 2008 to 45 percent in 2011, the lowest level
since 1995.
There are a number of unconventional resources with the
potential to support the President's all-of-the-above strategy
and to further reduce U.S. reliance on foreign oil. These
include U.S. oil reservoirs amenable to CO2 EOR,
heavy oil, oil shale, shale oil, and natural gas resources to
include methane hydrates.
Studies indicate that 24 billion barrels of residual oil
may be recoverable with current CO2 EOR technologies
and another 36 billion barrels with next-generation technology.
For perspective, the United States currently produces about 2
billion barrels of crude oil per year and has proved reserves
of about 23 billion barrels. The National Coal Council
estimates that another 33 billion barrels of residual oil zone
oil is recoverable at a crude oil price of $85 per barrel.
In combination with oil shale, heavy oil, oil sands and
shale oil, EIA estimates that unconventional oil resources
total more than 3,000 billion barrels of liquid hydrocarbons in
place. Production of unconventional natural gas resources has
also risen sharply during the past decade. Shale gas in 2012 in
the United States is roughly 25 times what it was in 2000. EIA
estimates that 482 trillion cubic feet of unproven but
technically recoverable natural gas exists, more than 20 times
2011 annual natural gas consumption of 24 trillion cubic feet.
Even more abundant than shale gas is natural gas from
methane hydrate. The Bureau of Ocean Energy Management,
Regulation and Enforcement estimates in-place gas hydrate
resources of 21,400 trillion cubic feet in the Gulf of Mexico,
and the USGS estimates 85 trillion cubic feet on the North
Slope of Alaska.
Implicit in the development of our unconventional oil and
gas resources is that air and water quality and public health
and safety are not compromised. To this end, the Department
signed a memorandum of agreement with the EPA and the USGS to
address the potential environmental, health and safety impacts
of hydraulic fracturing and the development of other
unconventional fossil resources. The DOE's NETL is also
carrying out research to quantify and understand the risks of
shale gas and shale oil development as well as improve related
unconventional oil and gas characterization and extraction
technologies under Section 999 of the Energy Policy Act of
2005, the Ultra-Deepwater and Unconventional Natural Gas and
Other Petroleum Resources program. Just this week, the
selection of 15 new projects was announced as part of the
Section 999 program.
Regarding methane hydrates, DOE's efforts have featured
extensive interagency coordination and collaborations with
leading international gas hydrate research organizations.
Because of these efforts, hydrates have moved from a scientific
curiosity in 2000 to a known resource today.
DOE and NETL have a long history of success in
unconventional oil and gas research. Collaboration with
industry in the 1970s and 1980s was a linchpin in the current
shale gas revolution. Recent successes include completion of a
large-scale field test of natural gas extraction from methane
hydrates on the North Slope of Alaska. Also, Altela
Incorporated will open two commercial water treatment
facilities this year in Pennsylvania based on technology
demonstrated under DOE's oil and gas program. NETL also
conducts onsite research that complements its extramural
portfolio and it leverages competencies and capabilities
including expertise in resource characterization, technology
development and environmental monitoring to inform responsible,
sustainable exploration of production of the Nation's
unconventional domestic gas resources.
Let me conclude by saying that the United States contains
significant hydrocarbon wealth that can be extracted and used
to provide economic benefits for all Americans. The Department
is committed to developing the science and technology that will
allow the Nation to use its abundant fossil energy resources in
a way that balances the energy needs for sustaining a robust
economy with continued environmental responsibility. I
recognize the developed legislation that aids in supporting
unconventional oil and gas research, and while we have not
developed a position, I am pleased that this legislation is
focused on this important energy resource.
Mr. Chairman, this completes my prepared statement. I look
forward to addressing any questions that you or the other
Subcommittee members may have.
[The prepared statement of Dr. Cugini follows:]

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Chairman Harris. Thank you, Dr. Cugini.
I now recognize our second witness, Mr. David Martineau,
the Chairman of the Texas Independent Producers and Royalty
Owners Association.

STATEMENT OF MR. DAVID MARTINEAU, CHAIRMAN,

TEXAS INDEPENDENT PRODUCERS AND

ROYALTY OWNERS ASSOCIATION

Mr. Martineau. Thank you very much. Good morning, Mr.
Chairman and members. My name is David Martineau and I am
representing the Texas Independent Producers and Royalty Owners
Association, also known as TIPRO. TIPRO was founded in the East
Texas Field in 1946. Since then, TIPRO has s grown to be a top-
tier oil and natural gas trade association made up of over
2,500 members statewide. Our membership ranges from small,
family-owned businesses to large publicly traded independent
producers, and includes large and small royalty owners, mineral
estates, and trusts. I currently have the pleasure of serving
as the Chairman of the Board of Directors for TIPRO. I am a
geologist. I worked for Pitts Oil Company for 40 years, as we
said, and I am truly honored to be here.
Lately, much has been made of this country's looming fiscal
cliff. The United States, however, is not only facing a fiscal
cliff, but an energy cliff as well. Domestic independent
producers are responsible for approximately 75 percent of the
domestic natural gas production, and nearly 50 percent of the
domestic oil production. However, threats to the framework that
allows independents to maintain and grow their production
levels exist in various forms. One, tax provisions like
intangible drilling deductions, IDCs, and depletion allowance
are crucial to the survival of the small independent producers
and they are being attacked and mislabeled as big oil
subsidies. Overreaching regulations from the EPA and U.S. Fish
and Wildlife Service with no scientific backing pile additional
unnecessary compliance costs onto the oil and natural gas
producers. The Federal Government is attempting to go green and
pick winners by focusing federal research and development
monies on unproven, uneconomical and unreliable sources. They
will not face the fact that 85 percent of the energy in the
United States comes from fossil fuels.
What needs to be done to continue to tap the American
energy potential that has been created by the new shale
revolution? You need to, one, understand variations in
subsurface properties to avoid drilling marginal wells and
increase recovery efficiency, scientifically characterize risks
and inform stakeholders, minimize surface impacts of
unconventional oil and gas operations.
In the past, federal dollars have been spent on researching
and developing improved methods of oil and gas extraction. Much
of the resultant data and techniques combined with the forward
thinking of some brilliant and creative private-sector minds
resulted in some of the biggest energy successes in the
country's history. Let me outline a few specific cases of
worthwhile federal research conducted on oil and gas. In 1976
the U.S. Department of Energy initiated an eastern shale
project to evaluate the gas potential of and enhance oil
production from shales within the Appalachian, Illinois and
Michigan basins in the eastern United States. This project
showed that we had enormous amounts of natural gas locked in
these domestic shale formations, which are now the massive
Marcellus and Utica shale plays. In 1982, the Federal
Government began funding the research efforts of the Gas
Research Institute, an industry-formed research and development
program founded in 1978, which has since resulted in increased
natural gas viability as a fuel source. In 1991, George P.
Mitchell, the father of the Barnett shale, with financial help
from the Department of Energy, drilled and completed his first
Barnett Shale horizontal well. In 2005, the Energy Policy Act
and a research program managed with the Research Partnership to
Secure Energy for America called RPSEA has been a very
successful program.
Recognizing the importance of oil and natural gas and
investing federal money in its development should not be a
thing of the past. In fact, never in history has it been more
crucial to continue improving and enhancing our ability to
recover domestic oil and natural gas. Domestic energy
independence can be achieved, and federal research money can
play a part.
In the State of Texas alone, since the shale revolution
started in 2006, from 2006 to 2011 we have increased annual
production of oil from 347 million barrels to 431 million
barrels and natural gas from 6.3 trillion cubic feet to 7.7.
This partially is why our imports have dropped from 70 percent
to 45 percent in that same time period as we head toward energy
independence.
Chairman Hall's bill 6603 is a good step in the right
direction, and I compliment him for his efforts. Many areas
where additional research could produce significant results are
outlined in the bill, including hydraulic fracturing,
development of improved proppants, water minimization,
management, reuse and alternatives, improved modeling of
formation, energy efficiency in exploration and production.
Hydraulic fracturing--the big item. The hydraulic
fracturing process, as it has evolved over the past 50-plus
years from vertical wells to long horizontal wells with
multiple fracture treatments, has introduced many complexities.
There is a need for research focus in this area to increase
recovery efficiency. To do so requires focusing on the
subsurface processes involved with fracturing, including
modeling of the process, microseismic assessment, emissions,
water usage and other research. Successful research will
increase the efficiency of the process, significantly reducing
the number of well bores required, resulting in a reduction in
well sites, water usage, emissions, traffic, noise, dust and
other factors, all while increasing oil and gas recovery per
well. This area of research, the optics of which do not
indicate direct environmental impact, can have an overwhelming
environmental impact.
Water management is another big issue. According to data
collected by the Texas Water Development Board, the volume of
water used in hydraulic fracturing represents less than one
percent of all the water consumed in the State of Texas.
However, water management goes hand in hand with hydraulic
fracturing, and the industry recognizes that there is still
progress that can be made in this arena. Research and
development are needed to address mitigation of the volumes of
freshwater required in hydraulic fracturing; significant
volumes of water produced from oil and gas shale wells and
associated concerns as to its composition when it comes back;
the development of technology to process water, converting the
industry's largest waste stream into a new, useful product; and
assuring the ability to safely dispose of water in the
subsurface by geologic characterization of potential disposal
zones across the country because they vary from basin to basin.
Understanding the subsurface conditions and types of
resource rock found within unconventional gas formations, in
particular oil and gas shale, require ongoing research. Flow of
fluids--gas, oil and water--through the low-permeability
formations, particularly oil and gas shales, is not well
understood. By increasing our understanding of subsurface
geologic conditions, we can make progress toward effectively
answering questions regarding economic recovery and
environmental safety. Additionally, subsurface research can
increase recovery efficiency from many unconventional oil and
gas fields in the U.S., further unlocking minerals yet in
place. These developed fields each have an entire
infrastructure already in place with roads, well bores,
metering facilities, marketing.
Thousands of small independents, many of whom are TIPRO
members, do not have the resources to conduct their own
research, yet cumulatively produce a huge portion of domestic
oil and natural gas. This is an area where targeted and
carefully disseminated federally funded research efforts can
have a significant and immediate impact on production and the
economy, and I urge you to revive federal research investments
into this worthwhile industry.
Often efforts intended to impact major global oil and
natural gas companies end up having a much larger impact on
small, family-owned companies, many of whom live and work in
your hometowns. These companies are a giant component in
generating American jobs and resources for your state and this
country, and they are worthy of your investment.
Thank you for your time.
[The prepared statement of Mr. Martineau follows:]

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Chairman Harris. Thank you very much.
I now recognize our third witness, Dr. Daniel Hill, the
Interim Department Head and Professor and holder of the Noble
Chair in Petroleum Engineering at Texas A&M. Dr. Hill.

STATEMENT OF DR. DANIEL HILL,

INTERIM DEPARTMENT HEAD, PROFESSOR

AND HOLDER OF THE NOBLE CHAIR IN PETROLEUM ENGINEERING, TEXAS
A&M UNIVERSITY

Dr. Hill. Good morning, Chairman and Committee members. I
am Dan Hill. I am the head of the Petroleum Engineering
Department at Texas A&M. I have been a faculty member for over
30 years after working in industry for about five years, and
throughout my career I have conducted research on methods to
improve oil and gas production. For the past ten years, I have
been supervising research projects funded by the Department of
Energy studying horizontal wells and hydraulic fracturing.
Unconventional oil and gas production has changed the U.S.
energy game. In just a few years, applications of advanced
technology have led to the most dramatic economic boost our
country has seen in my lifetime. Production of natural gas and
oil from unconventional reservoirs, primarily shale formations,
is soaring, daily lessening this country's dependence on
imported oil. Slide 1 is a history and forecast of the U.S.
natural gas supply. In less than ten years, gas production from
shale formations has grown to over 30 percent of the U.S.
supply and continues to grow. This is great news in every
possible way. Natural gas is the cleanest burning fossil fuel,
it yields the least CO2, and it is low cost, thanks
to its newfound abundance in unconventional reservoirs.
Even more dramatic is the rapid increase in domestic oil
production from unconventional reservoirs. Slide 2 shows that
oil production from the Bakken formation in North Dakota is now
close to 500,000 barrels per day. Forecasts are that Bakken
production will reach a peak of 1 to 2 million barrels per day,
equivalent to the peak production from the Alaskan North Slope.
Production from the Eagle Ford formation in South Texas has
grown from about 800 barrels per day to almost 300,000 barrels
per day in only three years, as you see in this slide. These
are just two examples. There are many other unconventional
reservoirs in other parts of the country that are also rapidly
adding to domestic production. Without question, there is a
revolutionary change in U.S. energy supply underway, solely due
to oil and gas production from unconventional reservoirs.
And how has this happened? This shale production revolution
is a result of major advances in the technologies of horizontal
drilling and hydraulic fracturing, and, in particular, the
combination of these two technologies. These advances have been
aided greatly by a modest level of research funding from the
Department of Energy, funding that supported research primarily
at universities, small businesses and the national
laboratories.
Let me give you one example. Beginning in the early 1980s
and through the mid-1990s, the Department of Energy, along with
the Gas Research Institute, supported fundamental research on
measuring the sounds made as hydraulic fractures are created.
This research, led by a team at Sandia National Laboratory,
resulted in a commercial technique for mapping hydraulic
fractures that is now called microseismic monitoring. This
technique, which has now been applied to tens of thousands of
fracture treatments, and which is now itself a multimillion-
dollar industry, has allowed engineers to greatly improve
hydraulic fracturing and well completion practices by providing
a means to measure the extent of the fractured region. Slide 4
shows a microseismic map of the area affected by a multistage
fracturing operation. The development of microseismic
monitoring of hydraulic fracture treatments was clearly enabled
by the Department of Energy-funded research that proved its
viability.
Is the current domestic energy growth sustainable? The goal
of energy security, and possibly energy independence for the
United States, is no longer just political rhetoric, but is
technically attainable. However, it will not be easy, and it
will require two things: further developments in technology,
and the trained engineers and geoscientists needed for
continued growth.
On the technology side, although hydraulic fracturing
methodologies have obviously been developed to the point that
oil and gas are economically recoverable from very low
permeability unconventional reservoirs, there is still a great
deal of improvement that can be made to this technology. Major
challenges include using less freshwater in fracturing and
drilling fewer wells to contact the same amount of reservoir.
The Department of Energy has been funding fundamental
research in conjunction with the Research Partnership to Secure
Energy for America, or RPSEA, on topics like these for the past
several years, and this research is having a visible impact on
industry practices. It is important to continue supporting
RPSEA as they have a proven track record of producing important
research results using a unique public-private partnership
model.
Perhaps most important is the role that Department of
Energy funding for unconventional oil and gas research will
have on the training of the engineers and scientists needed to
sustain growth in unconventional oil and gas development. The
research funded by DOE occurs primarily in universities and
most of the money ends up in the pockets of graduate students.
The research funding provided to universities through the
proposed Department of Energy research program will help
support the graduate students who will become the future
technology leaders of our country.
Thank you.
[The prepared statement of Dr. Hill follows:]

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Slides presented during Dr. Daniel Hill's testimony

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Chairman Harris. Thank you very much.
I now recognize our fourth and final witness, Mr. Michael
Hagood, the Director of Program Development for Energy and
Environment Science and Technology at the Idaho National
Laboratory. Mr. Hagood.

STATEMENT OF MR. MICHAEL HAGOOD,

DIRECTOR OF PROGRAM DEVELOPMENT,

ENERGY AND ENVIRONMENT SCIENCE AND TECHNOLOGY, IDAHO NATIONAL
LABORATORY

Mr. Hagood. Chairman Harris, Ranking Member Miller and
members of the Subcommittee, thank you for the opportunity to
testify before the House Science, Space, and Technology
Subcommittee on Energy and Environment.
I have been asked to provide a statement on aspects of U.S.
oil shale resource development and the importance of associated
research development and demonstration. The U.S. oil shale
resource is immense in size with most of the resource located
in the States of Wyoming, Utah and Colorado. Estimates from
recent U.S. Geological Survey studies indicate that among these
three states, approximately 4 trillion barrels of oil are
estimated to be in place with a significant portion of this
resource projected to be recoverable. To put that in
perspective, some of those estimates are at 800 billion barrels
of oil. To further put that in perspective, given 2011
estimates, the use of oil in the United States is approximately
6.8 billion. It is enormous.
A viable oil shale industry established on the foundation
of these world-class western oil shale resources would help
meet U.S. energy demands and reduce dependence on selected
imports and their associated costs as well as reduce the risks
associated with potential supply disruptions. On top of that,
as already mentioned previously, this also has implications
relative to the U.S. economy and not just directly but also in
moving up the value chain associated with manufacturing.
An oil shale research and demonstration program can
contribute significantly to unlocking some of the richest
portions of the western oil shale resource and help achieve
this in an environmentally responsible manner. Government and
industry research development and demonstration investment in
the Canadian oil sands and previous U.S. and current U.S.
government investment in shale gas and oil development attest
to the value of RD&D in developing unconventional fossil energy
resources. In addition, several industry players are currently
conducting R&D demonstration projects as part of the oil shale
research and demonstration leasing program managed by the
Department of Interior's Bureau of Land Management.
While a U.S. oil shale industry will likely be initiated
with current technology such as with mining and surface
retorts, aggressive research development and demonstration is
also needed to explore and advance new approaches in
innovation. Research development and demonstration offers to
expand technology options, improve operability and efficiency,
mitigate potential environmental impacts, and reduce costs of
producing oil shale. The objective of a potential oil shale
research development and demonstration program should be to
provide solutions that help achieve specific production and
environmental performance goals. Such a program would have a
near-term objective of supporting responsible development of an
oil shale industry but also be sufficiently farsighted to
anticipate and promote multiple next-generation technology
advancements. Given the longevity of this resource, it is
something important to keep in mind. This resource could last
100 or more years.
An oil shale research development and demonstration program
should focus on challenges that exist at both a site operation
scale and those that occur at industry-wide scale including
addressing fuel logistics, integrated energy systems and
address potential cumulative environmental effects. Relative to
energy systems, these can include integration of renewable
energy or even nuclear energy with fossil energy development.
Research development and demonstration associated with site
operations should include enhancing production efficiency and
environmental performance associated with in situ processing.
Addressing environmental performance both at regional and
operation scale needs to address surface and groundwater
management, air quality, greenhouse gas, wildlife and land
disturbance challenges. An effective R&D program should be
guided by a strong, strategic plan developed working with
diverse stakeholders and implementing R&D roadmap to ensure
that the key research needs are identified and prioritized.
Such a strategy can be built upon work already completed by
U.S. Department of Energy in supporting and implementing the
Energy Policy Act of 2005, Section 369.
Planning should also take advantage of decades of relevant
research conducted in association with the Canadian oil sands
as well as what is transpiring recently as part of the
Department of Interior's oil shale leasing program. This effort
should also incorporate assets and expertise that have emerged
around western oil shale operations and research including by
industry, regional universities, government agencies and
laboratories.
The U.S. Department of Energy is a technical integrator
that can bring together needed assets from both within and
outside DOE to deliver an impactful RD&D program and can also
act as an independent broker of technical information. DOE and
its laboratories are well qualified to provide this leadership
and to deliver a focused, solutions-oriented research program
to address key challenges in developing long-term U.S. oil
shale industry development.
Chairman and members of the Subcommittee, thank you once
again for the opportunity to share my testimony with you.
[The prepared statement of Mr. Hagood follows:]

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Chairman Harris. Thank you very much, and I thank the panel
for their testimony, reminding members that Committee rules
limit questioning for five minutes. The Chair will at this
point open the round of questions, and I recognize myself for
five minutes first.
Mr. Hagood, thank you very much for that testimony. Let me
get those figures straight. There are estimates that of those 4
trillion barrels, 800 billion potentially recoverable, and if I
do my math right, that is over 120 years at our current usage,
and remember that our current usage of oil is actually
declining over the past few years, so we have potentially over
120 years in that oil shale by those numbers?
Mr. Hagood. Yes.
Chairman Harris. That is what I thought. And who has the
largest oil shale deposits in the world? It is us, and is it
some other country also?
Mr. Hagood. Well, the United States has----
Chairman Harris. The United States, so let me see, I think
I get it. Okay. So it is something we probably ought to be
investing in.
Dr. Hill, do you realize that of the--oh, my gosh, let me
see, $15 billion or so DOE budget, that only $5 million is
spent on unconventional, none of it on oil shale or shale oil
and gas?
Dr. Hill. I am well aware.
Chairman Harris. You realize that, right?
Dr. Hill. Yes.
Chairman Harris. Okay. I know you mentioned the importance
of getting this money to graduates, but there is no money going
to graduate students who are looking at oil shale from DOE, I
anticipate.
Mr. Martineau, let me just run that one more time because
even in the current discussion, we are hearing about Big Oil
and all the rest of that. The intangible drilling cost
deduction and depletion allowance doesn't go to Exxon, does it?
The vast, vast, vast majority. I mean, the vast majority goes
to small owners and drillers?
Mr. Martineau. Yes and no. Exxon and major oil companies
get to deduct 70 percent of their intangibles, but when they
come back into this country and start drilling again, it is
very important.
Chairman Harris. That they continue to do it because they
are drilling here, not making money overseas.
Mr. Martineau. Amortized over five years.
Chairman Harris. So when we are talking about that, that is
about domestic manufacturing. That is what I thought, and I
thought we all support domestic manufacturing. You mentioned
that--it is interesting because you kind of mentioned the
importance of investing in these technologies, and there are
two ways you can invest. The government can invest in order to
find ways to condemn the technology, or they can invest to find
ways to further develop new technologies, and my fear is that
some of the investment being done over at EPA, and I am going
to get Dr. Cugini next about DOE, may be the former, that's
what we want to do, is we want to do research to condemn
current technologies, not realizing the future is to find the
next technological breakthrough, and it would seem to me that
that--and I am just asking if you share that opinion. It seems
that that is the best way we should be spending our money is
actually to find out how to increase production through new
technology, not finding problems with current production in
order to just condemn it. I mean, that has no use if you are
not going to also find ways to improve it. Is that correct?
Mr. Martineau. I think you can improve the technologies
that we currently have, and----
Chairman Harris. And that would do both things at once,
right? It would increase production and help the environment.
Mr. Martineau. Exactly.
Chairman Harris. Right, and I am still trying to figure out
how drilling those wells at Pavilion by the EPA does the latter
and not the former. I am still trying to figure it out. It is
just to condemn current technology. It is incredible to me.
Dr. Cugini, let me end up with you in my last couple
minutes because, you know, this is about getting money into the
Department of Energy to do some things. Is that really true,
that there is no money spent right now on oil shale R&D? I
mean, that was the testimony before the Committee this year.
Dr. Cugini. Well, I think there has been some historical--
--
Chairman Harris. Not historical--this year.
Dr. Cugini. But those projects are still underway, so at
the University of Utah, we have some small amount of work going
on and----
Chairman Harris. And how much is a small amount out of the
$15 billion DOE budget?
Dr. Cugini. I don't have those numbers----
Chairman Harris. Can you get that number back to me? And I
will ask the Committee to make sure we make that request of the
doctor. Because I suspect it is really small, which is just
amazing to me because we have testimony, we are looking at 120
years of oil, and I am not even counting the things that is in
shale oil and gas. We are just talking about this one resource,
120 years. We are in the midst of--the whole world would like
to buy our oil and we are sitting on it, and you are telling me
there is one little project at Utah, and that is it for oil
shale.
Dr. Cugini. Well, I think there is also some work that we
do with Bureau of Land----
Chairman Harris. Well, now, let me ask you----
Dr. Cugini. --Management that you pointed out during your--
--
Chairman Harris. Let us pretend we start with a clean
slate. What are some of the things we should be doing in order
to move the development of oil shale along? What are some of
the things the Department of Energy you think could do within
the realm of possibility?
Dr. Cugini. Well, obviously several of the projects would
involve improving the efficiency of the process, looking at
things like better water management and those type of
technologies. I think those are the two key components of an
oil shale program. The energy requirements and water
requirements are such that it makes it difficult to extra the
oil economically so I think a program that was addressing those
two issues would allow us to look further at oil shale.
Chairman Harris. And do you think that Chairman Hall's bill
moves us in that direction, or can?
Dr. Cugini. I think added resources would have the
opportunity to do it. I think that is the way I would say it.
Chairman Harris. Okay. Thank you very much for answering.
I now recognize the ranking member, Mr. Miller, for five
minutes.
Mr. Miller. Thank you, Mr. Chairman. I know what Emerson
said about a foolish consistency but I am still struck by this
discussion.
Dr. Cugini?
Dr. Cugini. Yes.
Mr. Miller. You said in your testimony that, not oil shale,
but shale oil technology was a result--that we have now was a
result of research in the 1970s and the 1980s, Federal
Government research but closely working with industry in that.
Is that correct?
Dr. Cugini. That is correct.
Mr. Miller. Okay. And how--we have heard the phrase
``picking winners and losers'', and the various technologies
are in competition with each other as the coal industry has
learned from the decline in natural gas prices, and I think
most of the assumptions about oil shale is that the reason it
is not commercially practical, although it has been researched
within an inch of its life, it is not commercially viable at
current prices. But how are we not picking a winner? How are we
not picking winners and losers in the 1970s and the 1980s?
Dr. Cugini. Well, I think in the 1970s and 1980s, the
research was developed--was focused on developing technology,
base sets of technology. So you heard testimony today about
some of the work that resulted in seismic activity allowing us
to draw seismic maps. It was somewhat fundamental in nature. We
were also able to start asking industry to start looking at
these technologies, providing information about the resource
maps and other types of information related to resources, and
working with industry, industry picked up a lot of the balls in
looking at applying, as we found out, hydraulic fracturing and
other types of technologies.
Mr. Miller. And by the way, I support energy research, and
I support energy research into any available form of energy. In
the 1970s and 1980s, I think we were spending ten percent of
all federal research funding on energy research, and I think
now it is 3, and that seems foolish to me. I think we should be
spending more on energy research, and it should include energy
into alternative fossil fuels or unconventional fossil fuels.
So the research in the 1970s and 1980s was for a fairly early
stage that might or might not work. Is that correct? Is that
why the industry wasn't just doing it by themselves without
needing government to be part of that?
Dr. Cugini. I think there were a lot of factors in play. I
mean, part of it was the early stage of the resources--the
research. It was also a lack of information relative to whether
that resource was actively there and actively extractable. So
part of the DOE's budget in research at that time was
characterizing--working with USGS and others to characterize
the available resource. So there were a combination of
interests. I think one of them may have been the early stage of
the technology development.
Mr. Miller. I am struck by the arguments, the fairly
dismissive arguments about alternative energy sources as being
unreliable, uncertain, and the fossil fuel research that we
have heard about today is described as a sure thing, a slam
dunk. Mr. Martineau, that was your testimony, and you are
nodding your head now, that yes, that is right. But if it is a
slam dunk, if we know it is going to be profitable, why do we
need to be funding it? Why is that not an ordinary business
expense for the industry that will produce it? It seems like
the more logical funding should be for early-stage research for
technologies that might or might not prove to be commercially
viable.
Dr. Cugini, could you walk me through that? Could you
explain that to me?
Dr. Cugini. Well, there still is somewhat risk factors
associated with some of the technologies, so take for example
exploiting the natural gas resource from shale development.
Right now, there is incentive to exploit that resource because
at about 20 percent extraction of the gas, which current
technologies, give or take, give us, it is economically
recoverable. But there is potential to access quite a bit more
of that gas through novel techniques. There really isn't any
incentive, I think, in industry or capital in the industry to
go after improved extraction technologies. So that might be an
example that I think addresses your question.
Mr. Miller. Mr. Martineau, if this research is as sure as
you say it is to produce recoverable energy, why is this not--
why is our funding for this research not paying for just an
ordinary business expense for the industry? Why is it not a
direct, just subsidy?
Mr. Martineau. A subsidy--well, of course, I have been an
independent oil and gas operator, which I have been a geologist
for 52 years now, and I just look back at what has happened in
the shale itself. We used to drill wells all the time through
shales, non-commercial, low permeability nanodarcy type thing,
and you couldn't do it, and until they started the Barnett
shale program in 1981, when George Mitchell drilled the first
well, attempting to develop the gas, and you think how many
years it took before the shale took over. Now we have a shale
revolution all over the whole United States, but if it hadn't
been for some of the research work, and I was involved somewhat
when the first horizontal well that I mentioned here before
that George Mitchell drilled, was funded somewhat by the
Department of Energy to see if a horizontal well--at that time
gas prices were so low, it didn't make sense to do it, and as
the gas prices came up, we started doing it. But some of the
research that us independents--because we don't have access to
research. We strictly drill well, drill producers, dry holes
and commercial wells, and so I think the research that has been
done that I have been involved with through my years in the
business has been a real asset for the small independents,
because we don't have the research teams to come up with the
different type of technologies that were advanced in fracking
itself. Fracking has been around for 50 years. We have been
fracking wells forever, but the technology of hooking a
horizontal well with a frack job--and they used to frack them
all with water in one stage--or no, gel, and then they switched
to water, increased the production tremendously. The horizontal
legs now, it used to be 2,000, 3,000 feet. Now it is 6,000 to
7,000 feet but 50 fracks in it. In other words, the
technologies and the mapping that he did showing where the
frack job goes is really critical because nobody knew before.
The microseismic work that we have done and the technology,
that was backed by funded research from the Department of
Energy and different people how to do--how do you trace where
these frack jobs go.
The big issue, of course, is frack water contaminating the
freshwaters, and that mapping that he showed, it only goes 150,
200 feet away from that well before. They go up into the
freshwater zone. It doesn't happen. There has never been a well
yet that has been contaminated by a frack job from the
freshwater zones. They have been contaminated all right, but it
is because of poor casing, cementing or the lack of integrity
in the pipe, which has caused the water, but, you know, they
have been opening water wells in homes forever and you could
light a match to it and, you know, it is not the first time.
Since fracking came around, everybody says, oh, they are
caustic. That is not true. That has been happening forever in
this United States.
Chairman Harris. Thank you very much, and the gentleman
yields back his time.
Chairman Hall is recognized for five minutes.
Chairman Hall. I thank you, Mr. Chairman, and I think Dr.
Cugini and Mr. Martineau and others of you there could also
point out that independents seek and search for and majors buy
it, and independents are the ones that take the chance and need
some help, and years ago I think that the names of Frank Pitts
and Shelby Pitts are well known to this Committee. They have
been before this Committee and before Energy and Commerce many
times, and thank you. It is a product of theirs for being here.
Mr. Martineau, I want to thank you also for impact on
unconventional energy production in Texas. As you know, states
currently have the authority to regulate hydraulic fracturing,
though I am concerned that the EPA's activist regulatory agency
and disregard for scientific methods, not taking a scientific
approach to it, in their attempts to usurp this authority. How
does the responsible regulatory agency for oil and gas
production in Texas--that is the Railroad Commission--perform
regulation and oversight of TIPRO members and their companies?
Mr. Martineau. Well, the Texas Railroad Commission has been
overseeing the development of oil and gas for many, many years,
and they have got technical staff of engineers and geologists
just like the oil companies do, and whenever a frack job is
performed--of course, now with the new frack focus, you have to
report exactly what has been pumped into the particular well
and that information was somewhat started kind of by the
Railroad Commission because everybody kept saying well, we
don't know what is going into the well. But the Railroad
Commission oversees all the development when you are drilling a
well, how much surface casing you have to set to protect the
freshwaters and how much cement you actually have and you have
to report all of this information to the Railroad Commission.
So they have been overseeing the operations of oil and gas in
Texas forever, and had the EPA come in--and I testified--well,
I didn't testify. I went over to a hearing where the EPA was
talking about trying to control fracking, and every state,
every rock is a little bit different. You frack them all
different. You can't come up with one rule that covers the
entire United States. Each state has different types of rock
and therefore each State has its own regulatory agency and
therefore you don't need to have one massive rule by people who
have never drilled a well in their life trying to tell you how
to do it.
Chairman Hall. Well, Mr. Miller asked some questions,
logical questions about why can't the success pay for the
search, you know. It is probably true that the independents do
take all the chances and the majors buy them after they are
successful. That is the reason that they need some support as
they go.
Before I yield back my time, I want to thank Mr. Miller for
his service to this Committee. He has been a very valuable
member. He goes back to my state, all my people came from North
Carolina, to give his services there, and I want to wish him
well there.
I yield back my time.
Chairman Harris. Thank you very much, Mr. Chairman, and the
gentleman from California, Mr. McNerney, is recognized for five
minutes.
Mr. McNerney. Thank you, Mr. Chairman, and I thank the
panelists for coming today and testifying. Most of my
colleagues, I believe would be in favor in providing research
dollars for development of energy resources but I just
challenge my Republican colleagues to be as receptive toward
spending dollars on clean energy as they are on fossil fuel
energy. For example, the wind energy production tax credit is
about to expire this year. That will throw about 40,000 people
out of work, and this is an industry that has been developed in
this country by American research dollars. These jobs are going
to go overseas and they are going to be taken over--this
industry is going to be taken over by our competitors. So I
think it is important that we keep that in mind as we move
forward.
Now, I think everyone on this panel agrees that the
unconventional resources are massive, that there is a massive
amount of energy and fossil fuels there. But what is the energy
balance of the unconventional resources versus the conventional
resources? Pick any one of them, tar sands or shale oil. What
is the energy out versus the energy in compared to what it
looked like when the oil was first being developed back in the
early 1900s? Does anyone want to take a shot? Dr. Hill, do you
want to take a stab at that?
Dr. Hill. All right. Well, certainly some energy is
expended in creating these wells, and you could pretty much
figure it out from the economics, you know, compare the value
of the oil produced compared with the cost to create and
complete the wells, and a typical good oil-producing well now
from a shale formation, you know, that ratio might be two or
three to one. In other words, two or three times--the value of
the crude oil produced is two or three times the cost of the
well. So that is a rough ratio.
Mr. McNerney. I mean, that sounds about right. Back in the
spindle oil well days, they were talking about 90 or so to one,
so we are seeing a much bigger investment of energy into these
wells than we ever saw before, and those of us that are
concerned about CO2 and global warming, and I am one
of those people, we are going to be putting two to three times
as much carbon into the atmosphere per unit of energy
delivered. So this is a very big concern for myself, for a lot
of people across this country about what impact it is going to
have on our global environment. And I think that is something
we need to consider as we move forward and the research dollars
that are spent in this program to understand that impact and to
find ways to mitigate that impact if carbon sequestration is
part of the solution.
Now, another question I have is, will the so-called energy
independence that we are aiming at result in any lower cost for
American consumers as opposed to the cost that it will reduce
for foreign consumers? So what I am getting at is that, yes,
this is going to produce a lot more energy, a lot more oil but
this is fungible. This is an international market. Those
products are going to go overseas just like they are to this
country. It is not going to help our consumers any more than it
is going to help any other consumer in the world. So to say
that this is benefiting American consumers more than foreign
consumers I think is not necessarily true. It is not
necessarily a true statement. Does anyone care to respond? Mr.
Martineau? Go ahead.
Mr. Martineau. You know, one thing earlier that you said
about the other resources, and I think of biofuels in
particular, because it is kind of interesting, you hear a lot
of conversation, you know, biofuels are, what, ten percent of
the gasoline you have do now, and the cost of the biofuels,
which is this third-party energy, green energy-type thing,
comes from the corn that is grown, and they were talking about
how much water it takes to keep that corn growing, which is the
water that we are now talking about how do we use it, we are
using up all the water in fracking. A lot of it is being used
to grow the corn. The corn now goes into biofuels and doesn't
go to the food and so our food prices have gone up. And so, you
know, these are the third-party-type green energy things that I
think are very expensive, that people don't put the real dollar
to it what that ten percent cost is unbelievable----
Mr. McNerney. I agree. There needs to be a fair look at all
these sources, and I am not going to single out fossil fuels
because corn-based ethanol has its problems, no question about
it.
The last question I have is regarding to the industry's
record for hiring veterans of this country. The wind industry
has the best record of any industry of hiring veterans because
of the transfer of skills. What is the record of the fossil
fuel industry in this area?
Mr. Martineau. I am not real sure, although I heard, and I
am not sure which group, they are doing a program, I think it
is Houston--I will have to find out--where they are bringing in
all of the veterans because the job increases that have
increased in the United States recently because of the shale
revolution is unbelievable, and they are putting a program
together, and I can find out the name of it but it is to ask
veterans to come in, study how to be a roughneck, how to be a
roustabout, you know, either that or can they go to college and
become an engineer or a geologist. So there are programs that
are using veterans because we can't find people to go to work
in all these shale plays that are going on right now, and I
think your group in the wind industry, they can go to work in
the oil industry. They are not going to have to go overseas.
They can go right to work in the oil and gas industry.
Mr. McNerney. Mr. Chairman, I would ask that you consider
that a part of your bill, Mr. Hall, to give provisions, special
provisions for training and hiring veterans if they are going
to be used in this research.
Chairman Harris. Thank you very much, Mr. McNerney, and I
now recognize the gentleman from California, Mr. Rohrabacher,
for five minutes.
Mr. Rohrabacher. Well, let me just note that when people in
this country are forced to use energy resources that are more
expensive than the alternatives that they could use otherwise
because of some harebrained environmental theory that whatever
that harebrained theory is, that that expense, which is usually
hidden from the public, goes right out of the pool of money
that we have to provide good jobs for our veterans and
everybody else. So if wind costs five times as much to produce
the same amount of electricity as natural gas, that is how much
money less we have to provide good jobs for veterans and
anybody else in this country because we are eating up resources
that could be used, put to better use and are now just
evaporated because that wealth no longer exists. I find wind to
be one of the, and from what I have seen and heard from various
sources, one of the most inefficient ways of producing
electricity per cost and not to mention the fact that there are
environmental costs to it as well, the thousands of birds that
get killed. I am not necessarily a bird man here but I can just
tell you that there are many more birds that are killed by
windmills than there are by fracking from what I understand.
And by the way, wind energy is not anything new. My family
came from a small farm in North Dakota and I used to go up
there and work in the farm in the summertime, sometimes the
wintertime. They had windmills back then. In fact, about 100
years ago, windmills were thought to be the potential use for
electricity, especially on farms and places like that, but they
decided not to go that direction because it was cheaper and it
was a waste of resources not to go with the cheaper method of
producing electricity, and if you don't go with the cheaper
method, you are evaporating wealth, which could be put to use
in improving people's standard of living.
And let us also note, the idea that we have not been
financing ``green energy research'' as compared to what we are
doing with oil and gas is just incredible. I mean, hundreds of
times more money has been spent on green energy research than
in oil and gas, and that is documented here.
And one other thing. I think the oil industry and the gas
industry, one of the most vilified industries that have done so
much good for our country. Having come from a family in North
Dakota, I realize what our cities must have smelled like when
we were relying on horses for our transportation system, and I
will tell you that a hundred years ago, one of the biggest
problems was horse manure, and the smell and the stench and the
health-related things, and the oil industry saved us from all
of that, and kids aren't even taught that now. They just think
that it was hunky-dory back in those days.
One thing that I probably have disagreed with the industry
about is about this whole research thing that we are talking
about today. If we are putting money into research, which is
what we are talking about, and we are talking about how
fracking became, you know, a viable source, and there are
certain technologies that were developed and certain government
involvement in that. What is the American taxpayer getting out
of that? Are we going to, as far as I am concerned, if we
invest in the development technology for your industry, and
that technology reaps a big reward because we are producing all
this energy now and making billions of dollars doing it,
shouldn't the taxpayers be the owners of that technology if we
are investing in it, and how much have we gotten back from our
investment in research, for example, in fracking and other
things? Besides the fact the public is benefiting, there is no
doubt about that, but we are talking about in the other
industry and people input money into research and development,
develop new technologies, they have the patent rights and they
have the property rights to that utilization and they make
money on it. Now, shouldn't the taxpayers make money for
investing and developing your technology? Anybody can answer
that. That is fine with me.
Dr. Hill. I guess the government could do that if they
chose to, in other words, Department of Energy-funded research,
the Department of Energy could own the intellectual property.
In general, the way it has always been is that this type of
research is done for the general benefit of the public and so
that knowledge that is created is share with everyone.
Mr. Rohrabacher. Mr. Chairman, just for the record and this
hearing, that this is one Congressman that would insist that if
we are going to invest taxpayer money and whether it is the oil
industry or any other industry, that developing technology for
them to make a profit, the taxpayers should have an ownership
right of some kind on the technology that is being developed,
and that is just for the record. Thank you very much.
Mr. Martineau. Let me answer one thing there. If you think
about the economy, the natural gas prices here in the United
States, they are benefiting because we have so much natural gas
now that gas prices are down so low and they are benefiting
indirectly. If they want to move to Europe, they sure can and
pay $11 in MCF over there as opposed to $3.
Mr. Rohrabacher. You know any time you do something right
in a free market economy, it means somebody is going to make
some more money, right? So it is not just oil and gas, it is
anybody, if we were paying the research and development costs
for any other industry and then they were profiting from it,
that would be different if that industry was using their own
money and developing their own technology. They would actually
own the rights to that particular technology and they would
lease it out to other people and make money from it. Now, if
the United States government is going to do this for your
industry or any other industry, I might add, I just think that
the taxpayers should own that share of the technology they are
helping to develop and should go into the coffers of the
taxpayer.
Chairman Harris. Again, I want to thank the gentleman from
California, and the gentleman, the new gentleman on the
Committee has been very patient waiting. It is my pleasure to
recognize Mr. Curson for five minutes for questioning.
Mr. Curson. Thank you, and being the newest member, I am
probably the least knowledgeable about this issue, but I have
studied the history of this Committee and these hearings, and
first I want to agree with the previous speaker that I am glad
that our automobiles aren't powered by horse manure, coming
from the industry.
But in this particular issue, I know the question that the
citizens of my district will ask is, we have got an industry
that the government has participated in R&D. This is a for-
profit industry. They provide the oil industry very generous
tax rates and incentives. The three largest companies, oil
companies in America, in 2011 made $80 billion in profits while
the rest of the economy was struggling out of the worst
recession that we have had in many, many years. Why would the
government pay for R&D to create more profit for a profit
company when these companies aren't making nickels and dimes,
they are making huge dollars? I heard clearly that many of the
smaller oil companies that don't make these type of profits are
the ones that are the actual benefactors. Well, there is other
ways for those companies to take advantage of this rate. I
believe that--I would like to have an answer on why in the big
picture with companies making this kind of profit should the
government be rolling out taxpayer dollars to do your R&D,
particularly these aren't new technologies. This unconventional
resources have been around for years and the oil companies have
decided not to pursue them because they weren't profitable in
the end. So if now new technologies are making it more clear
that they can be profitable, you would think that would be the
responsibility of the oil companies to pursue it, and in
previous hearings on this very subject when you get a member of
the U.S. Chamber that says ``I don't think you will find
anybody in the industry that is saying we need more money from
the federal government.'' I believe that is the same thing the
citizens of my district would say.
So if there is a reasonable answer to that, I would like to
hear that.
Dr. Hill. I would like to point out that again, as I said
in my testimony, the majority of research funding of this type
that goes to the Department of Energy in general, it is funding
university research. Is it not going to Exxon Mobil. It is not
going to these very profitable oil companies. It is being spent
in universities, and this is how we were able to train the
engineers that this country desperately needs, and so I would
encourage you to think of it that way. Don't think of this as
not money flowing directly to the industry, it is helping
develop technology that anyone in the country is welcome to use
but it is really being spent in support of education.
Mr. Martineau. And that education goes to people like
Apple. You notice where Apple is on their profits compared to
Exxon? You need to look at that. It is four times higher than
what Exxon is, and the engineering that he was just talking
about from those students is what helped. Will you give up your
phone? Will you give up your computer? Will you give up the
plastic that you use every day in these water bottles? It all
comes from the research done originally by the oil and gas
industry and utilized by other technologies like Apple.
Chairman Hall. Will the gentleman yield?
Mr. Curson. I yield the rest of my time.
Chairman Hall. What percentage of the little independents
that drill and hit to those who drill and miss?
Mr. Martineau. You don't want to know the number of dry
holes I have drilled in my lifetime.
Chairman Hall. I think that answers my question.
Mr. Martineau. And you know, it kind of goes back, speaking
of dry holes made me think about when we talk about intangible
drilling deductions, and the reason that bill was put in place
back in 1913 was because at that time if you drilled a bunch of
dry holes or non-commercial wells, you were out of business,
and if you didn't continue having some sort of resources, so
that tax credit for intangible drilling was passed in 1913, 100
years ago, and because of that being able to continue if you
drill dry holes and non-commercial wells, Mr. Hall, is what has
kept our industry alive, and to be able to say you want to take
away intangible drilling costs, you will put so many companies
out of business, it is unbelievable because not everybody
drills a producer, let me tell you. There can be non-commercial
wells, and people forget about those, but you haven't got your
money back. And it is not like making a washing machine or an
automobile, you know. It comes out every day. You come and
drill with me, you might not make a well every day.
Chairman Harris. Thank you very much, and I want to thank
all the witnesses for your valuable testimony and to the
members for their questions. The members of the Subcommittee
may have additional questions for the witnesses, and we ask you
to respond to those in writing.
Mr. Rohrabacher. Mr. Chairman?
Chairman Harris. I am sorry. I yield to the gentleman from
California.
Mr. Rohrabacher. I would like unanimous consent for one
minute.
Chairman Harris. Without objection.
Mr. Rohrabacher. I would just like to thank Mr. Miller for
the job that he has done with us. It has been a lot of fun
kibitzing with you on various issues, and he is a very
intelligent member and a very hardworking member of this
Committee, and sometimes we have had disagreements, obviously,
but the fact is, is that he is a very respected person here and
we will miss him and wish him well in the years ahead. Thank
you for the good job that you have done.
Mr. Miller. Thank you, Mr. Rohrabacher. I am not aware of
any instance in which either one of us has convinced the other
of anything, but thank you.
Chairman Harris. I want to thank the gentleman from
California and echo the gentleman's comments. It has been a
pleasure working with the ranking member. And, you know, in the
end, we all realize that we want what is best for the country
and what is best for Americans, and do our little bit here on
the Energy and Environment Subcommittee of the Science
Committee toward that end. I want to thank him for his service
to the Congress and to his district.
Anyway, again, we will ask you to respond to any questions
in writing that come from Committee members. The record will
remain open for two weeks for additional comments from members.
The witnesses are excused and the hearing is adjourned.
[Whereupon, at 10:53 a.m., the Subcommittee was adjourned.]

Appendix I

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Answers to Post-Hearing Questions

Responses by Dr. Anthony Cugini

[GRAPHIC] [TIFF OMITTED] T7038.044

Responses by Mr. David Martineau

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Responses by Dr. Daniel Hill

[GRAPHIC] [TIFF OMITTED] T7038.046

Responses by Mr. Michael Hagood

[GRAPHIC] [TIFF OMITTED] T7038.047

[GRAPHIC] [TIFF OMITTED] T7038.048

[GRAPHIC] [TIFF OMITTED] T7038.049

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[GRAPHIC] [TIFF OMITTED] T7038.051

Appendix II

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Additional Material for the Record

Letter submitted by Chairman Ralph M. Hall from the American
Geosciences Institute in support of H.R. 6603

[GRAPHIC] [TIFF OMITTED] T7038.052

[GRAPHIC] [TIFF OMITTED] T7038.053

``The new Boom: Shale gas fueling an American industrial revival,''
Article, Washington Post

[GRAPHIC] [TIFF OMITTED] T7038.054

[GRAPHIC] [TIFF OMITTED] T7038.055

[GRAPHIC] [TIFF OMITTED] T7038.056

[GRAPHIC] [TIFF OMITTED] T7038.057

[GRAPHIC] [TIFF OMITTED] T7038.058

``Oil and Natural Gas Generate EMPLOYMENT and TAX REVENUE,'' submitted
by Mr. David Martineau

[GRAPHIC] [TIFF OMITTED] T7038.059