[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]





  DOMESTIC NATURAL GAS SUPPLY AND DEMAND: THE CONTRIBUTION OF PUBLIC 
                           LANDS AND THE OCS

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

                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             March 15, 2001

                               __________

                            Serial No. 107-6

                               __________

           Printed for the use of the Committee on Resources



 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house
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                         COMMITTEE ON RESOURCES

                    JAMES V. HANSEN, Utah, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska,                   George Miller, California
  Vice Chairman                      Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana     Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Peter A. DeFazio, Oregon
Elton Gallegly, California           Eni F.H. Faleomavaega, American 
John J. Duncan, Jr., Tennessee           Samoa
Joel Hefley, Colorado                Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado              Calvin M. Dooley, California
Richard W. Pombo, California         Robert A. Underwood, Guam
Barbara Cubin, Wyoming               Adam Smith, Washington
George Radanovich, California        Donna M. Christensen, Virgin 
Walter B. Jones, Jr., North              Islands
    Carolina                         Ron Kind, Wisconsin
Mac Thornberry, Texas                Jay Inslee, Washington
Chris Cannon, Utah                   Grace F. Napolitano, California
John E. Peterson, Pennsylvania       Tom Udall, New Mexico
Bob Schaffer, Colorado               Mark Udall, Colorado
Jim Gibbons, Nevada                  Rush D. Holt, New Jersey
Mark E. Souder, Indiana              James P. McGovern, Massachusetts
Greg Walden, Oregon                  Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho            Hilda L. Solis, California
Thomas G. Tancredo, Colorado         Brad Carson, Oklahoma
J.D. Hayworth, Arizona               Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana

                   Allen D. Freemyer, Chief of Staff
                      Lisa Pittman, Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                 James H. Zoia, Democrat Staff Director
                  Jeff Petrich, Democrat Chief Counsel
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                    BARBARA CUBIN, Wyoming, Chairman
              RON KIND, Wisconsin, Ranking Democrat Member

W.J. ``Billy'' Tauzin, Louisiana     Nick J. Rahall II, West Virginia
Mac Thornberry, Texas                Edward J. Markey, Massachusetts
Chris Cannon, Utah                   Solomon P. Ortiz, Texas
Jim Gibbons, Nevada,                 Calvin M. Dooley, California
  Vice Chairman                      Jay Inslee, Washington
Thomas G. Tancredo, Colorado         Grace F. Napolitano, California
C.L. ``Butch'' Otter, Idaho          Brad Carson, Oklahoma
Jeff Flake, Arizona
Dennis R. Rehberg, Montana
                                 ------                                

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on March 15, 2001...................................     1

Statement of Members:
    Cubin, Hon. Barbara, a Representative in Congress from the 
      State of Wyoming...........................................     1
        Prepared statement of....................................     3
    Kind, Hon. Ron, a Representative in Congress from the State 
      of Wisconsin...............................................     4
        Prepared statement of....................................     5
    Markey, Hon. Edward J., a Representative in Congress from the 
      State of Massachusetts.....................................     6
    Otter, Hon. C.L. ``Butch'', a Representative in Congress from 
      the State of Idaho, Prepared statement of..................    63

Statement of Witnesses:
    Alberswerth, David, Director, Bureau of Land Management 
      Program, The Wilderness Society............................    91
        Prepared statement of....................................    94
    Downey, Marlan W., President, American Association of 
      Petroleum Geologists.......................................    75
        Prepared statement of....................................    77
    Fisher, Robert W., President, Montana Petroleum Association, 
      and Senior Vice President/Managing Partner, Ballard 
      Petroleum Holdings, LLC....................................    83
        Prepared statement of....................................    85
    Hackett, James T., Chairman/President/Chief Executive 
      Officer, Ocean Energy, Inc.................................    12
        Prepared statement of....................................    14
    Papa, Mark, Chairman & CEO, EOG Resources....................    29
        Prepared statement of....................................    32
    Simmons, Matthew R., President, Simmons & Company 
      International..............................................     8
        Prepared statement of....................................    10
    Speer, Lisa, Senior Policy Analyst, Natural Resources Defense 
      Council....................................................    45
        Prepared statement of....................................    47

Additional materials supplied:
    Cavaney, Red, President and CEO, The American Petroleum 
      Institute, Statement submitted for the record..............   114
    Powder River Basin Resource Council, Statement submitted for 
      the record.................................................    50

 
  DOMESTIC NATURAL GAS SUPPLY AND DEMAND: THE CONTRIBUTION OF PUBLIC 
                           LANDS AND THE OCS

                              ----------                              


                        Thursday, March 15, 2001

                        House of Representatives

              Subcommittee on Energy and Mineral Resources

                         Committee on Resources

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to call, at 2:00 p.m., in 
Room 1334, Longworth House Office Building, Hon. Barbara Cubin 
[Chairman of the Subcommittee] presiding.

 STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF WYOMING

    Mrs. Cubin. The oversight hearing by the Subcommittee on 
Energy and Mineral Resources is meeting today to hear testimony 
on domestic natural gas supply and demand and the contribution 
of the public lands and the OCS.
    Under rule 4(g) the Chairman and the Ranking Minority 
Member can make opening statements. If any other Members--and 
you can see there are so many up here, we really need to worry 
about it--have statements, we will include them in the record.
    So, with that, our first hearing for the 107th Congress, we 
meet today in our oversight function for issues concerning 
public lands and mineral resources. Last week the full 
Resources Committee began this inquiry by looking at the role 
of our public lands and power marketing administrations to 
provide a broad spectrum of energy supplies. Our hearing today 
will focus upon the natural gas availability issues, both from 
onshore Federal mineral estate and from the outer continental 
shelf.
    Fifteen months ago an advisory body to the Secretary of 
Energy completed a report entitled ``Meeting the Challenges of 
the Nation's Growing Natural Gas Demand.'' This study examined 
demand-side projections and supply-side forecasts and concluded 
that coordinated action by the Federal Government will be 
necessary to stave off an impending imbalance. That was 15 
months ago. That is, gas producers and pipelines may not be 
able to meet consumers' expectations for this fuel if we don't 
get our act together soon.
    Perhaps the key recommendation of this panel was for the 
President to establish an interagency working group within the 
White House to bring industry representatives and various 
Executive Branch agencies together to discuss the place for 
natural gas and an energy strategy for the Nation. The panel 
believed that interagency squabbles were inhibiting supply, 
particularly from Federal mineral estate in the West and on the 
outer continental shelves. A primary finding of the supply-side 
team was that while sufficient resources exist to meet growing 
demand well into the 21st century, many access restrictions are 
denying significant volumes of gas today, and will continue to 
do so unless administrative and/or legislative action to reduce 
permitting delays occurs.
    I don't need to tell everyone what happened this winter, 
but the NPC guys look like they were pretty good forecasters, 
better than the local TV weathermen actually anyway, the ones 
that said that the 50-year storm was headed our way a week or 
two ago, and then we had a half an inch of snow here. So, the 
NPC did a good job. They warned of this problem by the end of 
this decade, and it is here now.
    One of the President's first initiatives was to ask Vice 
President Cheney to lead an energy policy development group at 
the White House level. He will report on the current state of 
the Nation's energy situation and make recommendations for a 
national energy strategy. The Vice President's report is 
expected next month.
    But, today I would like our Subcommittee to listen to the 
views of industry and economists and the environmental 
community about the role for natural gas. This energy source, 
nicknamed ``the fuel of the future'' by some of the past 
administrations, is an increasingly important fraction of our 
domestic demand. But unlike crude oil and refined petroleum 
products that we import by the tankerload, natural gas is a 
commodity that we must get from North American supplies by way 
of pipeline. Yes, there are a few mothballed LNG port 
facilities in this country, but even if they were refurbished 
and operating, it would still represent a small fraction of the 
demand. And the proposed reopening of just such a facility on 
the western shore of the Chesapeake Bay, right now, is causing 
concerns among Maryland officials because of the proximity to a 
nuclear power plant.
    So, we are talking about getting our gas from the United 
States and Canadian sources, as Mexico is currently a net 
importer of natural gas. So far our neighbors to the north have 
been willing to sell us their gas from Western Canada and more 
recently from offshore of Nova Scotia. Still, this is not 
enough. Perhaps stranded gas from the North Slope of Alaska is 
finally becoming economic to transport to the lower 48 markets, 
but that gas won't make it here for several years to come at 
best.
    But, significant amounts of the estimated natural gas 
resource base is on Federal land or the submerged lands beneath 
the Federal waters of the outer continental shelf. However, it 
seems more and more potentially resource-rich land and 
submerged lands in the United States are closed, both to 
assessment and/or development. Land withdrawals, development 
moratoria and regulatory restrictions on land use prohibit 
development of significant gas resources in areas like the 
eastern front of the Rocky Mountains, the eastern front of the 
Gulf of Mexico and almost all of the Atlantic and Pacific 
submerged lands. Likewise, many promising OCS lands are off 
limits by an Executive Order and congressional moratoria or 
both.
    Our charge is to learn what, if anything, we might do to 
foster exploration for natural gas in prospectively valuable 
areas of the public lands. Can we do it while we are still 
protecting the environment? Are trade-offs worth it to boost 
the usage of favored energy sources? What will happen to our 
national economy if we don't change the culture that has 
hamstrung permitting of resource extraction activities over the 
next decade?
    These are the types of questions that we have to begin to 
address, and we will do that today at this hearing.
    [The prepared statement of Mrs. Cubin follows:]

  Statement of The Honorable Barbara Cubin, Chairman, Subcommittee on 
                      Energy and Mineral Resources

    The Subcommittee meets today, in our inaugural hearing of the 107th 
Congress, in our oversight function for issues concerning public lands 
energy and mineral resources. Last week the full resources Committee 
began this inquiry by looking at the role of our public lands and power 
marketing administrations to provide a broad spectrum of energy 
supplies. Our hearing today will focus upon natural gas availability 
issues, both from onshore Federal mineral estate and from the outer 
continental shelf.
    Fifteen months ago an advisory body to the Secretary of Energy 
completed a report entitled ``Meeting the Challenges of the Nation's 
Growing Natural Gas Demand.'' This study examined demand-side 
projections and supply-side forecasts and concluded that coordinated 
action by the Federal Government will be necessary to stave off an 
impending imbalance. That is, gas producers and pipelines may not be 
able to meet consumers expectations for this fuel if we don't get our 
act together soon.
    Perhaps the key recommendation of this panel was for the President 
to establish an Interagency Working Group within the White House to 
bring industry representatives and various Executive Branch agencies 
together to discuss the place for natural gas in an energy strategy for 
the nation. The panel believed that inter- agency squabbles were 
inhibiting supply, particularly from Federal mineral estate in the West 
and on the Outer Continental Shelves. A primary finding of the supply-
side team was that while sufficient resources exist to meet growing 
demand well into the twenty-first century, many access restrictions are 
denying significant volumes of gas today, and will continue to do so 
unless administrative and/or legislative action to reduce permitting 
delays occurs.
    I don't need to tell everyone what happened this winter, but the 
NPC guys look like pretty good forecasters. Better than the local TV 
weathermen anyway who said the 50-year storm was headed our way ten 
days ago and Washington got a quarter-inch of snow. The NPC warned of a 
problem by the end of this decade, and it is here now.
    One of President Bush's first initiatives was to ask Vice President 
Cheney to lead an Energy Policy Development Group at the White House 
level. He will report on the current state of the nation's energy 
situation and to make recommendations for a national energy strategy. 
The Vice President's report is expected next month.
    But, today I'd like our Subcommittee to listen to the views of 
industry and economists, and the environmental community about the role 
for natural gas. This energy source, nicknamed ``the fuel of the 
future'' by some in the past Administration, is an increasingly 
important fraction of our domestic demand. But, unlike crude oil and 
refined petroleum products we import by the tanker load, natural gas is 
a commodity we must get from North American supplies transported by 
pipeline. Yes, there are a few moth-balled liquefied natural gas (LNG) 
port facilities in this country, but even if they were refurbished and 
operating it would represent a small fraction of demand. And the 
proposed reopening of just such a facility on the western shore of the 
Chesapeake Bay is causing concerns among Maryland officials because of 
proximity to a nuclear power plant.
    So, we are talking about getting our gas from U.S. and Canadian 
sources, as Mexico is currently a net importer of natural gas. So far 
our neighbors to the north have been willing to sell us their gas from 
western Canada and more recently from offshore of Nova Scotia. Still 
this is not enough. Perhaps stranded gas from the North Slope of Alaska 
is finally becoming economic to transport to lower-48 markets, but that 
gas won't make it here for several years to come, at best.
    But, significant amounts of the estimated natural gas resource base 
is on Federal land or the submerged lands beneath Federal waters of the 
outer continental shelf. However, it seems more and more potentially 
resource rich land and submerged lands in the United States, are closed 
to both assessment and/or development. Land withdrawals, development 
moratoria, and regulatory restrictions on land use prohibit development 
of significant gas resources in areas like the eastern front of the 
Rocky Mountains, the eastern Gulf of Mexico and almost all of the 
Atlantic and Pacific submerged lands. Likewise, many promising OCS 
areas are off-limits by Executive Order and Congressional moratoria 
both.
    Our charge is to learn what, if anything, we might do to foster 
exploration for natural gas in prospectively valuable areas of the 
public lands. Can we do it while still protecting the environment? Are 
trade-offs worth it to boost the usage of this favored energy resource? 
What will happen to our national economy if we don't ``change the 
culture'' that has hamstrung permitting of resource extraction 
activities over the past decade? These are the types of questions we 
must begin to address at this hearing.
                                 ______
                                 
    Mrs. Cubin. The Chair would now like to recognize the 
Ranking Member, Mr. Kind.

 STATEMENT OF HON. RON KIND, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF WISCONSIN

    Mr. Kind. Thank you, Madam Chair, and distinguished guests, 
and I am looking forward to what will hopefully prove to be a 
very productive Subcommittee in this session of Congress as we 
have a much needed and long overdue energy policy debate for 
our long-term energy needs in this country. And I think it is 
certainly timely, in light of the President's recent 
announcements regarding carbon dioxide emissions and allowing 
oil and gas exploration on all public lands, for the 
Subcommittee to take a closer look at the question of supply 
and demand of natural gas, and one of the cleaner and more 
abundant energy resources that we have available.
    It is also disappointing to find the President reversing 
himself so early in his tenure on a campaign promise that he 
made to the American people to have power plants reduce carbon 
dioxide emissions in order to meet clean air standards. The 
President has acknowledged that global warming is one of the 
most important environmental challenges that we face, but 
instead of addressing that issue, he has turned his back on it.
    It is equally disheartening to learn that he has stated 
that all public lands, even lands that have been set aside as 
national monuments, can be made available to oil and gas 
exploration.
    This is not a good beginning for a rational and productive 
debate on national energy policy, I believe. The solution to 
this problem is not simply more supply at any cost, as the 
President's recent actions seem to imply. Instead, we need a 
comprehensive and coordinated strategic plan that incorporates 
conservation measures and wise use of our resources. The best 
interests of the American people and the oil and gas industry 
will be better served by a balanced policy that consists of 
promoting exploration and development where it is appropriate, 
while also protecting our natural heritage and biodiversity, 
and fostering conservation and developing alternative and 
renewable energy sources.
    Certainly, natural gas will be a critical component of 
meeting those needs, and Federal lands have historically played 
a very large role in helping meet our needs, producing about 11 
percent of the natural gas produced onshore in the United 
States, while the outer continental shelf currently accounts 
for more than 26 percent of the domestic natural gas 
production, with the Gulf of Mexico OCS producing on average 
over 5.1 trillion cubic feet of natural gas per year.
    Further there has been, according to the Department, a 
nearly 60 percent increase in the production of natural gas on 
Federal onshore lands over the last 7 years, but I am concerned 
that some people believe that much of the Rocky Mountain area 
containing significant gas reserves are off limits or 
unreasonably restricted and therefore prevent oil and gas 
exploration and production. However, the vast majority of the 
restricted lands they cite are off limits only seasonally, to 
provide wildlife protection, for example. That is just not 
accurate to say there is no access to those lands or that 
somehow such restrictions prohibit production in the long run. 
Moreover, this line of reasoning appears to suggest that the 
oil and gas producers are in a better position than wildlife 
managers, for instance, many of whom are State fish and game 
professionals, to determine when exploration, drilling and 
production should occur in an environmentally sensitive manner.
    If we are to continue America's economic growth and 
continue creating jobs and wealth across the country, we need 
the affordable, reliable energy that fuels our economy and 
supports our way of life. If necessary, Congress can develop 
cost-effective, environmentally sound mechanisms for increasing 
domestic supply, but increasing supply, especially by opening 
up protected areas such as national monuments or ANWR, is 
neither the only nor primary answer, I feel. Environmental 
concerns have to be addressed. We will not solve our energy 
problems by opening up currently protected areas or ignoring 
wildlife needs.
    I thank the panelists for your testimony here today. I look 
forward to constructive engagement on these very important 
issues, and I thank the Chair for yielding me the time.
    Mrs. Cubin. Thank you, Mr. Kind.
    [The prepared statement of Mr. Kind follows:]

Statement of The Honorable Ron Kind, Ranking Democrat, Subcommittee on 
                      Energy and Mineral Resources

    Madame Chair, distinguished guests, it is certainly timely, in 
light of the President's recent announcements regarding carbon dioxide 
emissions and allowing oil and gas exploration on all public lands, for 
the Subcommittee to take a closer look at the question of supply and 
demand of natural gas, one of the cleaner and more abundant energy 
sources.
    It is disappointing to find the President reversing himself so 
early in his tenure on a campaign promise he made to the American 
people to have power plants reduce carbon dioxide emissions in order to 
meet clean air standards. The President has acknowledged that global 
warming is one of the most important environmental challenges we face, 
but instead of addressing that issue; he has turned his back on it.
    It is equally disheartening to learn that he has stated that all 
public lands--- even lands that have been set aside as national 
monuments---can be made available to the oil and gas industry.
    This is not a good beginning for a rational and productive debate 
on national energy policy. The solution to this problem is not simply 
more supply at any cost as the President's recent actions seem to 
imply. Instead, we need a comprehensive and coordinated strategic plan 
that incorporates conservation, and wise use of our resources.
    The best interest of the American people and the oil and gas 
industry will be better served by a balanced policy that consists of 
promoting exploration and development where appropriate, while also 
protecting our natural heritage and bio- diversity, and fostering 
conservation and developing alternative energy sources.
    Certainly natural gas will be a critical component of meeting those 
needs. Presently natural gas provides nearly a quarter of the Nation's 
energy needs. The Energy Information Agency, National Petroleum 
Council, Gas Research Institute, and others forecast significant 
increases in future domestic gas demand to as much as 29 trillion cubic 
feet by 2010.
    According to the Department of the Interior, the U.S. is mostly 
self-sufficient in meeting an annual domestic demand for 22 trillion 
cubic feet of natural gas, of which the United States imports 3.4 
trillion cubic feet almost exclusively from Canada.
    Federal lands have historically played a large role in helping meet 
our needs, producing about 11 percent of the natural gas produced 
onshore in the United States while the Outer Continental Shelf 
currently accounts for more than 26 percent of domestic natural gas 
production, with the Gulf of Mexico OCS producing, on average, over 5.1 
trillion cubic feet of natural gas per year. Further, there has been, 
according to the Department, a nearly 60 percent increase in the 
production of natural gas on Federal onshore lands over the past 7 
years.
    Within the North Slope of Alaska, the Minerals Management Service 
estimates that there is more than 26 trillion cubic feet of stranded 
natural gas reserves. This equals nearly 21 percent of the total proven 
onshore and offshore reserves of the Lower 48 States. The entire gas 
endowment of Prudhoe Bay has been cycled through the oil field 
infrastructure since 1977 to enhance oil recovery. Gross gas production 
on the North Slope in 1999 averaged 8.7 billion cubic feet per day that 
is just 1 billion cubic feet less than total net imports to the US in 
1999. Until we can transport this gas to the Lower 48, it is premature 
to even discuss exploration in ANWR.
    But I am concerned that some of our witnesses today believe that 
much of the Rocky Mountain area containing significant gas reserves are 
off-limits or unreasonably restricted and therefore prevent oil and gas 
production. However, the vast majority of the ``restricted'' lands they 
cite are off-limits seasonally, for example, to provide wildlife 
protection.
    It is not accurate to say that there is no access to those lands, 
or that somehow such restrictions prohibit production in the long run. 
Moreover, this line of reasoning appears to suggest that oil and gas 
producers are in a better position than wildlife managers--many of who 
are state fish and game professionals--to determine when exploration, 
drilling and production should occur in an environmentally sensitive 
manner.
    If we are to continue America's economic growth and continue 
creating jobs and wealth across the country, we need the affordable, 
reliable energy that fuels our economy and supports our way of life. If 
necessary Congress can develop cost-effective, environmentally sound 
mechanisms for increasing domestic supply. But, increasing supply---
especially by opening up protected areas, such as national monuments or 
ANWR---is neither the only nor the primary answer. Environmental 
concerns must be addressed; we will not solve our energy problems by 
opening up currently protected areas or ignoring wildlife needs.
                                 ______
                                 
    Mrs. Cubin. As the Committee knows, the rules are that only 
the Chair and the Ranking Member give opening statements, but 
since there are so few of us here, if any other Members would 
like to give an opening statement, I would like to welcome them 
to do that.
    Mr. Markey.

    STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF MASSACHUSETTS

    Mr. Markey. Thank you, Madam Chair, very much. I see from 
press reports just two days ago that President Bush called for 
allowing drilling for oil and gas on all public lands, 
including some areas presently designated as national 
monuments. So I suppose we soon may have to rename some of our 
national monuments to reflect their new status. The Statue of 
Liberty National Monument, for example, could become the Statue 
of Fossil Fuels Production National Monument, with an actual 
flame burning on the top of the torch. What an inspiring symbol 
that would be of the Bush Administration's public lands policy. 
Of course, we would have to change the inscription to read, 
give me your drill bits, your rigs, your huddled oil companies 
yearning to drill free, to dump their wretched refuse on our 
pristine shores. Send your well-heeled executives to me. I lift 
their lamps besides their golden doors.
    Mrs. Cubin. He means well.
    Mr. Markey. Now I am told in looking at this great threat 
that exists in the lower 48 that we have 1,466 trillion cubic 
feet of natural gas that unfortunately cannot be exploited, 
which is really a shame when you hear about it, you know. 
Sounds like a great tragedy and a loss, and we probably would 
become completely energy-dependent on OPEC. But the closer you 
look at the numbers, Madam Chair, you find out that 1,361 of 
the 1,466 are now accessible, but the obsession, of course, is 
with the 105 that are not accessible, and I guess the question 
is, why don't they go after the 1,361 trillion cubic feet first 
which have yet to be exploited before we have the debate over 
the 105? And I think that those are the issues, that is, the 
sequencing of the drilling, that have to be dealt with first.
    We know that this 30- to 40 trillion cubic feet of natural 
gas in Prudhoe Bay in Alaska that we all agree should be 
exploited. There is between 60- and 100 trillion cubic feet of 
natural gas off of Nova Scotia. There are scores of trillions 
of cubic feet down in Trinidad that we could create a policy 
for liquefying to bring into the East and gulf coast of the 
United States to deal with that issue.
    And I think these hearings are going to help us put 
together a comprehensive policy where we are looking at all of 
these sources in a way that I think is going to minimize this 
final 100- or 150 trillion cubic feet and realize that we can 
solve the problem if we use our heads in working together in a 
bipartisan fashion as we did in Alaska where the environmental 
impact statement was actually approved 18 years ago to bring 
down the natural gas from Alaska, but yet the industry hasn't 
built the pipeline yet. And I think the first set of questions 
have to go to them so they can tell us why they haven't built 
the pipelines where it is already approved before we open up 
the most sacred lands in our country.
    I thank you, Madam Chair.
    Mrs. Cubin. Certainly welcome your comments, Mr. Markey, 
anytime.
    Mrs. Cubin. The Chair now would like to introduce the first 
panel: Matthew Simmons, the President of Simmons and Company 
International; Mr. James Hackett, Chairman, President and Chief 
Executive Officer of Ocean Energy, Inc.; Mark Papa, Chairman 
and CEO of EOG Resources; and Lisa Speer, Staff Attorney for 
Natural Resources Defense Council. I will first call on Mr. 
Simmons.
    The Chair would like to remind you that your entire 
statement will be included in the record, and if you would 
please limit your oral presentation to five minutes.

 STATEMENT OF MATTHEW R. SIMMONS, PRESIDENT, SIMMONS & COMPANY 
                         INTERNATIONAL

    Mr. Simmons. I commend this Committee for having this 
hearing today. The current supply-demand balance for North 
American natural gas is precarious. Supply has now fallen 
behind demand, and to make up this shortfall the country has 
withdrawn record amounts of natural gas storage, leaving us 
already at record low levels of gas storage with still weeks of 
cold weather still probably to come before the industry begins 
an arduous task of trying to refill its storage system before 
the summer air conditioning gas needs kick in.
    Drilling for natural gas is at the highest level since the 
drilling collapse of 1982, yet thus far there has been no 
supply response. Canada is a year ahead of the U.S. in setting 
new records for gas drilling, but has also yet to see any 
significant supply response. There is a widespread hope that 
this supply response is just around the corner, but a growing 
number of industry experts, particularly those actually 
drilling these record number of wells, are beginning to 
question whether the current rig fleet and acreage available 
for drilling are adequate to create significant supply 
additions beyond the current base.
    There is a distinct possibility that five years hence North 
American natural gas supply base will be less than what we 
enjoy today.
    A week ago the Department of Energy held a 2-day workshop 
to review the natural gas industry today pursuant to the 
various assumptions that went into creating the NPC report on 
natural gas's long-term outlook. The findings were grim. Demand 
is outpacing the NPC estimates, while supply lags. A rig 
shortage has emerged some five to seven years earlier than the 
NPC report envisioned. People shortages are now becoming 
severe. Access to potential added gas reserves have been even 
more restricted. More troublesome is the fact that more new 
natural gas-fired power plants are now on order to be online by 
2002 than the NPC model assumed would be onstream by 2010. Few 
have any plants or facilities for any fuel-switching 
capability.
    This adds up to a possible need for up to 30 TCF of natural 
gas by as early as 2005. Adding so much supply is impossible. 
Reaching the 30 TCF market even in 2010 is a question. There is 
a risk that many parts of our country could be short of 
electricity capacity for up to a decade. Nothing highlights the 
urgency of finding fresh supplies of natural gas more than the 
prospect of long-term electricity rationing.
    The natural gas supply is particularly threatened by 
increasing evidence that the current supply base is now 
declining at a rate where half the current supply will be 
consumed by 2005. This means that 50 percent or 25 BCF of gas 
per day of new gas production needs to be added merely to keep 
the current supply base flat. In this context it is hard to 
exaggerate the importance of OCS energy resources.
    Natural gas from our continental shelf makes up 25 percent 
of domestic supply; 85 percent of this comes from the Gulf of 
Mexico shelf, the balance from deep water, but the shelf supply 
has one of the country's highest decline rates. What is now 11 
BCF a day will likely decline to only 3 BCF a day by 2005. 
Whether this can realistically be replaced by ever higher 
drilling activity in this mature area is questionable for two 
reasons.
    First, the number of offshore rigs is now near a 100 
percent utilization. Second, the finds each year are 
diminishing. Deepwater gas is growing from almost nothing at 
the start of the 1990s to over 2 BCF a day and projected to 
grow as high as 5 by 2005. If these aggressive targets were 
met, they would still only account for 10 percent of the U.S. 
Supply base.
    But complex technical issues to develop these deepwater 
resources still remain unsolved. Leading this list is an 
ability to strip associated gas from deepwater oil and how to 
transport this dry gas from water depths up to 10,000 feet. 
This highlights and underscores the importance of developing 
natural gas reserves in the highly gas-prone part, eastern part 
of the Gulf, an area that has been off limits to any 
hydrocarbon exploration for over a decade.
    The Clinton Administration placed a moratorium on any lease 
sales in the eastern portion of the Gulf through 2012 with the 
exception of a block of acreage planned for leasing this 
December. Lease Sale 181 is critical to help resolve America's 
pending natural gas crisis. It is extremely important to 
prevent Florida and Georgia from experiencing the awful energy 
problems now facing California.
    The Rocky Mountain States are another critically important 
area, but 40 percent of their reserves lie in Federal lands 
currently unavailable for any development. Much of these 
remaining reserves are burdened by cumbersome and lengthy 
permitting delays and other restrictions.
    Alaskan natural gas has suddenly become another critical 
portion of our fragile energy equation. For the past 30 years 
Alaskan energy just simply meant oil. Now Arctic gas could 
become invaluable.
    The Department of the Interior is about to begin a careful 
and detailed inventory of onshore natural gas potential. This 
inventory needs to be extended to the entire offshore waters of 
the U.S. Whether or not any of the potential reserves get 
developed is another issue, but unless an effort is made to 
test the potential, the country will never know how much 
natural gas we might have.
    Despite record levels of the drilling and remarkable 
technology advances and safer and more efficient drilling, the 
amount of exploration wells has fallen to less than 10 percent 
of wells drilled, and the exploration success is still less 
than 35 percent. The cost to drill new wells is rising even 
though drilling economics are not good enough to justify 
contractors building new rigs.
    Unless these problems are tackled quickly, America faces a 
genuine energy crisis that could last for over a decade. As 
natural gas becomes even more scarce, energy wars could erupt 
between various States reminiscent of the water wars between 
the Western States when the Colorado River dam system was 
created. These are unpleasant comments to make at such an 
important congressional hearing, but they are real issues, and 
they are serious issues. I appreciate the opportunity of 
sharing these concerns with this Committee.
    Mrs. Cubin. Thank you, Mr. Simmons.
    [The prepared statement of Mr. Simmons follows:]

     Statement of Matthew R. Simmons, President, Simmons & Company 
                             International

    I am Matthew Simmons, President of Simmons & Company International, 
a specialized energy investment bank. I have spent the past 28 years 
focusing exclusively on energy related investment banking and research. 
I am a member of the National Petroleum Council and was a member of the 
Bush-Cheney Energy Transition Advisory Committee. I also am a past 
Chairman of the National Ocean Industry Association. I served as the 
Demand Task Force Chairman on the National Petroleum Council's 
extremely important review of natural gas and the challenges we face in 
addressing a future market likely to exceed 30 TCF per year.
    I commend this Committee for holding these hearings today. The 
current supply demand balance for North American natural gas is 
precarious. Over the course of the past year, supply has fallen behind 
demand despite a significant number of natural gas users abandoning 
this precious fuel source because its price has soared. To make up this 
shortfall, the country has withdrawn record amounts from natural gas 
storage facilities. The country now has the lowest amount of gas 
storage in modern history with weeks of cold weather probably still to 
come before the industry begins the arduous task of trying to re-fill 
its storage system before the summer air-conditioning gas needs kick 
in.
    Drilling for natural gas is at the highest levels since drilling 
collapsed in 1982. Yet, thus far, there has been no supply response. 
Canada is a year ahead of the United States in setting new records for 
gas drilling, but has also yet to see any supply response.
    There is a widespread belief, or at least a hope, that such a 
supply response will arrive shortly. But a growing number of industry 
experts, particularly those actually drilling these record number of 
wells, are beginning to question whether the current rig fleet and 
acreage available for drilling are adequate to create significant 
supply additions beyond the current production base. There is a 
distinct possibility that five years hence, North America's natural gas 
supply base will be less than what we enjoy today.
    A week ago, the Department of Energy held a two-day workshop to 
review the natural gas industry today, pursuant to the various 
assumptions that went into creating the NPC report on natural gas long 
term outlook which was published just over a year ago. The findings 
were grim. Demand is outpacing the NPC estimates while supplies lag. A 
rig shortage is emerging some five to 7 years earlier than the NPC 
reported envisioned. People shortages are now becoming severe. Access 
to potential added gas reserves has been even more restricted, 
particularly with the new roadless policies and the potential challenge 
to the important upcoming lease sale in the Eastern portion of the Gulf 
of Mexico.
    More troublesome is the fact that more new natural gas-fired power 
plants are now on order to be on-line by 2002 than the NPC model 
assumed would be on-stream by 2010! Few have any plans or facilities 
for any fuel-switching capability. There is growing evidence, or at 
least strong suspicion, that many of these new gas-fired plants were 
originally built as merely peaking plants but now will be forced to 
become defacto quasi-base load plants in an electricity generation 
scarcity world.
    This adds up to a possible need for up to 30 TCF of natural gas by 
as early as 2005. Unless a supply miracle soon arrives, the Nation's 
ability to increase its use of electricity is severely threatened. 
There is a risk that many parts of our country could be short of 
electricity capacity for up to a decade. Nothing highlights the urgency 
of finding fresh supplies of natural gas more than the prospect of long 
term electricity rationing.
    The natural gas supply is particularly threatened by increasing 
evidence that the current supply base is now declining at a rate where 
half of the current supply will be consumed by 2005. This means that 50 
percent, or 25 BCF per day of new gas production needs to be added 
merely to keep the current base flat.
THE IMPORTANCE OF OCS RESOURCES
    Natural gas from our Outer Continental Shelf remains the backbone 
of our domestic supply. Over 13 BCF per day come from these waters, 
making up about 25 percent of total domestic supply. 85 percent of this 
supply comes from the Gulf of Mexico's shelf. The balance comes from 
deep water gas. The supply from the shelf has one of the country's 
highest decline rates. What is now 11 BCF per day will likely decline 
to only three BCF per day by 2005. Whether this can realistically be 
replaced by ever higher drilling activity in this mature area is 
questionable for two reasons. First, the number of offshore rigs is now 
at near 100 percent utilization. Second, the finds each year are 
diminishing.
    Deepwater gas has grown from almost nothing at the start of the 
1990's to over two BCF per day today and is projected to grow to as 
high as five BCF per day by 2005. If these aggressive targets were met, 
they would still only account for 10 percent of the U.S. base in 2000. 
Furthermore, some complex technical issues still remain unsolved. 
Leading this list is an ability to strip associated gas from deepwater 
oil and how to transport this dry gas from water depths up to 10,000 
feet.
    This highlights and underscores the importance of developing the 
natural gas reserves in the eastern part of the Gulf, an area that has 
been off-limits to any hydrocarbon exploration for over a decade. The 
Clinton Administration placed a moratorium on any lease sales in the 
eastern portion of the Gulf through 2012 with the exception of a block 
of acreage planned for leasing this December. Lease Sale 181 is 
critical to help resolve America's pending natural gas crisis. It is 
extremely important to prevent Florida and Georgia from also 
experiencing the awful energy problems now facing California.
FEDERAL LANDS ARE ALSO CRITICALLY IMPORTANT
    The Rocky Mountain states represent another critically important 
gas prone area. But, 40 percent of their potential gas reserves lie in 
Federal Lands currently unavailable for any development. Much of the 
remaining reserves are burdened by cumbersome and lengthy permitting 
delays and other restrictions.
    Alaskan natural gas has suddenly become another critical part of 
our fragile energy equation. For the past 30 years, Alaskan energy 
meant simply oil. Now, its potentially vast gas resources are an 
important resource. But to get this gas out of the ground, wells need 
to be drilled in areas beyond the Prudhoe Bay region because much of 
this area's gas may need to be re-injected to prop up a sagging, old 
oil production. This puts added emphasis on the importance of opening 
up ANWR and promptly resolving the pipeline route and considering the 
possibility of constructing two pipelines so both Alaskan and Beaufort 
Sea gas can be transported to a gas hungry USA.
    The Department of Interior is about to begin a careful and detailed 
inventory of onshore natural gas reserve potential. This exercise is 
extremely important but it also needs to be extended to the entire 
offshore waters of the U.S. Whether any of the potential reserves this 
inventory might uncover get developed is another issue, but unless an 
effort is made to test the potential, the country will never know how 
much natural gas we might have available to curtail a terrible risk to 
our economy's well being.
    Natural gas is the most precious energy source in North America. It 
is the most environmentally friendly real energy source we have. There 
is no geo-political risk to this energy supply. But getting it produced 
is a difficult task, even if all access problems are quickly resolved.
    Despite record levels of drilling and remarkable technology 
advances in safer and more efficient drilling, the amount of 
exploration wells has fallen to less than 10 percent of all wells 
drilled, and the exploration success rate is still less than 35 
percent. This means that 65 of every 100 exploratory wells drilled 
fail. The cost to drill new wells is rising even though drilling 
economics are not good enough to justify contractors building new rigs 
or paying wages high enough to attract a new generation of people to 
operate the rigs and develop the prospects.
    Unless these problems are tackled quickly, America faces a genuine 
energy crisis that could last for over a decade. Even if the problems 
of access are resolved, it might be too late to avoid a crisis for the 
next several years. But, any delay in resolving all the obstacles to 
growing fresh gas supplies merely extend and increase the crisis.
    As natural gas supply becomes ever more scarce, energy wars could 
erupt between various states reminiscent of the water wars between 
western states as the Colorado river dam system was created. Texas, for 
instance, has done a remarkably good job in building ample new gas-
fired power plants to safely supply its growing electricity needs. But 
as these plants come on-line, more and more of Texas natural gas supply 
needs to stay within Texas. This will cutoff supplies which other 
states now take for granted.
    These are unpleasant comments to make at such an important 
congressional hearing but they are real issues and serious issues. I 
appreciate the opportunity to share my concerns with this Committee and 
urge all of you to help resolve this crisis.
                                 ______
                                 
    Mrs. Cubin. The Chair now recognizes Mr. Hackett to 
testify.

    STATEMENT OF JAMES T. HACKETT, CHAIRMAN/PRESIDENT/CHIEF 
             EXECUTIVE OFFICER, OCEAN ENERGY, INC.

    Mr. Hackett. Thank you, Madam Chairman. On behalf of the 22 
companies that are part of the Domestic Petroleum Council, 
independent oil and gas companies, I want to give some comments 
about the situation we are facing, and I am going to skip 
around a little bit, given Matt's summary at the beginning.
    On page 4, if you would, the Department of Energy-sponsored 
NPC study concluded that the North American natural gas 
resource base is sufficient to meet the projected growth and 
demand for natural gas, which Congressman Markey remarked as 
well. However, this ability is very dependent on industry and 
government positively addressing seven key challenges, which 
are in front of you on the slide on top. Access to resources 
tops this list.
    Page 5 shows that access to the resource base and to rights 
of way for infrastructure is critical for sustainable supply. 
Of the lower 48 resource base cited in the NPC study, 
approximately 47 percent is owned by the Federal Government. 
But the resource base under Federal Government lands is far 
more critical than that percentage might imply.
    The map illustrates the total lower 48 natural gas resource 
base and the percentages of it that are either completely off 
limits or importantly is access-restricted according to the NPC 
study. As can be seen on the map on page 6, a significant 
portion of the Rocky Mountain area, including some 76 percent 
of the natural gas resources, is owned by the Federal 
Government.
    Let me give you some examples of restrictions that we 
believe can and must be dealt with.
    Last year Bureau of Land Management officials in New Mexico 
announced new criteria for approval of applications for permits 
to drill in the San Juan Basin, while the BLM conducted a new 
environmental impact statement in preparation for updating its 
resource management plan. Had the criteria, including announced 
moratoria on some applications, been put into effect as 
announced, critical California gas supply from this mature 
producing area would have been lost in the recent crisis.
    Another prime example of this type of regulatory problem is 
illustrated by the time line chart you see on page 7 for BLM 
lands in southwest Wyoming. With the layering of wildlife 
protection and other environmental restrictions, you can see 
that there are only limited periods in which necessary gas 
exploration and production drilling by the industry can occur.
    Much of the land we are discussing is like that shown on 
page 8 at the top in Wyoming. With our current technology we 
can explore and produce gas on these lands with much smaller 
drilling locations. Also improved geoscience technology allows 
us to better target promising geologic formations below ground 
so we drill fewer wells to develop larger producing fields, but 
we still must drill to find and produce gas. Then we must and 
do reclaim the land back to its original condition.
    Now, an important word about the offshore appears on page 
9. As the NPC study pointed out and Matt referred to, as we in 
our industry know, with two of our three coasts completely off 
limits to exploration and production, the Gulf of Mexico, 
including its deep waters, will be crucial in meeting gas 
demand. Lease Sale 181 in the eastern Gulf of Mexico scheduled 
for December of this year provides a good example of what we 
need to be doing. It alone can make a significant contribution 
to providing natural gas to the Nation and the surrounding 
region to meet increasing electricity generation needs with a 
more clean-burning and environmentally safe fuel than any other 
alternative.
    The chart on page 10 illustrates the NPC's projection of 
the impact of access restrictions in the eastern Gulf of 
Mexico. Shown here on the bottom red line is the impact if Sale 
181 does not happen. Our Nation will suffer if the sale doesn't 
proceed as planned.
    Page 11 shows that over the past decade production from the 
wells we have drilled every year has declined more sharply. 
This means that the number of wells to be drilled will have to 
increase even beyond current high levels to meet projected 
demand. This can only be achieved through billions of dollars 
of investments by companies such as ours, but it will be a 
limited exercise without greater access to the U.S. resource 
base.
    As shown on page 13, producers are responding to market 
signals by spending billions of dollars putting additional gas 
rigs to work to meet consumer demand, but this pace will 
decelerate without more access to new inventory.
    On page 14 appear our recommendations to the administration 
about several steps to be taken to seek better coordination of 
energy permitting.
    In addition, on page 15 we support the ongoing 
congressionally mandated inventory of energy resources on 
Federal Government lands, but it needs to be expedited. Even 
more importantly, Congress and the administration should use 
the time during which the inventory is being undertaken to 
consider whether there should be a simplified process to allow 
States and their congressional delegations to seek removal of 
the access restrictions where there is little or no other 
benefit from the restriction, but the very real detriment of 
not producing critically needed energy supplies. The U.S. 
Government also needs to improve permitting processes and 
coordination.
    I appreciate the opportunity to be with you to discuss the 
Nation's energy challenges. All of us that are producers care 
as much about consumers as we do about producers. We are one of 
both. Thank you.
    Mrs. Cubin. Thank you, Mr. Hackett.
    [The prepared statement of Mr. Hackett follows:]

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    Mrs. Cubin. The Chair now recognizes Mr. Papa to testify.

     STATEMENT OF MARK PAPA, CHAIRMAN & CEO, EOG RESOURCES

    Mr. Papa. Madam Chairman, members of the Committee, I am 
Mark Papa, Chairman of the EOG Resources of Houston Texas. 
Today I am testifying on behalf of the Independent Petroleum 
Association of America, IPAA, National Stripper Well 
Association and 32 cooperating State and regional oil and gas 
associations. These organizations represent the thousands of 
independent petroleum and natural gas producers that drill 85 
percent of the wells, produce 40 percent of the oil and 65 
percent of the natural gas in the United States.
    This issue is particularly important to my company, EOG 
Resources, because we are at the forefront of the effort to 
develop new domestic gas reserves. During the past three years, 
EOG has ranked either number one or number two of all companies 
in terms of footage drilled in the U.S. looking for new gas 
reserves.
    Today's hearing addresses the impediments to developing 
domestic natural gas supply because access to the national 
resource base is prohibited or constrained. Much of the 
Nation's gas underlies Federal-controlled land both offshore 
and onshore. Policies in these areas have constrained or 
prohibited access largely based on fears of environmental harm.
    But these resources can be developed in an environmentally 
sound and sensitive manner. The Department of Energy recently 
released a comprehensive report, Environmental Benefits of 
Advanced Oil and Gas Exploration and Production Technology, 
demonstrating that the technology is available to preclude 
environmental damage. This technology is currently being 
employed when exploration is allowed. However, without policy 
changes the Nation may face a gas supply challenge.
    The National Petroleum Council's natural gas study projects 
demand increasing by over 30 percent during the next 15 years. 
This will require not only finding and developing resources to 
meet this higher demand, but also to replace the current 
depleting resource.
    While many analysts are focusing on how much natural gas 
demand will grow, it is equally important to recognize what is 
happening to supply. All natural gas wells begin to deplete as 
soon as they come on production. In fact, depletion rates for 
all U.S. production have increased from 16 percent in 1990 to 
23 percent today. In simple terms, this means that the domestic 
natural gas industry is on an ever-increasing depletion 
treadmill, and the reserves underlying Federal lands become 
that much more important.
    Let me address both offshore and onshore land use issues, 
and I will start with offshore. Currently over 75 trillion 
cubic feet, TCF, of natural gas in the offshore is off limits 
to development because of moratoria that are based on 
technologies that have been replaced decades ago. It is 
essential that those areas of the offshore that are scheduled 
for leasing remain accessible.
    Specifically, Lease Sale 181 lying off the Alabama coast 
must be undertaken. Unfortunately after years of negotiation to 
allow this lease sale, uncertainty remains as to regarding the 
political efforts that may be made to halt this sale. Lease 
Sale 181 is projected to be a significant natural gas area with 
estimated reserves of about 8 trillion cubic feet, enough 
natural gas to fuel Florida's 5.9 million households for 16 
years. To prevent the sale in view of the extraordinary 
environmental safety record of the Gulf of Mexico operations 
would be a tragic energy policy decision.
    Onshore the NPC natural gas study estimates the development 
of over 137 trillion cubic feet of natural gas under 
government-controlled land in the Rockies is restricted or 
prohibited. It is important to understand that access to these 
resources is limited by more than just one moratoria. The 
constraints differ. Monument and wilderness designations 
clearly prohibit access to some areas. Regulations like the 
Forest Service roadless policy and prohibitions in the Lewis 
and Clark National Forest are equally absolute.
    Let me discuss the Lewis and Clark National Forest for a 
moment as a specific example. The Rocky Mountain Division of 
the Lewis and Clark National Forest is estimated to contain 
large amounts of natural gas. The 1986 forest management plan 
anticipated development of this resource and made it an 
objective. In 1996, the Forest Service published a draft EIS 
with a preferred alternative that would allowed limited 
environmentally sensitive leasing. In 1997, the Forest Service 
published the final EIS, adding additional environmental 
protections to the preferred alternative.
    Notwithstanding these additional restrictions, the Lewis 
and Clark National Forest supervisor decided that no oil and 
gas leasing in this area would be permitted. The Forest Service 
amended the forest management plan without further public 
comment, deeming the decision to exempt the Rocky Mountain 
Division from leasing insignificant.
    These types of decisions obviously generate adverse energy 
supply consequences.
    Regarding onshore Federal lands, we offer both the short- 
and long-term recommendations. In the short term, additional 
BLM personnel are needed to process the increased number of 
permits that are being generated as the industry responds to 
supply challenges, and regarding our company, I can 
specifically mention the Rawlins and Pinedale offices in your 
home State, Madam Chairman, and also the Vernal, Utah, offices 
as areas where we have a potential backlog of getting permits 
done.
    Long term there are several policy decisions that need to 
be dealt with. We need a commitment to assure that government 
actions are developed with full recognition of the consequences 
to natural gas and other energy supplies. IPAA believes that 
all Federal decisions, regulatory guidance, environmental 
impact statements, Federal land management plans should 
identify at the outset the implications of the actions on 
energy supply. These implications should be clear to the 
decision-maker. Such an approach does not alter the mandates of 
the underlying law compelling the Federal action, but it would 
likely result in developing options that would minimize adverse 
energy consequences.
    In conclusion, it is time for this county to develop a 
sound future policy. Certainly there is room in such a policy 
for sound energy conservation measures and protection of the 
environment, but energy production, particularly petroleum and 
natural gas, is an essential component that must be included 
and addressed.
    Thank you for considering these comments.
    Mrs. Cubin. Thank you, Mr. Papa.
    [The prepared statement of Mr. Papa follows:]

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    Mrs. Cubin. The Chair now recognizes Ms. Speer for her 
testimony.

  STATEMENT OF LISA SPEER, STAFF ATTORNEY, NATURAL RESOURCES 
                        DEFENSE COUNCIL

    Ms. Speer. Thank you. My name is Lisa Speer. I am Senior 
Policy Analyst with the Natural Resources Defense Council. NRDC 
is a national nonprofit organization dedicated to protecting 
the environment and public health. My testimony today is on the 
environmental impacts and other environmental issues related to 
oil and gas or gas exploration and development on the outer 
continental shelf. My colleague, Dave Alberswerth, will deal 
with gas development onshore.
    Our Nation faces important challenges in the coming year. 
With California dealing with an energy crisis and natural gas 
prices shooting up for many, many people, it is time for this 
country to come together and develop a comprehensive national 
energy strategy.
    Two distinct visions of what that strategy should look like 
have emerged. One vision focuses on extracting as much energy 
as possible, principally in the form of fossil fuels, in the 
hope that we can somehow drill our way out of our energy woes. 
An alternative vision calls for encouraging innovative and new 
technologies to meet our energy needs in an environmentally 
responsible manner.
    NRDC believes that U.S. energy policy must rely on the 
application of readily available, currently available 
technology as a way to reduce consumption. Such an approach 
will decrease America's reliance on foreign sources of energy, 
protect the environment, provide for our energy needs and 
buffer the economy against short-term swings in the market.
    NRDC recently published a report called ``A Responsible 
Energy Policy for the 21st Century,'' which discusses these 
issues in detail. I would like to submit it for the record, if 
I might. (NOTE: This report is available for viewing in the 
Committee's official files.)
    Turning to natural gas development on the OCS, some people 
argue that we should move ahead to open protected areas of the 
OCS to natural gas development. They argue that natural gas--
the risk of oil spills when developing natural gas is 
negligible, and, therefore, natural gas development can proceed 
in an environmentally benign fashion. This argument ignores the 
fact that oil spills are not the only concern with respect to 
natural gas development on the outer continental shelf.
    OCS gas development, like oil development, can have 
substantial environmental impacts. For example, offshore 
activity, be it for oil or for gas, frequently entails 
extensive onshore infrastructure in the form of roads, 
pipelines, processing facilities, waste-handling facilities and 
other industrial infrastructure. This infrastructure can cause 
significant harm to the coastal zone. For example, OCS 
pipelines crossing wetlands in the Gulf of Mexico are estimated 
to have destroyed more coastal salt marsh than exists from New 
Jersey to Maine.
    Moreover, the industrial character of offshore oil and gas 
development is often at odds with the existing economic base of 
affected coastal communities, many of which rely on coastal 
tourism, fishing and recreation.
    Air and water pollution is a second issue. Offshore 
operations for oil or gas generates tremendous amount of waste, 
some of which contains a variety of pollutants, including toxic 
pollutants. Air pollution is also generated in significant 
amounts by offshore oil and gas drilling rigs as well as 
production platforms.
    And then there is the possibility of an oil spill. There is 
always the possibility of finding oil when searching for gas. 
We know of no instance where a lease has prohibited the 
development of oil in a gas-prone region, and we are not aware 
of any company ever agreeing to such a restriction in the 
history of the OCS program. If oil is found, the possibility of 
spills exists. According to the Department of the Interior, 
some 3 million gallons of oil have spilled from OCS oil and gas 
operations between 1980 and 1999.
    Concerns over these impacts have led many States and their 
congressional delegations to oppose OCS development off their 
coasts. Since 1981, Congress and two Presidents have imposed 
restrictions on OCS leasing in sensitive areas off of our 
coasts. These moratoria now protect the eastern and western 
coast of United States, much of the eastern Gulf of Mexico and 
Bristol Bay, Alaska. They represent a clearly established 
consensus on where OCS development should take place in this 
country. They have been endorsed by a broad array of elected 
officials from former President George Bush to Governor Jeb 
Bush, from Governor Knowles of Alaska to Governor King of Maine 
and from Governor Davis in California and Governor Bush in 
Florida.
    We strongly oppose any attempt to lift the moratoria to 
promote gas development or to promote gas development in other 
sensitive areas off of Florida and Alaska. Fortunately, we 
don't need to drill these areas for natural gas. That is 
because some 80 percent of the Nation's untapped economically 
recoverable OCS gas is located in areas already open to 
leasing.
    The idea that most of America's OCS gas is locked up is 
simply not supported by the facts. It is also not supported by 
this report. If you add up, as Mr. Markey indicated, the amount 
of gas that is in OCS areas that are under restriction, it 
amounts to less than 5 percent of the total amount of gas the 
Nation has outside of Alaska as identified in this report.
    Large untapped efficiency resources exist that can provide 
more gas more cheaply and faster than drilling public lands. 
For example, providing tax incentives for the construction of 
energy-efficient buildings and manufacturing of energy-
efficient heating and water-heating equipment could save some 
300 trillion cubic feet of gas over 50 years. That is more than 
twice the amount of gas the Interior Department estimates is 
economically recoverable from the entire OCS.
    These strategies will do far more to increase our Nation's 
energy security than a ``drain America first'' approach of 
exploiting onshore and offshore Federal lands.
    Thank you, Madam Chairman.
    Mrs. Cubin. Thank you very much for your testimony.
    [The prepared statement of Ms. Speer follows:]

   Statement of Lisa Speer, Senior Policy Analyst, Natural Resources 
                            Defense Council

    My name is Lisa Speer. I am Senior Policy Analyst with the Natural 
Resources Defense Council (NRDC) in New York. NRDC is a national 
nonprofit organization of scientists, lawyers, and environmental 
specialists, dedicated to protecting public health and the environment. 
Founded in 1970, NRDC serves more than 400,000 members from offices in 
New York, Washington, Los Angeles, and San Francisco. My testimony 
today addresses environmental issues surrounding natural gas 
exploration, development and production from submerged Federal lands on 
the Outer Continental Shelf (OCS).

1. Background: Energy Policy in the 21st Century
    At the dawn of a new century, America finds itself once again 
wrestling with a problem that has, off and on, been at the forefront of 
U.S. politics for several decades: energy. The United States has 5 
percent of the world's population, but consumes nearly a quarter of the 
world's energy supply. We use energy to heat our homes and our 
businesses, power our computers and telephone systems, run our 
automobiles and aircraft, and drive our manufacturing plants and 
hospitals. In short, we have constructed an economy and a way of life 
that depends on the ready availability of energy.
    Two distinct visions of an energy policy for the United States have 
emerged to meet these demands. One vision focuses chiefly on extracting 
as much energy as possible, mostly in fossil fuel form (oil, coal and 
natural gas), in hopes that supply can catch up with demand. The 
alternative vision, however, calls for encouraging innovation and new 
technology to meet our energy needs in an environmentally responsible 
manner. This vision emphasizes efficient use of energy, and places 
priority on using energy resources that are least damaging to our 
environment. It promotes economic growth and American industrial 
competitiveness. This energy path would not force consumers to make 
sacrifices. Instead it relies on improved technologies that will 
eliminate waste while increasing productivity and comfort.
    Therefore, NRDC believes that U.S. energy policy must rely on the 
application of technological advances already in place and readily 
available as a way to reduce consumption. Such an approach will 
decrease America's reliance on foreign sources of energy in the near- 
and long-term, protect the environment, provide for America's energy 
needs, and buffer the economy against short-term swings in the market. 
NRDC's recently published report, A Responsible Energy Policy for the 
21st Century examines these issues in detail. I ask that the report be 
included in the record.

2. Natural Gas Resources of the Outer Continental Shelf
    As the cleanest burning fuel, natural gas makes an important 
contribution to the Nation's energy supply. Some argue that natural gas 
development on the Outer Continental Shelf should be promoted. They 
argue that the risk of oil spills is negligible, and that 
environmentally sound development can take place. This argument ignores 
the reality that oil spills are not the only environmental concern 
related to OCS development. Offshore gas development, like oil 
development, causes substantial environmental impacts, including the 
following.
    Onshore damage: The onshore infrastructure associated with offshore 
oil or gas cause significant harm to the coastal zone. For example, OCS 
pipelines crossing coastal wetlands in the Gulf of Mexico are estimated 
to have destroyed more coastal salt marsh than can be found in the 
stretch of land running from New Jersey through Maine. 1 
Moreover, the industrial character of offshore oil and gas development 
is often at odds with the existing economic base of the affected 
coastal communities, many of which rely on tourism, coastal recreation 
and fishing.
---------------------------------------------------------------------------
    \1\  Boesch and Rabalais, eds., The Long-term Effects of Offshore 
Oil and Gas Development: An Assessment and a Research Strategy. A 
Report to NOAA, National Marine Pollution Program Office at 13-11.
---------------------------------------------------------------------------
    Water pollution: Drilling muds are used to lubricate drill bits, 
maintain downhole pressure, and serve other functions. Drill cuttings 
are pieces of rock ground by the bit and brought up from the well along 
with used mud. Massive amounts of waste muds and cuttings are generated 
by drilling operations an average of 180,000 gallons per well. 
2 Most of this waste is dumped untreated into surrounding 
waters. Drilling muds contain toxic metals, including mercury, lead and 
cadmium. Significant concentrations of these metals have been observed 
around drilling sites. 3
---------------------------------------------------------------------------
    \2\  MMS, 2000. Gulf of Mexico OCS Oil and Gas Lease Sale 181, 
Draft Environmental Impact Statement (DEIS), p. IV-50.
    \3\  Id.
---------------------------------------------------------------------------
    A second major polluting discharge is produced water, the water 
brought up from a well along with oil and gas. Offshore operations 
generate large amounts of produced water. The Minerals Management 
Service estimates that each platform discharges hundreds of thousands 
of gallons of produced water every day. 4 Produced water 
typically contains a variety of toxic pollutants, including benzene, 
arsenic, lead, naphthalene, zinc and toluene, and can contain varying 
amounts of radioactive pollutants. All major field research programs 
investigating the fate and effects of produced water discharges have 
detected petroleum hydrocarbons, toxic metals and radium in the water 
column down-current from the discharge. 5
---------------------------------------------------------------------------
    \4\  Id., p. IV-32.
    \5\  Id., p. IV-32-33.
---------------------------------------------------------------------------
    Air pollution: Drilling an average exploration well generates some 
50 tons of nitrogen oxides (NOx), 13 tons of carbon monoxide, 6 tons of 
sulfur dioxide, and 5 tons of volatile organic hydrocarbons. Each OCS 
platform generates more than 50 tons per year of NOx, 11 tons of carbon 
monoxide, 8 tons of sulfur dioxide and 38 tons of volatile organic 
hydrocarbons every year. 6
---------------------------------------------------------------------------
    \6\  Id., p. IV-40.
---------------------------------------------------------------------------
    Oil spills: If offshore areas are leased for gas exploration there 
is always the possibility that oil also will be found. We no of no 
instance where a lease prohibits an oil company from developing oil if 
oil is found in a gas prone region. We are not aware of any company 
ever agreeing to such a condition in the history of the OCS program. 
Without such a restriction included in a lease there would be no 
assurances that oil in fact would not be developed, raising the 
possibility of an oil spill. According to statistics compiled by the 
Department of the Interior, some 3 million gallons of oil spilled from 
OCS oil and gas operations in 73 incidents between 1980 and 1999. 
7 Oil is extremely toxic to a wide variety of marine 
species, including marine birds, mammals and commercially important 
species of fish.
---------------------------------------------------------------------------
    \7\  MMS, 2000. Gulf of Mexico OCS Oil and Gas Lease Sale 181, 
Draft Environmental Impact Statement (DEIS), pp. IV-50.
---------------------------------------------------------------------------

3. The OCS Moratoria
    Beginning in 1981 and every year since then, Congress has imposed 
restrictions on OCS leasing in sensitive areas off the Nation's coasts. 
These moratoria now protect the east and west coasts of the U.S. and 
most of the Eastern Gulf of Mexico. The moratoria reflect a clearly 
established consensus on the appropriateness of OCS activities in most 
areas of the country, and have been endorsed by an array of elected 
officials from all levels of government and diverse political 
persuasions, from former President George H.W. Bush to Governor Jeb 
Bush of Florida, and from Governor Tony Knowles of Alaska to Governor 
Gray Davis of California.
    We strongly oppose any attempt to lift the moratorium, or to 
promote gas development in other sensitive OCS areas, including the 
Sale 181 area off the west coast of Florida and areas off Alaska. We 
have called on the Interior Department to remove these areas from the 
new Five Year OCS Program currently under development.

4. Drilling in the Moratoria Areas, the Sale 181 Area and the Alaskan 
        OCS is Not Necessary
    Despite assertions from industry and their supporters on Capitol 
Hill, it is not necessary to drill in sensitive areas to meet America's 
energy needs. For example, industry is pressing to drill in the 
moratorium areas, the Eastern Gulf of Mexico, and off Alaska. But such 
drilling is unnecessary because seventy per cent of the nation's 
undiscovered, economically recoverable OCS oil and gas, and 80 percent 
of the Nation's undiscovered, economically recoverable OCS gas, is 
located in the Central and Western Gulf of Mexico. 8 Thus, 
removing the moratorium areas, the OCS off Alaska, and the Eastern Gulf 
of Mexico from the five-year program will leave the vast majority of 
the nation's OCS oil and gas available to the industry.
---------------------------------------------------------------------------
    \8\  U.S. Department of the Interior, Minerals Management Service 
(MMS), 2000. Outer Continental Shelf Petroleum Assessment, 2000, page 5 
and Gulf of Mexico Assessment Update.
---------------------------------------------------------------------------
    Large untapped energy efficiency resources provide a much better 
choice. Congress can help by providing tax incentives for the 
construction of energy efficient buildings, manufacturing energy-
efficient heating and water heating equipment. These measures could 
save 300 Tcf of natural gas over 50 years. 9 This is more 
than twelve times the Interior Department's mean estimates of 
economically recoverable gas located outside the Central and Western 
Gulf of Mexico. 10 These strategies will do far more to 
increase our nation's energy security than a drain America first policy 
of exploiting sensitive offshore and onshore Federal lands.
---------------------------------------------------------------------------
    \9\  NRDC, 2001. A Responsible Energy Policy for the 21st Century, 
p. 32.
    \10\  U.S. Department of the Interior, Minerals Management Service 
(MMS), 2000. OCS Petroleum Assessment, 2000, p. 5 and Gulf of Mexico 
Assessment Update.
---------------------------------------------------------------------------
    Thank you for the opportunity to testify.
                                 ______
                                 
    Mrs. Cubin. I thank all of the Members of the panel.
    Before I forget it, I would like to ask the Committee's 
unanimous consent to submit for the record statements that are 
being made by a couple of constituents of mine, who live in the 
Powder River Basin, where there is a huge coal bed methane 
play. They have some concerns about the water and the 
environment and what is going on up there. So with unanimous 
consent, I will offer this for the record.

    [Letters from the Powder River Basin Resource Council 
submitted for the record follow:]

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[GRAPHIC] [TIFF OMITTED] T1208.009

    Mrs. Napolitano. Madam Chairman, can we also introduce into 
the record the report she handed to be introduced? I don't 
think you accepted it.
    Mrs. Cubin. Certainly, we accept that to be put on the 
record.
    [The aforementioned report has been retained in the 
Committee's official files.]
    Mrs. Napolitano. Thank you, ma'am.
    Mrs. Cubin. You bet. I will start off with my five minutes 
really with a statement. No one argues that we are having an 
energy shortage or that there is some sort of a crisis. There 
certainly is. Many of us have known that for a long time. What 
has been disturbing to me is--I am glad that Vice President 
Cheney is the head of the task force that the President has 
appointed to come up with a national energy policy. I would 
like to give you my view of what a national energy policy 
should include.
    First of all, I think we have to estimate--not estimate, we 
have to figure out what our national consumption is and how 
much we actually need to be safe as a Nation, and how much we 
need to consume or how much we do consume. Then, we need to 
predict or estimate future growth in consumption or reduction 
in consumption, whichever that might be. At that point, we need 
to apply the forces of conservation, better technology, 
efficiencies in the technology that we have and try to reduce 
our consumption of energy as much as we possibly can. At that 
point, we need to--when we know what our energy consumption 
needs are, then we have to decide what percentage of that 
should be produced domestically.
    After we decide that, we need to decide what sources--what 
percentage of that domestic production should come from coal, 
oil, gas, wind, solar, geothermal, hydro, whatever, and that 
way we would have an idea.
    This document or this policy could certainly change, and 
there would be times when one fuel would be contributing more 
to the energy supply than others, but at least we wouldn't find 
ourselves in a situation where we don't--a boom-and-bust 
situation which the minerals industries usually find themselves 
in.
    I think if we all work together as Congressmen, and we work 
with industry, and we work with agencies so that we can have 
access to produce the energy that we need, we will be far 
better off than politicizing this issue. To say or to think 
that President Bush would want to put every acre of public land 
open for drilling is simply nonsense.
    I wish Mr. Markey were still here. The statement he made 
about the 1,466 trillion cubic feet available for production 
are total and 1,361 are available, well, they may be available 
to be permitted, but they aren't ever going to get the permit 
because we have the Endangered Species Act that affects access. 
We have wilderness areas, wilderness study areas, national 
parks, national forests, on and on and on and on.
    So the information is truly slanted, and that isn't going 
to help us get to a national energy policy, and it is not going 
to help us solve the problems that we have.
    So I hope that this Subcommittee will work together to put 
forward honest pictures of what the situation is like out 
there. What I see so far has been very distorted, and I 
certainly hope the Committee can do a better job of being 
realistic with the facts.
    Having said that, I will now recognize Mr. Kind for any 
questions he might have of the panel.
    Mr. Kind. Well, I want to thank the witnesses for your 
testimony here today. I think as we embark upon this, what will 
hopefully be a national discussion in regards to our long-term 
energy needs, that we will be able to approach it in a 
bipartisan and balanced fashion.
    One of the disturbing things that I have witnessed thus far 
in the early stages of this next session of Congress is there 
has been a lot of focus, a lot of attention on the supply 
equation, and that is the business that you gentlemen are in, 
and we recognize that, and it is going to have to play an 
important role in regards to our energy needs. But I think we 
need to be careful that it doesn't become too one-sided, 
because obviously we need to focus on the demand aspect. And I 
appreciate Ms. Speer's testimony today in regards to various 
ideas and proposals to deal with the demand, and I would hope 
that all of us here would be in agreement that there is a lot 
of work that we can do, a lot of progress we can make in 
regards to sound conservation practices and trying to reduce 
the demand side of the equation, things we may be able to 
pursue in the Tax Code to encourage greater energy-saving 
devices and development of higher efficient buildings, for 
instance. And I think we also need to take a serious look at 
the CAFE standards when it comes to oil production and the 
needs of oil in this country.
    And I agree with the Madam Chair's assessment in regards to 
what data and what information we are going to need, and that 
is where I think you all can be of invaluable assistance in 
trying to project out what the energy consumption needs are 
going to be in light of the economic fluctuations that we are 
in right now. But hopefully we are going to be able to bring 
some balance to this and take a serious look at developing a 
long-term energy conservation policy, which I believe this 
country sorely lacks, an honest assessment of the type of 
alternative and renewable sources that we can honestly and 
cost-effectively pursue today.
    But one of the questions that I have for you gentlemen here 
today is it appears as if you do have a political problem. I 
mean, Ms. Speer testified in regards to the congressional 
moratorium on OCS exploration and drilling off the east and 
west coast and the eastern part of the Gulf, for instance. Even 
Governor Bush in Florida, for instance, has come out on record 
opposed to drilling in 181, for instance; Governor Knowles up 
in Alaska. In light of that, how do you make the case to the 
American people when you have community leaders and Governors 
of the very States who are on record as saying--some of them 
actually saying that we believe in drilling, just not in our 
backyard. I mean, how do you overcome that type of political 
resistance that you may be facing? And I would open it up to 
anyone.
    Mr. Hackett. I might just try to clarify what my view of 
that situation is, is that while Governor Bush may be against 
the OCS sale that has been announced for December, it has been 
some five years in the making. The other four Governors of the 
States that it touches are in support of it. So four out of 
five are actually in support of it, and the onshore facilities 
that were referred to earlier are not anticipated to be in 
Florida. So States who will be most impacted by this who 
actually welcome offshore rigs for fishing purposes in the 
States that I work in, Louisiana and Texas, because they 
attract fish, they may have a very different view than Governor 
Bush about that particular sale.
    And more importantly, I think there are a lot of answers, 
and I think you are absolutely right, Congressman Kind, in the 
long term in terms of demand reduction, more efficiency, LNG, 
frankly nuclear energy, a number of different alternatives for 
supplies of energy that we need to look very hard at. The 
problem is they don't get here for five years, and neither does 
the pipeline from Alaska. So we all sit here as citizens of 
this country worried about our global competitiveness and how 
we are going to make it over the next five years, and we need 
to take very seriously getting the facts out in front of us 
about what we are facing and the question about whether there 
really is a lot of free property out there that we are somehow 
not taking advantage of.
    I promise you in a competitive market-based economy people 
tend to take advantage of what is given to them. If that was 
truly there, I promise you we wouldn't be spending our energy 
up here talking to you. We would be out there trying to drill 
it up. Thank you.
    Mr. Kind. Ms. Speer, let me throw it at you for a second. 
In light of what Mr. Hackett just testified to, given our 
short-term energy needs, do you believe it is possible through 
conservation and development of alternatives and renewables to 
pivot in a short period of time, given the demand that already 
exists in the marketplace and what will inevitably be there in 
the very near future?
    Ms. Speer. That is a very good question, and the short-term 
needs are very pressing right now. There are some ramping-up 
activities that we can take. But the reality is my 
understanding is that for most offshore gas fields, as well as 
onshore gas fields, that it takes a good five or six years, 
according to Chevron, to bring those on, too. So this is going 
to take time to solve, and there are a lot of issues that have 
to be addressed, including things like pipeline availability in 
some areas.
    But I just want to emphasize with respect to the eastern 
Gulf that you know this is not just a few people here and 
there. Every single member of the Florida delegation with one 
exception has supported the moratorium and supported the 
position that we have articulated and Governor Bush has 
articulated. These are very deeply held views on the part of 
very many people, and fortunately, there is not that much gas 
there by the Interior Department's estimates. The Interior 
Department again says there is about 6.9 trillion cubic feet in 
the entire eastern Gulf of Mexico, and again, that is only 
about 5 percent of Interior Department's estimates of the total 
OCS undiscovered resources.
    Mrs. Cubin. The gentleman's time has expired.
    The Chair now recognizes Mr. Flake from--oh, he is gone. So 
Mr. Otter.
    Mr. Otter. Thank you very much, Madam Chairman. I wasn't 
quite ready. Being the bottom of the political food chain here, 
I expected some of the more senior Members to get their 
opportunity in the box first, but thank you very much.
    Mrs. Cubin. If you would like, I could recognize somebody 
else. Generally on the Committee we can recognize people in the 
order that they show up.
    Mr. Otter. I shall show up very early from now on.
    Mrs. Cubin. If you would like to take a few minutes.
    Mr. Otter. No, no, I am ready. Having got this position, I 
am not giving that up for anything, and now that I have used 2-
1/2 minutes of my time getting the floor--you know, much is 
said about who is and who isn't supporting this thing, and I 
think it is important--in fact, I think it ought to be the 
direction that we always look to first rather than looking to 
an organization from New York or an organization from San 
Francisco or Dallas, Texas, or someplace else about where we 
ought to be drilling and where we ought to be exploring or 
where we ought to be looking for energy needs, I think we ought 
to look to the States first, and if Governor Jeb Bush doesn't 
want his State to develop, that ought to be so.
    But would you then agree--would you all then agree that if 
Governor Kempthorne of Idaho or all the other Governors said, 
yes, we want to build dams, yes--because I don't, Madam 
Chairman and members of the Committee, I don't think that we 
can talk about this subject in a vacuum. I think it is going to 
have to be part of the entire piece for energy, and so I think 
we have got to talk about dams and coal-fired plants. I think 
we have talk to about FERC. I think we have got to talk about 
additional potential; heaven forbid, even nuclear plants. I 
think we need to talk about all these things as part of our 
national energy policy.
    And so I want to know, I want to hear from each of the 
Members that--would you be equally enthusiastic about extolling 
the statements if a Governor said, yes, come and drill in my 
State; yes, come and build a dam; yes, we want a coal-fired 
plant from clean coal?
    I will start with you, Mr. Simmons.
    Mr. Simmons. I spent this morning at the Department of 
Energy workshop on the power situation of the United States and 
heartily endorsed clean coal, nuclear. Natural gas will not get 
to 30 TCF, in my opinion, and it is going to basically cause 
severe risk of electricity problems for a decade. So I think 
the time has come that we need to embrace every form of energy, 
including conservation, but the conservation numbers, unless 
the conservation people can do some very quick education, do 
not add up to enough reduced demand to basically conserve us 
out of a problem.
    Let me give you one example. If we could create tomorrow 
morning 100,000 80-mile-per-gallon cars, we would save 4960 
barrels a day. That is a single well in the Gulf of Mexico. 
Those are real economic reality numbers. So I think it is going 
to be very important as we go into these very serious energy 
debates that we have some real genuine intellectual honesty 
about how we deal with some numbers very precisely, because 
this could be the greatest risk to our economy since World War 
II.
    Mr. Hackett. Thank you, Congressman. I agree with Matt that 
we are a very spoiled Nation, this Nation doesn't like to 
conserve, generally speaking. You look at the demand for oil 
products, even with the crunch that you had in the late 1970's, 
early 1980's, and you see it has gone up over that whole 
period. I was not pointing to governors' support of individual 
States as a reason to necessarily approve or disapprove of 
anything. It was just to straighten the record out, so we are 
not biased in one direction. This is a national issue, it is a 
national issue on environment and energy. The biggest risk to 
us is the economy against a global competition that will have 
much lower natural gas costs.
    There is plenty of natural gas in the world we just, can't 
get it in here because we don't want to allow degasification 
facilities to be sited in our country. We have four of them. We 
are refurbishing two of them. They do not make a big enough 
dent. They costs hundreds of millions of dollars just like the 
ships that are required to get them here, and the facilities 
overseas that you have to make it from, but there is plenty of 
it at the right price over time. It doesn't happen for five 
years. So what do we do in the meantime? That is where you look 
at all the alternatives, you mention and I applaud you for your 
thought process.
    Mr. Papa. Congressman, we agree that we need a national 
energy policy that embraces not only natural gas, but also 
clean coal, consideration of nuclear, certainly renewables, 
wind, solar, some of those items, and I think none of us 
disagree with that. To me, I think you can frame the debate on 
access for natural gas is very simply, I believe, that if, the 
Nation is willing to tolerate a higher average natural gas 
price over the next 10 or 20 years, then we can continue to 
withhold lands from drilling. If however we open up these lands 
for drilling, the consequence will be you have more supply, you 
will have an average lower natural gas price over the next 10 
years or so. And I guess the Nation has to weigh what are the 
economic consequences of those two items?
    Ms. Speer. Thank you. I want to agree with Mr. Hackett that 
we are a spoiled Nation, and we really do have to get our house 
in order on this question if we are going to continue to 
prosper in the way we have. In our view, the way to proceed, 
though, is a different way. And I think that the record of 
energy efficiency improvement really speaks for itself. For 
example, from 1975 to 2000, new generations of energy efficient 
refrigerators has reduced their electricity consumption by 75 
percent saving some 60,000 megawatts of electricity. And 
standards that have been adopted by the Energy Department since 
1997 for clothes dryers and air conditioners and other 
appliances will eliminate the need to build 120 new power 
plants. These are real figures, and we think this is the 
direction people should go. With respect to the discussion of 
governors--.
    Mrs. Cubin. The gentleman's time has expired. If you could 
make it quick.
    Mr. Otter. I think she answered the question. Madam 
Chairman, I reserved my opening statement and I would like it 
submitted for the record.
    Mrs. Cubin. Yes.
    Mr. Otter. Thank you.
    [The prepared statement of Mr. Otter follows:]

 Statement of The Honorable C.L. ``Butch'' Otter, A Representative in 
                    Congress from the State of Idaho

    Madam Chairwoman, thank you for holding this hearing today on the 
important role that public lands play in the development of a 
comprehensive domestic energy policy. I am pleased to join you and my 
colleagues in support of proposals to increase our natural gas supply.
    At first look, you might ask, why would Idaho be interested in 
this? There are no natural gas plants in Idaho. Almost 87 percent of 
Idaho's electricity-generating capability comes from hydroelectric 
power. However, while Idaho does not produce natural gas, it now 
imports nearly 64 trillion cubic feet of gas that is used to provide 
energy for homes, businesses, and industrial operations in Idaho--
almost all of it in my District.
    Additionally, over 914 trillion cubic feet of gas is transported 
across Northern Idaho from Canada into the United States to serve the 
demand for natural gas in California, Washington, Oregon, and other 
western states. This trend is growing dramatically. The U.S. Energy 
Information Agency forecasts that within 20 years, demand for natural 
gas will increase 62 percent--much faster than it is being produced.
    Madam Chairwoman, we need to develop an energy policy now--one that 
will utilize resources we know are already available right here in the 
United States--on public lands and submerged offshore in methane 
deposits.
    Under the previous Administration, U.S. imports of foreign oil 
increased to 56 percent--7 percent of it from Saddam Hussein. Last 
summer, gas prices skyrocketed, and the only answer from the previous 
Administration was to beg foreigners for more oil, tap into our 
Strategic Petroleum Reserve, and actually cut off efforts to create new 
sources of energy in the United States. Because of stringent 
regulations, relicensing existing hydro, nuclear, or natural gas 
facilities has become costly and time consuming. We should be seeking 
ways to bolster our national security by developing domestic energy 
sources and decreasing our dependence on foreign oil
    The crisis is at near-critical mass in Idaho and the West. Record-
low water levels will severely harm hydroelectric dams' ability to 
produce sufficient power to meet Idaho's needs--let alone increasing 
demands of Californians and other western power users. The previous 
Administration's forest roadless restrictions on Forest Service and 
Bureau of Land Management lands is blocking access to 9 million acres 
of Idaho public lands--land that most certainly would yield to the 
development of new sources of natural gas supply and rich mineral 
resources. These rules were imposed contrary to BLM's statutory duty to 
manage public lands for multiple use and sustained yield.
    Recent estimates reveal that 1,300 trillion cubic feet of natural 
gas and some 204 billion barrels of oil could be made available on 
American soil. That energy that could fuel American industries, 
businesses, homes--and help offset the millions of dollars that 
taxpayers are now paying for years of poor maintenance by the Federal 
agencies in our national forests.
    Madam Chairwoman, we also need to block efforts that would tear out 
existing clean, renewable sources of hydroelectric power. 
Environmentalists have proposed tearing out hydroelectric dams that 
produce up to 3,000 megawatts of power at their peak--enough to power 
the City of Seattle three times over. Replacing the clean electricity 
generated by the dams with the next cheapest source--natural gas--would 
take years to implement, cost millions of dollars per year, and would 
further exacerbate the growing demand for natural gas that is already 
there. Instead, we should support efforts to swiftly relicense these 
dams, and authorize access to public lands to increase transmission 
capability.
    I look forward to working with you, Madam Chairwoman, and the rest 
of the members of this Committee, to explore common sense proposals to 
unlock the abundant natural gas supply on the millions of acres of 
public lands and to review unwise directives such as the roadless 
regulations, that prevent access to those who could untap resources, 
reduce the risk of forest fires, and to ease our nation's energy 
crisis.
                                 ______
                                 
    Mrs. Cubin. The Chair recognizes Mr. Markey.
    Mr. Markey. Thank you, Madam Chair. Let me go to you, Mr. 
Papa, the 1999 report of the National Petroleum Council (NPC). 
The report estimates that the total of natural gas resource 
base in the lower 48 States, including offshore, equals 1,466 
trillion cubic feet. Much of this resource base resides on 
Federal lands or Federal waters. The NPC study asserts that a 
large portion of this resource base is not open to either 
assessment or development.
    So I would like to ask you some questions, if I may, about 
this assertion, which I believe to be a total exaggeration. 
First of all, I see that the NPC asserts that approximately 40 
percent, or 137 TCF of the Rocky Mountain States resources is 
either closed to exploration or is under restrictive 
provisions. Isn't it true that the fine print in this report 
states that only 29 TCF of the Rocky's gas resources are 
actually closed to development, that is, in a natural park or 
wilderness area, while the remaining 108 TCF are available for 
oil, gas or leasing under certain stipulations, such as 
seasonal limitations during calving periods.
    So wouldn't you agree that this 108 TCF is, in fact, 
accessible in the same way the industry is arguing that in the 
Arctic Refuge, that they can drill in a way that doesn't 
disturb the caribou? Isn't it true that you are also permitted 
to right now drill in these areas under the same conditions 
that you are requesting to be able to drill in Arctic Refuge?
    Mr. Papa. Congressman Markey, I believe that a study is 
underway, as has been initiated by Madam Chairman, to take a 
look at these numbers and see if we can get to some numbers 
that everyone can agree on. The issue that you bring up here is 
a very viable one. The problem with the reasoning, in my 
opinion, that you just generated, is that a lot of these areas 
that are accessible to drilling and leasing have very severe 
restrictions on them. For example, there may be a very narrow 
window such as a two month window that you can access it.
    Mr. Markey. I am looking at the chart here that Mr. 
Hackett, the Chairman and President/CEO of Ocean Energy has 
provided, and I am looking at Wyoming, and a lot of these look 
like they are State restrictions for the NRA and fishermen that 
have been put on the books by the State government, big game 
winter range, sage grouse nesting, raptor nesting, prairie dog 
avoidance. I don't know how hard it is to avoid a prairie dog. 
I can move over here a little bit, but just don't disturb that 
nest. They do not seem like they are the most restrictive. Most 
of them are State restrictions. Are we supposed to preempt the 
governors in all these western States from putting on these 
relatively modest seasonal restrictions?
    Mr. Papa. It is good we are having the debate on this 
because it has opened up--in my opinion, the numbers are really 
misleading. As someone who tries to access these lands to 
drill, I can tell you a lot of this land is not accessible.
    Mr. Markey. When we are talking about seasonal here, aren't 
we really talking about what the NRA wants? They just want a 
season, but the rest of the year would be fine. Do you have a 
problem with that? Does the NRA support your position on 
drilling?
    Mr. Papa. I am not aware of the NRA's position on this .
    Mr. Markey. I look at your own chart here and it looks to 
me like only 3.5 percent of all public lands are off base, and 
it goes up to 10 percent, but then you have to include the 
Department of Defense and Department of Energy lands as well, 
which are public lands, obviously.
    But I don't know that we really want to move on to the 
Department of Defense reservations for drilling. But it is only 
3.5 percent if you eliminate the Department of Defense and 
Energy. And these are under the--this is the Independent 
Petroleum Association of America study that I am reading that 
was provided to me here today, which seems like a pretty low 
percentage. Let me move on quickly. The NPC report also asserts 
that 76 trillion cubic feet are closed to development in 
offshore areas, that is, California, Florida and Atlantic 
coastal moratoria imposed by Congress with the full support of 
the affected States.
    Are you calling for a repeal of the moratoria on offshore 
drilling along the Atlantic and Pacific coasts?
    Mr. Papa. At this time, no. We are designating it as 
resources.
    Mr. Markey. So you are not calling for repeal? Okay. So as 
I look at the numbers, it seems there is only 105 TCF--29 in 
the Rocky mountain States and 76 on the OCS--of the natural gas 
resource base that are not accessible. That means there are 
1361 TCF, of the 1466 TCF natural gas resource base which are 
available for development, and I am told at a 31 TCF per year 
consumption rate, that is enough to meet America's anticipated 
needs for over 40 years. Does that number square with you? Do 
you disagree with this number that 1361 TCF would be available, 
at least for part of the area for drilling?
    Mr. Papa. That is the potential that is out there. That is 
not proven reserve. In a competitive marketplace, I can assure 
you that if that were readily available--.
    Mr. Markey. So even that number is speculative, is that 
what you are saying? Even that you don't know. It could be 
lower.
    Mr. Papa. It could be lower. That is exactly right.
    Mrs. Cubin. The gentleman's time has expired. I would like 
to answer one of the requests that you brought up, Mr. Markey, 
if you do not mind. You were talking about the chart where the 
seasonal use restrictions. I wanted to point out that they are 
not really State laws or State regulations. The State manages 
the wildlife, but the habitat is managed under the Federal 
Government, so that is the answer to that.
    Mr. Markey. If you would yield. I am told that many of 
these restrictions are put in place by the BLM at the request 
of the State gaming officials, and that it is only the Federal 
Government responding to the State requests in almost all of 
these restrictions. Although they don't have the legal 
authority to impose them requested by Wyoming or Arizona or 
other States.
    Mrs. Cubin. Based on managing the animals, that would be 
correct.
    Mr. Markey. So that is a State action.
    Mrs. Cubin. But I can't say that all or most of them are. I 
don't know the answers to that but fortunately we do not need 
to know the answer to that because we were smart enough as a 
Congress last year, Mr. Skeen, and I, as you recall, offered 
the amendment to have the USGS do an inventory of all of the 
mineral wealth underground in the United States, and then do an 
overlay of any rules, regulations, laws designations that 
restrict the possibility for exploration or introduction. And 
this is a priority of Secretary Norton. I have talked to her 
yesterday. So, soon we will have the facts that we need, so 
that we can do something. The Chair now--.
    Mr. Markey. Can I just? I await that report. But pending 
that we have the Independent Petroleum Association's report, 
which makes it clear in their own study that 95 percent of it 
is available.
    Mrs. Cubin. One last thing, he and I need to do this off 
the record. Believe it or not, it is okay to mine coal in the 
Black Hills National Forest, but it is only okay to mine it 
where it isn't. So the point is, it is not okay to mine coal in 
the Black Hills Forest where it is, but it is okay to mine it 
where it doesn't occur. So that is my point.
    Mr. Markey. So, I don't care honestly, as you can 
appreciate, whether your constituents can kill animals or not, 
but your constituents might care. So I think these are 
primarily restrictions imposed by the States for your 
constituents.
    Mrs. Cubin. We appreciate your concern. The Chair 
recognizes Mr. Gibbons.
    Mr. Gibbons. Thank you, Mr. Chairman. To follow up on what 
you were just mentioning. The State of Nevada is nearly 90 
percent owned by the Federal Government. Yet in the State of 
Nevada, probably 1000 of 1 percent has either oil or gas 
deposits located on it. Oil and gas is not located under every 
square inch of available land to determine whether or not it is 
there for production. And it is found where you find it, which 
makes many of these large leases that you have out there 
literally valueless when it shows that you have entered a dry 
well and not found what you thought you had found in the 
beginning.
    So speculation, of course, as to what might be under there 
at this point in time is, as a geologist would say, only as 
good as as far as you can stick your finger in the ground to 
see what is there. You have to spend that money. You have to 
invest in those drilling operations to make that determination. 
Nonetheless, let me say that I do support the effort to 
increase our resources, energy resources in this country.
    There is, no doubt, in my mind, even though we are spoiled, 
we are a Nation that has 5 percent of the world's population 
using 25 percent of the world's energy, but I guarantee you 
that not one person in this room is ready to reduce the quality 
of life. They will not reduce the quality of their health care 
and the benefits that have come from the development of 
resources in this Nation. And I dare say that once the rest of 
the world begins to catch up with us in the quality of life and 
things that we have enjoyed because of our resources, that the 
consumption rate will pretty much level out in those countries 
at about our per capita rate of consumption of energy.
    My point being in all of this is that in this support for 
your effort to supply this Nation, which has seen in recent 
months some great challenges to its energy consumption, what 
single issue, what is the biggest impediment that if we were to 
go at it legislatively, taking a bite of the apple, not being 
able to take the whole thing at one time, but one bite of the 
apple, what impediment would you like to see us address first? 
And I will begin, and let you go right down the aisle just as 
Mr. Otter did.
    Mr. Simmons.
    Mr. Simmons. Unfortunately, I think the magnitude of the 
problem is such that we don't have the luxury of prioritizing 
and doing one thing at a time. If, for instance, we decided to 
waive every access issue, which I know will not happen, we open 
the door to the next problem, which is an unbelievable 
limitation in people and rigs. So it goes on one problem after 
another. So I think one of the critical needs in getting the 
proper national energy strategy together is to recognize how 
fragile our energy supplies are right across the face of 
energy. We can't make the mistake of saying there is one area 
we can solve, and then we are out of our energy problems. 
Unfortunately we have a thousand things to simultaneously 
solve.
    Mr. Hackett. It is hard to disagree with that assessment, 
and I think that, as with many things in a free market economy, 
we tend to realize too late when we find ourselves in the 
situation, and oftentimes we tend to ignore that we are heading 
into it as well politically, in particular, and I think 
California is a great example of that. I think Matt is 
absolutely right. I think we need to be absolutely committed to 
the notion that we have to develop the resources we can 
environmentally safely develop as quickly as we possibly can to 
bridge us into the period when we can have the very serious 
debate about things like nuclear energy and improving our 
ability to import LNG and bringing a pipeline down from Alaska.
    Whatever it takes from government and industry hand in hand 
to make that happen, we need to get serious about it. We needed 
to get serious about it probably five years ago. The industry 
itself probably started to get serious about it two or three 
years ago in terms of making pronouncements up here, but it is 
upon us.
    Mr. Papa. Congressman Gibbons, in response to your 
question, I give you two answers. One, I think we need a 
pragmatic review of surface access in the lower 48 States and 
the outer continental shelf in terms of availability to drill 
and balancing all considerations including environmental. At 
the same time I would recommend that you look very hard at fast 
tracking the permitting for an Alaskan gas pipeline. I think 
that is a longer-term solution to the problem.
    Ms. Speer. Thank you. I think that is an excellent 
question. And I would say corporate average fuel economy 
standards are the number one priority. They have been frozen by 
a congressional rider since 1994 at 27.5 miles per gallon for 
cars and 20.7 for SUVs and trucks. By increasing that to an 
average for both of about 30.9 miles per gallon we could save 
over 1.6 billion barrels of oil annually by 2020. That is more 
oil than the government estimates would be produced from under 
Arctic Refuge, the entire outer continental shelf, plus the 
amount we import from Saudi Arabia, Kuwait, Qatar, Bahrain and 
the United Arab Emirates. That is the kind of step we ought to 
be taking to help our Nation reduce its dependence on oil.
    Mrs. Cubin. The gentleman's time has expired. The Chair 
recognize Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Madam Chair. May I defer to Mr. 
Inslee? He has to leave.
    Mr. Inslee. Thank you very much. I do have a flight. I 
appreciate that, so do my children. My name is Jay Inslee. I 
represent the First District. It is located in the suburbs 
north of Seattle. I am sure you are aware of it. The folks in 
the State of Washington are seeing their electrical prices go 
up five-, tenfold or at least the wholesale prices to date, 
which are already resulting in astronomical retail price 
increases. We have an emergency situation up in the Pacific 
northwest right now. I say that because a lot of people think 
it is just California. It is felt in the Pacific north as well. 
And a lot of the things we have been talking about potentially 
have some resolution five to 10 years from now.
    But I want to focus on today and tomorrow with my 
constituents, because the fact of the matter is, this year, to 
prevent us from tripping into a recession, we need some relief 
led by this administration today on two things: Really, the 
only two things we can do right now, today, this week, which 
are conservation and a realistic wholesale price cap on 
electricity. And frankly, neither one are we seeing leadership 
too much on getting those immediate help for the Pacific 
northwest and whole west of the United States.
    I want to ask you gentlemen your thoughts in that regard. 
First, Mr. Simmons, I noted you were in the Bush-Cheney 
transition team. I think I read that in your testimony. What 
did you advise the administration and what is their position on 
immediate conservation efforts to try to reduce the demand in 
the next five to six months in the western United States on how 
to help us give incentives for conservation? Can you tell us 
what you advised the administration and what their position is 
as far as you understand it?
    Mr. Simmons. My advice has been that conservation is a very 
important thing to take seriously. But I do not honestly 
believe in any stretch of the way that we can do anything in 
the next 6 to 12 months to even make a dent on these terrible 
problems. I am originally from Utah. I am afraid Utah will get 
sucked into the California problems, too. I would love to think 
we can conserve our way out, but I think we are actually 
talking about Draconian life-style changes, as was said 
earlier, none of us in this room are probably emotionally 
prepared to do.
    I think one of the dangerous things we could do is hold 
conservation out as a silver bullet. That has nothing to do 
with not being a really strong believer that we have to find 
ways to start conserving energy, but I just do not believe we 
will all turn in our Suburbans. I think we need to hunker down 
for a possible decade-long solution to a really massive energy 
problem. I have described this in a Senate hearing a month ago 
as a Marshall plan of energy that will literally take us a 
decade to do, and I think the bad news is there is no solution 
in the next 6 months.
    Mr. Inslee. Well, thanks for the optimistic note. I frankly 
think you are dead wrong, just flat dead wrong. It is that kind 
of thinking that got us behind the eight ball. I tell you, if 
we achieve 10 percent conservation of electrical usage in a 
retail and commercial basis in the State of Washington, we will 
relieve enormous pressure on our utilities during peak demands. 
As you well know, it is the peak pricing in the electrical 
market that kills utility. If we look at this and if we hit 10 
percent conservation, we will dramatically reduce the pricing 
benefits that the generators have in a moment.
    And so, I guess I will reiterate the question, Mr. Simmons, 
for instance, did you encourage the administration to get 
behind an effort to increase our CAFE standards and if so, what 
was their response?
    Mr. Simmons. No, I didn't. I actually do not believe that 
CAFE--that we mandate people to do things they are not prepared 
to do. I think the evidence is you can enact CAFE standards and 
Americans will buy sport utility vehicles and suburbans, so 
that wasn't any of my recommendations.
    Mr. Inslee. You understand the goal is to close the 
loophole in the CAFE standards so that if you close the 
loophole, you do away with that loophole. You understand that 
can be done, I am sure. So what you are telling me is you are 
here to advocate drilling in national monuments before the 
United States of America closes a major loophole in their CAFE 
standards, and simply gains gasoline by conserving it. Is that 
what you are telling us?
    Mr. Simmons. No, I am saying we need a very carefully 
designed and very balanced energy policy that does a little bit 
of everything, because not one thing will get the job done.
    Mr. Inslee. I agree with you. Are you telling this panel 
that we should allow drilling in national monuments, crown 
jewels of the west before we increase CAFE standards? Is that 
your testimony?
    Mr. Simmons. No, not at all.
    Mrs. Cubin. Mr. Inslee, he answered your question.
    Mr. Simmons. I don't know that anybody here is proposing 
drilling in national monuments.
    Mr. Inslee. Just so you know, President Bush yesterday said 
we should drill on national monuments.
    Mrs. Cubin. The gentlemen's time has expired. The Chair 
recognizes Mr. Rehberg.
    Mr. Rehberg. No questions.
    Mrs. Cubin. You have no questions. Mr. Inslee, I believe it 
is your turn now.
    Mr. Inslee. Thank you, Madam Chair, for your courtesy.
    Mrs. Napolitano. I am sitting here shaking my head in 
disbelief because we in California are going through the energy 
crisis, and now we are faced with the increase in gas prices 
because of its ability to create energy, and we are now facing, 
supposedly, a crisis in supply of gas.
    I am not quite sure that I totally agree with some of what 
I have been presented with in that for years, we have been 
saying we have more than ample supply of gas. We have heard it 
for years when I was in a State assembly. I have heard it in 
dialogue, I have heard it in testimony, and now we are saying 
that we need to go and drill in areas because we must find--to 
make sure that we have enough, and if I heard you, Mr. Papa, 
you stated that you did not know how much there was.
    Our chair has indicated they have done an assessment and 
evaluation, and they have an idea why most of these precious 
resources are. Just recently there was a statement made by me 
that I am very concerned about continuing to not necessarily 
explore but dig out our resources, because in the end, we may 
not leave that much for our successors, the children, 
grandchildren and future generations.
    While we need to know what we have and be able to tell our 
constituents, our friends and our neighbors that conservation 
is going to have to be a fiber and not just a side line. It is 
a major portion for me in the State of California that they, to 
be able to tell my constituents that they need to understand 
that the future rests on every one of us, not just the 
industry, not just government, but everyone.
    That said, I am concerned because of the implications of 
not necessarily wrongdoing, but the gouging by the providers of 
energy that are driving up the prices because they control the 
abilities for us to be able to get it. We no longer produce it, 
so we have to pay the price. And my understanding that that is 
a problem, that we are now looking at in the CPUC, looking at 
the three contracts of marketers that have brought capacity 
through the El Paso natural gas and others, that they may have 
controlled, that they were able--my entities in California 
bought, were unable to use, sold back and this particular 
entity held on to it driving the price up.
    To me that is unconscionable, because people that are 
mostly hurt when they can't pay the price of this energy are 
people on fixed income. The poor people. And I just can't see 
why we can not come to other meeting of the ways to provide 
energy and be able, especially now that we are beginning to 
feel a downturn in the economy. We are just keeping fueling 
while somebody is making an inordinate amount of money for 
their investors. And I am going to look at some of this 
material.
    I have just found most of it as I came in. I would like to 
see a lot more dialogue going on. I would like to see more 
people who can give the other sides of it, so we can better 
understand and have some clarity to where we are and what we 
can do about it. I thank the Chairwoman for bringing this 
session, at least, to light so we can make some of our 
frustrations known and maybe have you talk to us about what is 
it that you can help us clarify in our minds when we talk to 
our constituents to say look, this is what needs to happen. But 
so far I haven't seen that I haven't heard that, and I would 
like to see how you gentlemen can somehow clarify a little bit 
of that mystery behind what is happening, and now can we work 
together so that we may be able to do our job and help you do 
yours.
    Mr. Papa. Congresswoman, thank you. I think that is a very 
germane comment that comes up when you have got an upset 
condition in California, and most everywhere else, and your 
constituents are saying why is this upset? It hasn't happened 
in the past. Speaking for natural gas producers in the U.S., 
and, as part of IPAA, I will say that one thing we will welcome 
the opportunity to discuss with you, one on one or as a group, 
more details on this, but the one thing that hopefully will 
bring some light to it is if you think about it, that every 
single gas well in the United States for the last several years 
has been producing at maximum rates 365 days a year, and yet we 
still don't have enough gas to really meet the demand 
requirements there.
    I can tell you that there has been no curtailment by any 
producers or anything along those lines. We as an industry are 
racing as hard as we can. We have increased the level of 
drilling activity, and we are trying to grow supply as fast as 
we can. We are facing a higher depletion rate, a treadmill 
every year. If we stop drilling as a Nation for one year, we 
would lose 23 percent of our productive capacity in one year, 
and we have to make up that 23 percent to just stay even. So I 
do think that more dialogue is absolutely necessary on this 
subject, and we would certainly welcome it.
    Mrs. Napolitano. I appreciate your comments and thank you, 
Madam Chair. There will be a hearing at next week at the State 
legislature in California to deal with the specific comment I 
made on the overpricing or the holding back of the supply. 
Thank you.
    Mrs. Cubin. One comment I would like to make is with retail 
prices capped as the California electric dereg did, it gives 
the consumer no incentive whatsoever to conserve, so that could 
be something that ought to be brought up too, maybe.
    Mrs. Napolitano. Madam Chair, I couldn't agree with you 
more, but I think it is inherent upon the leadership to begin 
espousing down to the local conservation, the methodology and 
do concerted efforts through the media, it is the highest 
authority. They have every right and every ability to get it 
across. It happened when we did water conservation some 10 
years ago and we met it and were able to survive, and I think 
we will survive this one. But you are right. I think we need to 
do a concerted effort for teaching people when, where and how 
to do it, because we take it for granted we know, people may 
not.
    Mrs. Cubin. Right. The Chair now recognize Mr.Rehberg. He 
has a question.
    Mr. Rehberg. Thank you, Madam Chair. It is often said that 
life kind of repeats itself, and I found myself remembering 
exactly 20 years ago when I first came to Washington D.C., it 
was May of 1979 in the middle of a gas crisis. Sitting in back 
of me where my staff is sitting today, I sat behind Congressman 
Marlenee staffing this Committee. And at that time we were 
talking about energy shortages and how we were going to 
conserve our way out of this problem. We funded, over the 
course of the next three years, a lot of solar energy policy, a 
lot of wind energy policy a lot of alternative energy policy 
and that seems to have fallen by the wayside.
    Mr. Simmons I totally agree with you, with all due respect 
to my colleague from the State of Washington. I fear that we 
are creating a debt even more serious than the financial debt 
that we were creating for the next generations, the energy debt 
we are creating because a day will come where we will not be 
able to dig one more shovel full of coal or one more gas well 
can be punched, whether it be in Alaska or Montana. So I would 
not feel good about my representation for my State if we didn't 
seriously address the issue of production aside from 
conservation.
    We will do the best we can with conservation. One of the 
things I remember from 20 years ago was a stupid policy called 
the windfall profits tax, and here we are again talking about 
the same thing in the State of Montana. I see in the 
legislature they just introduced the windfall profits tax on 
the electric companies out there because of the wholesale price 
of energy.
    My question to you, and I apologize I looked through the 
materials and I didn't see if you touched on it. If you had, I 
apologize. I was looking for your resume and I don't have that 
as well. I see you are from the investment arena. Do you feel 
that the Federal taxation policy and the policies such as 
another quick example, CARA, where are we going to take off 
shore drilling revenues and put it into something called 
purchases of additional properties as opposed to taking that 
revenue and turning it into a solution for the energy crisis, 
keeping it in the same arena. Do you think our taxation 
policies in many of the things we talk about, capping of 
electrical costs and such, give a true picture? Has it made it 
more difficult for your clientele or your group to be able to 
fund people in the production of energy that this country 
needs?
    Mr. Simmons. I think the thing that has been the real 
inhibitor more than anything else is energy prices that were 
just simply too low. Unfortunately, America got to thinking 
they were real, but they virtually devastated the petroleum 
industry. They almost wiped out the country's spare energy fuel 
reserves. The industry spent 30, 20 years trying to cope with 
low energy price by downsizing, and we became a shadow of 
ourselves. It was not the tax policy. I think there are some 
creative things we can do on tax policy, particularly in some 
areas that won't work unless there is some extra stimulus.
    This is a personal view, but I don't believe the current 
energy prices are probably yet high enough to actually pay for 
an energy Marshall plan. And someone has got to foot that bill. 
I think that we have an enormous education ahead of us to 
educate Americans on the proper relationship of energy costs. 
The natural gas consumers last year, commercial and residential 
spent about $31 billion on natural gas. They spent $7.7 billion 
on movie receipts. Now I don't think that necessarily means 
they should not have done that. We spent $135 billion on 
residential energy last year and we spent $205 billion last 
year on advertising, most of which doesn't ever get seen and 
all of which is embedded in costs.
    So I think in this complicated energy relook we have to 
basically come back and know an awful lot more about energy 
costs, and if we are crazy enough, reckless enough to go back 
and try to windfall profit, we will never get the energy 
Marshall plan built because it will not be built by the 
government. It has got to be the private sector and they have 
to have money or they will not be able to afford it. It will be 
costly. We are talking trillions of dollars.
    Mr. Rehberg. Would you say also because of the cost of 
regulations it has inhibited the companies' ability to get out 
and find the additional resource that is available to us.
    Mr. Simmons. Absolutely. It has not helped anything, but it 
has been one of a whole long laundry list of problems.
    Mr. Rehberg. Certainly it is not one issue this is, it is 
the cumulative effect.
    Mr. Simmons. Yes, the buildup over 30 years.
    Mr. Rehberg. Thank you, Madam Chair.
    Mrs. Cubin. Thank you.
    The Chair recognizes Mr. Carson.
    Mr. Carson. Just a couple questions for you. I thank you 
for being here today. Ms. Speer brought up the point that was 
not addressed in the testimony I heard, the testimony is quite 
eloquent and the evidence quite well that the actual footprint 
of new exploration platforms is actually quite low . She talked 
about the coastal development, the infrastructure needs to back 
that up. I want the three panelists from the energy industry to 
talk about their experience with that.
    And Ms. Speer, if you might respond to what their concerns 
are that it is not so much of the exploration equipment itself, 
but in fact, the roads in infrastructure to back that 
exploration up.
    Mr. Simmons. There was a terrific article in The New York 
Times in the last couple of months on the wildlife refuges of 
Louisiana, and I wasn't aware that Louisiana had wildlife 
refuges, and the data was remarkable because they have been 
doing the spoiling of the coastal plains in Louisiana for over 
50 years now, and the numbers in The New York Times, I have 
never known The New York Times to be proenergy, were really 
stunning.
    And so I would encourage you to have one of your staff dig 
out that article and look at it and just see that--you know, 
some stuff built 50 years ago was really built sloppily. But 
anything in the last 20 years has really been done in an 
unbelievable--I am not in the energy business. I am in the 
investment banking business. But I have worked with these 
energy companies for 30 years. They are very responsible 
corporate citizens. Most executives are passionate outdoorsmen. 
I have never known an outdoorsman that doesn't love the 
environment. So I think the reality turns out to be quite 
different than the rhetoric.
    Mr. Hackett. I might add the last five years are 
dramatically different than the first 15-, 20-year period that 
was referred to earlier in the testimony. As with most 
statistics they can tell you what you want them to tell you, 
depending on what period you choose. I do not know the actual 
details behind the comments that either of the witnesses have 
given you on the shoreline, but I will tell you that when you 
look at alternate fuels, which we thought might be the holy 
grail back in the late 1970's, early 1980's, we need to be very 
careful to know what we are getting into in terms of cost, in 
terms of damage to the environment.
    You talk about substituting for an offshore platform that 
has a one block imprint, granted, with affiliated structures on 
shore, and you look at an equivalent power generating capacity 
of a wind farm, some of which are out in California, and you 
are talking about sizes that are 320 times the size, 45 square 
miles to have a wind farm with comparable capacity. Ten square 
miles for a photovotaic farm to be able to produce solar 
energy. We were not talking about always environmentally 
friendly alternate technologies. We have got to use whatever we 
can the best way we can, but we have to keep in mind that no 
solution is perfect. There is always a balancing act that has 
to occur.
    Mr. Papa. Congressman Carson, I would echo those comments. 
I would recommend that you might want to take a look at this 
DOE report entitled ``Environmental Benefits of Advanced Oil 
and Gas Exploration and Production.'' I can tell you that 
technologies today are much different than they were 20 or 30 
years ago. Horizontal drilling, ability to drill multiple wells 
from a single location. Lots of activities. And I think the oil 
industry is unfortunately stereotyped by things that may have 
occurred 30 or 40 years ago, certain specific upset cases that 
may have occurred. But I think a look at the last five years 
particularly shows that we can be very responsible 
environmental citizens.
    Mr. Carson. Ms. Speer do you have a comment about those?
    Ms. Speer. Yes. First of all, I think that we all agree 
that the industry has done a tremendous job in improving its 
record of environmentally sound development. Things have 
improved dramatically in the last 20 years. That said, there 
are still very significant impacts that accompany offshore oil 
and gas development. Spills happen routinely. They happen in 
great magnitude.
    You need roads, you need processing facilities, you need 
storage tanks, you need an infrastructure that can have very 
significant impacts in the coastal areas. I was reading the 
comments of the State of Louisiana yesterday on the 5-year 
program, and they talk about continuing impacts that they are 
experiencing, particularly with respect to their coastal 
wetlands.
    Also, you know, you have air pollution that generates over 
100 tons per platform per year. Nearly 70 tons per exploratory 
well per year. You have water pollution, enormous amounts of 
waste are generated by those operations, and a lot of it is not 
handled by a closed loop system. Most of it is not on the OCS. 
Right now most of it is discharged over the side after minimal 
treatment.
    Mr. Carson. Great. Let me ask you a different question 
about that. The testimony of the IPAA was helpful about some of 
the tax policies that might be beneficial. Being from Oklahoma, 
I have a lot of friends in the oil and gas industry, and they 
talk often about tax policies that would encourage stripper 
wells and things like that from being kept up. I would like the 
comments of Mr. Simmons, Hackett and Papa about now that the 
emphasis seems to be access, if we have different tax treatment 
in the oil and gas industry, whether the deductibility of 
certain costs or changing the AMT, the very things you proposed 
in your testimony, to what extent will that get us to the holy 
grail of increased sustainable natural gas production?
    Mr. Simmons. I would repeat a comment that probably sounds 
like a broken record, but there are no silver bullets. Every 
one of them are important, and unfortunately, they all have to 
be done at the same time. And to the extent we don't do ten of 
the thousand, we are basically whatever the percentage that is 
behind. And again, it is the best thing you can do in 
conservation to the best thing you can do on access. And if we 
don't do them all at the same time, then the awful problems of 
California are going to be all over the United States for the 
next decade.
    Mrs. Cubin. The gentleman's time has expired. I would like 
to thank the witnesses for their valuable testimony and thank 
the members for their questions. This Subcommittee may have 
additional questions. And we will ask that you respond to them 
in writing if you would not mind doing that.
    I would like to thank the panel, and you are free to go. I 
would like to recognize now the second panel of witnesses, 
Marlan W. Downey, President of the American Association of 
Petroleum Geologists; Robert Fisher, President of the Montana 
Petroleum Association and Vice President of Ballard Petroleum; 
and Mr. David Alberswerth, Director of the BLM Program for The 
Wilderness Society. If you would please take your places at the 
table.
    Mrs. Cubin. Thank you. First I would like to recognize 
Marlan W. Downey.

STATEMENT OF MARLAN W. DOWNEY, PRESIDENT, AMERICAN ASSOCIATION 
                    OF PETROLEUM GEOLOGISTS

    Mr. Downey. Thank you, Madam Chairman. I am President of 
the American Association of Petroleum Geologists, which is an 
international association that represents the energy 
professionals in geology, geophysics, and engineering 
worldwide. I was greatly impressed by the testimony and the 
questions coming before us, and I am going to skip over the 
testimony that I have provided in written form. And I am going 
to attempt to talk very briefly about some elements of the 
questions that have been brought up previously.
    I would like to start with just the simple description of 
what the scale of the problem is. I think from all estimates, 
we are going to need about 10 trillion cubic feet of new gas 
every year for the new demand. That is a tough thing to do. The 
good thing is that we do have enormous resources undiscovered, 
unproduced, but estimated in the United States. That is the 
good news. The bad news is that we do not get to go to Saudi 
Arabia or Qatar or Mexico or Venezuela for any of those 
supplies, as we can do for oil. America has to solve its gas 
problems all by itself, within its own boundaries, with 
possibly a little help from Canada.
    Gas is very difficult, very expensive, to transport, so 
forget about any significant help on our 10 trillion cubic feet 
of gas increase in demand every year from any other place than 
internal. It is our problem. Fortunately we do have a very 
large resource and I would say that, especially for that part 
that is located, appears to be located in the Rocky Mountains; 
I think it is vastly underestimated in the Rocky Mountains. We 
are going to need all of that, and we are going to need all the 
help we can get from conservation while we are at it.
    Now, the good news is that once upon a time not too long 
ago, in fact, for 25 years running, we found an extra 10 
trillion cubic feet of gas every year. Well, folks, we had 2000 
rigs running. Right now we have got a thousand. And we are 
barely able to stay ahead of the game and to find each year 
what we burn up last year. Natural gas is important in the 
United States for two reasons: One is that it emits a lot less 
carbon dioxide than any other fossil fuel when converted to 
electricity; that is good; the second one is that it provides 
much more nearly a quick fix for local energy problems, because 
given the equipment, you can start up a large gas turbine 
electric generating plant, in probably under a year, as opposed 
to four or five years for a coal-fired plant and an infinity 
currently for a nuclear plant.
    So that is a powerful reason why we were interested in 
being able to handle that natural gas. When we put those 
additional one thousand rigs to work for us to add that ten 
trillion cubic feet of gas, we have another subtlety in the 
problem. Shell won't help us, Exxon won't help us, ARCO and 
Amoco won't help us. All the majors have left the domestic 
onshore. The problem, and the solution, is going to be almost 
entirely with the small mom-and-pop operators, the independent 
producers that are drilling with most of those thousand rigs-- 
using those thousand rigs currently.
    And I heard a mention of the taxation problems. Is there 
anything that can be done to help? Well, I will say that since 
the solution for this problem, if it is going to be attacked 
from a supply standpoint, is going to be the mom-and-pop 
independent operators, that there is a world of difference in 
how they need to operate in a tax system than the large 
companies. The small companies are capital short. They need to 
get their money back from each well they drill before they can 
drill another one. Currently you have to wait 7 years to fully 
recover your expenses, your general expenses from drilling a 
well.
    That doesn't bother Shell or Exxon, but it does bother 
small companies. Something that allows small companies to 
recover their cost, the same year they start recovering 
revenue, would make a world of difference for little companies. 
No less tax to the government, no greater benefit to the small 
company, but cash flow, little companies live on cash flow.
    At the end I have to agree, I would love to have the 
problem solved with conservation, but there isn't a chance in 
hell in the short term that can be anything but a partial help. 
I would love to have gas brought in from Alaska, but you are 
talking a decade from now. Short term, to keep our head above 
water, we better be encouraging domestic drilling by small 
companies in the United States. And if we do not, well, then, 
our national planners better be looking at a new energy future 
for the United States, one that doesn't count on natural gas.
    Thank you, Madam Chairman.
    [The prepared statement of Mr. Downey follows:]

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    Mrs. Cubin. Thank you, Mr. Downey. The Chair now recognizes 
Mr. Rehberg for an introduction.
    Mr. Rehberg. Madam Chair, it gives me a great deal of 
pleasure to introduce the next gentlemen to you, Bob Fisher 
from my home State, the State of Montana is president of the 
Montana Petroleum Organization, an organization I have had a 
real close association with since my dad was the executive 
director of the Montana Petroleum Association for many years. 
He is the senior vice president and managing partner of Ballard 
Petroleum holdings, a big name for a little company, and to 
tell you how much I have appreciated and honor the Ballard 
family, when I became lieutenant governor in 1991, I 
immediately appointed Dave Ballard to the Oil and Gas 
Commission in Montana, a position he still holds at the age of 
44 and is chairman of that commission.
    The most recent governor has reappointed him. And we just 
look to this family and to this company for their leadership 
within this arena that we are talking about today. Ballard 
Petroleum employs 28 people and produces 1100 barrels of oil 
per day. Bob is a professional geologist who, despite his 
youthful appearance, has spent 25 years in Montana's oil and 
gas business.
    Bob, welcome to the Energy and Minerals Resources 
Subcommittee. I really appreciate your taking the time. I know 
how many barrels of oil it took to fly you out here.

   STATEMENT OF ROBERT FISHER, PRESIDENT, MONTANA PETROLEUM 
         ASSOCIATION, VICE PRESIDENT, BALLARD PETROLEUM

    Mr. Fisher. Thank you very much, Congressman Rehberg, thank 
you for your introduction. Madam Chair, members of the 
Committee, thank you for the introduction. I am here on behalf 
of Montana Petroleum Association and some of the mom-and-pop 
operations that Mr. Downey has just referred to. Independent 
producers supply over half of the Nation's natural gas needs. 
The company I helped establish, Ballard Petroleum is one of the 
few independent producers remaining in Montana. Since there has 
been so much addressed of the National Petroleum Council 
findings, I think I will address a few other concerns and some 
of the National Petroleum Council findings. Secretary Pena 
noted in 1998 that for a secure energy future, government and 
private sector decision makers need to be confident that 
industry has the capability to meet potential significant 
increases in future natural gas demand. That is a fairly 
prophetic outlook by Mr. Pena.
    It is important to note that at the same time, the Clinton 
Administration was restricting air emissions from coal-fired 
generation facilities, and we are restricting access to 
government lands and access to the basic resources. These are 
various forces that are put in motion, along with hundreds of 
other small things we have done over 30 years that have 
combined to create a very bad recipe for the long-term supply 
problems.
    In Montana, to give you an idea where we have been for the 
last decade or so, we have had three major forest service 
decisions, and I want to focus in on the forest service and 
BLM. Those three major decisions started with the Beaverhead 
National Forest in southwestern Montana. We started with about 
a million six, 2.1 million acres of land, a million six of it 
legally available. The games of explaining what is available 
for lease. No surface occupancy was almost a half a million 
acres. When they came out with their final EIS, a half a 
million acres is put into NSO; 741,000 acres is put into 
controlled surface use with timing limitations; and we had 
415,000 acres, bless their heart, that were standard lease 
terms, and it goes downhill from there.
    The next forest service decision has 997,000 acres 
available. Of that, 185,000 is put off discretionary 
unavailable, legally unavailable is 144,000 for wilderness 
areas. No surface occupancy takes up 384,000 or 45 percent of 
the forest remaining. Controlled surface use and timing 
limitations takes up another 25 percent, and bless their heart, 
they gave us 24,000 acres out of a million acres as standard 
lease terms. It gets worse. Lewis and Clark came along. The 
decision there in 1997, we had 1.8 million acres of land 
available to start with. 614,000 were the Bob Marshall 
wilderness areas and I love them. They are a great wilderness, 
but then the remaining 1.2 million acres, 356,000 no lease, the 
entire Rocky Mountain area of the Lewis and Clark Forest. 
363,000 acres, no surface occupancy. Controlled surface use and 
timing limitations takes up another 400,000, and bless their 
heart, standard lease terms, zero acres.
    I am here to tell you that access in Montana has been 
severely restricted and that the lands that were allowed to 
explore on and to help this country meet its energy needs have 
been severely restricted in Montana. As far as moving forward I 
think there have been a lot of good comments today, 
conservation being a very important issue, but I also think 
attitudes need to change, across the country, we need to work 
with the conservation groups, with environmentalists, with 
preservationists, industry and State, local and Federal 
governments. NIMBY has to leave. NOPE has to leave. And NOPE 
means ``not on planet earth,'' ``not in my backyard.'' .
    This whole attitude that this country needs energy, it is 
important to our economy, it is important to our way of life 
and our quality of life. And we all need to come to the table 
and work together. And there are some very successful 
cooperative efforts out there that we could look at and model 
going forward. Some of these are known as the petroleum 
showcase models that are out there in the Forest Service 
presently.
    I am a small operator and I can tell you this: these are 
personal experiences, when you go to do business on Federal 
lands, it takes 30 to 45 days to permit a well in Wyoming. I 
can drill it in 8 days. Okay. That is a 9,000 foot materials 
test. If I drill the same well which I did on Forest Service 
administered grasslands in Wyoming, it took me 6-1/2 months to 
get a permit. This country drills 24,000 wells a year. We have 
need to go to a pace of approximately 40,000 wells a year. We 
are short drilling rigs, but we also have to increase the pace. 
Streamlining the permitting process, bringing all the factions 
to the table when we are developing areas, is really critical 
for our country to meet, just to arrest the decline of 
production, let alone find new reserves.
    So I know my time is short, but there are a lot of acres 
that the Federal lands cover, 200-- over 252 million acres in 
the west. Not all those acres are in productive areas. The 
geologic basins that hold oil and gas are unique.
    So are some of the environmental concerns cover very unique 
areas, and sometimes we clash, but because we clash does not 
mean that the oil and gas sector has to be locked out of those 
areas. There are enough technologies out there now that we can 
mitigate environmental concerns, and I would just as soon have 
the Wilderness Society at the table with me, or the Nature 
Conservancy at the table with me so I know what to protect when 
I go into an area so I can develop those resources, because it 
does nobody any good to be issued an APD, an approved permit 
for drill, and then be served with a lawsuit and we begin the 
litigation.
    And there are enough examples throughout the Rockies where 
litigation can last up to a decade for a well to be drilled. 
And that serves nobody any good. I thank you for your time.
    Mrs. Cubin. Thank you.
    [The prepared statement of Mr. Fisher follows:]

      Statement of Robert W. Fisher, President, Montana Petroleum 
   Association, and Senior Vice President/Managing Partner, Ballard 
                        Petroleum Holdings, LLC

    Madam Chairman, Members of the Committee, for the record my name is 
Robert Fisher and I am the President of the Montana Petroleum 
Association (MPA) and Managing Partner in a small independent 
exploration and production company headquartered in Billings, Montana. 
It is a distinct honor to be here today at the invitation of 
Congressman Rehberg to represent the MPA and independent oil and gas 
business at work in the Rocky Mountain States.
    Independent producers supply over half of the Nation's natural gas 
needs. The company I helped establish, Ballard Petroleum, is one of the 
few independent producers remaining in the state of Montana. I am here 
today to attempt to convey to this Committee the challenges facing all 
exploration companies in their quest to help this Nation meet its 
energy needs. Specifically, I would like to address some of the 
findings of the 1999 National Petroleum Council report on natural gas, 
entitled Meeting the Challenges of the Nation's Growing Natural Gas 
Demand .
    The 1999 NPC report was prepared at the request of then Secretary 
of Energy, Federico Pena. Secretary Pena noted that, For a secure 
energy future, government and private sector decisions makers need to 
be confident that industry has the capability to meet potential 
significant increases in future natural gas demand. A very prophetic 
outlook indeed.
    It is important to note that in 1998 the Clinton Administration was 
restricting air emissions from coal-fired generation facilities forcing 
this sector toward increased natural gas usage to meet new air quality 
standards and at the same time fostering an environment in our Federal 
land management agencies that continued to restrict access to 
government lands and access to the basic resource. To put these various 
forces in motion without consideration of the impact on the commodity 
of natural gas was poor policy decisionmaking at best, and a recipe for 
long term supply problems.
    The 1999 NPC report identified several key factors influencing 
natural gas supply and deliverability to this nation. These factors 
include:
     LAcess to resources and rights-of-way
     LContinued technological advancements
     LFinancial requirements for developing new supply and 
infrastructure
     LAvailability of skilled workers
     LExpansion of the U.S. drilling fleet
     LLead times for development
     LChanging customer needs
    In regards to the National Petroleum Council's report, I would like 
to relate my company's specific interactions with various government 
agencies and other examples of Montana's attempts to help meet this 
Nation's energy needs.
    First, a history of various Federal agency actions was prepared to 
give this Committee a reference point from which to evaluate the 
ability of the industry in Montana to help assist this Nation in the 
development of energy resources and power generation.
    In January 1994 the Beaverhead National Forest began scoping for a 
new Environmental Impact Statement (EIS) for oil and gas leasing. In 
February 1996 a Record of Decision (ROD) was issued concerning the 
original 2,149,300 acres.
     LLegally Unavailable 503,400 acres (23 percent)
     LAdministratively Unavailable 9000 acres (<1 percent)
     LAdministratively Available 1,636,900 acres (76 percent)
    Of the Administratively Available acreage the following 
designations were enacted:
     LNo Surface Occupancy (NSO) 479,300 acres (22 percent)
     LControlled Surface Use (CSU)/Timing Limitations (TL) 
741,700 acres (35 percent)
     LStandard Terms (STD)* 415,900 acres (19 percent)
    *Bureau of Land Management (BLM) standard lease terms are 
applicable.
    In February 1996 a Record of Decision was issued by the Helena 
National Forest covering approximately 997,700 acres. In July 1996 the 
Forest Service promptly withdrew their 2/96 ROD because of other 
reasonably foreseeable projects that had arisen since the EIS was 
prepared. Subsequently, a new ROD was issued in May 1998 with the 
following leasing availability designations:
     LLegally Unavailable 144,500 acres (14.48 percent)
     LAdministratively Available 853,200 acres (85.52 percent)
    Of the Administratively Available acreage the following 
designations were enacted:
     LDiscretionary Unavailable 185,100 acres (18.55 percent)
     LNo Surface Occupancy 384,700 acres (38.56 percent)
     LControlled Surface Use and or Timing Limitations 258,700 
acres (25.93 percent)
     LStandard Terms Only 24,700 acres (2.48 percent)
    Finally, in September 1997 a Record of Decision was issued for 
1,862,453 acres in the Rocky Mountain Division and the Jefferson 
Division of the Lewis and Clark National Forest with the following 
leasing availability designations:
     LLegally Unavailable 614,458 acres (33 percent)
     LAdministratively Available 1,247,995 acres (67 percent)
    Of the Administratively Available lands the following designations 
were enacted:
     LNo Lease 356,111 acres (19.12 percent)
     LNo Surface Occupancy 363,033 acres (19.49 percent)
     LControlled Surface use 393,793 acres (21.14 percent)
     LControlled Surface Use and or Timing Limitations 135,058 
acres (7.25 percent)
     LStandard Lease Terms 0 acres (0 percent)
    It is important to note that for the Rocky Mountain Division no 
lands were offered for lease. Only certain lands will be offered for 
lease in Central Montana in the Jefferson Division of the Lewis and 
Clark National Forest.
    The summary of these three combined Forest Service decisions is as 
follows:
     LTotal Forest Service Acres 5,009,453 acres
     Legally Unavailable 1,262,358 acres (25.2 percent)
     LLegally Available 3,747,095 acres (74.8 percent)
       LAdministratively/Discretionary Unavailable 194,100 
acres (3.87 percent)
       LNo Lease 356,111 acres (7.10 percent)
       LNo Surface Occupancy 1,227,033 acres (24.15 percent)
       LControlled Surface Use and or Timing Limitations 
1,529,251 acres (30.53 percent)
       LStandard Lease Terms 440,600 acres* (8.80 percent)
      *94 percent of these available acres are in the Beaverhead 
National Forest These combined decisions have potentially cost the 
State of Montana 10 to 30 TCF in natural gas reserves. This equates to 
tens of billions in revenues for local and state government.
    In October 1997 Mike Dombeck, Head of the U.S. Forest Service, 
issued a memo to all employees of the USFS stating the following:
    Recently, Forest Supervisor Gloria Flora and the staff of the Lewis 
and Clark National Forest made a decision to not allow any further 
exploration for oil and gas on the Rocky Mountain Front. The decision 
was widely and positively covered by the media, including several 
national outlets. This decision was based primarily on the will of the 
people who responded to the draft EIS and preferred alternative. If 
collaborative stewardship is to be a cornerstone of our working 
relationship with the American people, we must, as the Lewis and Clark 
National Forest has done, demonstrate that the will of all people will 
be one of our key bases for decisions, along with sound science and 
resource objectives. This is true conservation leadership.
    When you have people in the highest positions of government 
praising their employees for eliminating access and locking up the 
resource base then you create an environment that fosters opposition to 
Congressionally mandated Multiple-Use land policies. The greatest 
concern of our industry following these decisions was the copycat 
phenomenon that would ensue following, in particular, the No-Lease 
Decision of the Lewis and Clark Forest. This perceived threat to 
responsible resource development and to basic access is now coming to 
fruition in the State of Wyoming in the recently released Preferred 
Alternative for the Bridger-Teton Forest. The Forest Service decision 
to adopt a No Lease policy even after a 10-year process to prepare the 
Bridger-Teton Land and Resource Management Plan is in total disregard 
for the science and detailed planning that went into the document. This 
latest decision by the Forest Service bypasses Congressional directives 
for multiple-use and places another 370,000 acres in a de-facto 
wilderness classification and more resources off limits.
    Following these decisions, of course, was the designation of 
Monument status for almost one-half million acres along the Upper 
Missouri River and the Clinton Administration's Roadless Initiative 
that locked up over 6 million acres of Forest Service land in Montana.
    Attitudes must change!
       LNIMBY: Not in my back yard
       LBANANA: Build Absolutely Nothing Anywhere Near Anyone
       LNOPE: Not On Planet Earth
    Our country cannot afford the radical swings of policy that can 
adversely effect our environment or our national security. Responsible 
development with utmost care for the environment is not mutually 
exclusive!
    The problem facing this industry and this Nation is reasonable 
access to resources! The National Petroleum Council went further in its 
recommendations by stating that The Council believes that unprecedented 
and cooperative effort among industry, government, and other 
stakeholders will be required to develop production from new and 
existing fields and build infrastructure at sufficient rates to meet 
the high level of demand indicated in this study.
    Specific examples of the regulatory burden and inefficiencies are 
everywhere. As an independent exploration company Ballard Petroleum 
(BPL) has dealt with many of the Regional BLM and Forest Service 
offices throughout the western U.S.
    In the Manti-LaSal Forest of Utah it took BPL 10 months to receive 
a permit to drill a single well. The well was drilled in two weeks time 
on Forest Service lands and subsequently plugged. We then left the area 
for the winter months and came back to reclaim the well pad per USFS 
regulations. The USFS intervened and requested changes to the 
previously approved USFS reclamation plan. These changes then had to be 
re-submitted and re-approved. This process took the entire summer and 
early fall period. The USFS instructed reclamation to begin just prior 
to the fall snow period. BPL began reclamation knowing that there was a 
significant chance of snow and that operations would be forced to stop 
due to heavy snows. The snow came, we were forced to leave and then 
subsequently served with a non-compliance letter for not reclaiming the 
well pad in a timely manner. If BPL had been left alone, BPL would have 
properly reclaimed the location in June and July of 2000. Instead, the 
USFS bureaucracy cost BPL the entire summer period of decent working 
weather due to the USFS mandated changes to a previously approved USFS 
reclamation plan!
    Another example of stifling regulatory oversight experienced by BPL 
was in the Powder River Basin of Wyoming in 1999/2000. In order to 
permit a single well on the USFS administered Thunder Basin Grasslands 
it took BPL 6 months to receive an approved permit to drill. It took 8 
days to drill the well.
    Generally speaking, when operating in the Powder River Basin of 
Wyoming, it takes one week to two weeks to drill 5000 to 12000 feet in 
depth. It takes the Forest Service a minimum of 6 months to permit a 
single well as opposed to 30-45 days for the BLM to permit the same. 
The industry in the United States needs to drill thousands of new wells 
every year to arrest the natural decline of known resources and to 
develop new reserves to meet this Nation's energy needs. If you examine 
production volumes in this country you will find that all producing 
areas are declining in production except for one area in Wyoming, the 
Powder River Basin.
    In the Rocky Mountain States of Montana, Wyoming, Colorado and Utah 
there are 44,655,799 acres of Forest Service lands and 45,771,563 
available acres of BLM lands. (1995 statistics) The National Petroleum 
Council report identifies additional resources by region in excess of 
300 TCF in the Rocky Mountain Foreland Basins and Overthrust Province. 
Continued restriction of access to these resource areas will only drive 
investment away. Our Federal, state and local economies will continue 
to lose revenues. Our nation will continue to lose good paying natural 
resource jobs and will become even more dependent on imports of all 
resources, not just natural gas and oil.
    Montana and the Western States have a wealth of natural resources 
that can be responsibly developed. Eastern Montana can supply the 
Nation with super-compliant low sulphur coal. Coalbed Natural Gas is 
just beginning to be developed in Montana and could supply several TCF 
for future energy needs. Montana's Overthrust province may hold in 
excess of 20 TCF but is currently out of reach because of recent USFS 
decisions. The representatives for the western States need to take a 
much more aggressive role in Federal lands decisions or their state 
economies will suffer!
    The Oil and Gas Industry can address the concerns voiced by the 
National Petroleum Council pertaining to investment, drilling fleet 
expansion, technological advancement, training skilled workers and 
contracting lead times for development.
    Our industry cannot solve government lands access issues without 
unprecedented cooperation from our government! Federal surface 
ownership in the western U.S. totals more than 252 million acres. The 
Forest Service needs to have a specific mandate from Congress that 
directs that prudent, environmentally sound resource development needs 
to be considered on an equal footing with current environmental and 
sense of place issues that are dominating the decision processes. 
Public land managers of the Forest Service are ignoring Congressional 
mandate that directs the Forest Service to support, facilitate, and 
administer the orderly exploration, development, and production of 
mineral and energy resources on National Forest System lands to help 
meet the present and future needs of the nation.
    There are those in the government and the press that are very quick 
to point the accusatory finger of blame at industry, but please examine 
the facts and your sacrosanct positions. The government, in aggregate, 
is the largest natural gas producer in our country and therefore 
benefits enormously from this resource base. At the same time the 
government is further restricting access to the resource base at an 
alarming pace, both onshore and offshore through moratorium, No Surface 
Occupancy, No Lease declarations and regulatory overlap of Timing 
Limitations and Controlled Surface Use stipulations.
    The greatest impediment to securing our Nation's natural gas 
resources for energy generation is our own Federal Government! Since 
the early 1980's there has been an enormous amount of discussion/
reporting on the ever-increasing volumes of imports and potential 
energy shortages. Well, the energy shortages are here (California and 
the Northwest United States), imports are at all time highs and 
government continues to reduce access to oil and gas minerals on public 
lands. Our country has just experienced something that many of us only 
thought happened in Third World nations and portions of the Former 
Soviet Union rolling black outs and power shortages. With snow pack and 
moisture levels at record lows in the Northwest and low levels of 
natural gas in storage the individual consumer and all of business has 
not seen the end of the energy shortages and high power bills!
    As a Nation it is easy to sit back and enjoy low inflation and a 
vibrant economy while putting off the nagging question of energy policy 
when the raw commodity is cheap. Now that energy has everyone's 
attention our Nation rushes to govern, as more often than naught, by 
crisis. My brother served in Desert Storm, for cheap oil. He came 
home--others did not! Leadership demands that this Nation describe a 
course that best meets the demand for energy, in high or low commodity 
price environments, that protects our citizenry and arguably the 
strongest economy on earth.
    If you can't access the basic resources don't be surprised when you 
reach for the light switch and there is no light!
                                 ______
                                 
    [Attachments to Mr. Fisher's statement follow:]

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    Mrs. Cubin. The Chair now recognizes Mr. David Alberswerth.

   STATEMENT OF DAVID ALBERSWERTH, DIRECTOR, BUREAU OF LAND 
           MANAGEMENT PROGRAM, THE WILDERNESS SOCIETY

    Mr. Alberswerth. Thank you, Madam Chairman. Before I start, 
I couldn't help but notice that the staff has identified me 
that I am with the BLM. And I can assure you that the current 
management at the BLM would be dismayed to hear this. Thank you 
very much for the opportunity to testify on behalf of the 
Wilderness Society today on this important topic of the public 
lands' contribution to domestic natural gas supplies.
    My name is David Alberswerth and I am the director of the 
Wilderness Society's Bureau of Land Management Program. Prior 
to joining the Wilderness Society staff last year, I served the 
Clinton Administration within the Department of Interior as 
special assistant and senior advisor to the Assistant Secretary 
for Land and Minerals Management. It is the Wilderness 
Society's hope that in exercising its oversight role regarding 
this important matter, the Subcommittee will seek to be as 
objective as possible in reviewing the extent of natural 
resources on our public lands and the environmental values that 
also reside on those lands that can be placed at risk by 
natural gas exploration and development activities.
    For although natural gas extracted from our public lands is 
an important component of our Nation's well being, the 
environmental, wildlife, watershed, and wilderness values of 
those lands are also vitally important to Americans. Some 
suggest that these two interests are incompatible, or that we 
cannot meet our energy needs without sacrificing some of our 
most precious lands. The Wilderness Society believes that we 
can meet our energy needs without sacrificing our most 
treasured natural landscapes. In fact, America has a proud 
tradition of combining a strong economy with strong 
environmental values, and we urge the Subcommittee to be guided 
by both goals. A review of some pertinent facts, which I will 
set forth below, demonstrates clearly that this is possible.
    One fact of central importance that I wish to draw to the 
Subcommittee's attention is that the vast majority of public 
lands managed by the BLM in the overthrust belt States are 
presently open to leasing exploration and development by the 
oil and gas industry. In fact, information presented to the 
Assistant Secretary for Land and Minerals Management by the BLM 
in 1995 indicated that over 95 percent of BLM lands in those 
states, including split estate State lands, were available for 
oil and gas leasing.
    Although there have been some changes in the land status of 
some of the lands indicated on the attachment to my testimony, 
the data here is still essentially valid, and I would suggest 
it would be in the Subcommittee's interest to request an update 
of that data from the BLM for the Subcommittee's consideration 
of next week's hearing on the same topic. In addition, the 
Subcommittee should ask the Interior Department for its report 
to Vice President Cheney's energy policy task force, which I 
understand is being finalized this week and will be submitted 
to the task force.
    I think, given the Subcommittee's charter here for 
oversight of Federal land policies and their relationship to 
energy development, that the direction that the Vice 
President's task force is headed is of vital importance to this 
Committee. It is also relevant to any discussion of our public 
land energy policies to understand that the BLM has been 
carrying out a robust onshore oil and gas leasing program for 
the past decade. For example, the Clinton Administration issued 
oil and gas leases on more than 26 million acres of public 
lands during the last 8 years.
    Mr. Alberswerth. There are nearly 50,000 producing oil and 
gas wells on the public lands. Thousands of new drilling 
permits have been issued during the past 8 years, 3,400 by the 
BLM in fiscal year 2000 alone. Production of natural gas from 
onshore and offshore Federal lands has steadily increased from 
1991 to the present.
    Now, criticism by some that in recent years too much public 
land has been made unavailable for oil and gas activities is 
simply not supported by the facts. Upon close examination, 
industry criticism of lack of access to onshore public lands 
really falls into two categories: Lands that are off limits 
entirely to oil and gas development and lands available for 
development if the industry takes special care of the 
environment. The former areas include wilderness areas, 
wilderness study areas and areas such as steep slopes or areas 
where other mineral activities are taking place; in other 
words, places where oil and gas activities could pose extreme 
environmental or safety hazards or be incompatible with other 
values. Currently such areas comprise roughly 5 percent of BLM 
managed lands in the five States.
    The latter category often encompasses areas where evidence 
indicates the presence of sensitive wildlife habitat such as 
elk calving areas or sage grouse leks where operations at 
certain times of the year could pose severe threats to 
wildlife. The basic types of stipulations imposed by the BLM 
are described in more detail in my written statement.
    Although industry public relations campaigns frequently 
emphasize the benign nature of contemporary exploration and 
development practices and technologies, when required by the 
BLM to utilize these technologies to minimize environmental 
impacts the industry is reluctant to do so, as we have been 
hearing here today. In fact, in testimony delivered before the 
Full Committee last week, the Independent Petroleum Association 
of the Mountain States specifically singled out protection of 
elk habitat as an example of an unnecessary environmental 
precaution. The witness' candor was refreshing. Clearly the oil 
and gas industry cares little for the concerns shared by most 
Americans that environmental values on our public lands be 
protected. However, the purpose of these stipulations which the 
industry disdains is simply to ensure that these advanced 
technologies touted elsewhere are used to minimize the impact 
of energy production on environmentally sensitive public lands.
    In conclusion, I had planned to talk about everybody's 
favorite natural gas report here today. I hope everybody would 
agree on the basic data in there. Our conclusion from reviewing 
that report is that there is about a 40-year supply of natural 
gas without having to go into the sensitive areas that the 
industry is complaining about that they would like to go into.
    In any event, in conclusion, if we are careful we can 
pursue energy policies that allow and even encourage increased 
natural gas use while protecting sensitive public lands and the 
environmental values that all Americans have a right to have 
protected, but our policies must also recognize that there are 
adverse impacts to natural gas development and valid safety 
concerns with natural gas distribution issues that should not 
be swept under the carpet in a headlong drilling and 
development frenzy.
    Thank you very much.
    [The prepared statement of Mr. Alberswerth 
follows:]

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    Mrs. Cubin. Thank you, Mr. Alberswerth, and thank all of 
you for your testimony.
    My first question will be of Mr. Downey. I understand that 
you have some geologic experience on the North Slope of Alaska. 
Can you describe for me, please, how much gas Prudhoe Bay and 
satellite fields could provide to the lower 48 States and how 
long it would take to get that down?
    Mr. Downey. Sure, I think the key thing is that in Prudhoe 
Bay, the 30 or 40 trillion cubic feet that are there are not 
available at all for going to a pipeline, not for many years, 
and the reason is simple physics. It is the gas at Prudhoe Bay 
that moves the oil out so that it flows to the pipeline. As 
soon as you take the gas out, the oil stops flowing. So the 
only time that any reasonable person would start tapping into 
the gas at Prudhoe Bay is long down the road when we run out of 
oil in Prudhoe Bay. All the rest is wishful thinking.
    Mrs. Cubin. Can you identify for me some of the high gas 
potential areas in the United States, the lower 48, that have 
serious access problems?
    Mr. Downey. I would defer to some of the other people who 
have had firsthand experience as to access, as I have never 
myself permitted a well in those areas. I would say that I 
think the Rocky Mountains is going to be one of the great gas 
provinces of the United States. We had a wonderful technical 
conference a few months ago in which people were pointing out 
an entirely new development of gas, and of a gas accumulation 
that is largely restricted to the Rocky Mountains, and I think 
you all are going to be a major exporter of gas to save 
California in the years to come.
    Mrs. Cubin. Could you explain to me why Mexico isn't a 
potential source of natural gas?
    Mr. Downey. They are a user. We supply gas to them, about, 
I think, 140 million cubic feet of gas per day. They need all 
they can get, and they are buying from us. Not much of a chance 
they will turn around and stop buying and start exporting.
    Mrs. Cubin. One last question, Mr. Downey, if you don't 
mind. Is there any gas potential in the OCS off our 
northeastern United States that are akin to the Sable Island 
discovery and project off of Nova Scotia that Mr. Markey 
referred to?
    Mr. Downey. Sure, there is potential, because we haven't 
been allowed to explore there, but all you have to do is go 
across the State line into Canada. They are finding all sorts 
of gas in that same setting and, thanks to Canada, they are 
keeping northeast United States warm with offshore Canadian gas 
while northeastern states refuse to allow it to be drilled and 
produced from their own offshore. I hope Canada stays friendly.
    Mrs. Cubin. Isn't that the truth? It really makes you 
wonder, doesn't it?
    My next question, I guess, will be for Mr. Alberswerth. You 
talk about the 95 percent of BLM land that is available for oil 
and gas leasing. Does that include land that has no prospects 
at all for oil and gas production?
    Mr. Alberswerth. That 95 percent, Madam Chairman, is within 
the overthrust belt States of Montana, New Mexico, Colorado, 
Utah and Wyoming, and the information that I presented was 
based on information developed by the BLM in response to a 
question as to what the potential availability of oil and gas 
resources were in those States. It is probably not as precise 
as one might want. I am sure that there are lands, you know, 
incorporated in that analysis by the BLM that may not have oil 
and gas potential, but I couldn't tell you where they are. It 
would be a good question to perhaps ask the BLM, you know, if 
they could do a better job of disaggregating that information.
    Mrs. Cubin. Well, hopefully in the study that is being done 
by the USGS, or will be soon done by the USGS, they can get 
that information. I think all of the information that we need 
is really out there. It is just a matter of someone bringing it 
all together, focusing on it and applying it to reality.
    Mr. Alberswerth. That is right, and I want to make clear, 
though, it doesn't include States like Idaho and Nevada, for 
example.
    Mrs. Cubin. It did not?
    Mr. Alberswerth. No, ma'am, it does not include those 
States which are generally considered to not have a great deal 
of oil and gas potential. So we had asked information from 
States where there was an ongoing oil and gas program.
    Mrs. Cubin. As you know, the subsurface of the U.S. Forest 
Service land is managed by the BLM, but BLM will not lease any 
Forest Service land for oil and gas without Forest Service 
approval, is that correct?
    Mr. Alberswerth. That is correct, and that 95 percent 
figure, I just want to be very clear about this, does not 
include Federal oil and gas on national forest lands. It is 
only BLM-managed surface and subsurface State or Federal 
minerals under privately owned lands. As you know, in your 
State of Wyoming there is a lot of split estate land, so it 
does not include minerals on national forests.
    Mrs. Cubin. Is the 95 percent adjusted for areas like the 
BLM lands in southwest Wyoming where layering of multiple 
overlapping restrictions of wildlife protection leaves such a 
small window of availability of time and so for all practical 
purposes they can't drill because the time is too short?
    Mr. Alberswerth. Well, see that is a dispute here. I 
mean--.
    Mrs. Cubin. Pardon me.
    Mr. Alberswerth. That is a dispute.
    Mrs. Cubin. Okay.
    Mr. Alberswerth. The 95 percent are lands that are 
available for oil and gas leasing and development, much of 
which is in fact subject to the sorts of environmental 
protections that members of the previous panel and others have 
objected to. For example, the seasonal elk habitat, no surface 
occupancy stipulation there is correct. In our view, those are 
appropriate protections that have been proposed.
    Mrs. Cubin. Sure.
    Mr. Alberswerth. In an attempt by the BLM to try to reach 
this balance, you know, where you allow oil and gas activities 
but they are trying to protect seasonal elk habitat or other 
types of wildlife habitat.
    Mrs. Cubin. I want to look at that language again just a 
second. 95 percent of BLM land is available for oil and gas 
leasing, and you are saying that doesn't count any of the BLM 
land in Idaho. Is that what you said?
    Mr. Alberswerth. Yes, the 95 percent figure, if you look 
carefully at the attachments, is in the States of Montana, 
Wyoming, New Mexico, Utah and--.
    Mrs. Cubin. And another one.
    Mr. Alberswerth. Colorado, excuse me. That is right. It 
does not include any other Western State and I should add, too, 
you know, there is an oil and gas program that is fairly 
significant in the State of California, but this whole debate 
about restrictions seems to be centered in overthrust belt 
States. So that is where that information is concentrated.
    Mrs. Cubin. But all of those nine, that 95 percent that you 
are talking about has restrictions, I don't mean every single 
square foot has restrictions but across the 95 percent there 
are other restrictions in place due to regulations, rules, 
things other than land designations, right?
    Mr. Alberswerth. I would assume so.
    Mrs. Cubin. And land designations, wilderness study areas, 
for example, would be included in that or not?
    Mr. Alberswerth. No, ma'am. My understanding is, and it may 
be worth asking the BLM about this, that the 95 percent 
excludes wilderness study areas. In other words, wilderness 
study areas are in the 5 percent where oil and gas leasing is 
not allowed.
    Mrs. Cubin. And you know, I think that the 95 percent 
figure can be very misleading because it is like I said with 
the coal in Black Hills National Forest, if you do drill on 95 
percent of it or you can mine in 95 percent of it but you can't 
mine where the coal is, it doesn't do you much good, and I 
think that is the claim a lot of people have made in a lot of 
the objections I have personally heard.
    Now a question for Mr. Fisher. Can you tell me your 
comparative experiences in permitting wells between the Forest 
Service, BLM and various State Oil and Gas Conservation 
Commissions? And the reason I ask this is because I am curious 
about a bill--not curious about, obviously I think it is a good 
idea or I wouldn't be writing a bill about it, but allowing the 
State Conservation Commissions to administer programs 
permitting wells. So just give me an idea of your experiences 
in dealing with those regulatory agencies.
    Mr. Fisher. From a standpoint of the Forest Service, 
generally the rules that are in place right now prohibit 
obtaining a drilling permit in less than 6 months. They can 
take upwards, I believe, to 10 months and my personal 
experience is, drilling a 9,000 foot well in the Powder River 
Basin on grasslands administered by the Forest Service, 6-1/2 
months to get a permit.
    Drilling a 3,500-foot overthrust test in the Manti-La Sal 
Forest in Utah, 10 months for a two-acre disturbance.
    Mrs. Cubin. Forest Service.
    Mr. Fisher. Forest Service, Manti-La Sal. I spent $700,000 
on a rig and the well cost me $400,000 to drill. I drilled the 
well in two weeks. There are some very disproportionate costs 
associated with conducting business on the Forest Service. When 
we get to the BLM, the BLM usually takes 30 to 45 days to 
process an APD. They are quite efficient, I think. They do a 
good job at it. When they have concerns, you have longer 
periods of time to get an APD, specific wildlife concerns or 
something that is special to or unique to an area, and those 
are understandable and you have to mitigate them.
    Mrs. Cubin. Is that in the Powder River Basin that you are 
speaking of?
    Mr. Fisher. I have permitted BLM in the Powder and down in 
Colorado, Utah, Montana. All four States I have done business 
in.
    Mrs. Cubin. Okay.
    Mr. Fisher. The BLM is fairly efficient at it and you have 
more personnel within that agency that have, or are ex-oil 
field if you will. They have some knowledge of the oil and gas 
industry. What I find, there is a very large gap between the 
knowledge base in the Forest Service in oil and gas operations 
and in the BLM, and that large gap I think has served the 
industry very poorly in the last decade on a lot of decisions 
that have been made concerning Forest Service lands. We have 
done a lot of effort to try to educate the Forest Service and, 
to put it bluntly, I think we are wholly ignored in the State 
of Montana when it comes to current technologies and smaller 
footprint technologies.
    Mrs. Cubin. What do you mean by wholly ignored?
    Mr. Fisher. We bring the data to them from service 
companies, from drilling contractors, from our known 
experience, explaining closed mud systems, explaining 
directional drilling multiple wells from a single pad, what our 
limitations are. In overthrust provinces you are not going to 
reach out much more than a mile. There are technologies now 
that could reach up to five miles, but you are in soft 
sediment, you are in offshore type situations. Alaska is 
different, but they can reach upwards of five miles in Alaska. 
Not in the lower 48. We do not have the tools, we do not have 
the technology, and it is much more complex geology.
    To the extent that I gave a lot of testimony on the Lewis 
and Clark, that I participated in the Helena National Forest 
debate and the results of those, I think when we talk about 
pendulums swinging one way or the other, whether or not the 
environment is the driving force in the decision process or the 
resource is the driving force, if the pendulum swings in either 
direction it is bad because something is ignored, and I am here 
to tell you in the State of Montana the resource development on 
Forest Service lands was wholly ignored in favor of environment 
exclusively, and those are the results of the decisions. So--.
    Mrs. Cubin. Do you think there is a significant difference 
in the environmental protection outcomes between those 
different agencies, including the State ConservationCommission?
    Mr. Fisher. I don't think the State does as good a job, if 
you will. If I permit on fee minerals, if I permit on State, 
the State of Montana has some fairly strict application of 
environmental laws through NEPA standards which are much like 
NEPA and so that permitting on State lands can be quite 
difficult if there are environmental concerns, but generally 
State lands are not in uniquely sensitive environments. Now 
there some along the Rocky Mountain front and other areas 
without a doubt.
    Mrs. Cubin. So between Forest Service and BLM, is there a 
significant difference between them in the resulting 
environmental protection that comes from those, you know, that 
they put out?
    Mr. Fisher. I don't believe so. The standards are 
relatively the same. I think the Forest Service a lot of times 
has different environments to deal with than the BLM. But then 
the BLM comes in after the Forest Service makes the decision 
and then administers the APD and you go through an entire other 
round of environmental analysis through the APD process.
    Mrs. Cubin. Does one or the other have a higher standard, I 
guess is what I am trying to say.
    Mr. Fisher. I would say that the Forest Service without a 
doubt has a higher standard to meet for environmental 
protection.
    Mrs. Cubin. Yes, that was the question, the way I should 
have put it in the first place. Well, I would like to thank you 
gentlemen for being here, taking your time today and would ask 
that you would respond to any questions that the Subcommittee 
members would like to ask but weren't able to do that. So thank 
you very much.
    The Subcommittee on Minerals and Energy is now adjourned.
    [Whereupon, at 4:17 p.m., the Subcommittee was adjourned.]

    [Additional material supplied for the record follows:]

    [A statement submitted for the record by Red Cavaney, 
President and CEO, The American Petroleum Institute, follows:]

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