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



 
                   TAPPING AMERICA'S ENERGY POTENTIAL
                    THROUGH RESEARCH AND DEVELOPMENT

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

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON ENERGY AND
                              ENVIRONMENT

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                       FRIDAY, NOVEMBER 30, 2012

                               __________

                           Serial No. 112-108

                               __________

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


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



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              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

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

                 Subcommittee on Energy and Environment

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


                            C O N T E N T S

                       Friday, November 30, 2012

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

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

                           Opening Statements

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

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

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

                               Witnesses:

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

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

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

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

             Appendix I: Answers to Post-Hearing Questions

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

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

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

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

            Appendix II: Additional Material for the Record

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

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

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


                   TAPPING AMERICA'S ENERGY POTENTIAL
                    THROUGH RESEARCH AND DEVELOPMENT

                              ----------                              


                       FRIDAY, NOVEMBER 30, 2012

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

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

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

        Prepared Statement of Subcommittee Chairman Andy Harris

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

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

         Prepared Statement of Committee Chairman Ralph M. Hall

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

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

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

     Prepared Statement of Subcommittee Ranking Member Brad Miller

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

    That has certainly been the Republican policy on energy research.

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

    I yield back the balance of my time.

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

           STATEMENT OF DR. ANTHONY CUGINI, DIRECTOR,

             NATIONAL ENERGY TECHNOLOGY LABORATORY,

                      DEPARTMENT OF ENERGY

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

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

          STATEMENT OF MR. DAVID MARTINEAU, CHAIRMAN,

                TEXAS INDEPENDENT PRODUCERS AND

                   ROYALTY OWNERS ASSOCIATION

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

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

                 STATEMENT OF DR. DANIEL HILL,

               INTERIM DEPARTMENT HEAD, PROFESSOR

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

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

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          Slides presented during Dr. Daniel Hill's testimony

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

                STATEMENT OF MR. MICHAEL HAGOOD,

                DIRECTOR OF PROGRAM DEVELOPMENT,

 ENERGY AND ENVIRONMENT SCIENCE AND TECHNOLOGY, IDAHO NATIONAL 
                           LABORATORY

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

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


                               Appendix I

                              ----------                              


                   Answers to Post-Hearing Questions


Responses by Dr. Anthony Cugini

[GRAPHIC] [TIFF OMITTED] T7038.044

Responses by Mr. David Martineau

[GRAPHIC] [TIFF OMITTED] T7038.045

Responses by Dr. Daniel Hill

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Responses by Mr. Michael Hagood

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                              Appendix II

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                   Additional Material for the Record



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

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

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

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