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



 
                       SUPPORTING AMERICAN JOBS
                        AND THE ECONOMY THROUGH
                      EXPANDED ENERGY PRODUCTION:
                    CHALLENGES AND OPPORTUNITIES OF
                  UNCONVENTIONAL RESOURCES TECHNOLOGY
=======================================================================

                                HEARING
                               BEFORE THE
                       SUBCOMMITTEE ON ENERGY AND
                              ENVIRONMENT
              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               ----------                              

                         THURSDAY, MAY 10, 2012

                               ----------                              

                           Serial No. 112-84

                               ----------                              

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



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              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

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

                 Subcommittee on Energy and Environment

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


                            C O N T E N T S

                              May 10, 2012

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

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

                           Opening Statements

Statement by Representative Andy Harris, Chairman, Subcommittee 
  on Energy and Environment, Committee on Science, Space, and 
  Technology, U.S. House of Representatives......................    16
    Written Statement............................................    17

Statement by Representative Paul D. Tonko, Acting Ranking 
  Minority Member, Subcommittee on Energy and Environment, 
  Committee on Science, Space, and Technology, U.S. House of 
  Representatives................................................    17
    Written Statement............................................   19 

                          Panel One Witnesses:

Hon. Charles McConnell, Assistant Secretary for Fossil Energy, 
  U.S. Department of Energy
    Oral Statement...............................................    22
    Written Statement............................................    24

Ms. Anu Mittal, Director, Natural Resources and Environment, U.S. 
  Government Accountability Office
    Oral Statement...............................................    28
    Written Statement............................................    30

Discussion                                                           46

                          Panel Two Witnesses

Ms. Samantha Mary Julian, Director, Office of Energy Development, 
  State of Utah
    Oral Statement...............................................    59
    Written Statement............................................    61

Mr. Jim Andersen, Chief Executive Officer and President, U.S. 
  Seismic Systems, Inc.
    Oral Statement...............................................    64
    Written Statement............................................    66

Mr. Cameron Todd, Chief Executive Officer, U.S. Oil Sands, Inc.
    Oral Statement...............................................    73
    Written Statement............................................    75

Mr. Tony Dammer, Member, Board of Directors, National Oil Shale 
  Association
    Oral Statement...............................................    79
    Written Statement............................................    81

Discussion                                                           90

              Appendix: Answers to Post-Hearing Questions

Hon. Charles McConnell, Assistant Secretary for Fossil Energy, 
  U.S. Department of Energy......................................   101

Ms. Anu Mittal, Director, Natural Resources and Environment, U.S. 
  Government Accountability Office...............................   115

Ms. Samantha Mary Julian, Director, Office of Energy Development, 
  State of Utah..................................................   119

Mr. Jim Andersen, Chief Executive Officer and President, U.S. 
  Seismic Systems, Inc...........................................   124

Mr. Cameron Todd, Chief Executive Officer, U.S. Oil Sands, Inc...   126

Mr. Tony Dammer, Member, Board of Directors, National Oil Shale 
  Association....................................................   131

             Appendix 2: Additional Material for the Record

Letter from Members of Wyoming House of Representatives to Bureau 
  of Land Management.............................................   134

``Water on the Rocks'': A Presentation by Western Resource 
  Advocates......................................................   137

Letter from Denver Board of Water Commissioners to Subcommittee 
  on Interior, Environment, and Related Agencies, Committee on 
  Appropriations.................................................   152

Letter from Rocky Mountain Farmers Union to Subcommittee on 
  Interior, Environment, and Related Agencies, Committee on 
  Appropriations.................................................   154

Oil Shale Fact Sheet from the Wilderness Society.................   155

Utah's Economic Development Plan from Governor Gary R. Herbert...   157

Energy Initiatives and Imperatives: Utah's 10-Year Strategic 
  Energy Plan....................................................   185

Draft Programmatic Environmental Impact Statement: Possible Land 
  Use Plan Amendments for Oil Shale and Tar Sands (May 4, 2012) 
  (Utah).........................................................   233

Oil Shale: A Century of Failure; Report by Checks and Balances 
  Project, April 2012............................................   279

Not Ready for Prime Time: Prepared by Checks and Balances Project   288

Resolution of Mesa County, State of Colorado.....................   295

Mesa County News Release, April 19, 2012, and Resolution No. 
  2012-12........................................................   300
Economic Impact of Failure to Implement Legislative Mandates of 
  Sec 369, Energy Policy Act 2005, a White Paper by Anton Dammer, 
  M.S., and James Bunger, Ph.D...................................   306

Letter to the Subcommittee from Dr. Dag Nummedal, Director, 
  Colorado Energy Research Institute, and Dr. Jeremy Boak, 
  Director, Center for Oil Shale Technology and Research, 
  Colorado School of Mines.......................................   315

U.S. Department of Energy, Office of Naval Petrolum and Oil Shale 
  Reserves, November 2008, ``Strategic Plan: Unconventional Fuels 
  Development Within the Western Energy Corridor''...............   320




                        SUPPORTING AMERICAN JOBS



                        AND THE ECONOMY THROUGH



                      EXPANDED ENERGY PRODUCTION:



                    CHALLENGES AND OPPORTUNITIES OF



                 UNCONVENTIONAL RESOURCES TECHNOLOGIES

                              ----------                              


                         THURSDAY, MAY 10, 2012

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

    The Subcommittee met, pursuant to call, at 9:33 a.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Andy 
Harris [Chairman of the Subcommittee] presiding.

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    Chairman Harris. The Subcommittee will come to order.
    Good morning, and welcome to this morning's hearing 
entitled ``Supporting American Jobs and the Economy Through 
Expanded Energy Production: Challenges and Opportunities of 
Unconventional Resources Technology.''
    Two weeks ago, the Science, Space, and Technology Committee 
heard from expert witnesses about America's vast untapped 
unconventional energy resources. The amount of energy under own 
soil is striking. With continued technological advances and the 
right policies to enable access to these resources, America 
could become the global leader in energy production for the 
next generation and beyond.
    For example, the Green River Basin located in Colorado, 
Utah, and Wyoming may contain up to three trillion barrels of 
oil--more potential oil than the rest of the world's current 
oil reserves combined. If this energy, which is overwhelmingly 
on federal lands, is made available, I am confident American 
ingenuity will find ways to responsibly explore and produce 
this resource.
    Portions of the United States are already experiencing the 
significant economic benefits of unconventional energy 
production. North Dakota's unemployment rate is now the lowest 
in the Nation due to the shale oil revolution. The State's top 
economic challenge is not job creation, but rather finding 
workers to fill the thousands of job openings created by the 
energy boom--a problem most States would love to have. The 
Federal Government should afford other States the opportunity 
to replicate this success story through aggressive pursuit of 
leasing, permitting, and technological opportunities.
    Unfortunately, when it comes to unconventional energy, 
President Obama talks the talk more than he walks the walk. 
Beginning with his State of the Union speech earlier this year, 
the President has touted the historical contributions of the 
Department of Energy's fossil energy research programs, while 
his annual budget request to Congress repeatedly calls for 
elimination of the very same program. And while the President 
regularly boasts of his support for an ``all of the above'' 
energy strategy, his Administration appears more focused on 
producing new regulations and restrictions than it is on 
producing more oil and gas. For example, the President has 
unleashed 10 different federal agencies in pursuit of potential 
regulations on hydraulic fracturing.
    Similarly, the President's campaign Website includes an 
``all of the above'' energy page that neglects to even 
acknowledge the fuel providing 45 percent of the United States' 
electricity: coal. It is clear the President continues to pick 
his preferred energy technologies at the expense of the free 
market and consumer need and choice.
    Perhaps most incredibly, just three days after his State of 
the Union speech declaring his commitment to this all of the 
above energy strategy, the President's Interior Department 
effectively reduced lands available for oil shale development 
by 75 percent, putting over 1.5 million acres off limits not 
only to exploration and production, but also to research and 
development.
    This morning, I am interested in examining the impact of 
the Administration's anti-fossil fuel policies, as well as 
exploring what targeted research questions DOE can and should 
address to facilitate the further development of America's 
unconventional energy resources.
    I also look forward to hearing how innovative companies are 
enabling more efficient and environmentally sound development 
of America's unconventional oil and gas resources.
    I thank the witnesses for appearing before the 
Subcommittee.
    [The prepared statement of Mr. Harris follows:]

        Prepared Statement of Subcommittee Chairman Andy Harris

    Good morning and welcome to this morning's hearing entitled 
``Supporting American Jobs and the Economy Through Expanded Energy 
Production: Challenges and Opportunities of Unconventional Resources 
Technology.''
    Two weeks ago, the Science, Space, and Technology Committee heard 
from expert witnesses about America's vast untapped unconventional 
energy resources. The amount of energy under our own soil is striking. 
With continued technological advances and the right policies to enable 
access to these resources, America could become the global leader in 
energy production for the next generation and beyond.
    For example, the Green River Basin, located in Colorado, Utah, and 
Wyoming, may contain up to three trillion barrels of oil--more 
potential oil than the rest of the world's current oil reserves 
combined. If this energy--which is overwhelmingly on federal lands--is 
made available, I am confident American ingenuity will find ways to 
responsibly explore and produce this resource.
    Portions of the United States are already experiencing the 
significant economic benefits of unconventional energy production. 
North Dakota's unemployment rate is the lowest in the Nation due to the 
shale oil revolution. The State's top economic challenge is not job 
creation but rather finding workers to fill the thousands of job 
openings created by the energy boom--a problem most States would love 
to have. The Federal Government should afford other States the 
opportunity to replicate this success story through aggressive pursuit 
of leasing, permitting, and technological opportunities.
    Unfortunately, when it comes to unconventional energy, President 
Obama talks the talk more than he walks the walk. Beginning with his 
State of the Union speech earlier this year, the President has touted 
the historical contributions of the Department of Energy's fossil 
energy research programs, while his annual budget request to Congress 
repeatedly calls for elimination of the very same programs. And while 
the President regularly boasts of his support for an ``all of the 
above'' energy strategy, his administration is focused more on 
producing new regulations and restrictions than it is on producing more 
oil and gas. For example, the President has unleashed 10 different 
federal agencies in pursuit of potential regulations on hydraulic 
fracturing.
    Similarly, President Obama's campaign Website includes an ``all of 
the above'' energy page that neglects to even acknowledge the fuel 
providing 45 percent of the United States' electricity: coal. It is 
clear the President continues to pick his preferred energy technologies 
at the expense of the free market and consumer choice.
    Perhaps most incredibly, just three days after his State of the 
Union speech declaring his commitment to an ``all of the above'' energy 
strategy, the President's Interior Department effectively reduced lands 
available for oil shale development by 75 percent--putting over 1.5 
million acres off limits not only to exploration and production but 
also to research and development.
    This morning, I am interested in examining the impact of the 
Administration's antifossil-fuel policies, as well as exploring what 
targeted research question DOE can and should address to facilitate the 
further development of America's unconventional energy resources.
    I also look forward to hearing how innovative companies are 
enabling more efficient and environmentally sound development of 
America's unconventional oil and gas resources.
    I thank the witnesses for appearing before the Subcommittee, and I 
now recognize Ranking Member Tonko for his opening statement.

    Chairman Harris. I now recognize Ranking Member--I am 
sorry. Mr. Tonko is--I guess you are the Ranking Member for 
today, the substitute Ranking Member, for his opening 
statement.
    Mr. Tonko. Thank you, Mr. Chair.
    Today's hearing is focused on another unconventional fossil 
resource that we have heard about many times in the past 
decades. Every time oil prices have spiked or that we have 
become concerned about a major disruption in our oil supplies, 
oil shale gets a new look. Why we continue to use public funds 
to pursue this energy source is truly a subject for research, I 
believe. The oil companies and the Federal Government have 
poured millions of dollars into research, demonstration 
projects, and subsidies to find an economically viable way to 
develop this resource. Yet it is still years, if not decades, 
away from being economically, technologically, and 
environmentally viable.
    Oil shale should not be confused with shale oil. Shale oil 
is being commercially produced along with shale gas in various 
places around our great country. Through application of 
conventional fracturing processes, oil is released from shale 
formations and then pumped to the surface. Oil shale, on the 
other hand, is essentially a rock that must be heated at 
extremely high temperatures for long periods of time before the 
hydrocarbons within it are indeed released. The magnitude and 
severity of the impacts on land, water, and other natural 
resources required to turn rock into oil are only part of the 
reasons that these resources have never been commercially 
viable. They should serve as our cue to look beyond oil.
    I have listened as many of my Republican colleagues 
questioned the wisdom and need for public investments in 
renewable energy resources, either through support of research 
or through tax incentives. But when it comes to offering 
subsidies to one of the wealthiest and most profitable 
industries in the world--the oil industry--their generosity 
knows no bounds. When I look at the potential for oil shale, I 
can only wonder why we should be throwing more hard-earned 
taxpayer dollars after bad.
    Even though gas prices have recently come down a bit, our 
constituents still feel the pain at the pump and know that it 
is a just a matter of time before another price spike hits. The 
public is tired of seeing an increasing portion of their 
paycheck go to the most profitable companies in the world, 
along with outsized portion of their tax dollars in the form of 
tax breaks for the oil and gas industry.
    Subsidizing oil shale has never lowered gasoline prices or 
led to our energy independence. I do not believe it ever will. 
In spite of years of government support for research and 
development since the early 1900s, this resource has proven to 
be much more bust than boom. The high cost of delivering this 
energy will inevitably translate into high retail prices for 
refined products. It is time we took a different path and 
invested in alternative energy sources. The oil industry has 
the financial resources to pursue this further if they believe 
it is viable.
    As our witness from the Government Accountability Office, 
the GAO, will outline from their investigation, there are 
things the Federal Government can do to better understand the 
range of uncertainties regarding the impacts of oil shale 
development. Among these, understanding the impacts on water 
quality and quantity stand out as the biggest concerns. The 
legendary water battles in the West are not about protecting 
ecosystems, though that is a worthwhile cause. These battles 
are about economics.
    There is no greater indicator of a region's economic 
potential, its ability to sustain human life and industry, than 
its access to clean water. It is hard for those of us from 
relatively water-rich States to understand what it means for a 
region whose annual rainfall can be measured in single digits 
in a good year. But for most Westerners, it is a sixth sense.
    I happen to be from an area of the country that is blessed 
with abundant, high-quality water resources. Given the current 
and looming shortages of water in many areas of the West, I 
cannot imagine why we would consider trading water, a 
renewable, vital resource for which there is no substitute, for 
a non-renewable resource that we can only obtain with very 
costly, highly damaging, and destructive methods. Land and 
water are not, or should not, be treated as disposable goods.
    The Interior Department released a draft Programmatic 
Environmental Impact Statement that was not only appropriately 
cautious, but reflected the reality of the technological 
immaturity of the oil shale industry. The Department of 
Interior is charged with managing the Nation's lands for the 
benefit of all the public in a manner that keeps faith with 
generations to come. These lands support hunting, fishing and 
recreation of all types. They serve as protection for 
watersheds that recharge groundwater supplies and feed streams 
and rivers that support agriculture, ranching, power production 
and countless other businesses. The people engaged in these 
economic activities in Colorado, Utah, and Wyoming also deserve 
consideration.
    A number of groups representing these interests have voiced 
their concerns about leasing public lands for oil shale 
development, and about its impact on water resources in 
particular. I am attaching several of their past communications 
on this subject to my testimony today.
    We should not sacrifice sustainable communities and 
livelihoods in an attempt to mimic Earth's geologic process of 
converting rock into oil. Can we really ask the public to once 
again believe that we are going to secure our energy future 
this way? Perhaps our witnesses this morning can convince me 
otherwise, but I believe we can make far better investments 
with public funds by increasing energy efficiency and expanding 
our use of renewable energy supplies.
    I thank our witnesses for being here this morning, and I 
look forward to hearing their testimony.
    With that, I yield back, Mr. Chair.
    [The prepared statement of Mr. Tonko follows:]

       Prepared Statement of Acting Ranking Member Paul D. Tonko

    Today's hearing is focused on another unconventional fossil 
resource that we have heard about many times in past decades. Every 
time oil prices have spiked or that we have become concerned about a 
major disruption in oil supplies, oil shale gets a new look. Why we 
continue to use public funds to pursue this energy source is truly a 
subject for research. The oil companies and the Federal Government have 
poured millions of dollars into research, demonstration projects, and 
subsidies to find an economically viable way to develop this resource. 
Yet it is still years, if not decades, away from being economically, 
technologically, and environmentally viable.
    Oil shale should not be confused with shale oil. Shale oil is being 
commercially produced along with shale gas in various places around the 
country. Through application of conventional fracturing processes, oil 
is released from shale formations and pumped to the surface. Oil shale, 
on the other hand, is essentially a rock that must be heated at 
extremely high temperatures for long periods of time before the 
hydrocarbons within it are released. The magnitude and severity of the 
impacts of land, water, and other natural resources required to turn 
rock into oil are only part of the reasons that these resources have 
never been commercially viable. They should serve as our cue to look 
beyond oil.
    I have listened as many of my Republican colleagues questioned the 
wisdom and need for public investments in renewable energy resources, 
either through support of research or through tax incentives. But when 
it comes to offering subsidies to one of the wealthiest and most 
profitable industries in the world--the oil industry--their generosity 
knows no bounds. When I look at the potential for oil shale, I can only 
wonder why we should be throwing more hard-earned taxpayer dollars 
after bad.
    Even though gas prices have recently come down a bit, our 
constituents still feel the pain at the pump and know that it is just a 
matter of time before another price spike. The public is tired of 
seeing an increasing portion of their paycheck go to the most 
profitable companies in the world, along with outsized portions of 
their tax dollars in the form of tax breaks for the oil and gas 
industry. Subsidizing oil shale has never lowered gasoline prices or 
led to our energy independence. I do not believe it ever will. In spite 
of years of government support for research and development--since the 
early 1900s--this resource has proven to be much more bust than boom. 
The high cost of delivering this energy will inevitably translate into 
high retail prices for refined products. It is time we took a different 
path and invested in alternative energy sources. The oil industry has 
the financial resources to pursue this further if they believe it is 
viable.
    As our witness from the Government Accountability Office (GAO) will 
outline from their investigation, there are things the Federal 
Government can do to better understand the range of uncertainties 
regarding the impacts of oil shale development. Among these, 
understanding the impacts on water quality and quantity stand out as 
the biggest concern. The legendary water battles in the West are not 
about protecting ecosystems, though that is a worthwhile cause. These 
battles are about economics. There is no greater indicator of a 
region's economic potential--its ability to sustain human life and 
industry--than its access to clean water. It is hard for those of us 
from relatively water-rich States to understand what it means for a 
region whose annual rainfall can be measured in single digits in a good 
year. But for most Westerners, it is a sixth sense.
    I happen to be from an area of the country that is blessed with 
abundant, high-quality water resources. Given the current and looming 
shortages of water in many areas of the West, I cannot imagine why we 
would consider trading water--a renewable, vital resource for which 
there is no substitute--for a nonrenewable resource that we can only 
obtain with very costly, highly damaging and destructive methods. Land 
and water are not--or should not--be treated as disposable goods.
    The Interior Department released a draft Programmatic Environmental 
Impact Statement that was not only appropriately cautious, but 
reflected the reality of the technological immaturity of the oil shale 
industry. The Department of Interior is charged with managing the 
Nation's lands for the benefit of all the public in a manner that keeps 
faith with generations to come. These lands support hunting, fishing, 
and recreation of all types. They serve as protection for watersheds 
that recharge groundwater supplies and feed streams and rivers that 
support agriculture, ranching, power production and countless other 
businesses. The people engaged in these economic activities in 
Colorado, Utah, and Wyoming also deserve consideration. A number of 
groups representing these interests have voiced their concerns about 
leasing public lands for oil shale development, and about its impact on 
water resources in particular. I am attaching several of their past 
communications on this subject to my testimony today.
    We should not sacrifice sustainable communities and livelihoods in 
an attempt to mimic Earth's geologic process of converting rock into 
oil. Can we really ask the public to once again believe that we are 
going to secure our energy future this way? Perhaps our witnesses this 
morning can convince me otherwise, but I believe we can make far better 
investments with public funds by increasing energy efficiency and 
expanding our use of renewable energy.
    I thank our witnesses for being here this morning. I look forward 
to hearing your testimony,

    Chairman Harris. Thank you very much, Mr. Tonko.
    If there are Members who wish to submit additional opening 
statements, your statements will be added at this point.
    At this time, I would like to introduce our witnesses for 
the first panel. The first witness is Mr. Charles McConnell, 
Assistant Secretary for Fossil Energy at the U.S. Department of 
Energy. Prior to joining DOE, Mr. McConnell served as the Vice 
President of Carbon Management at Battelle Energy Technology. 
He also spent 31 years with Praxair in various positions in the 
United States and Asia, including Global Vice President. He 
previously held a number of advisory positions, including 
chairmanships of the Gasification Technologies Council and the 
Clean Coal Technology Foundation of Texas.
    The second witness on the first panel will be Ms. Anu 
Mittal, Director, National Resources and Environment of the 
U.S. Government Accountability Office. Ms. Mittal has been with 
the GAO since 1989, during which time she has led a variety of 
reviews of federal programs related to land management, water 
resources, oceans and fisheries, environmental restoration, 
energy, defense cleanup, housing, food safety--you are busy--
science and technology and agriculture issues.
    Thank you for appearing before the Subcommittee today. As 
our witnesses should know, spoken testimony is limited to five 
minutes each, after which the Members of the Committee will 
have five minutes each to ask questions.
    Before I recognize Mr. McConnell, I want to again express 
what has been a recurrent theme, the displeasure with DOE's 
habitually late communications to Congress and to this 
Subcommittee and Committee. The testimony for this morning's 
hearing, I don't know if you realize this, Mr. McConnell, your 
testimony was due Tuesday morning at 9:30. That is the standard 
operating procedure for the Committees. We didn't receive it 
until 7 o'clock last night. At 7 o'clock last night, we were in 
session debating and voting until midnight. Obviously, Members 
did not have time to review your testimony, as we are entitled 
to under our rules. This extreme tardiness is the rule rather 
than the exception coming out of DOE. Whether it is delivering 
testimony or responding to letters from me and other Committee 
members and questions for the record, DOE is almost always 
embarrassingly late. Mr. McConnell, I trust that you will 
communicate this frustration back to Secretary Chu and his team 
and commit to delivering all follow-up materials associated 
with this hearing to the Subcommittee in a timely fashion.
    With that, I now recognize Assistant Secretary McConnell to 
present his testimony. You are recognized for five minutes.

              STATEMENT OF HON. CHARLES MCCONNELL,

             ASSISTANT SECRETARY FOR FOSSIL ENERGY,

                   U.S. DEPARTMENT OF ENERGY

    Mr. McConnell. Chairman Harris, Ranking Member Miller and 
Members of the Subcommittee, I appreciate the opportunity to 
discuss the role that the Office of Fossil Energy continues to 
play in the development of the Nation's unconventional fossil 
resources.
    Expanding production of American energy resources is a key 
part of President Obama's ``all-of-the-above energy'' strategy 
that includes renewables, nuclear and fossil resources. Very 
recently, the President laid out a specific goal to reduce the 
imports of oil by a third over the next ten years. Reducing our 
imports will have the important impacts of improving our energy 
security, balance of trade, generating new jobs and growing our 
economy, and we are in the progress of making that goal.
    Over the past few years, crude imports have dropped from 70 
percent to 50 percent, while natural gas today is at an 
abundant and unprecedented price point, driven by expanded 
production of shale gas, and an abundance currently has U.S. 
storage capacity at near capacity.
    America is sitting on one of the largest gas finds in the 
world as well as the globe that we live in today. The benefits 
are game changing. EIA estimates that in the current rate of 
consumption, the Nation has a 90-year supply of domestic 
economically recoverable natural gas. If anybody needs proof 
that domestic energy production can spark a renaissance in 
American manufacturing, increase exports, and create more jobs, 
just look at the impact of shale gas on the industries across 
the country. A recent announcement in the global companies such 
as Shell and Dow, perfect examples of that.
    The American Chemistry Council estimates $16 billion of 
capital investment, $132 billion in economic output, 17,000 new 
high-paying jobs and 395,000 nore jobs tangential to the 
chemical industry. Other industries such as the electric power 
industry, steel industry, and heavy manufacturing will all 
benefit from this expanded supply of domestic natural gas.
    We are poised to do some great things for our energy and 
economic security, but to get those benefits, we will have to 
do it right. We will have to do it right the first time, and 
you don't get do-overs in this business. A sustainable future 
requires sustainability in the way we do our work and how the 
work is performed.
    DOE has played a critical role in that development for 
years. Between 1978 and 1992, the Department invested $137 
million in early research on innovative shale gas technologies 
that led to investments by independent oil producers. Today our 
research on unconventional resources is being conducted against 
the backdrop of industry's rapidly evolving exploration and 
production practices. While these advances are exciting, but 
there are also challenges. Hydraulic fracturing processes have 
received a great deal of attention, and people in communities 
want the confidence that the expansion of the E&P is 
sustainable. These are primary technical challenges, and if 
they receive the proper focus, sensible focus, they can be 
addressed.
    So going forward, the expertise of our natural gas 
technologies program is being refocused to help launch an R&D 
initiative with the EPA and the Department of Interior to 
address the potential environmental health and safety impacts 
of natural gas drilling practices, particularly hydraulic 
fracturing. This effort is being driven by the Secretary of 
Energy Advisory Board recommendations focusing on shale gas 
safety as well as the President's new interagency working group 
on unconventional domestic gas resources, and we have recently 
cemented this with an interagency MOU. FE's role in this 
initiative will be to conduct R&D to ensure the development of 
sustainable fracturing technologies and techniques such as 
cementing, well bore integrity, and water usage, and let me add 
that while this R&D is focused on shale gas, many of the 
technologies can be applied and will be applied to shale oil 
production, particularly in areas such as the Bakken.
    In addition to shale, U.S.-led technology advances are 
making it possible for us to explore other unconventional 
resources. A prominent example of this is Fossil Energy's 
methane hydrate research process. Recently we conducted an 
unprecedented test of technology on the North Slope of Alaska 
that was able to extract a steady flow of natural gas from 
methane hydrates. This is a combination of cooperative work 
with the country of Japan, ConocoPhillips, and a collaborative 
effort with DOE and Fossil Energy to cost share. This isn't a 
subsidy to oil and gas, but it is a critical research done in 
the early stages of a critical market where resource discovery 
is necessary. Our methane hydrates research represents the 
critical ground floor that could provide a return on investment 
similar to that of our early shale gas, and we are just getting 
started.
    Additionally, the Department is focused on enhanced oil 
recovery using carbon dioxide from coal-fired power plants with 
enhanced oil recovery utilizing CO2, putting the 
CO2 in the ground and producing oil, and safely, and 
long-term permanently storing that CO2 for 
environmental benefits so we get both the benefit economically 
as well as environmentally.
    Thank you. I look forward to taking your questions.
    [The prepared statement of Mr. McConnell follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Harris. Thank you very much.
    I now recognize Ms. Mittal.

             STATEMENT OF MS. ANU MITTAL, DIRECTOR,

               NATURAL RESOURCES AND ENVIRONMENT,

             U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Mittal. Chairman Harris and Members of the 
Subcommittee, I am pleased to be here today to participate in 
your hearing on unconventional oil and gas resources.
    As requested, my statement will focus on oil shale and will 
highlight the opportunities and challenges related to the 
development of this unconventional energy resource. My 
statement is based on the findings of a report that we 
completed for this Committee in October 2010.
    As you know, U.S. interest in oil shale has waxed and waned 
since the early 1900s because, over time, average oil prices 
have generally been lower than the threshold necessary to make 
oil shale development profitable. More recently, however, 
higher oil prices have renewed interest in domestic oil shale. 
The Federal Government is in a unique position to influence 
this development, because 72 percent of U.S. oil shale lies 
beneath lands managed by the Department of the Interior.
    The Green River formation in Colorado, Utah, and Wyoming 
contains the world's largest deposits of oil shale. Being able 
to tap this vast amount of oil locked within this formation 
will go a long way to help to meet our future demands for oil. 
The U.S. Geological Survey, as you noted, estimates that the 
formation contains about three trillion barrels of oil, of 
which half may be recoverable. As you can imagine, having the 
technology to develop this vast energy resource will lead to a 
number of important socioeconomic benefits, including the 
creation of jobs, increases in wealth, and increases in tax and 
royalty payments for Federal and State Governments.
    Along with these positive outcomes, there are a number of 
key challenges that also should be considered. First, there is 
the uncertainty surrounding the viability of current 
technologies. To date, no commercial-scale surface retort or in 
situ technology has been proven in the United States that is 
both economically and environmentally viable. According to some 
energy experts, the key to developing U.S. oil shale will be 
through an in situ process, because most of our richest oil 
shale is buried beneath hundreds of feet of rock, making mining 
difficult or impossible.
    Second, developing oil shale poses significant 
environmental challenges for water quantity and quality, air 
quality, and wildlife. The water quantity and quality 
challenges are of particular importance, because developing oil 
shale will require significant amounts of water, which could 
pose problems in the arid West. Estimates of the quantities of 
water needed to support oil shale development vary 
significantly depending upon the assumptions that you use. 
However, it is expected that while the water is likely to be 
available for the initial development of the industry, the 
eventual size of the industry may ultimately be limited by the 
water availability. In addition, in the absence of effective 
mitigation measures, oil shale development could significantly 
impact water quality through increased runoff of sediments, 
salts, and chemicals, decreased downstream flows, permanent 
groundwater impacts to aquifers and wastewater discharges to 
streams and rivers.
    While large-scale oil shale development offers 
socioeconomic opportunities, it also poses certain 
socioeconomic challenges that also should not be overlooked. 
Oil shale development like other extractive industries can 
bring a sizable influx of workers who along with their families 
put additional stresses on local infrastructure. Development 
from expansion of extractive industries has historically 
followed a boom-and-bust cycle, making planning for growth 
difficult for local governments.
    As we noted in our 2010 report, industry experts believe 
that the United States is currently at least 15 to 20 years 
away from developing a large-scale oil shale industry, but 
there are certain actions that federal agencies can begin to 
take now to proactively prepare for such an industry. These 
include improving collaboration between federal agencies on 
research and developing more comprehensive baseline information 
on the current ground and surface water conditions in the 
region. Such information will help position federal agencies to 
better monitor and mitigate the impacts of oil shale 
development if a viable industry should emerge.
    In conclusion, Mr. Chairman, while there are potential 
opportunities for the development of oil shale, they must be 
balanced with the technological, environmental and 
socioeconomic challenges that are also present.
    This completes my prepared statement. I would be pleased to 
answer any questions that you might have.
    [The prepared statement of Ms. Mittal follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Harris. Thank you very, very much, and we will 
begin the questioning. The Members will be recognized for five 
minutes, and I recognize myself first.
    Mr. McConnell, as you know, the President has recently 
talked, as I said in my opening statement, about this ``all of 
the above'' energy strategy, so I am going to ask you just a 
few questions about what the Administration means by all of the 
above. First of all, is gas production from methane hydrate one 
of the components of ``all of the above''?
    Mr. McConnell. Yes.
    Chairman Harris. Okay. Can you just explain why for the 
last three fiscal years, then, the Fossil Energy budget request 
has proposed to eliminate the program, Fiscal Year 2010, 2011 
and 2012?
    Mr. McConnell. I can't speak to those previous years, but I 
can tell you, the budget request for 2013 has it in there. Last 
year, we did work on methane hydrates with funding that was 
provided through the Office of Science, recently conducted a 
test----
    Chairman Harris. I know you mentioned that. Thank you very 
much, and I appreciate the change of heart, believe me.
    Now, is oil shale part of the ``all of the above'' 
strategy?
    Mr. McConnell. Oil shale is certainly a part of the ``all-
of the above'' strategy.
    Chairman Harris. And what is the Administration doing to 
actively support the development of oil shale?
    Mr. McConnell. Much of the work that we are doing in the 
unconventional processing work that we are doing all provides a 
lot of the baselines for that industry, as well as the 
hydraulic fracturing that is going on in natural gas as well as 
tight oil that is going on in that area as well.
    Chairman Harris. But with regard specifically to oil shale, 
what is the level of investment that the Administration is 
proposing?
    Mr. McConnell. We don't have a specific line item in this 
year's budget request.
    Chairman Harris. Do you have any idea about how much out of 
the--the DOE has a several billion dollar budget. How important 
are they looking for the future, toward the future for oil 
shale? Is it $5 million, $10 million, $15 million?
    Mr. McConnell. In this year's budget request, it was zero.
    Chairman Harris. Oh, zero? Oh, okay. It doesn't sound like 
much active support. But what about oil sands? Is oil sands 
part of the ``all of the above'' approach?
    Mr. McConnell. It is part of the ``all of the above'' 
approach, and it is also part of what we are constantly looking 
at and part of our overall process.
    Chairman Harris. Is that also line item zero in the DOE 
budget?
    Mr. McConnell. We have a number of line items that aren't 
specifically identified by the market segments you are 
identifying, but in terms of the key technologies and the 
cross-cutting research that goes on from technologies that 
apply to many of the markets that you are mentioning.
    Chairman Harris. Perhaps you can follow up with some more 
detail. We will have some follow-up questions.
    The DOE has, you know, requested, as you said, I think, $12 
million in the budget to, I think you called it R&D initiative, 
but what it sounds like is, you know, understand and minimize 
the potential environmental, health and safety impacts of shale 
gas. I mean, most people would realize this is the prelude to 
regulation basically. Is there any research that you are doing 
that might actually help increase production?
    Mr. McConnell. There sure is.
    Chairman Harris. Okay.
    Mr. McConnell. It would be well bore integrity. We are 
looking at processes in terms of extraction, and we don't draw 
a distinction between sustainability and extraction techniques. 
We see it as one and the same because it has to be done right 
the first time with a sustainable impact.
    Chairman Harris. Right, and done right the first time, you 
are aware that, for instance, hydraulic fracturing has been 
done 1.2 million times in the United States, right, with no 
documented evidence of contamination of drinking water ever?
    Mr. McConnell. That is correct.
    Chairman Harris. That sounds not only done right the first 
time, it sounds like done right 1.2 million times, but anyway, 
we are going to have a difference of opinion on that, probably.
    Now, in 2007, the Department of Energy's Strategic 
Unconventional Fuels Task Force published a strategy and 
program plan that included numerous recommendations on how the 
Federal Government could support unconventional energy, 
development of unconventional energy. Is the DOE implementing 
any of the recommendations made by that task force back in 
2007?
    Mr. McConnell. We are working, continue to work year over 
year with the RPSEA organization following that--following 
those sets of recommendations.
    Chairman Harris. What progress has been made on the 
specific recommendation to ``provide an effective land tenure 
system'' for access to resources on public lands?
    Mr. McConnell. That is a question I can't answer. I don't 
know the answer.
    Chairman Harris. Perhaps you could, you know, get the 
answer and provide it in writing.
    What progress has been made on the recommendation ``to 
provide an inclusive regulatory system and development process 
that encourages expeditious development and a predictable 
schedule for permitting and approvals''? Is the Administration 
doing anything to encourage a predicable schedule for permit 
approvals?
    Mr. McConnell. That is not something in Fossil Energy that 
I am aware of directly, and I will have to provide that to you 
as well.
    Chairman Harris. Thank you. And do you know if the task 
force is still actively meeting and producing work products? Is 
that task force still having meetings?
    Mr. McConnell. It does meet from time to time, regularly--I 
can't speak to how often it has met, but it has had routine 
meetings over the past several years.
    Chairman Harris. And the last one being what do you think?
    Mr. McConnell. Don't know the answer to that.
    Chairman Harris. Okay. Maybe you can get that answer to us 
also. Well, thank you very much.
    I now recognize Mr. Tonko for five minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    In this Committee, we have spent a lot of time debating the 
appropriate role of government in the development of energy 
technologies. My Republican colleagues seem steadfast in their 
resolve that anything beyond basic research, whether it is 
applied research, demonstration, or financing amounts to 
government interference in the free market, somewhat of a 
picking winners and losers and crowding out private investment. 
However, this appears to only apply when maligning clean energy 
technologies, and their commitment to these principles quickly 
disappears when it comes to supporting increasing taxpayer 
funds to develop technologies for the oil and gas sector. That 
said, I am willing to acknowledge that there may be areas 
within fossil energy research space where a little government 
research could be helpful.
    With that in mind, Ms. Mittal, your report includes some 
recommendations for research areas. Could you expand on that, 
please, and address why you think these areas are particularly 
well suited for government involvement?
    Ms. Mittal. When we looked at gaps in research for oil 
shale, we heard from federal as well as State and academic 
researchers a consistent message that there were two areas in 
which there were gaps. One was that there was insufficient 
information and data on groundwater and surface water baseline 
information in the region that there was not enough information 
right now on the conditions of groundwater and surface water in 
the region. Therefore, when an oil shale industry develops, you 
will not know what the baseline conditions are, so it will be 
impossible to determine what the impacts of the industry are, 
so we need to do more research and get good information on both 
quantity and quality impacts, information on quantity and 
quality of the groundwater and surface water.
    The other area is that we need to develop more information 
on how groundwater and surface water interact with one another, 
and this will help develop models that will allow us to 
determine how contaminants are transported from groundwater to 
surface water and vice versa, and those are two areas that were 
identified for needing more federal research.
    Mr. Tonko. Thank you very much, and to our Assistant 
Secretary, the Department made a recent announcement regarding 
its work on methane hydrates. Can you please provide some 
detail on that, and in particular, discuss how it fits into 
what you would consider to be the right problem space for 
government research programs in fossil energy?
    Mr. McConnell. Well, in any kind of early emerging 
technologies, government assistance is required to help promote 
and stimulate industry involvement. A good example of that 
would have been in the early 1970s when hydraulic fracturing 
for natural gas actually began, and again, that just wasn't the 
government investing money, but it was a combination of 
government and industry partnering, and George Mitchell and the 
Woodlands a long, long time ago was very interested in moving 
forward but needed some help, and the government and Mitchell 
Energies moved forward with those initial--that work, and it 
has borne quite a bit of fruit since then.
    I think methane hydrates is a good analogy to that 
situation. It was--it is a unique and emerging type of 
technology in industry for natural gas conducted on the slopes 
of Alaska, and it also was a partnership between 
ConocoPhillips, the Japanese government as well as the 
Department of Energy, and I think any one of these emerging 
technologies, early on, a good measure of industry interest is 
their willingness to cross-share and partner, and that is the 
way that kind of research can be conducted and be most 
beneficial. We had the work done in Alaska. It was very 
successful. We were highly encouraged by the results we saw, 
and in any type of research program, it sets the baseline for 
what we hope will be continued work in that area and continued 
involvement that we can bring forward, and again, in 
partnership with industry and others that are willing to 
partner in the effort. So like any good strategic process, you 
do some things. You find out what you learn and then grow from 
there, and we are certainly enthused about what we have seen.
    Mr. Tonko. And in terms of comparing that with the 
potential DOE role in developing technologies for other 
unconventionals such as oil shale, would you contrast that for 
us?
    Mr. McConnell. Well, I don't know that there is any 
contrasting. I think the most important thing we do at Fossil, 
I believe, is to be very close to industry's interests and 
development so that we can stay close to their enthusiasm, and 
we talk a lot about technical recovery, and then we talk about 
economic recovery, and I think industry is a far better gauge 
of what emerging technologies they would like to spend time on 
and actually develop, and in the case of what you are 
describing, for us to find industry partners that are willing 
to do the cost sharing, to be involved and cooperatively 
develop this research, what it does is, it is a real bellwether 
for industry's level of enthusiasm at the time that they are 
involved, and we will stay very close to that.
    Mr. Tonko. Thank you very much.
    I yield back, Mr. Chair.
    Chairman Harris. Thank you very much.
    I now recognize the gentleman from California, Mr. 
Rohrabacher, for five minutes.
    Mr. Rohrabacher. Thank you very much.
    ``All of the above,'' really, we have a problem with that 
and I have a problem with that, and I just do not believe that 
the President has been forthright in discussing his energy 
policy with the Congress. We have seen that in this Committee 
where we have seen what appears to be purposeful deployment of 
regulatory bodies to stop certain types of production, 
especially fracking, which seems to be a--which seems to be 
something that is actually greatly expanding the energy 
available to the United States. So that gives us some concern. 
That isn't necessarily something that you would be involved in.
    I think that we--do you agree that we have reached a 
technological stage that we could become energy self-sufficient 
within a decade?
    Mr. McConnell. I wouldn't debate that with you, but I think 
it is really important that we have energy security. I think 
that is a little different than energy independence, but maybe 
we are just making a fine point of a word. I don't know. I 
think is important that we be energy secure.
    Mr. Rohrabacher. But are we technologically capable of that 
now?
    Mr. McConnell. Well, I will give you an example. We talked 
earlier about hydraulic fracturing, and I mentioned 
sustainability, and in fact, we have fracked a lot of wells for 
a lot of years. There is no question about that. I think it is 
also fair to say that in our society today, there are a lot of 
questions about fracturing, about the impacts in local 
communities, et cetera, and it is not just issues associated 
with groundwater, but it also has to do with seismic effects, 
it also has to do with wastewater disposal, wastewater 
treatment, all of the issues that are really important to 
sustainability.
    Mr. Rohrabacher. Do you think it also has to do with a 
mindset that what is formally described as Luddite mindset that 
has been beaten into kids' heads at our universities that a 
habitat for a squirrel is more important than energy for 
American homes?
    Mr. McConnell. I wouldn't subscribe to that. I don't think 
that at all. As a matter of fact, I think it is really 
important that it do be deemed sustainable and a big part of 
our future, and that is what----
    Mr. Rohrabacher. You don't think that anti-energy attitude 
has had some impact on the Administration and the production of 
energy in our country?
    Mr. McConnell. I can't comment to that. I can tell you it 
hasn't had any effect on what we are doing at Fossil Energy.
    Mr. Rohrabacher. Let me just note that we have had the 
ability in a number of areas. I have supported energy research 
into solar, for example, over the years, and it wasn't up until 
about a year and a half ago, there were no permits issued by 
the Federal Government to move forward with solar energy plants 
in the desert--none. And in fact, Mr. Chairman, I had to 
actually introduce legislation to sort of ``goose'' the system 
into letting people go on these vast stretches of desert that 
we have and set up a solar plant, and do you know how many 
solar plants have been issued permits now in the last year and 
a half?
    Mr. McConnell. I don't know the answer to that, sir.
    Mr. Rohrabacher. I think it is six, but let us just note 
that we are way behind the curve because the technology was 
there and has been there to try to build a solar plant in the 
desert, yet up until a year and a half ago there were zero 
solar plants in the desert, and you look back and I think it an 
overvalue being placed on habitat for insects and lizards 
rather than electric power for the homes of human beings.
    What about-- let me get to methane hydrates. It is another 
one I supported early on over the years. Has there been any 
progress with methane hydrate other than Alaska? There are 
methane hydrate potentials, for example, in the ocean.
    Mr. McConnell. There are indeed, and as part of the 
unconventional strategy going forward, we are doing some very 
early work in that to make assessments of resources and overall 
impact, yes.
    Mr. Rohrabacher. Has there been any--assessment of resource 
is one thing, development of technology is another. Have there 
been any technological steps forward in trying to utilize 
ocean-based methane hydrates?
    Mr. McConnell. We haven't conducted any demonstration 
projects, if that is your question.
    Mr. Rohrabacher. One last note. For the amount of energy 
that is being produced and consumed by the American people, the 
amount of research money that is spent by the Federal 
Government into that particular area, wouldn't you say that oil 
and gas actually produces a huge amount of our energy that we 
consume and that it is actually per amount of energy that we 
use from that source the amount of research actually is less 
than in other areas?
    Mr. McConnell. Well, from our standpoint, we recognize that 
both oil and gas as well as coal is an incredibly big part of 
our future. I think what we want to be sure we do is not fall 
into the trap of looking at how much we are using today and 
having that be equivalent to how much we are spending on 
research. A lot of the emerging technologies that we are 
spending our money on at a federal level as well as with 
industry is important in that regard. So yes, I think it is a 
big part of our future and it will be a big part of Fossil 
Energy's strategy.
    Mr. Rohrabacher. Thank you very much, and we just hope that 
the President is serious and it is reflected in the policies 
that go through his Administration about this idea of ``all of 
the above,'' because America, nothing would be better for our 
economy than for us to quit sending that money overseas and 
spending it right here. Thank you very much.
    Mr. McConnell. I couldn't agree with you more.
    Chairman Harris. Thank you very much.
    The gentleman from New Mexico, Mr. Lujan, is recognized for 
five minutes.
    Mr. Lujan. Mr. Chairman, thank you very much.
    Mr. Chairman, I was really encouraged when I read the 
hearing charter, ``Supporting American Jobs in the Economy 
through Expanded Energy Production: Challenges and 
Opportunities of Unconventional Resources Technology,'' but I 
was a bit disappointed when reading through the charter and 
through the testimony that was filed with us, that I didn't see 
any mention of fuel production from algae or that we were going 
to be able to talk about the energy that could be produced from 
battery storage. And I say that, Mr. Chairman, because there 
have been recent reports that have been put out that talk about 
the research and development that is taking place through the 
Department of Defense with unconventional energy production so 
that we can save soldiers' lives when we fully appreciate the 
amount of lives that have been lost through the transport of 
fuel that is developed from petro products or the weight of 
those batteries that they have to carry in those packs to be 
able to develop any generation or communication aspects.
    But with that being said, Mr. Chairman, I still am 
encouraged at the conversation that we are having today, and I 
hope that we can take that conversation up as well because it 
is an important one as we talked about, ``all of the above'' 
opportunities through the expansion of research and 
development.
    Pertaining to oil shale development and water concerns in 
the West, I appreciate the sensitivities that are being brought 
in that area. Coming from the high desert, although I have six 
beautiful ski areas in my district, you can imagine that the 
snowpack isn't always what it should be, and this year as we 
talk about the re-adjudication of water from the Colorado and 
the way that it is going to impact the West, what that means to 
water flows, commerce, opportunities, food production in the 
West is something that I am very sensitive to.
    And so, Ms. Mittal, being from the Southwest where water is 
so scarce, I would appreciate you going into some more detail 
on the potential impact of oil shale development on water 
quality, on quantity, and how research and development might 
lead to other opportunities as we talk about the amount of 
water that is necessary in these areas.
    Ms. Mittal. One of the things that our 2010 report noted 
was that right now it is very difficult to assess or measure 
the quantity impacts of oil shale development, and that is for 
three primary reasons. One is that we don't have a good sense 
of what the baseline conditions of groundwater and surface 
water is, as I mentioned earlier. The other issue is that there 
is a lot of uncertainty related to the technology, so we don't 
know how much water is actually going to be used by the 
technology. It is very, very uncertain. And the third issue is 
that there are a lot of uncertainties related to climate 
change, how much water is going to be needed in the future in 
that region from growing population, from compacts. There are 
water compacts that are going to require certain demands, that 
are going to place certain demands on the water in the Colorado 
River region. There are going to be other uses of water. So 
there are a lot of uncertainties right now that make it very 
difficult to actually quantify the impacts of oil shale 
development on water resources in that area.
    Mr. Lujan. I appreciate that. Although myself and my 
colleagues may not agree on what is causing some of the drought 
conditions that we are experiencing, the reality is that I have 
ranchers back in New Mexico that have sold off entire herds 
because there is less water, and I hope that we can all agree 
on the reality that there is less water out there and that we 
need to be mindful of that.
    Mr. McConnell, one thing that I don't believe that we do a 
good enough job of is explaining to the American people that 
there is a difference between oil shale and shale oil. But I 
want to concentrate my efforts on oil shale. The way that I 
understand it is, it is a rock and that there is an element in 
there, if I pronounce it correctly, kerogen, that has to be 
heated up, so we have to heat this rock up that is down below. 
How would you propose that we heat that rock up? You know, does 
it take a long match? How are we able to reach down there to 
heat that rock up so we can get this energy coming out of that? 
What kind of heat do we need?
    Mr. McConnell. Well, most of the technologies that are 
looked at--and again, there is a suite of technologies that can 
be employed, but it is really an in situ process in which you 
need to get the fuel source into that area to be able to do 
that heating as you described it. There are a number of 
different technologies that are being looked at, but again, 
this is a very early emerging industry and I wouldn't say there 
is a business-as-usual case for exactly what you are 
describing.
    Mr. Lujan. I appreciate that.
    Mr. Chairman, thank you very much and look forward to the 
next round of questions with the next panel. Thank you.
    Chairman Harris. Thank you.
    I now recognize the other gentleman from Maryland, Mr. 
Bartlett, for five minutes.
    Mr. Bartlett. Thank you very much.
    I was reading the other day a report that indicated that 
the gas in the Marcellus shale was the equivalent of 3.4 
billion barrels of oil. Is that the number that you have heard? 
Is that in the ballpark?
    Mr. McConnell. Equivalencies sometimes can be tricky, but I 
would agree with what you are talking about, yes.
    Mr. Bartlett. Now, underlying the Marcellus shale is a 
bigger footprint of Utica shale, which contains oil. This same 
report said that there was 4-1/2 billion barrels of oil in the 
Utica shale. Is that a number that you think is in the 
ballpark?
    Mr. McConnell. A large number, yes, sir.
    Mr. Bartlett. Okay. Every day the world uses 84 million 
barrels of oil. That means in 12 days, the world uses a billion 
barrels of oil. So this 4-1/2 billion barrels of oil, which you 
said was huge will last the world 52 days. That doesn't seem to 
me to be a really big deal, just 52 days.
    Methane hydrates have been mentioned. There are potentially 
huge energy stores in methane hydrates.
    Let me mention something else where there are huge 
potential energy resources. That is the tides. The Moon lifts 
the whole darn ocean what, two, three, four feet a day? I carry 
two buckets of water, that is heavy. That is an awful lot of 
energy. Why aren't we getting more energy out of the tides? It 
is for the same reason we aren't getting any energy, much of 
any energy out of methane hydrates because it is very 
dispersed. It has got to be concentrated before you can really 
capitalize on it. I think it will be a long time before we get 
much energy out of methane hydrates, although the potential 
energy there, I think, exceeds most other energy sources, does 
it not? It makes a potentially huge energy reserve in methane 
hydrates.
    The oil shales, 1-1/2 trillion barrels of potentially 
recoverable oil. Shell Oil Company has tried twice there and 
they have given up. Oil at $80 barrel was not high enough that 
it was recoverable.
    But let us imagine that we can get a trillion and a half 
barrels of oil from the oil shales. You know, it is awfully 
easy when you are dealing with big numbers to slip a zero or 
two, so I want you to check the numbers with me. Is 1,500 
billion a trillion and a half?
    Mr. McConnell. I am going to take you word for it that it 
is. I am not quite sharp enough to answer your question, sir.
    Mr. Bartlett. I think that 1,500 billion is a trillion and 
a half, and if that is true, and I now do some arithmetic, I 
find that if we are able to develop this trillion and a half 
barrels of oil from the oil shales, that it will last the 
world, I think, 40 or 50 years. A little over four years ago, I 
let a CODEL to China. Nine of us went to talk about energy, and 
the Chinese began their discussion of energy by talking about 
post oil. Clearly, there will be a post-oil world. The first 
prominent person I know of to recognize that was Hyman 
Rickover, and if you want to read a very fascinating speech, it 
was lost for a number of years, just Google for Rickover and 
energy speech, and his speech given the 15th day of May 1957 in 
St. Paul, Minnesota, will come up, and he made a very 
interesting observation. He said in the 8,000-year recorded 
history of man, the age of oil would be but a blip. He had no 
idea how long the age of oil would last. Now we know, the age 
of oil is going to last about 300 years. We are 150 years into 
the age of oil and we are not running out of oil, by the way. 
What we are running out of is our ability to produce it as fast 
as we would like to use it. There is way more oil out there to 
be pumped than all the oil that we have pumped, but the 
challenge is pumping it as fast as we would like to use it.
    Now, if we develop all of that oil and it lasts us just 50 
years, I have got great-grandkids. What are they going to do in 
50 years?
    Thank you very much, Mr. Chairman, and I yield back.
    Chairman Harris. Thank you very much.
    They are calling us for votes, but I think we can get a 
couple more Members' questions in before we have to go. I now 
recognize Mr. McNerney, the gentleman from California, for five 
minutes.
    Mr. McNerney. Thank you, Mr. Chairman.
    Mr. McConnell, how would you compare hydro fracking 
technology to oil shale technology, both in terms of the 
economics and impacts on local environment?
    Mr. McConnell. Well, maybe first of all, think about it in 
terms of where we are on the technical scale or the really--it 
is often called the TRL, or technical readiness. In terms of 
hydraulic fracturing and what is going on in the Marcellus and 
other areas across the country, that technology has been noted, 
as it has been performed for a number of years, recently come 
into a lot of prominence because of the high cost of natural 
gas just three or four years ago. We were all very concerned 
that we as a Nation were going to have to import natural gas, 
and we were able to take this technology, put it in play and 
utilize it. And from the standpoint of the Marcellus and many 
of the numbers that you quoted about availability of resources, 
etc., oftentimes the first call on that is considered to be 
technically recoverable hydrocarbon. But it is not really 
technical recovery, but it is really economically recoverable. 
And so we have got vast quantities of additional hydrocarbon 
resource that with the price points being what they need to be 
and with the technology evolving to where it can go, it really 
then opens up large additional volumes.
    The hydraulic fracturing activity has been performed for 
years and years, but of course, we continue to look at the 
impacts of it not just from standpoint of the fracturing itself 
but the wastewater disposal, the seismic activity, all of the 
other things that many of the people in our country are 
concerned about.
    Contrast that with the oil shale that you mentioned. It is 
much, much less far along on its technical scale of 
capabilities. A lot of the initial resource assessments have 
been performed. The volumes and the capabilities are vast. If 
you look at where we are today in terms of crude oil and the 
capacity that we have in this country in our domestic imports 
of it, I know that industry will continue to look at it as a 
next best opportunity to move forward to. But today it doesn't 
have economic recoverability, and because of that, there hasn't 
been a draw by industry at this point to get into it in the 
same way that we have done with hydraulic fracturing for 
natural gas.
    Mr. McNerney. Thank you. Would you comment on energy return 
on investment as applied to oil shale? Are you familiar with 
that term?
    Mr. McConnell. Well, I can give you just a statistic from 
the National Energy Technology Laboratory. Over the past 20 
years, we have done some analysis. For every dollar that the 
taxpayers put in, we have got about $13 of return back in terms 
of jobs and economic impact and other things that have 
contributed to our economy. The statistics that I quoted 
earlier, the rather modest investment that was done in 
hydraulic fracturing for natural gas today is paying enormous 
dividends and we are enjoying that and the American chemical 
industry, and we will likely be using more and more natural gas 
in electric power generation, etc., as we move forward.
    In the oil shale today, a lot of the initial work that we 
are doing again in assessments and looking at the potential for 
it, I don't know that we are far enough along to actually put a 
return on investment just yet.
    Mr. McNerney. Well, by energy return on investment, I mean 
energy in versus energy out. So energy out is a numerator; 
energy in is the denominator. If you have any comment on that, 
or Ms. Mittal, if you have a comment on that?
    Ms. Mittal. We didn't look at the actual amount of energy. 
What we were told is that it does require a lot of energy, 
especially the in situ process because you have to heat the 
rock for large periods of time to very high temperatures. It is 
a very high-energy-intensive process.
    Mr. McNerney. So it is likely to have a small energy return 
on investment in terms of the way I just defined it?
    Ms. Mittal. It could, but we don't have the actual numbers.
    Mr. McNerney. Thank you, Mr. Chairman. I will yield back.
    Chairman Harris. I thank you very much.
    I recognize the Chairman of the Committee, the gentleman 
from Texas, Mr. Hall.
    Chairman Hall. Mr. Chairman, I thank you, and I am really a 
little confused right now. I heard something that really 
sounded good to me, that one of our leaders said this country 
needs an ``all-out,'' ``all-of-the-above'' strategy that 
develops every available source of American energy. Of course, 
I jumped up and down and clapped my hands and re-read it, 
listened to it, say it one more time. I found out it was Mr. 
Obama that said that in the State of the Union speech. And 
other than prayer, energy is probably the most important word 
in the dictionary to any youngster that is in high school or 
early college right now.
    And it is very difficult to square that statement with the 
Administration's actions. For example, the budget proposes to 
eliminate a $50 million R&D program aimed at expanding safe 
production of oil and gas. This program, which I created in the 
Energy Policy Act of 2005, several Presidents have tried to 
knock it out, supports development of next-generation 
technologies important to ensuring domestic production of oil 
and gas and it is maintained and even increased. It was simple. 
We knew the energy was there, but we couldn't get it to the top 
of the water. We traded to universities the technology, traded 
the same very energy that they are going to get for us by 
giving us the technology to get it. It is an easy way to get 
technology without pledging or paying out money direct here 
too. It was a deal and it has worked. I don't understand why 
anybody wants to knock it out, because the program was 
highlighted by the Department of Energy's own advisory board as 
an effective program that should be enhanced and supported. I 
really don't--Mr. McConnell, if the President really wants to 
identify every single way to lower gas prices and increase 
energy production over the long term, why is he trying to 
eliminate the R&D program?
    Mr. McConnell. I don't believe he is trying to eliminate 
the R&D program. I think----
    Chairman Hall. What is he trying to do then? Tell me. 
Explain to me. I don't understand that. Where do you get that?
    Mr. McConnell. What we are trying to do is take the 
resources that we have got available and with the fiscal means 
that we have available, and one of the things I said when I 
took this job is, I would do the best we could to get the most 
impact with the resources we had available to us, and that is 
what we are doing.
    Chairman Hall. You have got a lot of resources up in ANWR 
and all of you say don't drill on little ANWR. There is just 19 
million acres in little ANWR. All we want to drill on is 2,000 
acres. Maybe 40 years of energy there. How in the world can you 
square what you are testifying to here? And you know you are 
under oath right now, don't you?
    Mr. McConnell. Yes, sir, I do.
    Chairman Hall. Then go ahead and explain to me. I will just 
note for the record that in the State of the Union speech, the 
President said, and I quote, ``It was public research dollars 
that helped develop the technologies to extract all this 
natural gas out of shale rock,'' and it is troubling that he is 
suggesting the Federal Government made hydraulic fracturing 
possible, while at the same time trying to kill R&D within the 
same program, and he said he deserves credit for the current 
oil and gas boom. This is a program that is working, that has 
worked with several universities and it's paying off. Why would 
anybody want to knock it out? And I will say this in deference 
to your President. My President tried to knock it out too, 
President Bush before he left office. We had a vote on the 
Floor. Overwhelmingly, they knew this program was working. I 
don't understand why anybody would want to knock out something 
that is working when we have the greatest need in the world for 
more energy.
    Mr. McConnell. I can't comment on what you are saying in 
terms of giving you a reason for what other people may view or 
how people want to see something go down. I guess what I will 
say is that the research and the focus in the areas that we 
have identified in hydraulic fracturing to continue that 
research, to put in a budget request for this year. We are 
enthused about it, and we will continue to work hard at all the 
things that you are talking about using the resources that we 
have got available and the manner in which we can most 
effectively employ them.
    Chairman Hall. Well, your views on hydraulic fracturing has 
been turned back and your spear blunted, witness after witness 
after witness. Even your own witnesses, the EPA's witness have 
sat there and admitted that what they are saying about 
fracturing and the danger it has done to drinking water, you 
had to go all the way to Wyoming to kind of drag up something 
that could hit fracturing. I don't understand that. Actually I 
will just say for the record that the State of the Union 
speech, the President said it was public research dollars that 
helped develop the technology to extract oil and natural gas 
out of the shale rock. It is very troubling that he is 
suggesting the Federal Government made hydraulic fracturing 
possible, while at the same time trying to kill R&D with the 
same program he said deserves credit for the current oil and 
gas boom. How do you react that he is campaigning one way and 
saying something and doing something else?
    Mr. McConnell. Federal research dollars originally back in 
the 1970s were leveraged with industry enthusiasm, George 
Mitchell and the Woodlands and the work that was done with 
industry, and in fact, hydraulic fracturing was pioneered by 
the Department of Energy's work along with industry.
    Chairman Harris. Thank you.
    Chairman Hall. Yes, sir, it was a different Department of 
Energy than what you folks are running over there now, though.
    I yield back my time.
    Chairman Harris. Thank you very much, Mr. Chairman.
    The gentlelady from California, Ms. Woolsey, has been very 
patient. We are going to recognize her and then we are going to 
walk fast over to vote.
    Ms. Woolsey. You can't answer this question, but my 
question is--well, he left. I can't imagine why I love our 
Chairman so much after that group of questions. You can't 
answer that because you don't know, but we just think he is 
great, but not today, I don't.
    Mr. McConnell, our colleagues, as you have heard today and 
over time, have been arguing that more taxpayer resources need 
to be transferred from work on emerging alternative energy 
technologies and into technology development for oil and gas. 
So regardless of one's priorities in that regard, there is such 
a question about the relative impact of limited federal dollars 
in all of these sectors and whether a major increase in oil and 
gas research funding translates into real benefits for the 
industry or consumers. So what happens if we increase the oil 
and gas research program? Will it be a big or a small 
improvement? And is the oil and gas industry actually beating 
down your door asking for more research money? And where do we 
get the biggest bang for our buck on this?
    Mr. McConnell. Well, I think that is a great question 
because really what it does is, it speaks to the pulse in the 
industry and what industry is looking at. I think the signals 
that come from the Federal Government in terms of funding, 
willingness to support activities and focus on research that 
industry is interested in, they get signals from budget, but 
they also get signals from the capabilities and competencies 
that exist within the Department of Energy. We have received a 
number of enthusiastic support signals from industry. Those in 
the natural gas industry, the leaders in those industries are 
incredibly driven by wanting to ensure that sustainable 
processes for this, not just in the seismic--or the hydraulic 
fracturing but in the wastewater disposal, in the seismic 
impacts, in the communities. They all want this to be a 
sustainable, long-term industry, and the ability for us at the 
Department of Energy to work with the Department of Interior, 
to work with EPA from an interagency standpoint, to do things 
going forward in a sensible manner so that industry can have 
the confidence that this Administration is going to move it 
forward in a confident manner, to make it a sustainable 
industry. I think the President has been pretty clear about the 
fact that he wants that to happen. He has certainly been clear 
to us at the Department of Energy of what we are supposed to 
do.
    Ms. Woolsey. So what is the Department of Energy thinking 
about drilling and exploration for gas and oil off of, for 
example, the northern California coast, which I represent, that 
should be a sanctuary and probably will never be drilled but if 
it was, it would take all kinds of expensive research to make 
any of this worthwhile. But is there any way that we can prove 
that that isn't worth the pennies we would--well, the thousands 
of dollars we would--millions invest in order to get pennies 
worth of energy?
    Mr. McConnell. We don't have any plans to do either at this 
point. That is not on our short-term strategic plan, and the 
focus that we have with the resources we have is not oriented 
in that area.
    Ms. Woolsey. Okay. Thank you. And I think because of that, 
I am going to yield back so we can go vote. Thank you so much.
    Chairman Harris. Thank you very much.
    I want to thank the panel for their valuable testimony, the 
Members for their questions. The Members of the Committee may 
have additional questions for you, and we will ask you to 
respond to those in writing. The record will remain open for 
two weeks for additional comments from the Members.
    I am going to dismiss the first panel. We will recess until 
five minutes after the last vote, which should be about 20 
minutes from now, to go ahead with the second panel. Thank you 
very much to the first panel for being with us this morning. 
The Committee stands in recess.
    [Recess.]
    Chairman Harris. Thank you very much. I want to thank the 
second panel for your patience with us, and I will call the 
Committee to order.
    The first witness in our second panel is Ms. Samantha Mary 
Julian, Director of the Office of Energy Development for the 
State of Utah. Previously, she served as the Energy and Natural 
Resources Cluster Director for the Governor's Office of 
Economic Development. Ms. Julian is responsible for the 
promotion of Utah's state energy policy, coordinating with the 
Governor's energy advisor to implement the Governor's energy 
goals and objectives, seeking federal grants and participating 
in federal programs and making administrative rules.
    Our next witness is Mr. Jim Andersen, President and CEO, 
U.S. Seismic Systems. Mr. Andersen began his career as an 
engineering officer on U.S. Navy nuclear submarines and went on 
to hold a variety of engineering and senior management 
positions in engineering-intensive, high-technology companies, 
including Westinghouse, White Hall Hydroscience, Litton 
Industries, and Northrop Grumman.
    Our third witness is Mr. Cameron Todd, CEO of U.S. Oil 
Sands, Inc. Prior to joining U.S. Oil Sands, Mr. Todd worked 
five years with Conoco Oil and Gas Limited, where he had the 
executive role of Senior Vice President, operating refining and 
marketing. He has had an extensive and successful career in the 
domestic and international oil and gas industry, with over 30 
years of experience in all facets of the business.
    Our final witness on the second panel is Mr. Tony Dammer, 
Member, Board of Directors, National Oil Shale Association. Mr. 
Dammer is an independent consultant specializing in oil shale 
and other unconventional fuels development. From September 2008 
to February 2012, he was Senior Vice President of Red Leaf 
Resources, a Utah-based oil shale technology and resource 
development company. He joined Red Leaf Resources after 28 
years of federal service in the U.S. Department of Energy, 
Office of Naval Petroleum and Oil Shale Reserves. For the last 
20 of those years, he served as the Director of the office, 
responsible for the management and operation of six reserves in 
California, Wyoming, Colorado, and Utah.
    As our witnesses should know, spoken testimony is limited 
to five minutes each, after which the Members of the Committee 
will have five minutes each to ask questions.
    I now recognize our first witness on the second panel, Ms. 
Julian, to present her testimony.

             STATEMENT OF MS. SAMANTHA MARY JULIAN,

            DIRECTOR, OFFICE OF ENERGY DEVELOPMENT,

                         STATE OF UTAH

    Ms. Julian. Thank you, Chairman Harris, Ranking Member 
Tonko and Members of the Committee.
    Utah is the epicenter of unconventional fuel development 
for the United States. Our office was created in 2011 with the 
Utah legislature seeing that there needed to be an ``all of the 
above'' approach to energy development. We are the voice for 
energy development responsibly through economic development and 
policy.
    I am not here today to say that oil shale or oil sands will 
drop prices at the pump or immediately solve the country's 
dependence on foreign oil. I am here to say that despite the 
lack of efforts of some federal agencies, the unconventional 
energy industry is happening in Utah today and deserves 
support.
    These developments are important, and the Federal 
Government needs to understand that these industries are 
commercially viable. Operators seek public land certainty and 
federal policy consistency.
    Special interest groups often attack these industries 
claiming massive use of water that is otherwise unavailable in 
our State. In Utah, water is available for oil shale and oil 
sands development through existing water rights and general 
market system. Water is owned by the State and in trust of its 
citizens. It is subject to the water appropriation system and 
managed by the State Engineer. The process has been in place 
for over 100 years.
    Utah also manages its lands to promote responsible 
development. It is the main source of our funding for our 
educational system, and our pupils and educators count on it.
    As any operator will tell you, whether it is shale, sands, 
gas, oil, coal, working with the State is much more streamlined 
and consistently regulated.
    Our oil sands technology zone is a way for Utah to lead in 
innovative and research and development efforts. It is a rent-
free lease on a pre-permitted site adjacent to a sands mine, 
allowing proof of concept to remove technology risk for capital 
providers. Our alternative energy development incentive 
encourages responsible development, again, to fund our 
textbooks, our classrooms, and our students. It is a post-
performance incentive for oil shale, sands, utility-scale 
renewable energy, and nuclear.
    Governor Herbert's 10-year energy plan is the State's path 
forward for responsible energy development. It is about all 
approach diversified resources.
    So how could the Federal Government contribute to expand 
production through R&D? The most consequential assistance the 
Federal Government could provide, and I repeat, the most 
consequential assistance the government could provide, is to 
assist the BLM in consistent--to be consistent with the Energy 
Policy Act of 2005. Secondly, current DOE procurement favors 
federal R&D providers. That is national labs over external 
providers of industry and universities. If funding decisions 
were, instead, calculated proportionately on GDP or ranking of 
energy production, Utah would increase from $3.5 million in 
funding to $60 million, or almost twentyfold. Proactive work by 
the BLM and DOE would positively affect our energy 
independence, security, and decrease our dependence on foreign 
oil.
    We truly appreciate the support of Congress to make 
unconventional energy an R&D priority and help federal agencies 
understand that taking steps to ensure public lands certainty 
and federal policy consistency would create an energy game 
changer.
    Thank you for the opportunity to speak today. I look 
forward to your questions.
    [The prepared statement of Ms. Julian follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Harris. Thank you very much.
    I now recognize Mr. Andersen for five minutes to present 
his testimony.

                 STATEMENT OF MR. JIM ANDERSEN,

             CHIEF EXECUTIVE OFFICER AND PRESIDENT,

                   U.S. SEISMIC SYSTEMS, INC.

    Mr. Andersen. Thank you very much, Chairman Harris, Members 
of the Subcommittee.
    I have a little bit different presentation, and I am going 
to show some charts and hopefully this technology will work 
right.
    So what I am here to talk about is, we have developed a 
revolutionary sensing technology that we believe will solve 
many of the environmental problems associated with 
unconventional oil and gas development, primarily for 
hydrofracking. The sensors are all fiber optic, no electronics 
or copper in the well, and they replace the 50-year-old sensor 
technology that has been used in the industry that really isn't 
up to speed with these new extraction techniques, and I will 
talk a little bit about that.
    Not to go into a lot of technical mumbo jumbo, just a real 
simple ``how does it work.'' You know, we have two things. We 
have a box we call an optical interrogator. All the smarts are 
in that box, and lasers, electronics and all that, and then we 
have a fiber optic cable which we drop down the well. The fiber 
optic cable has no electronics, no circuit boards or any power 
that goes down the well. That makes it very reliable and 
inexpensive. How it works, we send laser-like pulse down the 
cable. When the reflection comes back, the information we are 
looking at is in that reflected pulse. Very, very simple.
    So just so you don't think that this is smoke and mirrors, 
in my prior life I used to run the division of Litton 
Industries and was responsible for fiber optics there, and we 
put the fiber optic sensor system on all the Virginia-class 
submarines. The contract was valued at over $450 million, had 
the electronics inside the submarine, fiber optic sensors 
outside the hull, and it turned out to be a very, very reliable 
system. It is now on the order of a dozen submarines, and 
reliability record is outstanding.
    A lot of the team members that used to work for me at 
Litton are now at my company, and we have commercialized it, 
made it less expensive and more reliable for commercial 
applications, and also we develop our own IP, but we have also 
licensed some of the technology from Northrop Grumman.
    So here is our premise. The existing equipment for frack 
monitoring is just too expensive and the performance is 
marginal, and when I say expensive, I use an example that, you 
know, to drill a well to produce shale, it costs about $5 
million. To install sensors and the cost of sensors is another 
$5 million. People just don't do it, and plus the performance 
is poor so there is really no motivation.
    We also believe that, you know, it is not just the sensing 
system but how much it costs to install, and the main driver to 
that is the cost of drilling the wells to install it. We have 
been working with the Department of Energy and they have done 
some studies and shown if you have very sensitive sensors like 
we do, instead of going down and drilling down to, you know, 
5,000, 6,000 feet, you could drill 500 or 600 feet. Great 
savings on installation also. We are trying to make this 
inexpensive so everybody will do it.
    You know, frack monitoring, basically what you end up with 
instead of blindly pumping in fluid at high pressure and, you 
know, wondering if you are fracturing, you monitor it with 
sensors in the ground as you do the stage. You can see there 
are different colors and you block off a certain section, you 
frack it and do the next one, and you see what the extent of 
the fractures are. So you have a record, and if it starts going 
to places where you don't want, you could stop it. We believe 
100 percent monitoring will solve the problems, and it is not 
just us. You know, the Secretary of Energy Advisory Board came 
out with some recommendations and they said you should have 
surveys carried out to ensure fracturing is limited to where 
you want it to occur. And they also have said we need 
additional studies to talk about shale gas leakage of water 
wells. We are also working with FTS International, a large 
company in the United States that does fracking and is 
developing systems to do 100 percent monitoring.
    Here I will just talk about well casing leaks a little bit. 
You know, it is an important issue. My feeling is, it is 
designed to prevent communication between layers but, you know, 
these things happen, and the next chart will show that the 
problem with gas migration, people talk about it like it is a 
new thing. It has been around for over a decade. You know, they 
had studies in Canada that 45 percent of the wells are leaking. 
So my thought is, is rather than denying or saying does this 
leakage happen or not, we have technology that is cheap 
insurance, and you could check for it and make sure that if it 
does happen, you could fix it.
    So summing up, there are several of the major areas of 
environmental concern that can be minimized via monitoring 
during and after the fracking process. This includes chemical 
contamination of the subsurface, aquifers, gas migration and 
even induced seismicity, and we have developed revolutionary 
fiber optic sensing technology to address the technical 
problems, such that you could do remediation before there is 
significant environmental damage.
    And I thank you and I welcome your questions.
    [The prepared statement of Mr. Andersen follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Harris. Thank you very much, Mr. Andersen. That is 
some fascinating technology.
    I now recognize our third witness, Mr. Todd, to present his 
testimony.

                   STATEMENT OF CAMERON TODD,

                    CHIEF EXECUTIVE OFFICER,

                      U.S. OIL SANDS, INC.

    Mr. Todd. Mr. Chairman and Members of the Committee, I 
thank you for the opportunity to address you today on vital 
matters of energy, environment, and the economy. My name is 
Cameron Toddm and I am the Chief Executive Officer of U.S. Oil 
Sands, a public company with a unique proven technology for the 
development of the U.S. extensive oil sand resources.
    I am here today to explain that development of these 
valuable resources is not only economically viable and 
technologically proven, but also can be done in an 
environmentally responsible manner with significant economic 
benefit for the Nation.
    U.S. Oil Sands has a proprietary technology using a 
renewable biosolvent to extract heavy oil from oil sand without 
the need for tailings ponds. This breakthrough is expected to 
revolutionize the development of oil sands, particularly in the 
United States where, in spite of extensive resources, there 
have been no commercial extraction projects to date.
    The solvent we use is nontoxic and biodegradable, made from 
citrus peels. Over the last 10 years, our company has 
exhaustively tested and piloted our process. It greatly 
simplifies current approaches to development and allows them to 
be built on a smaller scale using modular phases.
    Our company has been active in Utah for more than seven 
years and has invested more than $20 million developing the 
technology, acquiring lands, doing environmental reviews, in 
design, and initiating construction. Beginning later next year, 
expect to complete construction and initiate production on the 
first commercial oil sands extraction project in the United 
States. By that time we will have invested more than $50 
million and employed hundreds of people.
    Our process demonstrates the best environmental performance 
of any oil sand development to date. We recover 96 percent of 
the bitumen processed, the highest of any project. Since we 
produce clean sand without tailings ponds, we reclaim the mined 
area as we go. The process recycles 95 percent of the water 
used, and we use half the water of other projects. We use less 
than a third of the amount of energy and we have a lower 
greenhouse gas footprint than any project to date.
    Our first project is modest, producing 2,000 barrels a day. 
Over the next 10 years, assuming fair access to lands, our 
company has expansion plans for 50,000 barrels per day. Over 
the project life, we expect to generate over 60,000 person 
years of direct employment, high-quality, permanent jobs. And 
they come at a time when the American economy has been hit with 
the worst recession in 75 years. We expect to pay more than $9 
billion in taxes and royalties and contribute more than $20 
billion to the economy. And we will be saving the import of 
over $50 billion worth of foreign oil.
    And while we may be first, U.S. Oil Sands is not alone. 
Other companies are pursuing exciting technologies, and new and 
environmentally responsible and economically attractive 
projects are coming.
    So what is standing in the way? In short, federal policy. 
Even though most resources are on federal lands, it is no 
accident that 100 percent of our company, U.S. Oil Sands, 
leases are on State lands. The State is strongly supportive 
while the BLM essentially has a de facto moratorium on leasing 
and approval, this in spite of the instructions of Congress in 
the Energy Policy Act of 2005. The BLM is further proposing to 
reduce the lands available for development by nearly 80 percent 
because of their belief that commercial technologies do not 
exist, that only massive large-scale development would occur. 
It is not that these lands are conservation areas where 
development is prohibited. Quite the contrary, as conventional 
oil and gas, forestry, grazing, and mining are allowed, subject 
to normal approvals. It is only oil sand and oil shale leasing 
that is restricted.
    Developers are not asking for unfettered access. Every 
project would still be subject to extensive scrutiny and 
approval, just as are conventional projects. We have already 
shown that small-scale phased development is possible, and that 
world-class environmentally responsible technologies are 
proven.
    In conclusion, the oil sand resources of the western States 
are large and accessible. U.S. Oil Sands has developed a 
process to unlock these valuable resources in an 
environmentally superior manner. We expect our project on State 
lands to be in production next year. The process uses far less 
water, energy, surface area, and generates less greenhouse gas 
than any project to date. It generates clean tailings and 
requires no tailings ponds. Our company expects to generate 
tens of thousands of man-years of employment, billions of 
dollars of tax revenue, and contribute tens of billions of 
dollars to the economy. In exchange, we ask for no special 
treatment, no fuel subsidies and no grants. We simply suggest 
that Congress permit these developments on federal lands as 
mandated in the Energy Policy Act.
    We at U.S. Oil Sands intend to implement our game-changing 
approach with or without access to federal lands. We have 
identified large resources on State lands and will develop them 
in concert with the State. We will apply our approach to 
resources in Canada and other parts of the world where large 
deposits exist. It would be a shame if the people of the United 
States were not able to enjoy the benefits of development of 
their own extensive resources, but such a great technology and 
such a win-win-win result with respect to energy, the economy 
and the environment, is too good to not to be applied to solve 
the energy challenges of the world.
    Thank you.
    [The prepared statement of Mr. Todd follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Harris. Thank you very much.
    Our final witness, Mr. Dammer, is now recognized for five 
minutes to present his testimony.

                 STATEMENT OF MR. TONY DAMMER,

                  MEMBER, BOARD OF DIRECTORS,

                 NATIONAL OIL SHALE ASSOCIATION

    Mr. Dammer. Thank you, Mr. Chairman and Members of the 
Committee. I thank you for the opportunity to appear today. I 
have worked on and off in the oil shale business for several 
decades. They kicked me out of Colorado in 1982 when Colony 
folded, so I have seen the ups and downs of the industry.
    As been pointed out, oil shale development has had a long 
and tortured history which would take hours to relate, so I 
won't go over that in any detail here. But in 1982, Exxon 
abruptly closed its doors to the Colony project and, without 
warning, left the scene. That was referred to as Black Sunday. 
So the industry has been characterized by boom and bust, but 
not until almost 25 years later the passage of EPAct 2005, the 
Energy Policy Act of 2005, the government demonstrated any 
appreciable interest in the oil shale resource. High price of 
crude oil, coupled with concerns regarding energy geopolitics 
and increased dependence on imported oil from unfriendly, 
unstable sources, focused attention back on oil shale.
    Today, there are several companies engaged in oil shale 
research and development in the United States in varying 
degrees of development. Some are small, their work limited to 
the laboratory. Others such as Shell, Exxon, AMSO, Red Leaf, 
Total, Shale Tech International, just to name a few, are 
actively testing their technologies in various stages of 
development in the field.
    The secure fuels and domestic report, resources report 
published by the U.S. Department of Energy summarizes those 
technologies, those 32 separate companies working in oil shale 
and tar sand development in the United States. Most or all oil 
shale development companies and their profit and their profiles 
are summarized in www.Unconventionalfuels.com.
    I have by no means covered the technical landscape 
regarding oil shale development, and I regret that time does 
not allow a comprehensive review of all the technologies. 
Advances that have taken place in the last five years are very 
large. Suffice to say that clean, safe and sustainable 
technologies are being advanced to develop oil shale resources. 
The passage of the Energy Policy Act of 2005 provided impetus 
for this program.
    We talked a little bit about some of the key technical 
challenges that presents us. We talked a little bit about 
water. I have not read anything from any oil shale company that 
believes that they will exceed one barrel of water per three 
barrels of oil shale produced. A lot of the industries are 
water producers. I think there is a lot more known about water 
utilization than is generally understood by the public.
    One of the greatest concerns has been the requirement of 
water development in the scarce area. I think that has been 
overstated. A far greater concern than the technical challenges 
faced by oil shale, the oil shale industry, are policy and 
regulatory inconsistency and uncertainty. Since the passage of 
the Energy Policy Act of 2005, the Department of Interior has 
reversed itself on the initial Programmatic Environmental 
Impact Statement and changed the associated resource 
development plans. As we all know, oil shale regulations were 
overturned in 2008.
    The Energy Policy Act, however, was a comprehensive piece 
of legislation designed not only to prepare for R&D and leasing 
regulations but also to plan for the orderly development of oil 
shale and tar sands in what is essentially the Green River 
formation of Colorado, Utah, and Wyoming. That planning 
responsibility was assigned to the U.S. Department of Energy 
under section 369(h) and (i). Section 369(h) of that Act 
directed the Secretary of Energy in cooperation with the 
Secretary of the Interior and the Secretary of Defense along 
with governors of affected States to establish a task force to 
develop a plan to accelerate the commercial development of 
strategic unconventional fuels and initiate a partnership with 
Alberta and nations with oil shale resources. The task force 
report with recommendations was completed and forwarded to the 
President and Congress in 2007. Section (i) of the Act directed 
the Office of Petroleum Reserves to coordinate and create and 
implement the implementation of a commercial strategic fuels 
program. If these sections of the Act were implemented and the 
unconventional fuels development program was initiated within 
DOE, uncertainty and inconsistency in policy would not exist 
today.
    Unfortunately, there is little evidence that the 
recommendations of the task force or the establishment of an 
unconventional fuels program has occurred. My strong 
recommendation would be to implement the law as it was stated 
in the Energy Policy Act of 2005.
    Mr. Chairman and Members of the Committee, thank you once 
again. I would be pleased to answer any questions.
    [The prepared statement of Mr. Dammer follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Harris. Thank you very much for your testimony, 
and we will now begin the first round of questioning. I will 
recognize myself for five minutes.
    Mr. Andersen, let me just ask you, your technology, was 
there any government involvement in the development of the 
technology?
    Mr. Andersen. Well, I talked about initially there was some 
government involvement in technology that was put on a 
submarine, but we took that and developed our own intellectual 
property, our own funding. We built some systems for the 
government, but the R&D for those was all internal.
    Chairman Harris. Okay. And did you ever request any help 
from the Department of Energy or, you know, sought some of the 
funds from some of the programs we have been talking about 
today?
    Mr. Andersen. No, we haven't.
    Chairman Harris. Okay. Now, Mr. Dammer, your testimony--I 
want to thank you for your testimony. You know, it was a little 
disturbing to me that, you know, the Department of Energy, you 
know, Mr. McConnell kind of admits that oil shale and oil sands 
are part of all of the above but they are not spending any 
money on it. They are not really doing anything. The task force 
that you mentioned that produced that report in 2007 did 
outline some impediments that are occurring or constraints that 
exist on development of oil shale. In your opinion, is the DOE 
or BLM really doing enough or doing anything to implement the 
recommendations of that task force or basically has it almost 
ground to a halt?
    Mr. Dammer. I can't really speak to what the Department of 
Interior is doing. Let me correct that. I know exactly what 
they are doing, and they really are on the regulatory side of 
this, and we have sort of jumped the gun on regulations, 
because as you have heard today, you have people questioning 
water usage, you have the carrying capacity of the western 
energy quarter, socioeconomic concerns. Those are the concerns 
that need to be addressed and addressed in a plan, and that was 
the purpose of section 369(h) and (i) was intended to do. They 
weren't intended to promulgate new regulations. That is the 
responsibility of the DOI. It was to put together a plan to 
reasonably develop these resources, and these resources stretch 
from Wyoming down through Colorado, and they do broach the 
Green River and the Colorado River. So there is all kinds of 
hydrologic issues, incidentally, some of which have been 
answered far better than the testimony by GAO.
    Chairman Harris. Let me ask you, so--because my 
understanding that that--the oil shale, is it true that if you 
look at oil shale resources, that the United States really has 
more than the entire world's reserves, if we could unlock oil 
shale?
    Mr. Dammer. Many times over.
    Chairman Harris. That is what I thought. So, you know, it 
is an interesting all-of-the-above strategy. That is all I can 
tell you.
    I want you to directly comment on the use of water, because 
my understanding, the GAO report suggests that it takes five 
barrels of water to produce one barrel of oil. You say that 
more likely that it is one barrel of water for three barrels of 
oil. Is that because of advances in technology or the feeling 
that we can make those advances and that is a goal?
    Mr. Dammer. Well, I think the genesis of that statement is, 
is that companies like Shell, Exxon, Total, Red Leaf have been 
out on the ground for some period of time. A number of those 
projects have pilot projects. In the case of Red Leaf, we ran a 
pilot project so we know exactly how much water we were using, 
and we were using actually less than one barrel of water per 
barrel of oil shale produced. And most of that water was for 
domestic consumption and dust control. So there is a gap 
between what is going on in the industry and what is being 
talked about by these various reports and whatnot.
    Chairman Harris. Thank you very much. As you said, the 
purpose of the Energy Policy Act was to try to answer some of 
those questions.
    Mr. Todd, you know, thank you all the work the company has 
done. Just out of curiosity, were there--because you say you 
don't really want any loans or programs or grants or whatever, 
and that is kind of too bad because I think the money in your 
company would be much better than Solyndra, for instance, 
probably much better spent. What is the price per barrel that 
it is going to cost you ultimately when you begin this 
production? Can you give us an idea about what the price per 
barrel of producing is from the oil sands using your 
technology?
    Mr. Todd. We estimate our operating costs at under $30 a 
barrel, and we estimate the economic limit to be about $50 a 
barrel priced to go ahead.
    Chairman Harris. So even at today's relatively--I hate to 
say relatively depressed price of Midwest oil compared to the 
world but, you know, roughly $97, $96 a barrel, whatever it was 
in the last few days, it is economically--again, the Department 
of Energy testified it has to be economically viable, and 
clearly, that is economically viable in today's oil market.
    Mr. Todd. Absolutely. Of course, one of the problems we 
have in oil sands side in the federal level is to lump oil sand 
and oil shale together. They are different resources. They are 
both very large. They both occur in the western States. That is 
about where the----
    Chairman Harris. And they both start with ``oil.''
    Mr. Todd. But the fact is that the technologies for 
developing oil sand have been well at play. Our company is a 
unique one, but in Canada, we are--we have got two million 
barrels a day. It is hardly unconventional anymore.
    Chairman Harris. Yes. Thank you very much, and we will 
probably have a second round but I want to recognize Mr. Tonko 
for five minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    Mr. Dammer, since oil shale companies have secured 
thousands of acres of oil shale resources in Utah and have 
apparently secured funding to move forward with a commercial 
oil shale development program on these lands, why do you think 
it necessary for the Federal Government to make millions of 
acres of federal lands available for commercial development 
since, (A) large amounts of federal lands have already been 
available for oil shale development; (B) millions of acres of 
oil shale resources in the West are already in the hands of 
private industry, none of which to date have been commercially 
developed; and (C) it seems that ample oil shale resources have 
been acquired to move forward with the commercial program?
    Mr. Dammer. I think the short answer to that is the 
economics. The richest oil shale on earth is located in the 
Piceance Basin of Colorado. It is a relatively small area, but 
it is the area where the RD&D leases are located. That is where 
Shell, AMSO, Exxon, and Chevron want to deploy their in situ 
technologies, and the reason for that is, is that in that 
particular region, the pay zone in the middle of the Piceance 
Basin is 1,000 feet thick, all right, so there is about 1,000 
foot of over burden and then there is about 1,000 foot of pay, 
a very, very high quality, consistent oil shale. So what they 
want to do is they want to put those electric heaters down into 
that very thick pay. Keep in mind, we would be heating that 
whole column of thousand foot, and the payoff for that is 
tremendous. Shell incidentally believes that they will produce 
a million to 1.2 million barrels per acre. There is no 
conventional oil play on Earth that is that productive and that 
concentrated. So that is the story with the Piceance Basin.
    Mr. Tonko. And with the State and private lands that exists 
along with the proposed research leases in PEIS, are those not 
enough in terms of area or land space?
    Mr. Dammer. Well, they reduced the land space from two 
million to somewhere below 500,000 acres. The thought is no, 
that is not enough land.
    Mr. Tonko. Even for research and commercial pilots?
    Mr. Dammer. For commercialization. The two million acres 
that were the preferred alternative in the original regulations 
were two million acres, so what has happened is that amount of 
land has been carved back to somewhere below 500,000 acres, and 
yes, the answer to your question is, that is not enough open 
land.
    Mr. Tonko. Okay. In support of this discussion, I would ask 
that the Wilderness Society document outlining the private and 
state land leasing for oil shale be included, if we might, Mr. 
Chair, in the record?
    Chairman Harris. Without objection.
    [The information may be found in Appendix 2.
    Mr. Tonko. Thank you.
    And the oil shale industry has a very long history of grand 
failures, which have come at enormous cost to investors and to 
taxpayers and certainly the environment, yet today we are 
talking about it as this resource of the future, as if it is 
some new idea that has not seen a century of attempts with no 
return on investment. GAO just testified that their project to 
assess the water impacts of oil shale was complicated by the 
fact that the technologies were not mature enough to inform a 
precise assessment, yet here we are hearing that it is a proven 
commercial ready technology and all you need is the federal 
land to make it happen.
    Mr. Dammer and Ms. Julian, what has changed to perhaps have 
us think differently here?
    Mr. Dammer. Well, I don't want to correct you, but I don't 
think we said that these were ready for commercial, to be 
commercialized. There is no commercial oil shale development 
project. But what I would say is that there has been a lot of 
private R&D that has gone into these technologies. Shell has 
spent hundreds and hundreds of millions of private capital out 
on their site in Colorado. They have a very good idea of what 
their water usage is and their energy return on investment, as 
does Red Leaf Resources Incorporated, who has run a pilot. So--
--
    Mr. Tonko. Has that research provided for any different 
approach or would it be the same--is it the same effort with 
the same potential impacts on water and the environment?
    Mr. Dammer. Well, I think the in situ technology and the 
Red Leaf technology, which is a modified in situ, is unlike any 
other kind of technology that you might hearken back to, to the 
1980s where the surface retort was king and rumen pillar mining 
and surface mining were being considered. That is not to say 
that surface retorts haven't improved their technology 
remarkably, but this is not your grandfather's oil shale 
industry anymore. Just as with shale gas technology, 10 years 
ago--I have been in the oil and gas business for a long time. 
Ten years ago, people were saying you would never be able to 
deviate a well into a shallow conventional shale reservoir that 
is 10,000 feet deep and put out a long-reach horizontal well 
another 10,000 feet. People would have laughed at you. So, I 
mean, it is a technological play that is evolving, and it is 
evolving very fast.
    Mr. Tonko. Thank you, Mr. Chair. I yield back.
    Chairman Harris. Thank you very much. And again, we will 
have a second round here.
    Ms. Julian, in your written testimony you state that ``As 
any operator will tell you, coal, oil, gas, wind, solar, shale, 
sands, et cetera, working on state land is not only more 
clearly streamlined but consistently regulated.'' Could you 
please expand upon some of those lessons from Utah with regard 
to the permitting process or energy regulation with regards to 
state versus federal?
    Ms. Julian. Sure. In the State of Utah, our regulatory 
policy is laid out pretty simply. We completely have everything 
out on the table and really want to be an expeditious, 
business-friendly process. It is not subject to interpretation 
as much federal regulation is, which creates a delay and turns 
it into a judiciary system. The process to improve everything 
from air and water permits to mining permits in the last three 
years, the timeline has decreased significantly where some 
permits can be done in 90 to 120 days. And some of the things 
that we do in the State of Utah is, we put all the regulators 
in the room together for an entire project, and we have them 
work it out together with the company all at the same time and 
say what are the timelines, what are the obstacles, what do we 
need to go through for this, and just getting them in the same 
room and having these predesigned meetings has cut down on all 
kinds of things that regulatory agencies go through on a 
federal level that turn into a judiciary-type situation where 
you have lawsuits delaying projects and perhaps losing private 
investment such that happens to the federal entities.
    Chairman Harris. Thank you.
    I would like to ask unanimous consent to enter into the 
record the following three documents from the State of Utah: 
the Utah's economic development plan, Utah's 10-year strategy 
energy plan that is called ``Energy Initiatives and 
Imperatives,'' and Utah's response to the BLM's draft 
Programmatic Environmental Impact Statement for Oil Shale and 
Tar Sands. So without objection, so ordered.
    [The information may be found in Appendix 2.]
    Chairman Harris. Thank you very much.
    Specifically, you know, you discuss Governor Herbert's 10-
year strategic energy plan. Are there any particular examples 
from the plan you would like to highlight with regard to 
regulations, streamlined development, coordination, long-term 
planning, anything that you would suggest to the Federal 
Government adopt some kind of similar strategies?
    Ms. Julian. Sure. There were eight recommendations that 
came out of the plan from the task force. One of them was to 
increase transparency, to really look at the regulatory system, 
the licensing system, put it online, have people see exactly 
where it is at, and adjust the regulatory framework to 
technology, modernize it. Some of the things that we look at 
and the way that we look at regulatory processes are decades 
old. We haven't changed it. Technology has changed. Some of 
these processes were put in place before there were cell 
phones, before there was other messages--excuse me--methods of 
technology, and we haven't sped up the regulatory process to 
keep up with technology.
    Chairman Harris. Thank you.
    Now, Mr. Andersen, with regards to your technology, I 
understand that one of its usefulnesses actually can be to 
direct how the horizontal drilling occurs. Is that right? By 
detecting the--by doing--well, by seismic detections as you are 
drilling?
    Mr. Andersen. Oh, you could do that also. That is not one 
of the, I guess, parts that we are pushing here. But basically, 
you put a bunch of sensors in the ground and they triangulate 
on some event that is occurring and knowing exactly in three 
dimensions where it is, be it a fracture occurring or a drill 
progressing down, you know, as you drill a well.
    Chairman Harris. And what you are suggesting is that the 
technology actually would enable to be more efficient with 
regards to the fracturing. Is that right? Because you would 
know exactly where it is occurring and when it is occurring and 
the extent of it and whether you are near where you shouldn't 
be?
    Mr. Andersen. Absolutely. One of the things I primarily 
talked about here was the environmental effects, but in 
reality, there is a big efficiency improvement. I was in a 
frack job down in Fayetteville shale about a year ago, and I 
was talking to the geophysicist during the frack monitoring, 
and, you know, I asked her, what is your interest in this, why 
are you monitoring and a lot of the other guys aren't? She says 
well, you know, we have a certain amount of acreage, we want to 
maximize how much we get out of that field. If we don't 
monitor, we have to guess how far we space the wells, because 
we are not sure where the fractures are occurring. So if you 
put it too close, you will have thief zones and the frack fluid 
would leak into a previous fracked area. So the point was, 
their thought was if they could get this done inexpensively, 
they would do this on all their frack jobs and it will allow 
them to get maybe 30 percent, 35 percent more out of the fields 
rather than leaving areas just untouched.
    Chairman Harris. So in essence, that also relatively 
reduces the amount of--the environmental impact per, you know, 
million BTU of gas extracted from a gas well, for instance, 
right? Because you are extracting more from the same bore hole?
    Mr. Andersen. Exactly, and one other point is that, you 
know, I was talking--we had investor day at my plant yesterday 
and I was talking to one of our clients who, you know, does a 
lot of fracks, and he says, you know, typically you might do 
stages like six, eight stages, half of them may not produce, 
but you don't know because you are not monitoring it so you are 
not, you know, seeing the effects. So there would be a lot of 
efficiency improvements if you monitored 100 percent.
    Chairman Harris. And the bottom line is, two years ago, 
that technology just didn't exist?
    Mr. Andersen. It did not exist. That is correct.
    Chairman Harris. So, you know, as we look--and the whole 
purpose of the hearing is to look at research and development 
of unconventional oil and gas. I personally believe--and I am 
going to ask you whether you agree, but I suspect you do--that 
it is through technological improvement that we will actually 
improve and increase the amount of available unconventional oil 
and gas, and I think your product is a perfect example of how 
you do it through technology.
    Mr. Andersen. I agree 100 percent. If I may just real 
quickly, you know, they were talking in the 1970s that peak oil 
was reached, energy production was going down but then, you 
know, technology came along, hydro fracking, you know, and 
starting around 2008, it is going up. You know, technology has 
done that and what I am worried about is that whole revolution 
could get slowed down by people having concerns about the 
safety of it, and we can monitor that, and the technology 
exists to do that, and if some events start happening, they 
could be corrected before there is any significant 
environmental damage.
    Chairman Harris. No, this is great. I am a firm believer in 
technology. I wish we had invited ATK, a company that has some 
presence in my district that you may or may not be familiar 
with, is doing the propellant fracturing. It eliminates the use 
of water, and, you know, they claim they can roughly double the 
yield of wells, of their test wells done with that technology. 
Now, you combine that with your--and all of a sudden, you know, 
we have got potentials that we knew nothing about two, three 
years ago, which is always exciting.
    Yes, Mr. Todd, briefly, and then I am going to go to Mr. 
Tonko.
    Mr. Todd. If you don't mind, I might build on the same 
point relative to water. The last company that I worked for, an 
in situ oil sand developer in Canada, we were the first company 
to use a new water recycling technology that had developed and 
acquired by GE. It was--it allowed us to get the highest water 
recycle that had ever been achieved in the oil sands to date. 
It was a technology that did not exist five years prior. It is 
now standard practice, and it couldn't have existed if we had 
to have the answer before we were allowed to get access to the 
resource. As you start on the projects and you start small, you 
identify the problems and the opportunities and technology 
works along with you. But if you have to solve it all before 
you get started, you can never get there.
    Chairman Harris. Thank you very much.
    Mr. Tonko.
    Mr. Tonko. Thank you, Mr. Chair.
    Ms. Julian and Mr. Dammer, there seems to be an apparent 
difference in public acceptance in Utah versus Colorado. Can 
you speak to that, please?
    Ms. Julian. There is public opinion difference, definitely 
in Colorado versus Utah, and much of that is that some of the 
folks that are interested in oil shale development actually 
don't live in those regions or areas, and so they are worried 
about those particular concerns because they are not in the 
area, they are not aware of the jobs, the economic benefits to 
that community and the fact that it isn't just about water 
availability, it is how you use the water, and so Colorado and 
Utah do have somewhat of a difference. Even though Colorado has 
got a great resource, the State of Utah is open for business, 
and many oil shale and oil sands companies are coming over the 
border to do business with us.
    Mr. Tonko. Mr. Dammer?
    Mr. Dammer. Well, I think that Utah has an entirely 
different attitude toward commerce and development than 
Colorado has. Colorado is very much more diverse. I got a 
letter, I guess it was last night, that said that a number of 
mayors had objected to the expansion of oil shale lands to two 
million and they were backing the 400,000-acre thing, and one 
of the objectors was from Carbondale. Well, Carbondale is 
southeast and halfway to Aspen. So there is a lot of 
recreational, there is a lot of retirement type of activity out 
in and around Rifle and the Piceance Basin, and I think one of 
the challenges for oil shale development is going to be, how 
are you going to responsibly and sustainably build that 
industry in that area. It is going to be different.
    The other side of the coin is, is that three county 
commissioners, Mesa County, Garfield County, and Rio Blanco 
County, wrote the opposite letter saying that we represent the 
people of these counties and we support the two-million-acre 
thing. But what you see in Colorado that I don't think you see 
in Utah is, you see retirement communities that are not 
interested in mineral development. So you go into these towns 
and talk to people that have to ship their kids down to Aspen 
to serve Starbucks coffee to keep them in the area. They are 
interested in high-paying jobs. So it is a push and pull. I 
worked in Utah, and it is open for business. It is an entirely 
different environment.
    Ms. Julian. I would----
    Mr. Tonko. I am sorry.
    Ms. Julian. I am sorry. I would also add to it that I think 
people don't realize that you can have both. You can have 
environmental sustainability and energy development. It is not 
mutually exclusive. These things can happen together. You can 
have prosperity and economic development and jobs, ripple 
effects into the school systems, and you can still have 
tourism, you can still have your endangered species and all of 
the species that go along with it, our plant life survive and 
thrive and you can still have other industries such as 
agriculture and hunting. It can be done together. It is, again, 
not mutually exclusive.
    Mr. Tonko. My understanding is that the processes used in 
Estonia have reaped massive environmental damage there. Would 
we use that same process here?
    Mr. Dammer. No, sir. I worked in Estonia for several years. 
You are exactly right. The old, antiquated surface retorts that 
they use there are pretty nasty business. They produce a lot of 
semicoke. You know, they call them the Estonian Alps. To the 
credit of Enefit, which is their--they have a U.S. subsidiary 
now called Enefit American Oil and they own land in Utah. They 
refined that retort. I can't tell you exactly all the technical 
details of it, but it is much improved. But you would never 
want the retorts that are operating in Estonia to come to the 
United States, as with the Chinese retorts, the Fushun retorts. 
Those are horrible, nasty things.
    Mr. Tonko. Many of you have made reference to the 
technologies that produce water. What is the quality of this 
water compared to that which already exists on the surface?
    Mr. Todd. In our case, the water is a fresh water that we 
produce. We don't actually discharge water. The water that we 
lose is essentially water that evaporates and is coating the 
sand grains and so it is like putting wet beach sand on the 
ground. It has got water entrained in it, and that is all the 
water that is used in our process.
    Mr. Tonko. I believe I am out of time, so I yield back, Mr. 
Chair.
    Chairman Harris. If you have an additional question, you 
can take a little extra time if you want to ask another 
question.
    Mr. Tonko. If I could just ask Mr. Todd about the--in terms 
of commercial readiness, what is the difference between oil 
sands and oil shale?
    Mr. Todd. There are many, many differences, and we can go 
back to the chemistry of it all, but oil sands have oil in 
them. It is oil that is ready to go into a refinery. And so 
when we produce our oil, it will go direct to refining. It does 
not require to be upgraded. It is not a kerogen. It is oil. It 
is heavier and it requires some technical dealing with 
viscosity. Those are chemical problems to be dealt with. The 
kerogen that--they both started off in the shale. All the oil 
and gas in the world started off in shale. The stuff that 
migrated out of the shale after it became mature became oil and 
gas, and the oil, if it came close to the surface as it has in 
Utah, and the surface was eroded away and that oil came into 
contact with the atmosphere, the light ends of the oil would 
run off and what would be left is very heavy, and that is why 
it is hard to get out of the ground. On the other hand, what is 
left in the shale is still needed to be cooked, but 
unfortunately, it wasn't left buried long enough and so now it 
needs to be cooked man-made to get it out.
    So there are two completely different problems. One is the 
oldest oil in the world and one is the youngest oil in the 
world.
    Mr. Tonko. Mr. Chair, in support of the discussion we have 
been having, I ask that the nine-page report by the Checks and 
Balances Project titled ``A Century of Failure'' be included in 
the record.
    Chairman Harris. Without objection, so ordered.
    [The information may be found in Appendix 2.]
    Mr. Tonko. Thank you. And also a compilation of expert 
quotes titled ``Not Ready for Prime Time'' expressing opinions 
about the commercial readiness of oil shale, also prepared by 
the Checks and Balances Project, be included in the record.
    Chairman Harris. Without objection, so ordered.
    [The information may be found in Appendix 2.]
    Mr. Tonko. Thank you, sir.
    Chairman Harris. Thank you. I am going to ask unanimous 
consent to enter into the record three resolutions passed by 
the Board of County Commissioners for Garfield, Mesa, and Rio 
Blanco counties, Colorado, opposing the U.S. Bureau of Land 
Management's 2012 oil shale and tar sands Programmatic 
Environmental Impact Statement for lands administered by the 
BLM in Colorado, Utah, and Wyoming.
    [The information may be found in Appendix 2.]
    Chairman Harris. Additionally, I would ask unanimous 
consent to enter into the record two additional documents, a 
white paper co-authored by Mr. Dammer entitled ``Economic 
Impact of Failure to Implement Legislative Mandates of Section 
369, Energy Policy Act of 2005,'' and a letter from Dr. Dag 
Nummedal and Dr. Jeremy Boak with the Colorado School of Mines 
regarding unconventional oil and gas development. Without 
objection, so ordered.
    [The information may be found in Appendix 2.]
    Chairman Harris. I want to thank the witnesses for their 
valuable testimony, and their Members for their questions. The 
Members of the Committee may have additional questions for you, 
and we ask you to respond to those in writing. The record will 
remain open for two weeks for additional comments from Members.
    The witnesses are excused. Thank you all very much for 
coming. The hearing is now adjourned.
    [Whereupon, at 11:54 a.m., the Subcommittee was adjourned.]

                   Answers to Post-Hearing Questions


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                   Answers to Post-Hearing Questions

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                               Appendix 2

                              ----------                              

                   Additional Material for the Record


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 Letter from Members of Wyoming House of Representatives to Bureau of 
                            Land Management

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

  ``Water on the Rocks'': A Presentation by Western Resource Advocates

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

  Letter from Denver Board of Water Commissioners to Subcommittee on 
       Interior, Environment, and Related Agencies, Committee on 
                             Appropriations

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

 Letter from Rocky Mountain Farmers Union to Subcommittee on Interior, 
     Environment, and Related Agencies, Committee on Appropriations

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            Oil Shale Fact Sheet from the Wilderness Society

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     Utah's Economic Development Plan from Governor Gary R. Herbert

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  Energy Initiatives and Imperatives: Utah's 10-Year Strategic Energy 
                                  Plan
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 Draft Programmatic Environmental Impact Statement: Possible Land Use 
    Plan Amendments for Oil Shale and Tar Sands (May 4, 2012) (Utah)

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Oil Shale: A Century of Failure Report by Checks and Balances Project, 
                               April 2012

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   Not Ready for Prime Time: Prepared by Checks and Balances Project

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

              Resolution of Mesa County, State of Colorado

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  Mesa County News Release, April 19, 2012, and Resolution No. 2012-12

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

  Economic Impact of Failure to Implement Legislative Mandates of Sec 
 369, Energy Policy Act 2005, a White Paper by Anton Dammer, M.S., and 
                          James Bunger, Ph.D.

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 Letter to the Subcommittee from Dr. Dag Nummedal, Director, Colorado 
 Energy Research Institute, and Dr. Jeremy Boak, Director, Center for 
      Oil Shale Technology and Research, Colorado School of Mines

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   U.S. Department of Energy, Office of Naval Petrolum and Oil Shale 
    Reserves, November 2008, ``Strategic Plan: Unconventional Fuels 
            Development Within the Western Energy Corridor''

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